The ITO, Ward-1(1)(2), Baroda V. M/s. Flexell Computer Forms Pvt. Ltd., Baroda

MA 181/AHD/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1110 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Depreciation; Audit objection; Tax effect; Unabsorbed depreciation
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER MA NO.181/AHD/2019 (IN ./ IN I.T.A. NO.277/AHD/2015) [ / ASSESSMENT YEAR : 2008-09] THE INCOME TAX OFFICER WARD-1(1)(2) BARODA / VS. M/S.FLEXELL COMPUTER FORMS PVT.LTD. 883/1, GIDC ESTATE, MAKARPURA VADODARA-390 010 ./ ./ PAN/GIR NO. : AAACF 3356 R ( / APPLICANT ) .. ( / RESPONDENT ) / APPLICANT BY : SHRI L.P. JAIN, SR.DR / RESPONDENT BY : -NONE- / DATE OF HEARING 06/12/2019 !'# / DATE OF PRONOUNCEMENT 10/12/2019 / O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : THE PRESENT MISCELLANEOUS APPLICATION IS DIRECTED AT THE INSTANCE OF THE REVENUE POINTING OUT APPARENT ERROR IN THE ORDE R OF THE TRIBUNAL DATED 03/12/2018 PASSED IN ITA NO.277/AHD/2015. MA NO.181 /AHD/2019 ITO VS. M/S. FLEXELL COMPUTER FORMS PVT.LTD. ASST.YEAR 2008-09 - 2 - 2. IT IS PLEADED IN THE APPLICATION THAT ASSESSEE H AS FILED ITS RETURN OF INCOME ON 20/09/2008 DECLARING TOTAL INCOME AT NIL AFTER SET OFF OF BROUGHT FORWARD LOSSES OF RS.9,48,966/-. THE ASSE SSEE HAS BROUGHT FORWARD UNABSORBED DEPRECIATION PERTAINING TO AY 20 00-01. ACCORDING TO THE ASSESSING OFFICER, AN AMENDMENT IN SUB-SECTI ON (2) IN SECTION 32 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT VIDE WH ICH UNABSORBED DEPRECIATION CANNOT BE FORWARDED FOR MORE THAN EIGH T YEARS. THUS, ON ACCOUNT OF AN AUDIT OBJECTION THE ASSESSMENT WAS RE OPENED. THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION OF RS .29,89,190/- BEING UNABSORBED DEPRECIATION PERTAINS TO THE PERIOD UPTO AY 2000-01. THE CIT(A) HAS ALLOWED THE CLAIM OF DEPRECIATION AND SE T OFF OF IT AGAINST INCOME OF AY 2008-09. 3. DISSATISFIED WITH THE ORDER OF THE CIT(A), THE REVENUE CAME UP IN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE VIDE ORDER DATED 03/12/2018. THE TRIBUNAL WAS OF THE VIEW THAT TAX EFFECT INVOLVED IN THIS CASE IS LESS THAN RS.20 LAKHS BECAUSE THE TAX RELIEF GRANTED BY THE CIT(A) IS LESS THAN RS.20 LAK HS AND, THEREFORE, IN VIEW OF THE BOARD INSTRUCTION BEARING NO.3 OF 2018 DATED 11/07/2018 SUCH APPEAL IS NOT MAINTAINABLE BEFORE THE TRIBUNAL . 4. IT HAS BEEN FURTHER PLEADED THAT INSTRUCTION NO. 3/2018 CONTAINS EXCEPTIONAL CLAUSE AT SL.NO.8 OF THE INSTRUCTION. ACCORDING TO SUB-CLAUSE MA NO.181 /AHD/2019 ITO VS. M/S. FLEXELL COMPUTER FORMS PVT.LTD. ASST.YEAR 2008-09 - 3 - (C) OF CLAUSE 8 IF A REVENUE AUDIT OBJECTION HAS BE EN ACCEPTED BY THE DEPARTMENT, THEN THE APPEALS OF SUCH ISSUES WOULD B E CONTESTED ON MERIT AND WILL NOT BE WITHDRAWN BY VIRTUE OF THESE INSTRU CTIONS. SINCE IT WAS A CASE, REOPENED ON AUDIT OBJECTION, THEREFORE IT FAL LS WITHIN THE EXCEPTIONAL CLAUSE PROVIDED IN THE INSTRUCTION. 5. HOWEVER, DURING THE COURSE OF HEARING, WE HAVE C ONFRONTED THE LD.DR WITH THE CBDT INSTRUCTION BEARING NO.5/2017 D ATED 23/01/2017. THESE INSTRUCTIONS PROVIDE THAT EVEN IF AN ASSESSME NT IS BEING REOPENED ON ACCOUNT OF AUDIT OBJECTION BUT THE ADDITIONS ARE DELETED BY THE CIT(A) ON MERIT, THEN FOR THE PURPOSE OF CHALLENGING THE O RDER OF CIT(A) IN FURTHER APPEAL THE CASE WOULD BE REQUIRED TO BE EXA MINED ON MERIT. SIMPLY THE APPEAL WOULD NOT BE FILED BECAUSE THE CA SE FALLS WITHIN THE EXCEPTIONAL CLAUSE OF THE CBDT INSTRUCTION FOR NOT FILING THE APPEAL WHERE THE TAX EFFECT BY VIRTUE OF RELIEF GRANTED BY THE CIT(A) IS LESS THAN THE MONETARY LIMIT FOR FILING SUCH APPEALS. IN OTH ER WORDS, THE DEPARTMENT HAS TO ASSESS THE MERITS OF THE DISPUTE INVOLVED AND THEY WILL NOT FILE FURTHER APPEAL AGAINST THE ORDER OF THE CI T(A) OR ITAT IN A MECHANICAL MANNER. RELYING UPON THE EXCEPTIONAL CL AUSE PROVIDED IN THE CBDT INSTRUCTION. THE RELEVANT PARA-3 OF CIRCULAR NO.17 READS AS UNDER:- 3. HOWEVER, IT HAS BEEN NOTICED THAT PARA 8(C) OF CIRCULAR NO.21/2015, REGARDING CASES WHERE ADDITION MADE ON ACCOUNT OF REVENUE AUDIT OBJECTION IS DELETED, IS BEING ERRONE OUSLY INTERPRETED MA NO.181 /AHD/2019 ITO VS. M/S. FLEXELL COMPUTER FORMS PVT.LTD. ASST.YEAR 2008-09 - 4 - AND APPEALS ARE BEING MECHANICALLY FILED BY THE DEP ARTMENT WITHOUT PROPER EXAMINATION OF THE CASE ON MERITS. THIS IS CONTRARY TO THE INSTRUCTIONS CONTAINED IN CIRCULAR NO.21/2015 AND C IRCULAR NO.8/2016. IT IS THEREFORE, CLARIFIED THAT THE IMPORT AND INTE NT OF PARA 8 OF THE CIRCULAR NO.21/2015 IS THAT EVEN ON ISSUES MENTIONE D IN THE SAID PARA, APPEALS AGAINST THE ADVERSE JUDGMENT SHOULD ONLY BE FILED ON MERITS. 5.1. WE HAVE ALSO CONFRONTED THE LD.DR WITH THE JUD GEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PR.CIT VS. NAWANY CONSTRUCTION CO. (P.) LTD. REPORTED IN 98 TAXMANN.C OM 294 (BOMBAY). 5.2. THE HONBLE BOMBAY HIGH COURT HAS CONSIDERED T HIS CIRCULAR AND OBSERVED THAT MERE RAISING OF THIS AUDIT OBJECTION IS NOT SUFFICIENT FOR RECALL OF THE ORDER. THE RELEVANT PART OF THE DISC USSION OF THE HONBLE BOMBAY HIGH COURT HAS HELD AS UNDER: 8. IT IS CONCEDED THAT WHILE SEEKING TO RESTORE I NCOME TAX APPEAL NO.254 OF 2013 ON THE FILE OF THIS COURT, NEITHER T HE REVENUES CIRCULAR DATED 11-7-2018 IS REFERRED NOR ANY CONDITION THERE IN. IF THE CONDITION NOW RELIED UPON IS WITH REGARD TO THE REVENUE AUDIT OBJECTION, THEN, MERE RAISING OF THIS OBJECTION IN TERMS OF THIS CIR CULAR IS NOT ENOUGH. THE REVENUE WILL HAVE TO POINT OUT THAT THIS AUDIT OBJECTION HAS BEEN ACCEPTED BY THE DEPARTMENT. WE HAVE NO SUCH RECORD BEFORE US. 9. IN THE CIRCUMSTANCES, WE FIND THAT THIS IS AN A TTEMPT TO GET OVER THE BINDING CIRCULARS AND IN ANY CASE WE SHALL NOT ALLO W THE REVENUE TO GET OVER THEM IN THIS MANNER. THE CIRCULARS CONTINUE T O BIND THE REVENUE AND IF THEY CONTAIN ANY CONDITIONS, WHETHER SUCH CO NDITIONS ARE ATTRACTED OR NOT WOULD HAVE TO BE PROVED AND ESTABL ISHED BY THE REVENUE. ONCE THERE IS NO SUCH RECORD BEFORE US, W E DO NOT COUNTENANCE THE ORAL REQUEST OF MR. PINTO. CONSEQU ENTLY, WE DO NOT SEE ANY REASON TO ENTERTAIN THIS APPEAL. IT IS DISMISS ED. MA NO.181 /AHD/2019 ITO VS. M/S. FLEXELL COMPUTER FORMS PVT.LTD. ASST.YEAR 2008-09 - 5 - 5. THE LD.DR WAS UNABLE TO CONTROVERT THE ABOVE POS ITION. 6. ON DUE CONSIDERATION OF ALL THESE FACTS AND CIRC ULAR OF THE BOARD, I.E. CIRCULAR NO.5 OF 2017 IN THE LIGHT OF HONBLE BOMBAY HIGH COURT DECISION, WE ARE OF THE VIEW THAT DEPARTMENT HAS N OT BROUGHT ANY SUBSTANTIAL MATERIAL ON THE RECORD POINTING OUT THA T APPEAL WAS FILED AFTER EVALUATION OF MERIT ON THE ISSUES INVOLVED. IT SOU GHT TO RECALL THE ORDER OF THE TRIBUNAL MERELY ON THE BASIS OF AUDIT OBJECTION , WHICH IS NOT SUFFICIENT FOR RECALLING THE TRIBUNAL ORDER. THERE FORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE TRIBUNAL AND THE MISCELLA NEOUS APPLICATION IS REJECTED. 7. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 10 -12 -2019 AT AHMEDABAD. SD/- SD/- ( AMARJIT SINGH ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 10/ 12 /2019 &.., .(../ T.C. NAIR, SR. PS MA NO.181 /AHD/2019 ITO VS. M/S. FLEXELL COMPUTER FORMS PVT.LTD. ASST.YEAR 2008-09 - 6 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPLICANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-I, BARODA 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..6.12.19/10.12.19 (DICTATION-PA D 6+10 PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..9.12.2019/10/12/19 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.10.11.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10.11.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER