The ITO, Ward-4(2), Ahmedabad V. Kabra Investment Pvt.Ltd., Ahmedabad

MA 184/AHD/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 7108 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 10-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: A L THAKKAR
• Keywords: Depreciation; Tax effect

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , . ! !,'# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER MA NO.184/AHD/2010 (IN I.T.A. NO.4218/AHD/2007) ( ! % ! % ! % ! % / / / / ASSESSMENT YEAR : 2003-04) THE ITO WARD-4(2) AHMEDABAD (ORIGINAL APPELLANT) ! ! ! ! / VS. M/S.KABRA INVESTMENT P.LTD. 1/2, AKANKSHA APARTMENT NR.RLY CROSSING, GHATLODIA SOLA ROAD, AHMEDABAD (ORIGINAL RESPONDENT) ' '# ./() ./ PAN/GIR NO. : AAACK 7987M (APPLICANT) .. ( RESPONDENT ) REVENUE BY : SHRI D.C. SHARMA, D.R. ASSESSEE BY : SHRI A.L. THAKKAR, A.R. !* + ,#/ // / DATE OF HEARING : 11/11/2011 - % + ,# / DATE OF PRONOUNCEMENT : 30/11/2011 './ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY TH E REVENUE, RECEIVED ON 10.08.2010, ARISING FROM THE ORDER OF T HE TRIBUNAL, MENTIONED HEREINABOVE IN THE NOMENCLATURE, DATED 14 /05/2010. 2. FROM THE SIDE OF THE REVENUE, LD.DR MR.D.C. SHAR MA APPEARED AND PLEADED TO TAKE NOTE OF THE GRIEVANCE OF THE R EVENUE AS STATED IN THE SAID PETITION, REPRODUCED HEREINBELOW:- MA NO.184/AHD/2010 (IN ITA NO.4218/AHD/2007) ITO VS. KABRA INVESTMENT P.LTD. ASST.YEAR 2003-04 - 2 - IN THIS CASE SCRUTINY ASSESSMENT WAS COMPLETED U/S .143(3) OF THE ACT ON 28-02-2006. THE A.O. HAS DISALLOWED TRADING LOSS OF RS.2,55,565/-, INTEREST EXPENSES OF RS.4,16,913/-, RENT EXPENSES OF RS.1,50,000/- U/S.40A (2)(B) OF THE ACT AND DEPRECI ATION OF RS.10,833/-. AGGRIEVED WITH THE ORDER OF THE AO, T HE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), AHMEDABAD. THE LD. CIT(A) VIDE ITS ORDER NO.CIT(A)-VIII/ITO 4(2)/047/0 6-07 DATED 24-09-2007 HAS DELETED THE ADDITION MADE ON ACCOUNT OF TRADING LOSS OF RS.2,55565, INTEREST EXPENSES RS.4,16,913/- , RENT EXPENSES RS.1,50,000/- AND DEPRECIATION OF RS.10,833. THE R EVENUE HAD APPROACHED HON'BLE ITAT AGAINST THE DELETION OF ADD ITION MADE ON ACCOUNT OF TRADING LOSS OF RS.2,55,565/- AND INTERE ST EXPENSES OF RS.4,16,913/-. THE HONBLE ITAT HAS DISMISSED THE REVENUE APPEAL, OBSERVING THE FOLLOWING: AT THE OUTSET, IT WAS NOTED THAT THE TAX EFFECT IN THE DEPARTMENTS APPEALS IS LESS THAN RS.2 LAKHS. DEPA RTMENT OUGHT NOT HAVE TO FILED THE APPEAL. OUR VIEW IS SU PPORTED BY THE DECISION OF HON DELHI HIGH COURT IN THE CASE OF CIT VS MANGLAM RECINUS LTD (2008) 174 TAXMAN 186(DEL). AS THE APPEAL SO FILED IS AGAINST THE EX ECUTIVE INSTRUCTIONS WHICH ARE BINDING ON THE DEPARTMENT, W E DISMISS THE APPEAL IN LIMINE. HOWEVER, THE TAX EFFECT ON AMOUNT INVOLVED IN APPEA L IS 2,35,399/- CALCULATED @ OF 35% AS PER ITNS 150. 3. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LD.AR MR.A.L.THAKKAR APPEARED AND ARGUED THAT THERE WAS NO MISTAKE BY D ISMISSING THE APPEAL OF THE REVENUE IN LIMINE SINCE THE TAX EFFECT WAS LESS THAN RS.2 LACS. IN THIS REGARD, LD.AR HAS FURTHER CLARIFIED THAT VIDE AN ASSESSMENT ORDER PASSED U/S.143(3) DATED 28/02/2006 IT WAS EVIDENT T HAT THE RETURN OF INCOME WAS FILED DECLARING A LOSS OF RS.32,179/-. THE ASSESSMENT WAS MADE ON NIL INCOME, HOWEVER, THE TOTAL INCOME COMPU TED BY THE A.O. WAS RS.8,01,132/- AND AFTER GRANTING THE SET- OFF O F UNABSORBED BUSINESS- MA NO.184/AHD/2010 (IN ITA NO.4218/AHD/2007) ITO VS. KABRA INVESTMENT P.LTD. ASST.YEAR 2003-04 - 3 - LOSS TO THAT EXTEND ,THE INCOME WAS ASSESSED AT RS .NIL. THE LD.AR HAS THUS ARGUED THAT NO TAX DEMAND WAS RAISED AND THE A MOUNT OF TAX INVOLVED AS MENTIONED IN THE SAID MISCELLANEOUS APP LICATION WAS NOTHING BUT A NOTIONAL TAX. IN THIS REGARD, CBDT HAS ISSUE D INSTRUCTION NO.5/2008 DATED 15/05/2008, WHEREIN VIDE CLAUSE-4 I T WAS DIRECTED AS UNDER:- 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFE RENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT W OULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY TH E AMOUNT OF INCOME IN RESPECT OF THE ISSUE AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREAFTER REFERRED TO AS DISPUTED ISSUES ). HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON. SIMILAR LY, IN LOSS CASES NOTIONAL TAX EFFECT SHOULD BE TAKEN INTO ACCOUNT. IN THE CASES OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 3.1. THE LD.AR HAS POINTED OUT THAT IN THE CASE OF LOSS ONLY NOTIONAL TAX EFFECT IS REQUIRED TO BE COMPUTED FOR THE PURPOSE O F FILING OF APPEAL BEFORE THE TRIBUNAL BUT THE SAID DIRECTION OF THE C BDT IS APPLICABLE ON AFTER 15.05.2008 AS IS EVIDENT VIDE CLAUSE-11 OF TH E SAID CIRCULAR, REPRODUCED BELOW:- 11. THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER MAY 15, 2008. HOWEVER, THE CASES WHERE APPEALS HAVE BE EN FILED BEFORE MAY 15, 2008 WILL BE GOVERNED BY THE INSTRUC TIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 3.2. THE LD.AR HAS ALSO CLARIFIED THAT THIS APPEAL OF THE REVENUE WAS FILED ON 29/11/2007, THEREFORE, OUT OF THE AMBIT OF THE SAID CIRCULAR. MA NO.184/AHD/2010 (IN ITA NO.4218/AHD/2007) ITO VS. KABRA INVESTMENT P.LTD. ASST.YEAR 2003-04 - 4 - 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, AT THE OUT SET IT IS PERTINENT TO MENTION THAT THE INSTRUCTION NO.5/2008 DATED 15.5.2008 IS ISSUED BY THE BOARD AS PER THE AUTHORITY GRANTED IN THE STATUTE U/S 199 OF THE I.T.ACT. THESE ARE ADMINISTRATIVE GUIDELINES FO R THE REVENUE AUTHORITIES. IN TERMS OF SEC. 199 THE REVENUE BOARD MAY FROM TIME TO TIME ISSUE SUCH INSTRUCTIONS OR DIRECTIONS TO INCOM E-TAX AUTHORITIES AS IT MAY DEEM FOR THE PROPER ADMINISTRATION. THIS EMPOW ERING SEC.199 ALSO SAYS THAT THE SUBORDINATE AUTHORITIES OBSERVE/FOLLO W SUCH INSTRUCTIONS/DIRECTIONS IN ITS LETTER & SPRIT. TH EREFORE IF THE INSTRUCTION IS TO APPLY TO THE APPEALS FILED ON OR AFTER MAY 15, 2 008 THEN THE DATE SO SPECIFIED BY CBDT HAS TO BE ADHERED TO BY THE SUBOR DINATE AUTHORITIES INSTEAD OF RAISING AN ISSUE ASKING TO APPLY IT RETR OSPECTIVELY. ABOUT THE APPLICABILITY OF CBDT INSTRUCTIONS, TIME TO TIME IS SUED IN THE PAST, FIXING/RAISING THE MONETARY LIMITS HAVE DULY BEEN CONSIDERED IN SEVERAL DECISIONS VIZ. CAMCO COLOUR 254 ITR 565( BOM.), ZOE B Y TOPIWALA 284 ITR 379 ( BOM.), ASHIM KR. AGARWAL 275 ITR 48 ( JHA RKHAND). AS FAR AS THE APPLICABILITY OF THE SAID CIRCULAR IS CONCER NED, THAT TOO IS OPERATIVE PROSPECTIVELY. IT IS WELL SETTLED THAT INTERPRETAT IONS GIVEN BY CBDT IN FAVOUR OF THE ASSESSEE ARE BINDING ON THE DEPARTMEN T AND THAT THE DEPARTMENT IS ESTOPPED FROM RAISING ANY ARGUMENT CO NTRARY TO THE COMMON INTERPRETATION, THEREFORE, THIS CIRCULAR CAN ONLY OPERATE PROSPECTIVELY AND NOT RETROSPECTIVELY, CITATION UNI T TRUST OF INDIA, 249 ITR 612 (BOM) AND STATE BANK OF TRAVANCORE 158 ITR 102(S.C.). 4.1 IT IS EVIDENT THAT THE FINALL Y ASSESSED INCOME AFTER GIVING THE SET OFF OF UNABSORBED BUSINESS LOSS OF THE PAST YEARS THE INCOME WAS MA NO.184/AHD/2010 (IN ITA NO.4218/AHD/2007) ITO VS. KABRA INVESTMENT P.LTD. ASST.YEAR 2003-04 - 5 - DETERMINED AT RS.NIL. WHICH MEANS THAT IN THE IMPU GNED MISCELLANEOUS APPLICATION A NOTIONAL TAX EFFECT OF RS.2,35,399/- WAS CALCULATED BY THE REVENUE DEPARTMENT. SINCE THE SAID CALCULATION OF TAX EFFECT WAS NOTHING BUT A NOTIONAL TAX, THEREFORE, IT IS DIRECT LY COVERED BY THE INSTRUCTIONS ISSUED BY THE CBDT AS REPRODUCED HEREI NABOVE, NEVERTHELESS, OPERATIVE FROM A PARTICULAR PROSPECTI VE DATE. UNDISPUTEDLY, THE INSTRUCTIONS IN RESPECT OF LOSS C ASES, WHERE THE NOTIONAL TAX EFFECT IS TO BE TAKEN INTO ACCOUNT, IS OPERATIV E IN RESPECT OF THE APPEALS FILED ON OR AFTER 15/05/2008. HOWEVER, THIS APPEAL OF THE REVENUE WAS FILED 29/11/2007. SINCE UNDISPUTEDLY THE IMPUGNED A PPEAL OF THE REVENUE DEPATRTMENT WAS FILED PRIOR TO THE ISSUANCE OF THE SAID CBDT CIRCULAR, THEREFORE NOT TO BE GOVERNED BY THOSE INSTRUCTION S. IN OUR CONSCIENTIOUS VIEW, THE LAW AS APPLICABLE AT THE T IME OF DECISION TAKEN BY THE TRIBUNAL WAS CORRECTLY APPLIED BY CITING A D ECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MANGLAM REC INUS LTD (2008) 174 TAXMAN 186 (DEL). WE FIND NO FORCE IN THE MISC ELLANEOUS APPLICATION OF THE REVENUE, HENCE HEREBY DISMISSED. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE REVENUE IS DISMISSED. SD/- SD/- (A. MOHAN ALANKAMONY) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 30 / 11 /2011 /,..!, .!../ T.C. NAIR, SR. PS MA NO.184/AHD/2010 (IN ITA NO.4218/AHD/2007) ITO VS. KABRA INVESTMENT P.LTD. ASST.YEAR 2003-04 - 6 - '. + 01 2'1% '. + 01 2'1% '. + 01 2'1% '. + 01 2'1%/ COPY OF THE ORDER FORWARDED TO : 1. '3 / THE ASSESSEE 2. 04'3 / THE REVENUE 3. 5 / CONCERNED CIT 4. 5() / THE CIT(A)-VII, AHMEDABAD 5. 189 0! , , / DR, ITAT, AHMEDABAD 6. 9: ;* / GUARD FILE. '.! '.! '.! '.! / BY ORDER, 41 0 //TRUE COPY// < <<