INCOME TAX OFFICER 3(3)(3), MUMBAI V. M/S.TRAVEL MART INDIA PRIVATE LIMITED(M/S.TRAVEL MART INDIA. COM PRIVATE LIMITED), MUMBAI

MA 257/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9206 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-08-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 09-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Depreciation; Audit objection; Tax effect; Condonation of delay; Unabsorbed depreciation
• Section: 115JB; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) M.A. NO. 257/MUM/2019 (ITA NO. 1977/MUM/2018) ASSESSMENT YEAR: 2011 - 12 INCOME TAX OFFICER - 3(3)(3), ROOM NO. 672, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD, NEW MARINE LINES, MUMBAI - 400020. VS. M/S TRAVEL MART INDIA PRIVATE LIMITED (M/S TRAVEL MART INDIA.COM PRIVATE LIMITED), TULSIANI CHAMBERS, GROUND FLOOR, SHOWROOM NO. 7, NARIMAN POINT, MUMBAI - 400021. PAN NO. AABCT6760E APPELLANT RESPONDENT REVENUE BY : MR. V. VINOD KUMAR , DR ASSESSEE BY : MR. PRITESH MEHTA , AR DATE OF HEARING : 06 /03/2020 DATE OF PRONOUNCEMENT : 11/08/2020 ORDER PER N.K. PRADHAN, AM BY MEANS OF THIS MISCELLANEOUS APPLICATION (MA), THE APPLICANT SEEKS RECALL OF THE ORDER DATED 24.08.2018 PASSED BY THE ITAT E BENCH MUMBAI (ITA NO. 1977 /MUM/2018 ) FOR THE ASSESSMENT YEAR (AY) 201 1 - 1 2 . 2. THE LD. DEPARTMENTAL REPRESE NTATIVE (DR) SUBMITS THAT THE TRIBUNAL IN ITS ORDER HAS DISMISSED THE APPEAL OF THE REVENUE ON ACCOUNT OF SMALLNESS OF TAX EFFECT INVOLVED AS PER CBDT CIRCULAR NO. 3 OF 2018, WHEREAS, THIS CASE FALLS UNDER THE EXCEPTION CLAUSE OF 10(C) OF THE ABOVE CIRCULA R. IT IS STATED THAT IN THE INSTANT CASE, THE ASSESSEE WAS NOT ENTITLED TO M/S TRAVEL MART INDIA . MA NO. 257/MUM/2019 2 SET - OFF OF BOOK LOSS/UNABSORBED DEPRECIATION AGAINST THE BOOK PROFIT ON THE GROUND THAT THERE WAS NO BROUGHT FORWARD BUSINESS LOSS AS PER THE BOOKS OF ACCOUNTS AND NO ADJUSTMENT CAN BE MADE U/S 115JB. IT IS CLARIFIED BY HIM THAT THE ABOVE ISSUE AROSE BECAUSE OF AUDIT OBJECTION. FURTHER THE LD. DR SUBMITS THAT THE ITAT IN THE IMPUGNED ORDER HAS FURTHER OBSERVED THAT THE REVENUE IS AT LIBERTY TO GET THE ORDER RE - CALLED , IN CASE THE A BOVE APPEAL FALLS UNDER THE EXCEPTION AS PROVIDED IN THE SAID CIRCULAR. THE LD. DR ALSO SEEKS CONDONATION OF DELAY OF 39 DAYS IN FILING THIS MA ON THE GROUND THAT THE ISSUE PERTAINED TO ADJUSTMENT OF BROUGHT FORWARD LOSS/UNABSORBED DEPRECIATION NO T SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME, WHICH TOOK CONSIDERABLE TIME FOR A DECISION. 3. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE AUDIT OBJECTION AS REFERRED BY THE DR HAS BEEN TAKEN CARE OF BY THE CIT(A) AND THEREFORE, THERE IS NO NE CESSITY OF RECALLING THE ORDER. IN THIS REGARD, THE LD. COUNSEL FILES A COPY OF (I) ORDER OF CIT(A), (II) SUBMISSION OF APPELLANT BEFORE THE AO PURSUANT TO CIT(A)S ORDER AND (III) ORDER GIVING EFFECT TO CIT(A)S ORDER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. CONSIDERING THE SUBMISSIONS MADE BY THE LD. DR, WE CONDONE THE DELAY OF 39 DAYS IN FILING THIS MA. IN THE INSTANT CASE, AS SUBMITTED BY THE LD. DR, THERE IS A AUDIT OBJECTION REPORT WHICH READS AS UNDER : SUB: INCOME NOT ASSESSED UNDER SPECIAL PROVISIONS M/S TRAVEL MART INDIA . MA NO. 257/MUM/2019 3 SECTION 115JB PROVIDES FOR LEVY OF MINIMUM ALTERNATE TAX (MAT) AT PRESCRIBED PERCENTAGE OF THE BOOK PROFIT IF THE TAX PAYABLE ON TOTAL INCOME UNDER THE NORMAL PROVISIONS IS LESS THAN SUCH PERCENTAGE OF THE BOOK PROFIT ARRIVED AT AFTER CERTAIN ADDITIONS AND DELETIONS AS PRESCRIBED. ONE OF THE ADJUSTMENT IS BOOK PROFIT IS TO REDUCE BY THE AMOUNT O F LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION WHICHEVER IS LESS AS PER BOOKS OF ACCOUNT . IN THE INSTANT CAS E ASSESSMENT WAS COMPLETED UNDER SCRUTINY MANNER AND ASSESSED 'NIL' INCOME UNDER NORMAL PROVISIONS OF ACT, AFTER SET OFF OF UNABSORBED DEPRECIATI ON OF RS.17,11,115 / - . AS TAX PAYABLE UNDER NORMAL PROVISIONS IS NIL, INCOME WAS ASSESSED U/S 115JB AT RS.40,195 / - . THE AUDIT SCRUTINY REVEALED THAT WHILE ASSESSING INCOME UNDER SECTION 115JB BOOK PROFIT WAS ADOPTED AT NIL AS PER RETURN. HOWEVER AS PER PROFIT & LOSS ACCOUNT THE ASSESSEE WAS HAVING 'BOOK P ROFIT OF RS.13,32,749 / - . THE ASSESSEE ADJUSTED THIS BOOK PROFIT AGAINST BROUGHT FORWARD DEPRECATION LOSS. THE ASSESSEE IS HAVING ONLY BROUGHT FORWARD DEPRECIATION LOSS. THERE IS NO BROUGHT FORWARD BUSIN ESS LOSS AS PER BOOKS OF ACCOUNT. HENCE NO ADJUSTMENT IS ALLOWED AS PER THE PROVISIONS OF ACT. THUS THERE IS AN UNDER ASSESS MENT OF BOOK PROFIT OF RS.13,32,749 / - AND SHORT LEVY OF TAX OF RS.2,47,090 / - (18% + 3%) IN REPLY DEPARTMENT STATED THAT MATTER WILL BE LOOKED INTO AND FINAL REPLY WILL BE SENT IN DUE COURSE. 4.1 THE APPEAL FILED BY THE REVENUE IS PRODUCED BELOW: WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD.CIT(A) WAS CORRECT IN DIRECTING THE A.O. TO VERIFY AND ALLOW THE SET OFF OF BROU GHT FORWARD LOSSES AND/OR DEPRECIATION FOR THE A.Y. 2011 - 12 WHILE COMPUTING THE BOOK PROFIT U/S 115JB WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT CLAIM THE BROUGHT FORWARD LOSSES/UNABSORBED DEPRECIATION IN THE RETURN OF INCOME FILED, NOT CLAIME D DURING ASSESSMENT PROCEEDINGS NOR EVEN IN THE RECTIFICATION PROCEEDINGS AND NEVER FILED ANY EVIDENCE OR SUBSTANTIATION REGARDING THESE IN TERMS OF SECTION 115JB AND PROVE ITS CLAIM OF REDUCTION OF BOOK PROFIT U/S 115JB. M/S TRAVEL MART INDIA . MA NO. 257/MUM/2019 4 4.2 THE DISPUTE HERE IS WHETHER T HE APPEAL FILED BY THE REVENUE FALLS IN THE EXCEPTION CLAUSE (C) OF PARA 10 OF THE SAID CIRCULAR. CBDT CIRCULAR NO. 3 OF 2018 CLEARLY MENTIONS REVENUE AUDIT OBJECTION AS ONE OF THE EXCEPTIONS TO MONETARY LIMITS . 5. IN VIEW OF THE ABOVE, WE RECALL THE ORDER DATED 24.08.2018 IN THE INSTANT CASE AND DIRECT THE REGISTRY TO FIX THE CASE FOR HEARING BEFORE A REGULAR BENCH, AFTER INFORMING BOTH THE PARTIES. WE NOTE THAT THIS APPEAL WAS HEARD IN 06.03 .2020 . THE PRONOUNCEMENT IS DELAYED D UE TO LOCKDOWN IN VIEW OF COVID - 19 PANDEMIC. ORDER IS PRONOUNCED TODAY AS PER RULE 34(4) BY PLACING IT ON THE NOTICE BOARD . 6. IN THE RESULT, THE MA IS ALLOWED. SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 11/08/2020 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) ITAT, MUMBAI