GOLDEN TABACCO LTD, V. ASST CIT CIR 8(1),

MA 337/MUM/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1698 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2004-2005
• Appeal Filed On: 06-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Keywords: Depreciation; Rectification of order
• Section: 143(3); 263; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D.MANMOHAN, VP AND SHRI N.K. BILLAIY A, AM M.A. NO. 337/MUM/2013 (ARISING OUT OF I.T.A. NO. 3106/MUM/2009 ( / ASSESSMENT YEAR : 2004-05 M/S. GTC INDUSTRIES LTD. (PRESENTLY KNOWN AS GOLDEN TOBACO LTD.), TOBACCO HOUSE, S.V. ROAD, VILE PARLE (W), MUMBAI - 400 056 THE ACIT, CIR 8(1), AAYAKAR BHAVAN, MUMBAI ./ ./PAN/GIR NO. : AAACG 1421A ( ! /APPLICANT ) .. ( '#! / RESPONDENT ) ! $ / APPLICANT BY : ` SHRI VINODKUMAR BINDAL, '#! % $ /RESPONDENT BY : SHRI M.L. PERUMAL % &' / DATE OF HEARING :28.02.2014 () % &' / DATE OF PRONOUNCEMENT: 07.03.2014 *+ / O R D E R PER N.K. BILLAIYA, AM: THIS MISCELLANEOUS APPLICATION BY THE ASSESSEE IS D IRECTED AGAINST THE ORDER OF THE TRIBUNAL IN ITA NO. 3106/MUM/2009 FOR A.Y. 2004-05 DT. 19.6.2013. 2. THE ASSESSEE VIDE THE IMPUGNED MA IS REQUESTING THE ITAT TO RECTIFY ITS EARLIER ORDER DATED 19.06.2013, U/S 254(2) OF THE INCOME TAX ACT 1961. THE ITAT VIDE THE ORDER MENTIONED ABOVE, HAS UPHELD THE ORDER U/S 263 DATED 26.03.2009 PASSED BY THE CIT SETTING ASID E THE ORDER OF THE AO ITA NO.3106/M/09 2 PASSED U/S 143(3) DATED 27.12.2006 ON THE ISSUE OF THE DEPRECIATION ALLOWABLE ON THE PROPERTY TIME SHARING UNIT. THE C IT VIDE THE ORDER U/S. 263 HAS HELD THAT THE PROPERTY TIME SHARING IS AN I NTANGIBLE ASSET ACQUIRED BEFORE 01.04.98 AND HENCE NOT ELIGIBLE FOR DEPRECAT ION. 3. THE ASSESSEE CHALLENGED THE VALIDITY OF THE ORD ER U/S 263, BEFORE THE ITAT AND THE ITAT VIDE THE IMPUGNED ORDER DATE D 19.06.2013 HAS CONFIRMED THE ORDER OF THE CIT HOLDING THAT AFTER A CAREFUL CONSIDERATION OF THE QUESTIONNAIRE DATED 11.12.2006 ISSUED BY THE AO AND THE ANSWERS OF THE ASSESSEE TO THE QUESTIONS(QUESTION AND ANSWE RS ARE REPRODUCED IN THE BODY OF THE ITAT ORDER) IT IS CLEAR THAT THE AO HAS NOT QUESTIONED THE CLAIM OF THE DEPRECIATION MADE BY THE ASSESSEE ON THE TIME SHARING UNIT AND HENCE THE ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE AS HELD BY THE CIT. THEREFORE THE ITAT HAS CONFIRMED THE ORDER OF THE CIT AND HAS SLIGHTLY MODIFIED THE DIRE CTION TO THE A.O. 4. THE ASSESSEE VIDE THE IMPUGNED MA HAS PETITIONE D THE ITAT, THAT THERE ARE SOME MISTAKES APPARENT FROM THE RECORD IN THE ORDER OF THE TRIBUNAL DT. 19.06.2013 AND HAS REQUESTED THE ITAT TO RECTIFY THE ORDER. THE MISTAKES POINTED OUT BY THE ASSESSEE ARE DISCUS SED AS UNDER THE ITAT BY MISTAKE HAS FAILED TO CONSIDER PAGE NO- 78 TO 8O OF THE PAPER BOOK FILED BY THE ASSESSEE , BEING THE QUESTIONNAIRE DATED 17.02.2006 ISSUED BY THE AO REL ATING TO AY 2003-04.THE ASSESSEE HAS SUBMITTED THAT THE AY 2003 04 IS THE FIRST YEAR OF THE CLAIM OF DEPRECIATION ON THE PROPERTY T IME SHARING UNIT AND IN A.Y 2003-04 THE AO HAS RAISED SPECIFIC QUEST ION ON THIS ISSUE AND SOUGHT CLARIFICATIONS ETC FROM THE ASSESS EE AND AFTER SATISFACTION ABOUT THE CLAIM HAS ALLOWED IT IN AY 2 003-04 AND THE INTANGIBLE ASSET, BEING THE PROPERTY TIME SHARING U NIT HAS BECOME A PART OF HIS BLOCK OF ASSETS AND HAS MERGED IN THE B LOCK AND HENCE DEPRECIATION IS COMPULSORILY REQUIRED TO BE ALLOWED IN ALL SUBSEQUENT YEARS UNLESS THE TIME SHARING UNIT ASSET IS SOLD ITA NO.3106/M/09 3 DISCARDED AND DESTROYED ETC .THE SUM AND SUBSTANCE OF THE SUBMISSION OF THE ASSESSEE IS THAT ONCE DEPRECIATIO N IS ALLOWED IN RESPECT OF ANY ASSET IN ONE YEAR , IT MERGES IN THE COMMON HOTCHPOTCH OF DEPRECIABLE ASSETS CALLED BLOCK OF AS SETS AND THE INDIVIDUAL ASSET LOSES ITS IDENTITY THE ASSESSEE H AS STATED THAT IN SUCH SCENARIO, IN SUBSEQUENT YEARS THE ONLY ENQUIRY REQUIRED FROM THE AO IS REGARDING CONTINUED OWNERSHIP OF THE ASSE T AND THE AO CAN NOT REEXAMINE THE DEPRECIATION ISSUE 5. THE ESSENCE OF THE SUBMISSION OF THE ASSESSEE IS THAT THE ITAT HAS FAILED TO CONSIDER THE ASPECT THAT THE AO HAS EXAMI NED THE ISSUE OF THE DEPRECIATION ALLOWABLE ON THE PROPERTY TIME SHARING UNIT IN AY 2003-04 AND ACCORDING TO THE ASSESSEE THE AO HAS SATISFIED HIMSELF AND HAS ALLOWED DEPRECIATION ON THE UNIT. ACCORDING TO THE MERGER THEORY ADVANCED BY THE ASSESSEE THAT ONCE ANY ASSET IS ALL OWED TO BE PART OF THE BLOCK OF ASSETS, IT MERGES WITH THE BLOCK OF ASSETS AND LOSES ITS INDEPENDENT IDENTITY .ONCE THE ASSET LOSES ITS IND EPENDENT IDENTITY, ACCORDING TO THE ASSESSEE, DEPRECIATION IS MANDATOR ILY REQUIRED TO BE ALLOWED IN ALL SUBSEQUENT YEARS UNLESS THE ASSET IS SOLD, TRANSFERRED ,DISCARDED OR DESTROYED. FURTHER ACCORDING TO THE ASSESSEE, ONCE THE ASSET IS MERGED WITH THE BLOCK , THE AO IS PRECLUDED FROM MAKING ANY ENQUIRY ABOUT THE SPECIFIED ASSET AND THE ONLY ENQUIRY THE AO CAN MAKE ACCORDING TO THE ASSESSEE IS REGARDING CONTINUED OWNERSHIP OF THE ASSET AND NOTHING ELSE. 6. NEEDLESS TO SAY THAT THIS THEORY OF THE ASSESSEE IS NOT ACCEPTABLE ON MERIT. IT IS THE SUBMISSION OF THE REVENUE THAT THE DECISION OF THE AO ALLOWING DEPRECIATION ON THE TIME SHARING UNIT IS E RRONEOUS AND PREJUDICIAL TO THE REVENUE. 7. IN .Y 2004-05 THE DEPARTMENT HAS TAKEN REMEDIA L ACTION U/S ITA NO.3106/M/09 4 263. THE ITAT HAS UPHELD THE ACTION OF THE CIT U/S 263. THE ASSESSEE NOW WANTS TO REVERSE THE ITAT DECISION BY TRYING BA CK DOOR ENTRY BY FILING AN MA AND STATING THAT THERE IS A MISTAKE AP PARENT FROM THE RECORD IN THE ORDER OF THE ITAT AND IT SHOULD BE RECTIFIED AND THE ORDER OF THE ITAT DATED 19.06.2013 SHOULD BE REVERSED. WHAT THE ASSESSEE WANTS IN EFFECT IS NOT RECTIFICATION OF MISTAKE BUT A RECALL OF THE ENTIRE ORDER IN THE GUISE OF MISTAKE APPARENT FROM THE RECORD IN THE OR IGINAL ORDER WHICH IS BASED ON MERIT AND IS ON SOUND FOOTING AND THERE IS NO MISTAKE IN THE ORDER , LEAVE ALONE ANY APPARENT MISTAKE. 8. THE ITAT IN ITS ORDER HAS HELD THAT THE ISSUE O F THE DEPRECIATION ON PROPERTY TIME SHARING UNIT WAS NOT CONSIDERED BY TH E AO IN THE ASSESSMENT RELATING TO AY 2004-05 AND HENCE THE CIT WAS CORRECT IN EXERCISE OF HIS REVISIONARY POWERS U/S 263 HOLDING THAT THE SAID ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE. THE ONLY TWO CONDITIONS NECESSARY FOR THE CIT TO EX ERCISE HIS POWER ARE (1) THE ORDER SHOULD BE ERRONEOUS AND (2) IT SHOULD BE PREJUDICIAL TO THE INTEREST OF REVENUE. BOTH THE CONDITIONS ARE CUMULA TIVE AND NOT ALTERNATIVE. IF THESE CONDITIONS ARE SATISFIED THE CIT IS WELL WITHIN HIS POWER TO EXERCISE THE REVISIONARY JURISDICTION SUBJ ECT TO THE TIME LIMIT OF 2 YEARS. LN THIS CASE THE AO HAS NOT EXAMINED THE ISS UE AT ALL IN Y 2004 - 05 ,AND HAS NOT DISALLOWED THE DEPRECIATION ON TIME SHARING UNIT WHICH OUGHT TO HAVE BEEN DONE. THE OMISSION OF THE AO TO CONSIDER THE ISSUE IN THE ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE HENCE THE ORDER OF THE CIT U/S 263 IS IN ACCORDANC E WITH THE LAW AND HENCE THE ITAT HAS CONFIRMED THE ORDER AND THERE IS NO MISTAKE APPARENT FROM THE RECORD IN THE ORDER OF THE ITAT. ITA NO.3106/M/09 5 9. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS RAMESH ELECTRIC AND TRADING CO. 203 ITR 497 HAS HEL D AS UNDER: UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961, THE APPELLATE TRIBUNAL MAY, 'WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD', AMEND ANY ORDER PASSED B Y IT UNDER SUB-SECTION (1) WITHIN THE TIME PRESCRIBED THEREIN. IT IS AN ACCEPTED POSITION THAT THE APPELLATE TRIBUNAL DOES NOT HAVE ANY POWER TO REVIEW ITS OWN ORDERS UNDER THE PROVISIONS OF THE A CT. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES IS TO RECTIFY AN Y MISTAKE IN ITS OWN ORDER WHICH IS APPARENT FROM THE RECORD. THIS I S MERELY A POWER OF AMENDING ITS ORDER. THE POWER OF RECTIFICA TION UNDER SECTION 254(2) CAN BE EXERCISED ONLY WHEN THE MISTA KE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MIS TAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH R EQUIRES TO BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS O F REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPI NIONS. FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARE NT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. THE TRIBUN AL CANNOT, IN THE EXERCISE OF ITS POWER OF RECTIFICATION, LOOK IN TO SOME OTHER CIRCUMSTANCES WHICH WOULD SUPPORT OR NOT SUPPORT IT S CONCLUSION RESPECTFULLY FOLLOWING THE FINDINGS OF THE JURISDIC TIONAL HIGH COURT HEREINABOVE, THE MISCELLANEOUS APPLICATION FI LED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.03.2014 . *+ % ) , -*. 07.03.2014 ) % / SD/- SD/- (D.MANMOHAN ) (N. K. BILLAIYA ) 012 / VICE PRESIDENT * / ACCOUNTANT MEMBER MUMBAI; -* DATED 07.03.2014 . . ./ RJ , SR. PS ITA NO.3106/M/09 6 *+ *+ *+ *+ % %% % '&3 '&3 '&3 '&3 43& 43& 43& 43& / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT. 3. 5 ( ) / THE CIT(A)- 4. 5 / CIT 5. 36/ '& , , / DR, ITAT, MUMBAI 6. /7 8 / GUARD FILE. *+ *+ *+ *+ / BY ORDER, #3& '& //TRUE COPY// 0 00 0 / 9 9 9 9 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI