ITO 7(2)(1), V. RAJASHREE ROADLINES P.LTD,

MA 400/MUM/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1676 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRADEEP KAPASI
• Keywords: Business income; Depreciation; Rectification of order; Unabsorbed depreciation

Judgement Text

INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. , , BEFORE S/SH.VIJAY PAL RAO, JUDICIAL MEMB ER & SHRI RAJENDRA,ACCOUNTANT MEMBER MA NO.400/MUM/2013 (ARISING OUT OF ITA NO. 1627/MUM/2012) ASSESSMENT YEAR 2007-08 ITO 7(2((1) MUMBAI. VS. M/S RAJSHREE ROADLINES PVT. LTD. SHOP NO.5, SEWREE CO-OP PREMISES, SEWREE BUNDER ROAD, SEWREE (EAST), MUMBAI-400015 PAN: AACCR6706K ( / APPELLANT ) ( / RESPONDENT ) REVENUE BY : SHRI RAVI PRAKASH ASSESSEE BY : PRADEEP KAPASI ! ' / DATE OF HEARING : 07-02-2014 #$%& ! ' / DATE OF PRONOUNCEMENT : 21-03-2014 '( / O R D E R PER RAJENDRA, A.M. VIDE HIS MISCELLANEOUS APPLICATION(MA.)FILED U/S.25 4 OF THE ACT,AO HAS STATED THAT IN THE ORDER DATED 20.03.2013,PASSED BY THE TRIBUNAL,(ITA/1627/M UM/2012-AY.2007-08)THERE WERE CERTAIN MISTAKES AND SAME HAVE TO BE RECTIFIED.AS PER THE A O,IN THE MATTER BEFORE US,SCRUTINY ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT,ON 2 9.12.2009,THAT DURING THE ASSESSMENT PROCEEDINGS AO HAD RELIED ON THE PROVISIONS OF SEC TION 32(2) AND SECTION 72(2) OF THE ACT AND HAD DISALLOWED THE ASSESSEES CLAIM OF UNABSORBED D EPRECIATION,THAT IT WAS HELD THAT THE UNABSORBED BROUGHT FORWARD DEPRECIATION LOSS FROM A Y. 2006-07 COULD ONLY BE SET OFF AGAINST THE BUSINESS INCOME OF THAT YEAR AND WAS NOT ALLOWA BLE TO BE SET OFF AGAINST THE STCG DETERMINED U/S.50 ON SALE OF DEPRECIABLE ASSETS,THA T THE CIT(A)S HAD SUSTAINED THE STAND TAKEN BY THE AO,THAT ITAT HAD RELIED UPON THE CASES OF SH RIKRISHNA CHANDMAL OF MADHYA PRADESH HIGH COURT AND WESTERN STATES TRADING CO.PVT. LTD. OF SUPREME COURT AND HAD DIRECTED THE AO. TO ALLOW THE SET OFF OF LOSS CLAIMED BY THE ASSESSE E.IT WAS FURTHER STATED BY THE AO THAT THE CASES RELIED UPON BY THE TRIBUNAL DID NOT APPLY TO ASSESS EES CASE,THAT SAID CASES PERTAINED TO AY.1956-57,THAT DECISION OF THE TRIBUNAL WAS CONTRA RY TO LAW AS CONTAINED IN SECTION 32(2) OF THE ACT,AS AMENDED W.E.F 1/4/2002,THAT THE UNABSORB ED BUSINESS LOSS INCLUDING DEPRECIATION COULD BE SET OFF ONLY AGAINST INCOME UNDER THE HEA D OF BUSINESS OR PROFESSION AND NOT AGAINST INCOME RETURNED UNDER OTHER HEADS OF INCOME,THAT TH E DECISION OF TRIBUNAL APPEARED TO BE BASED ON WRONG APPRECIATION OF FACTS. 2. BEFORE US,DEPARTMENTAL REPRESENTATIVE REITERATED TH E AVERMENTS MADE IN THE MA.BY THE AO. AUTHORISED REPRESENTATIVE(AR)SUBMITTED THAT THERE W AS NO MISTAKE IN THE ORDER OF THE TRIBUNAL THAT COULD BE RECTIFIED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE DECIDING THE APPEAL WE HAVE NOT RELIED UPON THE JUD GMENTS OF HONBLE APEX COURT/M.P.HIGH COURT,AS STATED IN THE MA.WE HAD RELIED UPON THE CA SES OF SURESH INDUSTRIES(P.)LTD.,SHRI MA NO. 400/MUM/2013(ARISING OUT OF ITA NO. 1627/MU M/2012) M/S RAJSHREE ROADLINES PVT. LTD. 2 PADMAVATHI SRINIVASA COTTON GINNINING & PRESSSING F ACTORY AND GRAHAM FIRTH STEEL PRODUCTS (I) LTD. AND ALL THE DECISIONS WERE DELIVERED BY TH E TRIBUNAL.THUS,THE AO WAS NOT FACTUALLY RIGHT WHEN HE MADE AN ASSERTION THAT ORDER OF THE TRIBUNA L WAS BASED ON THE JUDGMENTS OF THE HONBLE APEX COURT OR THE HONBLE M.P.HIGH COURT.WE FIND TH AT IN THE CASE OF SHRI PADMAVATHI SRINIVASA COTTON GINNINING & PRESSSING FACTORY BE NCH OF TRIBUNAL HAD RELIED UPON THE SAID JUDGMENTS OF THE HONBLE COURTS.AO HAS NOT MENTIONE D WHETHER THE DECISION OF SHRI PADMAVATHI SRINIVASA COTTON GINNINING & PRESSSING F ACTORY HAS BEEN CHALLENGED BEFORE THE HIGH COURT OR NOT.NOT ONLY THIS WE HAD DISCUSSED TH E PRE AND POST AMENDED PROVISIONS RELATED WITH SET OFF OF UNABSORBED DEPRECIATION.IT WAS SPEC IFICALLY MENTIONED THAT FOR A VERY SHORT PERIOD SETTING OFF WAS NOT ALLOWABLE.IT APPEARS THAT WHILE FILING THE MA.,AO DID NOT CONSIDER THE AMENDED PROVISIONS AS WELL AS THE FULL ORDER OF THE TRIBUNAL. BEFORE PROCEEDING FURTHER WE WOULD LIKE TO REPRODUC E THE ARGUMENTS TAKEN BY THE REPRESENTATIVES OF BOTH THE SIDES AND THE DECISION TAKEN BY US FOR BETTER APPRECIATION OF THE FACTS OF THE CASE: 4. BEFORE US,AUTHORISED REPRESENTATIVE(AR) SUBMITTED T HAT ASSESSEE WAS ENTITLED TO CLAIM UNABSORBED DEPRECIATION AGAINST THE CURRENT YEARS I NCOME.HE RELIED UPON THE ORDER OF THE E BENCH OF THE TRIBUNAL DELIVERED IN THE CASE OF SUR ESH INDUSTRIES (P.) LTD. 27 TAXMANN.COM 203 DT. 10.10.12.HE FURTHER RELIED UPON THE CASES OF SH RI PADMAVATHI SRINIVASA COTTON GINNINING & PRESSSING FACTORY 125TTJ 411AND AND GRAHAM FIRTH ST EEL PRODUCTS (I) LTD. 24 SOT 106. DR RELIED SUPPORTED THE ORDERS OF THE AO AND TO THE FA A. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. FACTS OF THE CASE ARE THAT ASSESSEE HAD NEGATIVE BUSINESS INCOME OF RS.46 ,487/-.DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD SOLD ALL THE ASSETS IN BLOCK OF ASSETS HAVING WDV OF RS. 64.24 LAKHS AT A CONSIDERA -TION OF RS.86.65 LAKHS THEREBY GIVING BY RISE TO S TCG OF RS.22.41 LAKHS U/S 50 OF ACT.THE APPELLANT HAD A BROUGHT FORWARD BUSINESS AND DEPREC IATION LOSS AT THE BEGINNING OF AY.UNDER CONSIDERATION OF RS. 67,980/- AND RS.-25.45 LAKHS R ESPECTIVELY.AO AND THE FAA DENIED THE ASSESSE BENEFIT OF CARRYING FORWARD OF UNABSORBED D EPRECIATION AGAINST THE STCG.AFTER CONSIDER -ING THE PROVISIONS OF SECTION 32(2) ,72(2) AND 73( 3) OF THE ACT WE ARE OF THE OPINION THAT WHILE DECIDING THE ISSUE TO CARRYING FORWARD OF LOSS /UN ABSORBED DEPRECIATION AO AND FAA HAD NOT TAKEN INTO CONSIDERATION THE AMENDMENTS MADE IN THE SE SECTION FROM TIME TO TIME.FROM 01.04. 2002 AMENDED SECTIONS ARE APPLICABLE FOR CARRYING F ORWARD OF DEPRECIATION/LOSS.IT IS A KNOWN FACT THAT FOR A SHORT PERIOD,BEFORE THE AMENDMENT, THE SET OFF WAS RESTRICTED TO THE PROFITS AND GAINS OF BUSINESS AND PROFESSION ONLY-WHEREAS AFTER THE AMENDMENT (01.04.02)SET OFF IS AVAILABLE FOR PROFITS AND GAINS OF ANY KIND.IN OTHER WORDS TH E POST AMENDMENT PROVISIONS DO NOT TALK OF INCOME FROM BUSINESS OR PROFESSION ONLY AND THUS AL LOW UNABSORBED DEPRECIATION TO BE SET OFF AGAINST ANY INCOME.THE CASE RELIED UPON BY THE AR I .E.SURESH INDUSTRIES (P.)LTD., SHRI PADMAVATHI SRINIVASA COTTON GINNINING & PRESSSING F ACTORY AND GRAHAM FIRTH STEEL PRODUCTS (I) LTD. (SUPRA) SUPPORT THE SUBMISSIONS MADE BY TH E ASSESSEE.IN THE CASE OF SHRI PADMAVATHI SRINIVASA COTTON GINNINING & PRESSSING FACTORY (SUP RA)THE ISSUE TO BE DECIDED BY THE TRIBUNAL WAS WHETHER UNABSORBED DEPRECIATION COULD BE SET OF F AGAINST STCG OF THAT PARTICULAR YEAR ? (A) IN THAT CASE THE ASSESSEE HAD FILED ITS RETURN OF I NCOME FOR AY 1999-2000 DISCLOSING INCOME UNDER THE HEADS INCOME FROM BUSINESS; INCOME FROM S TCG AND INCOME FROM LONG-TERM CAPITAL GAINS. THE RETURN WAS PROCESSED INITIALLY U/S.143(1 ) OF THE ACT.LATER ON ASSESSMENT WAS REOPENED AND DURING THE REASSESSMENT AND APPELLATE PROCEEDIN GS ASSESSEE MADE A CLAIM THAT UNABSORBED DEPRECIATION SHOULD BE ALLOWED AS DEDUCTION FROM TH E STCG.FAA DISMISSED THE APPEAL FILED BY THE ASSESSEE.WHILE DECIDING THE APPEAL OF THE ASSES SEE TRIBUNAL FRAMED QUESTION NO.2 AS UNDER: (B)WHETHER UNABSORBED DEPRECIATION/ UNABSORBED ELIG IBLE BUSINESS LOSS CAN BE SET OFF AGAINST SHORT-TERM CAPITAL GAIN COMPUTED UNDER S. 50 OF THE ACT ? 6.AFTER CONSIDERING THE SUBMISSIONS OF THE RIVAL PA RTIES THE TRIBUNAL HELD : MA NO. 400/MUM/2013(ARISING OUT OF ITA NO. 1627/MU M/2012) M/S RAJSHREE ROADLINES PVT. LTD. 3 THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF SHRIKISHAN CHANDMAL (SUPRA) HAS HELD THAT THE DIVIDEND INCOME FROM SHARES HELD AS STOCK- IN-TRADE WHICH IS ASSESSABLE AS 'INCOME FROM OTHER SOURCES', CAN BE SET OFF AGAINST BROUGHT FORW ARD BUSINESS LOSS. THE HONBLE SUPREME COURT IN THE CASE OF WESTERN STATES TRADING CO.(P) LTD.(S UPRA) HAS ALSO APPROVED THE DECISION OF HONBLE MADHYA PRADESH HIGH COURT CITED ABOVE. IN V IEW OF THE PROPOSITIONS LAID DOWN IN THE ABOVE CITED CASE LAW, WE ARE OF THE OPINION THAT TH E ASSESSEE IS ENTITLED TO CLAIM SET OFF OF UNABSORBED DEPRECIATION AND ELIGIBLE BUSINESS LOSS, IF ANY, AGAINST SHORT-TERM CAPITAL GAIN COMPUTED UNDER S. 50 OF THE ACT. HENCE WE FIND MERI T IN THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE.ACCORDINGLY, WE DIRECT THE AO TO A LLOW SET OFF OF THE ELIGIBLE AMOUNT OF UNABSORBED DEPRECIATION AND UNABSORBED BUSINESS LOS S AGAINST THE SHORT-TERM CAPITAL GAIN. 7.IN THE OTHER TWO CASES CITED BY THE AR SAME PRINC IPLE HAS BEEN UPHELD.AFTER CONSIDERING THE ABOVE MENTIONED LEGAL POSITION WE ALLOW BOTH GROUND S OF APPEAL IN FAVOUR OF THE ASSESSEE- COMPANY. 4. FROM THE ABOVE IT IS CLEAR THAT WE HAD NOT DECIDED THE MATTER RELYING UPON THE ORDERS OF THE HONBLE COURTS AS MENTIONED IN THE MA.SECONDLY,WE H AVE ALSO HELD THAT IN THE OTHER TWO CASES CITED BY THE AR SAME PRINCIPLE HAD BEEN FOLLOWED.WE FIND THAT AO HAS NOT DISCUSSED ANYTHING ABOUT THE SAID TWO DECISIONS I.E. SURESH INDUSTRIES (P.) LTD. 27 TAXMANN.COM 203 DT. 10.10. 12.AND GRAHAM FIRTH STEEL PRODUCTS (I) LTD. 24 SOT1 06.IN THESE CIRCUMSTANCES WE ARE OF THE OPINION THAT THERE IS NO MISTAKE IN THE ORDER OF TH E TRIBUNAL THAT COULD BE RECTIFIED.SCOPE OF RECTIFICATION U/S.254(2) OF THE ACT IS VERY LIMITED .IT IS SAID THAT ONLY A PATENT, MANIFEST AND SELF- EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISC USSION OF EVIDENCE OR ARGUMENT TO ESTABLISH IT, CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRECTED UNDER SECTION 254(2) OF THE ACT.SECTION 254(2) DOES NOT CONFER POWER ON THE TRI BUNAL TO REVIEW ITS ORDER. UNDER THE GARB OF RECTIFICATION OF MISTAKE, IT IS NOT POSSIBLE FOR A PARTY TO TAKE FURTHER CHANCE OF RE-ARGUING THE APPEAL ALREADY DECIDED.IF TRIBUNAL RECORDS ITS FIND INGS AFTER CONSIDERING AND DISCUSSING ALL THE CONTENTIONS RAISED AND ARGUED BY BOTH THE PARTIES,T HEN ONLY ARITHMETICAL OR CLERICAL MISTAKES CAN BE RECTIFIED.A CLEAR ADJUDICATION ORDER CANNOT BE S UBJECT OF RECTIFICATION,UNLESS MISTAKES APPARENT FROM THE RECORD ARE MENTIONED IN THE MA.HONBLE JUR ISDICTIONAL HIGH COURT HAS IN THE MATTER OF RAMESH ELECTRIC AND TRADING CO.(203ITR497)HAS DISCU SSED THE PRINCIPLES WITH REGARD TO RECTIFI- CATION OF MISTAKES IN FOLLOWING MANNER: 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', A MEND ANY ORDER PASSED BY 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 ACT. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES IS TO RECTI FY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPARENT FROM THE RECORD. THIS IS MERELY A POWER OF AMENDING ITS ORDER. THE POWER OF RECTIFICATION UNDER SECTION 254(2) CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS.FAIL URE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSI ON IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. THE TRIBUN AL CANNOT, IN THE EXERCISE OF ITS POWER OF RECTIFICATION, LOOK INTO SOME OTHER CIRCUMSTANCES W HICH WOULD SUPPORT OR NOT SUPPORT ITS CONCLUSION. AS THE ORDER PASSED BY THE TRIBUNAL 20.03.2013 WAS PASSED AFTER CONSIDERING THE AVAILABLE MATERIAL AND THE LEGAL POSITION PREVALENT FOR THAT AY.,SO IN OUR OPINION THERE IS NO MISTAKE IN THAT ORDER THAT COULD BE RECTIFIED. WE ARE PAINED TO MENTION THAT,IN OUR OPINION,MA.FIL ED BY THE AO COMES UNDER THE CATEGORY OF UNNECESSARY LITIGATION.CENTRAL BOARD OF DIRECT TAXE S AND THE MINISTRY OF FINANCE HAVE DIRECTED THE OFFICERS OF THE DEPARTMENT NOT TO INDULGE IN UN NECESSARY LITIGATION.IN SPITE OF THE CLEAR LEGAL PROVISIONS ABOUT SETTING OFF OF DEPRECIATION,WHY AO DECIDED TO FILE MA.AND WHY WAS IT APPROVED BY THE CIT-A VERY SENIOR OFFICER OF THE DE PARTMENT-IS BEYOND OUR COMPREHENSION.WE MA NO. 400/MUM/2013(ARISING OUT OF ITA NO. 1627/MU M/2012) M/S RAJSHREE ROADLINES PVT. LTD. 4 CAN ONLY HOPE THAT IN FUTURE TAXPAYERS WILL BE SPAR ED OF SUCH KIND OF UNNECESSARY LITIGATIONS.WITH THESE OBSERVATIONS,WE REJECT THE M A.FILED BY THE AO. AS A RESULT,MA.FILE D BY THE AO STANDS DISMISSED. ) & *!+ ) & *!+ ) & *!+ ) & *!+ , ) ! , ) ! , ) ! , ) ! VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH - . . . . FD;K X;K FD;K X;K FD;K X;K FD;K X;K FOFO/K FOFO/K FOFO/K FOFO/K VKOSNU VKOSNU VKOSNU VKOSNU ) ) ) ) F FF F ;K ;K ;K ;K ! ! ! ! K KK K /0 /0/0 /0 S SS S . ORDER PRONOUNCED IN THE O PEN COURT ON 21 ST MARCH, 2014. '( #$%& *1 2 21 EKPZ EKPZ EKPZ EKPZ ,201 4 $ 3 4 SD/- SD/- ( / VIJAY PAL RAO) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER *5 / MUMBAI, 2 /DATE: 21.03.2014 SK '( '( '( '( ! ! ! ! 6%! 6%! 6%! 6%! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 57 ' '8 , 4. THE CONCERNED CIT / 57 ' '8 5. DR D BENCH, ITAT, MUMBAI / 9 3 !, MH MHMH MH :; , ' . . . *5 6. GUARD FILE/ 3 : < ! ! //TRUE COPY// '( / BY ORDER, = / / DY./ASST. REGISTRAR ' , & , *5 /ITAT, MUMBAI