ITO 6(3)1, V. GALAXY SWASS P. LTD,

MA 529/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8821 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH, G, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER MA NO: 529/MUM/2011 ARISING OUT OF :ITA NO.3747/MUM/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER-6(3)-1 ROOM NO. 514, AAYAKAR BHAVAN M.K. ROAD MUMBAI. M/S. GALAXY SAWS PVT. LTD. 132/134,PRADHAN BUILDING SVP ROAD, DONGRI MUMBAI-400 009. PAN NO.: AAACG 2447 G (APPLICANT) VS. (RESPONDENT) APPLICANT BY : SHRI PAWAN VED RESPONDENT BY : SHRI JITENDRA JAIN DATE OF HEARING : 8.6.2012 DATE OF PRONOUNCEMENT : 27.6.2012 ORDER PER RAJENDRA SINGH (AM). THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE REV ENUE REQUESTING FOR AMENDMENT OF THE ORDER DATED 11.3.201 1 OF THE TRIBUNAL IN ITA NO.3747/M/2009 ON THE GROUND OF SOME APPARENT MISTAKE IN RELATION TO REVALUATION RESERVE ACCOUNT CREAT ED ON ACCOUNT OF OFFICE PREMISES. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE DURING THE YE AR ON 19.5.2004 HAD SOLD THE OFFICE PREMISES FOR RS.96.00 LA CS, THE BOOK VALUE OF WHICH WAS RS.3,29,143/-. BEFORE SELLING THE OF FICE PREMISES, MA NO.529/M/11 ARISING OUT OF ITA NO. 3747/M/09 A.Y:05-06 2 THE ASSESSEE HAD GOT THE PREMISES REVALUED AT RS.97,44,00 0/- BY REGISTERED VALUER. THE EXCESS OF REVAULED AMOUNT OVER T HE BOOK VALUE IS RS.94,14,857, HAD BEEN CREDITED TO REVALUATION RESE RVE ACCOUNT AND DIRECTLY TAKEN TO THE BALANCE SHEET AND LOSS OF RS.1,44,0 00/- BEING DIFFERENCE BETWEEN SALE PRICE AND REVALUED AMOUNT WAS D EBITED TO P&L ACCOUNT. THE ASSESSEE HAD PAID THE TAX UNDER MAT SCHEME UN DER SECTION 115JB. THE ISSUE RAISED BEFORE THE TRIBUNAL WAS W HETHER REVALUATION RESERVE OF RS.94,14,857/- CAN BE ADDED TO THE BOOK PROFIT. THE AO IN THE ASSESSMENT YEAR HELD THAT REVALUATION OF THE ASSET IN THE YEAR OF SALE WAS A COLOURABLE DEVICE ADOPTED BY THE ASSESSEE TO AVOID PAYMENT OF TAX. IT WAS ALSO HELD BY HIM THAT P& L ACCOUNT HAD NOT BEEN PREPARED BY THE ASSESSEE IN ACCORDANCE WITH PART -II AND III OF SCHEDULE VI OF THE COMAPANIES ACT AS THE ENTIRE PROF IT OF RS.92,70,858/- WITH RESPECT TO BOOK VALUE OF THE ASSET H AD NOT BEEN CREDITED TO THE P&L ACCOUNT. THE AO HAD, THEREFORE, AD DED THE SUM OF RS.94,14,857/- TO THE BOOK PROFIT, WHICH HAD BEEN DE LETED BY CIT(A). 2.1 THE TRIBUNAL HAD DEALT WITH BOTH THE ASPECTS AND HELD THAT THERE WAS NO COLOURABLE DEVICE AS ACCOUNTS UNDER COMPANIES ACT WE RE REQUIRED TO BE PREPARED AS PER ACCOUNTING STANDARD AND AS PER AS-10, REVALUATION OF ASSETS WAS PERMITTED. THE TRIBUNAL ALSO HELD THAT REVALUATION HAD BEEN MADE AS PER VALUATION REPORTS WH ICH HAD NOT BEEN DISPUTED BY THE AO AND THEREFORE, THERE WAS NO C ASE OF ANY MA NO.529/M/11 ARISING OUT OF ITA NO. 3747/M/09 A.Y:05-06 3 DEVICE USED BY THE ASSESSEE. THE TRIBUNAL ALSO HELD THAT T HERE WAS NO PROVISION OF MAKING ADJUSTMENT ON ACCOUNT OF RESERVE A ND SINCE WHILE COMPUTING BOOK PROFIT ONLY SPECIFIED ADJUSTMENTS COULD B E MADE, THERE WAS NO CASE FOR ANY ADDITION. THE TRIBUNAL ACCORDINGLY CO NFIRMED THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO. 3. IN THE MISCELLANEOUS APPLICATION, THE REVENUE HAS SUBM ITTED THAT IN SCHEDULE- E OF FIXED ASSETS THERE WAS NO ADDITION SHO WN BY THE ASSESSEE AND THEREFORE THERE WAS NO REVALUATION OF THE P ROPERTY. THE SAID SCHEDULE HAD BEEN CERTIFIED BY THE AUDITOR AND, THEREFORE, REVALUATION WAS NOT PROVED AND ACCORDINGLY THE CLAIM O F CREATION OF RESERVE WAS NOT CORRECT. THE LD. DR APPEARING FOR THE R EVENUE SUBMITTED THAT THIS ASPECT HAD BEEN BROUGHT TO THE NOT ICE OF THE TRIBUNAL WHICH HAD ESCAPED ATTENTION AT THE TIME OF PA SSING OF THE ORDER. THE LD. DR ALSO SUBMITTED THAT THERE BEING APP ARENT MISTAKE IN THE ORDER , THE SAME SHOULD BE MODIFIED AND MISTAKE CO RRECTED. 3.1 THE LD. AR FOR THE ASSESSEE, ON THE OTHER HAND, SUBM ITTED THAT THERE WAS NO APPARENT MISTAKE IN THE ORDER OF THE TRI BUNAL. THE LD. AR SUBMITTED THAT, IN THE SCHEDULE OF FIXED ASSETS, THERE W AS ONLY COLUMN FOR ADDITION AND THERE WAS NO COLUMN FOR REVALUATI ON RESERVE. THE ASSESSEE HAD TAKEN REVALUATION RESERVE DIRECTLY TO THE BA LANCE SHEET AS THE ASSET HAD BEEN SOLD DURING THE YEAR AND DID NOT APPEAR IN THE MA NO.529/M/11 ARISING OUT OF ITA NO. 3747/M/09 A.Y:05-06 4 BALANCE SHEET AT THE END OF THE YEAR. IT WAS POINTED O UT THAT REVALUATION RESERVE HAD BEEN DULY SHOWN IN THE BALAN CE SHEET. THE LD. AR ALSO POINTED OUT THAT THE AO IN THE ASSESSMENT ORDER HAD NOT DISPUTED THE REVALUATION OF THE ASSET AND CREATION OF T HE RESERVE. IN PARA-6, HE CLEARLY MENTIONED THAT A SUM OF RS.94,14,8 57/- HAD BEEN CREDITED TO THE REVALUATION RESERVE IN THE BALANCE SHEE T. FURTHER IN PARA-6.2, HE DULY NOTED THE SUBMISSION OF THE ASSESSEE TH AT MARKET VALUE OF THE ASSET HAD BEEN TAKEN AS PER THE VALUERS R EPORT AT RS.97,44,000/-. THEREFORE, IT WAS NOT CORRECT ON THE PA RT OF THE LD. DEPARTMENTAL REPRESENTATIVE TO STATE THAT THE ASSESSEE H AD NOT CREATED RESERVE. MOREOVER THE POINT WHICH HAD BEEN DI SPUTED BY THE AO CAN NOT BE DISPUTED BY THE REVENUE IN APPEAL. THE LD. AR ALSO FILED COPY OF THE LEDGER ACCOUNT TO DEMONSTRATE THAT, ON 1.4. 2004 , THE ASSESSEE HAD DEBITED THE ACCOUNT OF OFFICE PREMISES BY RE VALUATION RESERVE OF RS.94,14,857/- AND ASSET REVALUATION RESERVE ACCOUNT HAD BEEN CREATED BY THE SAME AMOUNT. FURTHER ON THE DATE OF SALE I.E. 19.5.2004 THE ASSESSEE HAD DEBITED THE PROFIT ON SALE ON ASSETS ACCOUNT BY SUN OF RS.1,44,000/- WHICH HAD BEEN TAKEN T O THE P&L ACCOUNT. THUS THE RELEVANT ENTRIES HAD BEEN PASSED SHOWING AMOUNT OF RESERVE ON 1.4.2004 WHICH ALSO APPEARED IN THE BALA NCE SHEET WHICH HAD BEEN DULY NOTED BY THE AO AND, THEREFORE, IT COU LD NOT BE ARGUED THAT ASSESSEE HAD NOT REVALUED THE ASSET ONLY ON THE GROU ND THAT IN MA NO.529/M/11 ARISING OUT OF ITA NO. 3747/M/09 A.Y:05-06 5 THE SCHEDULE OF FIXED ASSETS, THE AMOUNT WAS NOT SHOWN. I T WAS ACCORDINGLY URGED THAT THE MISCELLANEOUS APPLICATION SHOUL D BE REJECTED. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE ONLY MISTAKE POINTED OUT BY REVENUE IS THAT THE ASSESSEE HAD NOT GOT THE ASSET REVALUED AND, THEREFOR E, THERE WAS APPARENT MISTAKE IN THE COMPUTATION OF BOOK PROFIT IN CLAIMING BENEFIT OF REVALUATION RESERVE. ON CAREFUL CONSIDERATION OF FACT S OF THE CASE AS WELL AS SUBMISSIONS MADE BY BOTH THE PARTIES, WE SEE NO AP PARENT MISTAKE IN THE ORDER OF THE TRIBUNAL. THE FACT THAT T HE ASSESSEE HAD GOT OFFICE PREMISES REVALUED AT RS.97,40,000/- AS PER VA LUATION REPORT HAD BEEN DULY NOTED BY THE AO. THE AO HAD NOT DISPUT ED WITH THE VALUATION REPORT. THE AO HAD ALSO NOTED THAT THE ASSESSE E HAD TAKEN THE REVALUATION RESERVE OF RS.94,14,857/- TO THE BALA NCE SHEET. THUS REVALUATION OF THE ASSET AND CREATION OF REVALUATION R ESERVE HAD NOT BEEN DISPUTED BY THE AO. AO HAD MADE ADDITION ONLY O N THE GROUND THAT THE REVALUATION OF THE ASSET WAS A COLORABLE DEVI CE. THE POSITION ACCEPTED BY THE AO IN THE ASSESSMENT CAN NOT BE DISPUTED B Y THE REVENUE IN THE APPELLATE PROCEEDINGS. THE ASSESSEE HAS A LSO PRODUCED COPY OF LEDGER ACCOUNT BEFORE US WHICH CLEARLY SHOWS THAT, THAT ON 1.4.2004 THE ASSESSEE HAD DEBITED THE OFFICE PREMISES ACCOU NT BY RS.94,14,857/- BEING REVALUATION RESERVE AND THE SAME HAD BEEN MA NO.529/M/11 ARISING OUT OF ITA NO. 3747/M/09 A.Y:05-06 6 TAKEN TO THE BALANCE SHEET. THE ASSET HAD BEEN REVALUE D AS PER VALUATION REPORT WHICH HAD NOT BEEN QUESTIONED BY THE AO. THEREFORE ONLY ON THE GROUND THAT THE REVALUATION R ESERVE WAS NOT SHOWN IN SCHEDULE OF FIXED ASSETS IT CAN NOT BE SAID THAT T HE ASSESSEE HAS NOT VALUED THE ASSET PARTICULARLY WHEN THERE IS NO SP ECIFIC COLUMN FOR SHOWING REVALUATION RESERVE IN THE SCHEDULE OF FIXE D ASSETS AND ASSETS HAD BEEN SOLD DURING THE YEAR AND DID NOT APPEAR IN THE BALANCE SHEET. IN ANY CASE, AS POINTED OUT EARLIER, THIS FACT HA D NOT BEEN DISPUTED BY THE AO AND THEREFORE, THERE CAN NOT BE AN Y APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL ON THIS ACCOUNT. W E SEE NO MERIT IN THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE A ND THE SAME IS THEREFORE REJECTED. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.6.12. SD/- SD/- (VIJAY PAL RAO) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI, DATED: 27.6.2012. JV. MA NO.529/M/11 ARISING OUT OF ITA NO. 3747/M/09 A.Y:05-06 7 COPY TO: THE APPLICANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.