DCIT, Central Circle-2(2), Hyd, Hyderabad V. Green Homes Realtors Pvt Ltd., Hyderabad

MA 58/HYD/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 5117 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 19-08-2016
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Depreciation; Audit objection; Tax effect
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER M.A. NO. 58/HYD/2016 (ARISING OUT OF ITA NO. 904/HYD/15) ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(2), HYDERABAD VS M/S. GREEN HOMES REALTORS PVT. LTD., HYDERABAD [PAN: AABCG3772B] (APPLICANT) (RESPONDENT) FOR REVENUE : SHRI K.J. RAO, DR FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR DATE OF HEARING : 16-12-2016 DATE OF PRONOUNCEMENT : 16-12-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : BY THIS MISCELLANEOUS APPLICATION THE REVENUE SEEKS MODIFICATION IN THE ORDER PASSED BY THE TRIBUNAL IN ITA NO. 904/HYD/2015 DT. 22-12-2015 ON THE GROUND THAT THE ASS ESSMENT WAS REOPENED BY ISSUING NOTICE U/S. 148 OF THE INCOM E TAX ACT [ACT] BASED ON AUDIT OBJECTION AND HENCE THE REVENUE IS ENTITLED TO FILE AN APPEAL DESPITE LOW TAX EFFECT IN AS MUCH AS AN EXCEPTION IS CARVED OUT IN THE CIRCULAR ISSUED BY THE CBDT. M.A. NO. 58/HYD/2016 :- 2 -: 2. WE HAVE HEARD THE LD. DR AS WELL AS LD. COUNSEL I N THIS REGARD AND CAREFULLY PERUSED THE RECORD. AT THE OUTSET, IT DESERVES TO BE MENTIONED THAT THE APPEAL WAS FILED ONLY ON ONE IS SUE I.E., APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE ONLY GROUND URGED BEFORE US IS EXTRACTED BELOW: WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS CORRECT IN ALLOWING THE GROUND OF THE ASSESSEE BY FOLLOWING TH E DECISION OF THE JURISDICTIONAL, SPECIAL BENCHS DECISION IN THE CAS E OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT (ITAT-SB) (20 TAXMAN .COM 244) (VISAKHAPATNAM TRIB)(SB) WHEN THE SAID DECISIONS W AS SUSPENDED OF ITS OPERATION BY THE HON'BLE HIGH COURT FOR THE STATE O F TELANGANA AND ANDHRA PRADESH IN M.P. NO. 9082012 IN ITTA NO. 3894 /2012 WHICH IS PENDING BEFORE THE HON'BLE JURISDICTIONAL HIGH COUR T? 2.1. THE AO DISALLOWED A SUM OF RS. 4,92,731/- BY A PPLYING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON THE GROU ND THAT ASSESSEE FAILED TO MAKE TDS ON CERTAIN PAYMENTS. ON AN APPEAL FILED BY THE ASSESSEE, THE LD.CIT(A) FOLLOWED THE DECI SION OF THE SPECIAL BENCH OF ITAT, VISAKHAPATNAM IN THE CASE OF M ERILYN SHIPPING AND TRANSPORT LTD., VS. ACIT REPORTED AS 136 ITD 23 (SB) [16 ITR 1] (SB)(VISAKHA.)(TRIB.) AND ALSO RELIED UP ON THE DECISION OF THE HYDERABAD BENCH IN ASSESSEES OWN CASE FOR THE AY . 2005-06 TO HOLD THAT THE PROVISIONS OF SECTION 40(A)(IA) DO NOT GET ATTRACTED IN RESPECT OF THE PAYMENTS ALREADY MADE SINCE THE EXPRE SSION GIVES THEREIN IS PAYABLE. AGGRIEVED, REVENUE PREFERRED AN APPEAL BEFORE US MAINLY ON THE GROUND THAT THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT L TD., VS. ACIT REPORTED AS 136 ITD 23 (SB) [16 ITR 1] (SB)(VISAKH A.)(TRIB.) (SUPRA) WAS CHALLENGED BEFORE THE HON'BLE HIGH COURT OF AP AN D TELANGANA AND THE OPERATION OF THE SAID ORDER WAS SUSPENDED BY T HE COURT IN M.A. NO. 58/HYD/2016 :- 3 -: WHICH EVENT, THE SAID DECISION OUGHT NOT TO HAVE BEEN APPLIED BY THE LD.CIT(A). 3. AT THE TIME OF HEARING OF THE APPEAL, BOTH THE PARTIES ADMITTED THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS BE LOW RS. 10 LAKHS AND CIRCULAR NO. 21/2015 DT. 10-12-2015 IS APP LICABLE WHEREBY THE REVENUE OUGHT NOT TO HAVE FILED AN APPEAL. THOUGH THE ASSESSEE HAS A STRONG CASE ON MERITS, THE BENCH THOU GHT FIT NOT TO GO INTO THE MERITS OF THE CASE BUT DISMISSED THE APP EAL OF THE REVENUE AS WITHDRAWN/NOT PRESSED HAVING REGARD TO THE B OARD CIRCULAR. 4. THE SAID ORDER WAS PASSED ON 22-12-2015. NINE M ONTHS THEREAFTER I.E., ON 09-09-2016, THE REVENUE FILED A M ISCELLANEOUS APPLICATION SEEKING RECALL OF THE ORDER ON THE GROUND THAT THE GROUND RAISED BY THE DEPARTMENT BEFORE THE TRIBUNAL WAS COVERED UNDER EXCEPTION PROVIDED IN CLAUSE-8(C) OF CBDT CIRC ULAR NO. 21/2015. HENCE, APPEAL IS MAINTAINABLE. IT MAY BE N OTICED THAT AS PER THE MISCELLANEOUS APPLICATION, THE REVENUE RAI SED THE FOLLOWING GROUNDS IN THE GROUNDS OF APPEAL, WHEREAS THE FACT REMAINS THAT ONLY THE DISALLOWANCE MADE U/S. 40(A)(IA) IS IN DISPUTE AS PER THE GROUNDS OF APPEAL ANNEXED TO FORM 3 6. 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN ALLOWING THE DEPRECIATION ON COTTAGES & RESTAURANTS. 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S. 40 (A)(IA). 3. ANY OTHER GROUND THAT MAY BE RAISED DURING THE PROC EEDINGS. M.A. NO. 58/HYD/2016 :- 4 -: 5. LD. COUNSEL, APPEARING FOR THE ASSESSEE, SUBMITTED THAT IN THE MISCELLANEOUS APPLICATION THE REVENUE CANNOT RAIS E A NEW GROUND AND IN FACT THERE IS NO NEED TO RECALL THE ORDER SINCE THE ISSUE URGED IN THE APPEAL WAS COVERED BY THE SPECIAL BENCH OF ITAT, VISAKHAPATNAM READ WITH THE DECISION OF THE HO N'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ACIT VS. M/S . JANAPRIYA PROPERTIES PVT. LTD., IN ITA NOS. 1614 & 1622 TO 1624/ HYD/2012 DT. 19-01-2015, WHEREIN THE COURT OBSERVED THAT SO LONG AS THE DECISION OF THE SPECIAL BENCH IS NOT REVERSED BY TH E HIGH COURT, THE SAME IS BINDING ON THE CO-ORDINATE BENCHES OF THE T RIBUNAL . HE FURTHER SUBMITTED THAT THE SPECIAL BENCH DECISION WAS REF ERRED TO WITH THE APPROVAL BY THE HON'BLE ALLAHABAD HIGH COU RT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICES PVT. LTD. (357 ITR 642) (ALL) AND THE SAID DECISION WAS AFFIRMED BY THE APEX COURT DISMISSING THE SPECIAL LEAVE PETITION. THUS, THE GROUND URGED BY THE REVENUE DESERVES TO BE DISMISSED EVEN ON MERITS; SINCE THE REV ENUE SEEKS TO KEEP THE MATTER ALIVE IN THE LIGHT OF THE EXCEPTION CL AUSE PROVIDED IN CBDT CIRCULAR NO. 21/2015, INSTEAD OF RE CALLING THE MATTER, THE ORDER OF THE TRIBUNAL CAN BE MODIFIED SUITA BLY BY DISMISSING THE APPEAL ON MERITS. 6. HAVING REGARD TO THE RIVAL SUBMISSIONS, WE ARE OF THE OPINION THAT THE ORDER DT. 22-12-2015 DESERVES TO BE MODIFIED BY REPLACING PARAS 2 & 3 OF THE SAID ORDER AS UNDER: THE ABOVE CIRCULAR PROVIDES FOR AN EXCEPTION WHERE BY AN APPEAL CAN BE PREFERRED BY THE REVENUE, DESPITE LOW TAX EFFECT, IF THE RE-ASSESSMENT PROCEEDINGS WERE BASED ON REVENUE AUD IT OBJECTION. M.A. NO. 58/HYD/2016 :- 5 -: SINCE, IN THE INSTANT APPEAL, THE RE-ASSESSMENT PRO CEEDINGS WERE INITIATED BASED ON THE REVENUE AUDIT OBJECTION , WE ARE OF THE VIEW THAT THE APPEAL IS MAINTAINABLE. HOWEVER, WE HOLD THAT THE LD.CIT(A) WAS JUSTIFIED IN FOLLOWING THE DECISION O F THE SPECIAL BENCH OF ITAT, VISAKHAPATNAM IN THE CASE OF MERILYN SHIPP ING AND TRANSPORT LTD., VS. ACIT REPORTED AS 136 ITD 23 (SB ) [16 ITR 1] (SB)(VISAKHA.)(TRIB.) (SUPRA). ITAT B BENCH, HYDERABAD IN THE CASE OF ACIT VS. M /S. JANAPRIYA PROPERTIES PVT. LTD., IN ITA.NOS.1614, 1622, 1623 & 1624/HYD/2012 DATED 19.01.2015 HAS HELD AS UNDER: 5. HAVING REGARD TO THE DIRECTION GIVEN BY THE HON 'BLE HIGH COURT, THE MATTER WAS POSTED FOR HEARING. THE LEARNED COUN SEL APPEARING ON BEHALF OF THE ASSESSEE PLACED BEFORE US THE FOLLOWI NG ORDERS OF THE ITAT TO SUBMIT THAT THE HON'BLE ALLAHABAD HIGH COURT IN ITS DECISION IN THE CASE OF CIT V/S. VECTOR SHIPPING SERVICES PVT. LTD. (357 IT R 647) HAS TAKEN A VIEW ON THE ISSUE IN FAVOUR OF THE ASSESSEE IN CONSONANC E WITH THE VIEW TAKEN BY THE ITAT VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING AND TRANSPORT (SUPRA), AND THE VIEW TAKEN BY THE HO N'BLE ALLAHABAD HIGH COURT WAS IMPLIEDLY AFFIRMED BY THE HON'BLE SUPREME COURT BY DISMISSING AN SLP SOUGHT BY THE REVENUE, AND THUS THE VIEW TAK EN BY THE ITAT SPECIAL BENCH VISAKHAPATNAM DESERVES TO BE FOLLOWED . (A) DECISION OF HYDERABAD BENCH A OF THE TRIBUNAL IN USHODAYA ENTERPRISES LTD. HYDERABAD V/S. DY. COMMISSIONER OF INCOME-TAX CIRCLE 16(2), HYDERABAD (ITA NOS.676/HYD/2009 & 411 /HYD/2010 DATED 7.1.2015) (B) DECISION OF MUMBAI BENCH A OF THE TRIBUNAL IN M/S. ARCADIA SHARE & STOCK BROKERS PVT. LTD., MUMBAI V/S. DY. CO MMISSIONER OF INCOME-TAX, RANGE 4(1), MUMBAI (ITA NO.1871/MUM/201 3 DATED 22.12.2014) 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY A GREED THAT THE ITAT HYDERABAD BENCH CONSIDERED AN IDENTICAL ISSUE AND FOLLOWED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERYLI N SHIPPING AND TRANSPORT (SUPRA). M.A. NO. 58/HYD/2016 :- 6 -: 7. UPON HEARING THE RIVAL SUBMISSIONS, WE ARE OF TH E VIEW THAT THE DECISION OF THE ITAT SPECIAL BENCH IS BINDING ON TH E TRIBUNAL, PARTICULARLY IN VIEW OF THE CLARIFICATORY ORDER PASSED BY THE HO N'BLE HIGH COURT OF JUDICATURE AT HYDERABAD IN THE INSTANT CASE, AND TH US, WE RESPECTFULLY FOLLOW THE DECISION OF SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING AND TRANSPORTS (SUPRA), AND HOLD THAT THE PROVISIONS OF S.40(A)(IA) CANNOT BE INVOKED WHERE THE PAYMENTS WERE ALREADY MADE BY THE ASSESSEE. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. IN THE RE SULT, APPEALS OF THE REVENUE INSOFAR AS THE ABOVE ISSUE IS CONCERNED, AR E HEREBY DISMISSED. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DI SMISSED. 7. IN THE RESULT, MISCELLANEOUS APPLICATION IS TREAT ED AS ALLOWED FOR STATISTICAL PURPOSES AS PRONOUNCED IN THE OPEN COU RT. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 16 TH DECEMBER, 2016 TNMM COPY TO : 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2( 2), HYDERABAD. 2. M/S. GREEN HOMES REALTORS PVT. LTD., 11-4-453, SHAMSHIRI ESTATE, LAKDIKAPUL, HYDERABAD. 3. CIT (APPEALS)-2, HYDERABAD. 4. PR.CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.