M/s H.P. State Forest Corp. Ltd., Shimla V. ACIT, Shimla

MA 6/CHANDI/2009

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1358 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 1 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-06-2013
• Assessment Year: 1994-1995
• Appeal Filed On: 15-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: Y K SUD
• Section: 43B; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER M.A. NO.6/CHD/2009 IN ITA NO.412/CHD/2007 ASSESSMENT YEAR: 1994-95 M/S H.P. STATE FOREST VS THE A.C.I.T., CORPORATION LTD., CIRCLE, KASUMPTI, SHIMLA. SHIMLA (H.P.). PAN: AAACH4036L (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI Y.K.SUD RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 22.11.2013 DATE OF PRONOUNCEMENT : 17.01.2014 O R D E R PER SUSHMA CHOWLA, JM: THE ASSESSEE HAS FILED AMENDED MISCELLANEOUS APPLI CATION ARISING OUT OF ITA NO. 412/CHD/2007 AGAINST ORDER OF THE TR IBUNAL DATED 27.09.2007, WHICH READS AS UNDER : 1. THAT THE ORDER IN THE ABOVESAID APPEAL WAS PASSED BY THE HON'BLE BENCH ON 27.09.2007. 2. THAT WHILE HEARING THE MISC. APPLICATION DATED 3 .12.2008 ON THE ABOVESAID APPEAL ON 5.3.2010 THE HON'BLE BENCH HAD GIVEN A DIRECTION TO FILE THE AMENDED M.A. INCORPORATING ALL THE FACTS OF THE CASE AND THE EFFECT OF THE ORDER OF THE H.P, HIGH COURT IN THE APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE BENCH IN ITA NO. 24 & 25 DATED 2.9.2003 DULY AMENDED VI DE M.A. ORDER DATED 30.7.04 PASSED BY THE HON'BLE BENCH. 3. THAT THE HON'BLE BENCH WHILE DISPOSING OF THE APP EALS OF THE ASSESSEE PERTAINING TO ASST. YEAR 1993-94 & 1994-95 WHEREIN THE INCOM E WAS ASSESSED AT RS.1.4 CRORES AND 1.5 CRORES RESPECTIVELY HAD SET ASIDE THE ASSESSMENT TO THE FILE OF THE A.O., TO BE FRAMED DENOVO AFTER GIVING PROPER OPP ORTUNITY TO THE ASSESSEE TO PRODUCE THE RELEVANT BOOKS OF ACCOUNTS AND SCRUTI NIZING THE AUDITED ACCOUNTS FILED BY THE ASSESSEE AND A DIRECTIONS WAS GIVEN IN THE SAID ORDER THAT ASSESSED INCOME SHALL NOT BE LESS THAN THE INCOME RETURNE D IN BOTH THE YEARS. COPY OF THE ORDER IS ENCLOSED AT PAGE 1. 2 4. THAT THE ASSESSEE FILED A MISC. APPLICATION AGAI NST THIS ORDER ON THE GROUND THAT THERE WAS NO VALID RETURN THEREFORE THE FINDING OF THE BENCH TO ASSESS THE INCOME NOT BELOW THE RETURNED INCOME SHOULD BE DELETED AND FURTHER THE ASSESSEE PRAYED THAT THE ASSESSED INCOME CANNOT BE MORE THAN 1.4 CRORES IN A SST.YEAR 1993-94 AND 1.5 CRORES IN ASST.YEAR 1994-95. THIS MA. WAS ALLOWED BY THE HON' BLE BENCH AND COPY OF THE ORDER IS ENCLOSED AT PAGE NO 2 AND 3. 5. THAT THE A.O. IN COMPLIANCE TO THE ORDER OF THE ITA T FRAMED A FRESH ASSESSMENT AND AGAIN ESTIMATED THE INCOME AT 1.4 CRORES FOR 19 93-94 ASST. AND 1.5 CRORES FOR 1994-95 ASST. VIDE ASSTT. ORDERS DATED 29.3.200 5 WHICH WERE HURRIEDLY PASSED BY HIM SINCE THE ASSESSMENT WAS GETTING BARR ED BY LIMITATION ON 31.3.2005 AND THE A.O. HAD STARTED THE ASSESSMENT P ROCEEDING IN MARCH 2005 ITSELF. THIS ACTION OF THE A.O. NEGATED THE ORDER O F THE ITAT. 6. THAT THE ASSESSEE FILED AN APPEAL BEFORE CIT(A) FOR ASST. YEAR 1993-94 & 1994- 95 AND DURING THE APPELLATE PROCEEDINGS THE CIT(A) DIRECTED THE A.O. TO COMPUTE THE INCOME BASED ON AUDITED ACCOUNTS AND F ILE THE COMPUTATIONS AND THE BASIS OF ASSESSED INCOME OF 1.4 CRORES FOR 1993 -94 ASST. AND 1.5 CRORES FOR 1994-95 ASST. THE A.O. IN COMPLIANCE TO THE REMAND ORDER OF CIT(A) ISSUED A QUESTIONNAIRE DATED 22.9.2005 TO THE ASSESSEE SEEKI NG FURTHER DETAILS THE SAME ARE PLACED ON PAGE NO. 4 AND 5 TO THE APPLICATION. THE ASSESSEE DULY FILED ITS REPLY VIDE LETTER DATED 1.10.2005(COPY ENCLOSED AT PAGES 6 TO 8). 7. THAT THEREAFTER THE A.O. PREPARED HIS REMAND REPORT WHEREIN HE COMPUTED THE TAXABLE INCOME AT RS..6637198/- FOR ASST YEAR 1993- 94 AND RS.26347914/- FOR ASST.YEAR 1994-95 AND RESTRICTED THE INCOME TO 1. 5 CRORES AS PER THE DIRECTIONS OF THE ITAT(COPY OF REMAND REPORT IS ATTACHED AT PA GE 9 TO 11). 8. THAT THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE FOR ASST.YEAR 1993-94 VIDE HIS ORDER DATED 12.3.2007(COPY ENCLOSED ON PAGE 12) AND DISMISSED THE APPEAL FOR IMPUGNED ASSESSMENT YEAR 1994-95. THE APPEAL EF FECT FOR ASST.YEAR 1993-94 WAS GIVEN BY THE A.O. VIDE HIS ORDER DATED 3.8.2007 WHERE IN INCOME WAS DETERMINED AT NET LOSS OF RS.245901157- BY MAKING T HE ADJUSTMENTS WITH THE INCOME ASSESSED IN THE REMAND REPORT AND RELIEF ALL OWED BY CIT(A)(COPY OF ORDER ENCLOSED AT PAGE 13). 9. THAT THE ORDER OF CIT(A) FOR 1994-95 ASST. WAS CHAL LENGED BEFORE THE ITAT AND IN APPEAL THE APPELLANT HAS RAISED GROUND NO.4 AS F OLLOWING: THAT THE CIT(A) WAS NOT JUSTIFIED IN TREATING THE R OYALITY AMOUNTING TO RS.7.50 CRORES AS TAX. THUS CONFIRMING THE ADDITION U/S 43B WITHOUT E VEN CONFRONTING THE ISSUE TO THE ASSESSEE. 10. THAT WHILE ADJUDICATING UPON THIS GROUND IN PAR A 3 OF THE ORDER THE HON'BLE BENCH HAS REVERSED THE FINDING OF THE LD.CIT(A) THA T ROYALITY IS A TAX AND THEREFORE IS NOT ALLOWABLE U/S 43(B) UNLESS IT IS A CTUALLY PAID BY THE ASSESSEE. 11. THAT THE ASSESSING OFFICER WHILE GIVING THE APP EAL EFFECT HAS REFUSED TO ALLOW THE DEDUCTION OF RS.7.50 CRORES AND HAS NEGATED THE ORDER OF THE HON'BLE BENCH ON THE GROUND THAT THIS GROUND WAS NEITHER RAISED BY THE ASSESSEE BEFORE THE CIT(A) OR THE ITAT AND ITAT HAS ONLY VACATED THE FI NDING OF THE CIT(A) THAT ROYALITY IS A TAX, COPY OF APPEAL EFFECT DATED 9.6. 2008 IS ENCLOSED HEREWITH AT PAGE 14 OF THE APPLICATION. 12. THAT THE APPELLANT FELT AGGRIEVED WITH THE ACTI ON OF THE A.O. AND TO ENFORCE THE ORDER OF THE HON'BLE BENCH FILED A PETITION BEFORE COMMISSIONER OF INCOME TAX ON 19.6.2008 COPY OF WHICH IS ENCLOSED HEREWITH AT PAGE 15 TO 17 OF THE APPLICATION. 13. THAT THE COMMISSIONER OF INCOME TAX ALSO REFUSED TO DIRECT THE A.O. FOR GIVING PROPER APPEAL EFFECT ON THE GROUND THAT THE HON'BLE BENCH HAS NOT DELETED THE ADDITION OF RS.7.50 CRORES BUT HAS ONLY HELD THAT T HE CIT(A) WAS NOT JUSTIFIED IN TREATING ROYALITY AS TAX(THE COPY OF ORDER OF CIT I S ENCLOSED AT PAGE 18 & 19. 3 14. THAT THE REFUSAL TO THE APPEAL EFFECT AMOUNTS TO A CONTEMPT ON THE PART OF ASSESSING OFFICER WHICH MUST BE VIEWED SERIOUSLY. 15. THAT IN THE REMAND REPORT FILED BY THE ACIT BEFORE CIT(A) WHICH IS AVAILABLE IN PAPER BOOK PAGE NO. 12-14 AND WHICH WAS DULY CONSIDERED B Y THE HON'BLE BENCH CLEARLY REVEAL THAT THE INCOME OF THE APPELLANT WAS COMPUTE D AT RS.26347914/- AFTER MAKING ABOVESAID ADDITION OF RS. 7.50 CRORES ON ACCOUNT OF ROYALITY AND SAME WAS RESTRICTED TO RS. 1.50 CRORES AS PER THE DIRECTION OF THE EARLIER ORD ER OF THE TRIBUNAL. 16. THAT IN THE MEANWHILE ON THE APPEAL FILED BY THE DE PARTMENT BEFORE THE HON'BLE H.P. HIGH COURT AGAINST THE ORDER OF IT AT DATED 2. 9.2003 THE HON'BLE COURT VIDE ITS ORDER 2.9.2009 COPY ENCLOSED AT PAGE 20 TO 26 APPROVED THE FINDING OF THE ITAT THAT THERE IS NO MINIMUM INCOME AT WHICH T HE ASSESSEE IS TO BE ASSESSED BUT REVERSED THE FINDING OF THE TRIBUNAL F IXING THE UPPER 'LIMIT-OF THE ASSESSMENT AT 1.4 CRORES FOR 1993-94 ASST. AND 1.5 CRORES FOR 1994-95 ASST. 17. THAT AS A RESULT OF THIS ORDER THE INCOME DETERMINE D IN REMAND REPORT STOOD AT RS.26347914/- BY MAKING ADDITIONS OF RS.108458844/- WHICH INCLUDED THE ADDITION OF 75000000/- WHICH STANDS DELETED BY THE ITAT VIDE ITS ORDER DATED 27.9.2007. 18. THAT IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE HON'BLE BENCH MAY KINDLY BE MODIFIED AND CLEAR DIRECTION BE GIVEN TO THE A.O. T O DELETE THE ADDITION OF RS.7.50 CRORES MADE ON ACCOUNT OF ROYALITY AS PRAYE D BY THE APPELLANT IN GROUND NO. 4 RAISED BY THE APPELLANT. 19. THAT GROUND NO. 3 IS RELATED WITH GROUND NO. 4 AND MAY KINDLY BE ADJUDICATED UPON AS ONLY GROUND NO. 1 & 2 WERE NOT PRESSED FOR BUT 3 & 4 WERE DULY ARGUED. 20. THAT THE APPEAL EFFECT FOR ASST.YEAR 1993-94 HAS BEEN GIVEN TO THE ORDER OF CIT(A) WHEREIN IN THE INCOME AS PER REMAND REPORT H AS BEEN ASSESSED AND RELIEF ALLOWED BY THE CIT(A) HAS BEEN GIVEN AND THIS ORDER HAS BECOME FINAL AND DEPARTMENT CANNOT TAKE A DIFFERENT STAND FOR ASST. YEAR 1994-95. 2. THE LD. AR FOR THE ASSESSEE HAD MADE ELABORATE S UBMISSIONS AND HAD POINTED OUT THAT THE ASSESSING OFFICER WHILE GIVING APPEAL EFFECT TO THE ORDER OF THE TRIBUNAL HAD REFUSED TO ALLOW DEDUCTIO N OF RS. 7.50 CR AND HENCE, THE PRESENT MISCELLANEOUS APPLICATION. 3. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE PERUSAL OF THE GROUNDS OF APPEAL RAISED BEFORE THE CIT(APPEALS) AN D ALSO FILED BEFORE THE TRIBUNAL DO NOT REFLECT ANY ISSUE RAISED BY THE ASSESSEE WITH REGARD TO DEDUCTION OF RS. 7.50 CR. IT WAS FURTHER POINTED O UT BY THE LD. DR FOR THE REVENUE THAT THE ASSESSEE HAS FAILED TO POINT OUT A NY DEFECT IN THE ORDER OF THE TRIBUNAL. 4. DURING THE COURSE OF HEARING, IT WAS PUT TO THE LD. AR FOR THE ASSESSEE REPEATEDLY AS TO POINT OUT WHAT IS THE DEF ECT IN THE ORDER OF THE TRIBUNAL AND HE FAILED TO POINT OUT ANY SUCH DEFECT . HIS REPEATED PLEAS 4 WERE WITH REGARD TO THE ASSESSING OFFICER NOT ALLOW ING THE DEDUCTION OF RS. 7.50 CR WHILE GIVING APPEAL EFFECTS TO THE ORDE R OF THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PERUSAL OF THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE DATED 27.09.2007 REFLECTS THAT THE FOLLOWING GROUNDS OF A PPEAL WERE RAISED BEFORE THE TRIBUNAL : 1. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN REJECTION OF BOOKS OF THE ASSE SSEE CORPORATION BY INVOKING PROVISIONS OF SECTION 145 AND BOTH ASSESSI NG OFFICER AND CIT(A) FAILED TO PROVE ANY DISCREPANCY IN AUDITED B OOKS OF ACCOUNT. 2. THAT THE LD. CIT(A) HAS WRONGLY UPHELD THE ORDER OF THE ASSESSING OFFICER PASSED U/S 144, IN FACT BOTH THE ASSESSING OFFICER AND CIT(A) HAVE FAILED TO APPRECIATE THE DIRECTIONS GIVEN BY T HE ITAT WHILE REMANDING THE CASE BACK TO THE FILE OF THE ASSESSIN G OFFICER FOR MAKING FRESH ASSESSMENT. 3. THAT THE LD. CIT(A) WRONGLY IGNORED THE REMAND REP ORT FILED BY THE ACIT AND ALSO THE REPLY OF THE APPELLANT TO THE REM AND REPORT. 4. THAT THE CIT(A) WAS NOT JUSTIFIED IN TREATING THE R OYALTY AMOUNTING TO RS. 7.50 CRORES AS TAX. THUS CONFIRMING THE ADDITION UN DER SECTION 43B WITHOUT EVEN CONFRONTING THE ISSUE TO THE ASSESSEE. 5. THAT THE ORDER OF THE CIT(A) AND ASSESSING OFFICER ARE AGAINST THE LAW AND FACTS OF THE CASE. 6. THE TRIBUNAL, AFTER ANALYZING THE ISSUE AT LENGT H VIDE PARA 4 HELD AS UNDER : THE CONTENTION OF THE RESPECTIVE REPRESENTATIVE AN D THE IMPUGNED ORDER ARE ANALYSED. IT IS SEEN THAT THE L D. FIRST APPELLATE AUTHORITY HAS MENTIONED THAT THE RO YALTY ISSUE IS COVERED BY THE DIRECT DECISION OF THE HON' BLE GUJRAT HIGH COURT IN THE CASE OF CIT VS GUJRAT STAT E FOREST DEVELOPMENT (2007) 288 ITR 28 (GUJRAT) AND T HE HON'BLE APEX COURT IN THE CASE OF GORE LAL DUBEY VS CIT (2001) 248 ITR 3 (S.C). WITHOUT GOING INTO MUC H DELIBERATION, IT IS SEEN THAT THE DECISION RELIED U PON BY THE LD. CIT(APPEALS), I.E. GORE LAL DUBE VS CIT (SU PRA), HAS BEEN OVERRULED BY THE FIVE JUDGES BENCH OF THE HON'BLE APEX COURT IN THE CASE OF WEST BENGAL & OTH ERS VS KESO RAM INDUSTRIES LTD. (266 ITR 721) WHEREIN A T PAGE 762, THEIR LORDSHIPS HAVE HELD THAT CESS ON RO YALTY IS A TAX BUT ROYALTY AS SUCH IS NOT A TAX. THEREFOR E, IT CAN BE SAID THAT THE DECISIONS RELIED UPON BY THE RESPECTIVE LD. REPRESENTATIVES AND ALSO BY THE LD. 5 CIT(APPEALS) HAVE BEEN DULY CONSIDERED BY THE TRIBU NAL IN THE AFORESAID CASE OF ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, WE ALLOW THIS GROUND OF THE ASSESSEE BY HOLDING THAT ROYALTY IS NOT A TAX. CONSEQUENTLY, WE REVERSE THE STAND OF THE LD . CIT(APPEALS) ON THIS ISSUE. 7. IT HAS BEEN HELD BY THE TRIBUNAL VIDE ORDER DATE D 27.09.2007 THAT ROYALITY IS NOT TAX. THE LD. AR FOR THE ASSESSEE H AS FAILED TO POINT OUT ANY ERROR IN THE ORDER OF THE TRIBUNAL AND HAS REPEATED LY SAID THAT THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSES SEE. UNDER THE PROVISIONS OF SECTION 254(2) OF THE INCOME TAX ACT, LIMITED MA NDATE IS AVAILABLE TO THE TRIBUNAL TO RECTIFY ANY ERROR WHICH HAVE CREPT IN T HE ORDER OF THE TRIBUNAL AND IN THE ABSENCE OF ANY ERROR BEING POINTED OUT BY TH E LD. AR FOR THE ASSESSEE, WE FIND NO MERIT IN THE PRESENT MISCELLANEOUS APPLI CATION MOVED BY THE APPLICANT. THE ACTION OF THE ASSESSING OFFICER WHI LE GIVING APPEAL EFFECT TO THE ORDER OF THE TRIBUNAL CORRECTLY OR OTHERWISE CA NNOT BE AGITATED BY WAY OF THE PRESENT MISCELLANEOUS APPLICATION AND THE SAME ARE MISPLACED AND THE SAID PLEA OF THE ASSESSEE IS THUS, DISMISSED. THE ASSESSEE IS AT LIBERTY TO APPROACH THE CORRECT FORUM FOR REDRESSAL OF HIS GRI EVANCE, IF ANY. 7. IN THE RESULT, MISCELLANEOUS APPLICATION IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH JANUARY, 2014. SD/- SD/ - ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17 TH JANUARY, 2014 POONAM COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH