STAR CHEMICALS ( BAM) P. LTD, V. DCIT CIR 3(3),

MA 667/MUM/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 5381 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 11-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Keywords: Depreciation; Rectification of order; Opportunity of being heard; Cost of acquisition; Revised return
• Section: 10; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 (ASSESSMENT YEAR: 2003-04) STAR CHEMICALS (BOM) P LTD, 55/56, JOLLI MAKER CHAMBERS NO.2 NARIMAN POINT, MUMBAI-400021 PAN:AAACS7485E .APPLICANT V/S DCIT CIR 3(3), ROOM NO.609 6 TH FL, AAYAKAR BHAVAN M K ROAD, MUMBAI-400020 RESPONDENT ASSESSEE BY : SHRI DEEPAK TRALSHAWA LA REVENUE BY : SHRI SUMEET KUMAR O R D E R PER VIJAY PAL RAO,JM THIS MISCELLANEOUS APPLICATION BY THE ASSESSEE I S DIRECTED AGAINST THE ORDER DATED 25.06.2010 WHEREBY THE ASSESSEE HAS SUBMITTED THAT WHILE DECIDING THE APP EAL OF THE REVENUE IN ITA NO.4655/MUM/2006 ON THE ISSUE OF C APITAL GAIN ON TRANSFER OF THE ASSETS, THIS TRIBUNAL HAS ERRED IN LAW IN AS MUCH AS NOT APPRECIATED THAT THE ASSESSEE M UST FILE HIS RETURN OF INCOME OVER THE YEARS CONSISTENTLY IN RESPECT OF HIS LEGAL CONTENTIONS AND CANNOT CHANGE OVER TO THE OPINION MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 2 AND VIEWS OF THE AO IN THE LATER YEARS SO LONG AS H IS APPEALS ARE PENDING FOR PRIOR YEARS ON THE SAME ISSUES. 2. THE LEARNED AR OF THE ASSESSEE HAS REFERRED THE FINDINGS OF THIS TRIBUNAL IN PARAGRAPHS 17 OF THE IMPUGNED ORDER AND SUBMITTED THAT THERE IS A MISTAKE IN TAK ING THE VIEW BY THIS TRIBUNAL THAT THE COMPUTATION OF CAPITAL GA IN ON THE BASIS OF COST OF ACQUISITION OF ASSETS WHEN THE TRA NSACTIONS ITSELF WAS TREATED BY THE AO AS FINANCE TRANSACTI ON IN THE ASSESSMENT YEARS 1995-96 AND 1996-97 AND THIS ISSUE WAS NOT AT ALL INVOLVED IN THE ASSESSMENT YEAR UNDER CONSID ERATION THEN THE QUESTION OF COST OF ACQUISITION OR WDV DO ES NOT ARISE. 3. THE LEARNED AR HAS SUBMITTED THAT THE ASSESSEE HAS OFFERED THE CAPITAL GAIN BY CLAIMING THE ASSETS T RANSFER AS DEPRECIABLE ASSETS AND THEREFORE, THE CAPITAL GAIN ASSESSABLE UNDER SECTION 50 IN RESPECT OF DEPRECIABLE ASSETS IS TO BE COMPUTED WITH REFERENCE TO THE WDV AND NOT BY TAK ING INTO CONSIDERATION THE COST OF ACQUISITION. HE HAS RELIE D UPON THE DECISION OF THE HON. BOMBAY HIGH COURT IN THE CASE OF BALKUMUND ACHARYA V DCIT REPORTED IN 310 ITR 310 (B OM) AND SUBMITTED THAT IF THE ASSESSEE HAS ERRONEOUSLY OFFERED THE CAPITAL GAINS TO TAX AND THE SAME ARE ACCEPTED BY THE AO IN SUCH CASE, THE HON. JURISDICTIONAL HIGH COURT HA S HELD THAT MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 3 THE APPEAL FILED AGAINST THE SAID ORDER OF THE AO IS MAINTAINABLE. HE CONTENDED THAT THE AUTHORITIES U NDER THE ACT ARE REQUIRED TO COLLECT ONLY THE LEGITIMATE DUE S AND NOT PERMITTED TO LEVY THE TAX WHICH IS AGAINST THE LAW . THE LEARNED AR HAS FURTHER SUBMITTED THAT THERE IS AN E RROR IN OBSERVATION OF THIS TRIBUNAL IN RESPECT OF THE AD DITIONAL ISSUE RAISED BY THE ASSESSEE BEFORE THE CIT(A), THOUGH T HIS TRIBUNAL HAS OBSERVED THAT THIS ISSUE NEEDS NO CONS IDERATION BECAUSE RECEIPT OF THE AMOUNT IS NOT DISPUTED BY T HE ASSESSEE AND ONLY BECAUSE THE ASESEEE HAS ADMITTED THE AMOUNT UNDER THE HEAD LEASE RENTAL AND THE REVENUE HAS TREATED IT AS TRANSACTION AS FINANCE CANNOT CHANGE THE CHARACTERISTICS OF THE RECEIPT FROM INCOME TO BE NO N-INCOME. THE LEARNED AR HAS SUBMITTED THAT THIS TRIBUNAL HA S COMMITTED THE ERROR BY NOT ACCEPTING THE CAPITAL C OMPONENT IN THE SHAPE OF REFUND OF PRINCIPLE IF ANY DEPENDS UPO N THE OUT COME OF THE DISPUTE FOR THE ASSESSMENT YEARS 1995- 96- AND 1996-97. HE HAS FURTHER POINTED OUT THAT THIS T RIBUNAL HAS ALSO AGAIN COMMITTED A MISTAKE BY NOT APPRECIATING THE FINDINGS OF THE CIT(A) WHEREIN IT WAS HELD THAT IF THE CONTENTIONS OF THE ASSESSEE ARE ACCEPTED AT ANY STA GE BY THE APPELLATE AUTHORITY, THEN THE CAPITAL GAIN IN THE C URRENT YEAR WOULD BE ON THE BASIS OF OPENING WDV. MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 4 4. THE ASSESSEE HAS ALSO ALLEGED THE MISTAKE IN TH E ORDER OF THIS TRIBUNAL IN RESPECT OF THE ITA NO.1593/MUM /2009 IN THIS MISCELLANEOUS APPLICATION. IT HAS BEEN STATED THAT IN PARAGRAPH 22 OF THE IMPUGNED ORDER, THIS TRIBUNAL H AS DECIDED THE ISSUE OF SCOPE OF RECTIFICATION OF THE MISTAKE U/S 154 BY HOLDING THAT THIS ISSUE INVOLVED COMPLEX POINTS OF FACTS AS WELL AS LAW AND THE SAME CANNOT BE DECIDED U/S 154. WHEREAS THE REVENUE HAS RAISED THE GROUND ON THE BA SIS OF TIME BARRED RECTIFICATION APPLICATION FILED BY THE ASSESSEE. THE LEARNED AR HAS SUBMITTED THAT THIS TRIBUNAL HAS NOT DECIDED THE ISSUE IN RESPECT OF RECTIFICATION OF AS SESSMENT U/S 154 AS PER THE GROUND RAISED BY THE REVENUE. 5. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT THE MISTAKE REFERRED BY THE ASSESSEE IN THE APPLICA TION SOUGHT TO BE RECTIFIED ARE BEYOND THE SCOPE OF SECTION 254 (2) OF THE ACT, AND THE CONTENTION RAISED BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION HAVE ALREADY BEEN CONSID ERED BY THIS TRIBUNAL WHILE PASSING THE IMPUGNED ORDER. THE REFORE, THE MA FILED BY THE ASSESSEE DOES NOT POINT OUT ANY MIS TAKE OR ERROR APPARENT ON THE FACE OF RECORD BUT RAISED THE CONTENTIONS WHICH WERE ALREADY CONSIDERED BY THIS TRIBUNAL. HE HAS RELIED UPON THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF RAMESH ELECTRIC AND TRADING CO., REP ORTED IN 203 ITR 497 (BOM). . MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 5 6. AS REGARDS, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BEFORE THE CIT(A), THE LEARNED DR HAS SUBMITTED TH AT IN ABSENCE OF REVISED RETURN, THE ADDITIONAL GROUND CA NNOT BE ENTERTAINED BY THE AO OR BY THE LEARNED CIT(A). A S REGARDS, THE ISSUE IN ITA NO.1593/MUM/2009, THE SCOPE OF S ECTION 154 OF THE ACT, THE LEARNED DR HAS SUBMITTED THAT THE REVENUE HAS CHALLENGED THE ORDER OF THE CIT(A) AND THIS TRIBUNA L HAS DECIDED THE ISSUE ON THE BASIS OF FACTS AVAILABLE O N RECORD AND IF THE CONTENTION OF THE REVENUE HAS NOT BEEN CO NSIDERED BY THIS TRIBUNAL, THE ASSESSEE CANNOT RAISED THE IS SUE IN THE MISCELLANEOUS APPLICATION. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. AT THE OUTSET, WE NOTE THAT THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATION RUNNING INTO 21 PAGES FOR POINTING OUT THE ERROR AND MISTAKE IN THE IMPUGNED ORDER. FROM THE PERUSAL OF THE MISCELLANEOUS APPLICATION AS WELL A S THE ARGUMENTS ADVANCED BY THE LEARNED AUTHORIZED REPRES ENTATIVE, IT IS APPARENT THAT THE ASSESSEE HAS NOT BROUGHT OUT ANY ERROR OR MISTAKE APPARENT ON THE FACE OF RECORD IN RESPECT OF THE IMPUGNED ORDER BUT ALL THE CONTENTIONS RAISED B Y THE ASSESSEE IN THE MISCELLANEOUS APPLICATION ARE ON T HE MERITS OF THE ISSUE DECIDED BY THIS TRIBUNAL. THIS TRIBUN AL WHILE DECIDING THESE APPEALS OF THE REVENUE HAVE ALREADY MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 6 CONSIDERED ALL THE CONTENTIONS RAISED BY THE ASSESS EE IN THIS MISCELLANEOUS APPLICATION AND THEREFORE BY WAY OF THIS MISCELLANEOUS APPLICATION, THE ASSESSEE HAS REITER ATED THE SAME. 8. AS REGARDS THE ISSUE OF CAPITAL GAIN, THIS TRI BUNAL HAS DECIDED THIS ISSUE IN PARAGRAPHS 17, AFTER CONSIDER ING ALL THE CONTENTIONS OF THE PARTIES AND BY GIVING ITS REASON ING. THEREFORE, EVEN IF, THE FINDINGS OF THIS TRIBUNAL IS NOT FOUND TO BE CORRECT IN LAW OR ON FACTS, THE SAME CANNOT BE TREATED AS ERROR OR MISTAKE APPARENT ON RECORD TO BE RECTIFIED U/S 254(2) OF THE ACT. THE RELEVANT PARAGRAPH 17 IS REPRODUC ED AS UNDER: 17. WE HAVE HEARD THE LEARNED DR AS WELL AS THE LEARNED AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT RECORD. AS REGARDS THE COMPUTATION OF CAPI TAL GAIN IS CONCERNED, WE NOTE THAT THE ASSESSEE ITSELF HAS WORKED OUT AND SHOWN THE CAPITAL GAIN FOR SALE OF THESE ASSETS. EVEN THE LONG TERM CAPITAL LOSS AND SHORT TERM CAPITAL LOSS WERE ALSO ADJUSTED BEING SE T OFF OF LOSSES AGAINST THE SHORT TERM CAPITAL GAIN A ND LONG TERM CAPITAL GAIN. THE ASSESSEE HAS NOT FILE D REVISED RETURN FOR COMPUTATION OF CAPITAL GAIN ON T HE BASIS OF COST OF ACQUISITION OF THE ASSETS. THEREF ORE, THE AO HAD NO OCCASION TO WORK OUT THE CAPITAL GAI N ON THE BASIS OF COST OF ACQUISITION OF ASSETS. TH E AO ACCEPTED THE CAPITAL GAIN WORKED OUT BY THE ASSESSEE. AND THUS THIS ISSUE DOES NOT EMANATE FROM THE ASSESSMENT ORDER. SIMILARLY, THE ADDITION AL ISSUE RAISED BY THE ASSESSEE DOES NOT ARISE FROM TH E ASSESSMENT ORDER BECAUSE NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME OR IN REVIS ED RETURN OF INCOME. THE ASSESSEE HAS CLAIMED BEFORE THE CIT(A) THAT WHEN THE CLAIM OF DEPRECIATION OF ASSETS HAS NOT BEEN ALLOWED BY TREATING THE TRANSACTIONS AS FINANCE TRANSACTION THEN GROSS LEAS E RENTAL CANNOT BE TREATED AS INCOME IN THE HANDS OF THE ASSESSEE. WE ARE OF THE VIEW THAT EVEN IF THE MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 7 TRANSACTION WAS TREATED AS FINANCE TRANSACTIONS, TH E NOMENCLATURE OF THE INCOME OFFERED BY THE ASSESSE E DOES NOT AFFECT THE CHARGEABILITY OF TAX WHEN THE UNDISPUTED FACTS ARE THAT THE ASSESSEE WAS RECEIVIN G THE CHARGES FROM THE OTHER PARTY WHICH MAY BE IN TH E NATURE OF LEASE RENTAL OR FINANCE CHARGES. THE QUESTION OF CAPITAL COMPONENT IN THE SHAPE OF REFU ND OF PRINCIPLE IF ANY DEPENDS UPON THE OUT COME OF T HE DISPUTE FOR THE ASSESSMENT YEARS 1995-96 AND 1996- 97. THEREFORE, IN THE ABSENCE OF SETTLEMENT OF THE ISSUE OF NATURE OF TRANSACTION NO HYPOTHETICAL ISSU E CAN BE DECIDED. THUS, THE CIT(A) HAS ADJUDICATED BOTH THE ISSUES AT THE APPELLATE STAGE WITHOUT GIV ING ANY OPPORTUNITY OF BEING HEARD TO THE AO WHICH IS A CLEAR VIOLATION OF RULE 46A OF THE INCOME TAX RULE S, 1962. AS FAR AS THE COMPUTATION OF CAPITAL GAIN ON THE BASIS OF COST OF ACQUISITION OF ASSETS IS CONCERNED WHEN THE TRANSACTION ITSELF WAS TREATED BY THE AO AS FINANCE TRANSACTION IN THE ASSESSMENT YEARS 1995-96 AND 1996-97 AND THIS ISSUE WAS NOT AT ALL INVOLVED IN THE ASSESSMENT YEAR UNDER CONSIDERATION THEN THE QUESTION OF COST OF ACQUISITION OR WDV DOES NOT ARISE. SINCE, THE ASSESSEE ITSELF HAS DISCLOSED AN D ADMITTED THE CAPITAL GAIN THEN IN OUR VIEW, THE CIT (A) HAS EXCEEDED HIS JURISDICTION TO CONSIDER AND ADJUDICATE UPON THIS ISSUE IN FAVOUR OF THE ASSESSE E. SIMILARLY, THE ADDITIONAL ISSUE RAISED BY THE ASSES SEE BEFORE THE CIT(A) ALSO NEEDS NO CONSIDERATION BECAUSE THE RECEIPT OF AMOUNT IS NOT DISPUTED BY TH E ASSESSEE. ONLY BECAUSE THE ASSESSEE HAS ADMITTED THE AMOUNT UNDER THE HEAD LEASE RENTAL AND THE REVENUE HAS TREATED THE TRANSACTION AS FINANCE CANN OT CHANGE THE CHARACTER OF RECEIPT FROM INCOME TO NON INCOME. EVEN OTHERWISE, THIS ISSUE DEPENDS OUT COME OF THE ISSUE OF NATURE OF TRANSACTION INVOLVED IN T HE ASSESSMENT YEARS 1995-96 AND 1996-97. THEREFORE, THE CIT(A) HAS TAKEN AN INCORRECT VIEW IN DIRECTIN G THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) QUA THIS ISSUE . 9. BY WAY OF THIS MISCELLANEOUS APPLICATION, THE ASSESSEE IS SEEKING REVIEW OF THE ORDER PASSED BY THIS TRIB UNAL AND THIS TRIBUNAL HAS NO INHERENT POWER AND JURISDICTION OF REVIEW OF ITS ORDER UNDER THE GARB OF RECTIFICATION OF MISTAKE. W HEN THE MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 8 ORDER IS PASSED ON MERITS, IT CAN NOT BE AMENDED OR RECALLED BY GIVING DIFFERENT REASONINGS. IF THE ASSESSEE IS REALLY AGGRIEVED BY THE ORDER OF THIS TRIBUNAL, THE EFFIC ACIOUS AND PROPER REMEDY IS TO FILE AN APPEAL BEFORE THE HIGH ER COURT OF LAW. THEREFORE, WE DO NOT FIND ANY SUBSTANCE OR ME RITS IN THE MISCELLANEOUS APPLICATION OF THE ASSESSEE FOR SEEK ING RE- ADJUDICATION OF THE ISSUE. IT APPEARS THAT THE MIS CELLANEOUS APPLICATION FILED BY THE ASSESSEE IS A GROSS MISUSE AND ABUSE OF PROCESS OF LAW WITHOUT POINTING OUT ANY APPARENT , OBVIOUS AND PATENT ERROR MANIFEST ON THE FACE OF RECORD. 10. AS REGARDS, THE MISCELLANEOUS APPLICATION IN IT A NO.1593/MUM2009 FOR THE MISTAKE IN THE ORDER ABOUT THE SCOPE OF SECTION 154 FOR RECTIFICATION OF THE ASSES SMENT IS CONCERNED, AT THE THRESHOLD, IT IS PERTINENT TO ME NTION THAT WHEN THIS PART OF THE IMPUGNED ORDER RELATES TO A S EPARATE APPEAL, THE ASSESSEE CANNOT MIX-UP TO TWO APPEALS I N ONE MISCELLANEOUS APPLICATION. MOREOVER, THE AO HAS D ECIDED THE ISSUE ON THE GROUND THAT THIS ISSUE SEEMS TO BE DE BATABLE AND ALREADY ADJUDICATED IN APPEAL AND HENCE ATTAI NED THE FINALITY. THE AO HAS HELD THAT THERE IS NO MISTAK E APPARENT ON THE FACE OF RECORD AND REQUIRES NO RECTIFICATION AS PER APPLICATION FILED BY THE ASSESSEE AND THE SAME WAS REJECTED. THE CIT(A) HAS DIRECTED THE AO TO RECTIFY THE ASSE SSMENT AGAINST WHICH THE REVENUE HAS FILED THE APPEAL. THI S TRIBUNAL MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 9 WHILE DECIDING THE ISSUE HAS COME TO THE CONCLUSIO N THAT THE ISSUE RAISED IN THE RECTIFICATION APPLICATION IS HI GHLY DEBATABLE AND CANNOT BE RECTIFIED U/S 154 AND THEREFORE, IT WAS HELD THAT THE CIT(A)S ORDER IS NOT SUSTAINABLE AND THE SAME WERE SET ASIDE. ONCE, THE ISSUE HAS BEEN DECIDED BY THIS TR IBUNAL BY HOLDING THAT THE ISSUE CANNOT BE DECIDED U/S 154 THEN IT WAS NOT NECESSARY TO DEAL WITH THE REVENUES OBJECTION OF LIMITATION REGARDING THE APPLICATION FOR RECTIFICATION. SINCE , NEITHER THE AO NOR THE CIT(A) HAS DEALT WITH THIS ISSUE ON THE GROUND OF TIME BARRED OF THE RECTIFICATION APPLICATION, THERE FORE, THE ISSUE DOES NOT EMANATES FROM THE IMPUGNED ORDER OF CIT(A) . MOREOVER, THIS CONTENTION WAS RAISED BY THE REVENU E AND IF THIS TRIBUNAL HAS NOT DECIDED THE SAME, THE ASSESSE E CANNOT ALLEGE ANY GRIEVANCE BECAUSE IF AT ALL ANY GRIEVAN CE OF NOT CONSIDERING THE PLEA OF LIMITATION, IN THAT CASE, T HE SAME SHOULD HAVE BEEN RAISED BY THE REVENUE AND NOT BY T HE ASSESSEE. 11. IN VIEW OF THE ABOVE DISCUSSIONS, WE FIND THAT THE ASSESSEE HAS NOT BROUGHT OUT ANY MATERIAL OR PLEA I N THE MISCELLANEOUS APPLICATION OR AT THE TIME OF ARGUME NT THAT ANY MISTAKE WHICH IS APPARENT AND OBVIOUS ON THE RECORD WHICH CAN BE RECTIFIED U/S 254(2). BY WAY OF THIS MA, T HE ASSESSEE IS SEEKING THE REVIEW OF THE ORDER OF THIS TRIBUNA L, WHICH IS NOT PERMISSIBLE IN LAW AND OUTSIDE THE PURVIEW OF T HE MA NO.667/MUM/2010 IN ITA NO. 4655/MUM/2006 AND ITA NO. 1593/MUM/2009 10 PROVISIONS OF SECTION 254(2). ACCORDINGLY, THE MISC ELLANEOUS APPLICATION STANDS DISMISSED. 12.. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 11TH FEB 20 11 SD SD ( P.M.JAGTAP ) ( VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11 TH FEB 2011 SRL:2211 COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI