Eveready Industries India Ltd., Kolkata V. DCIT, Circle - 11(1), Kolkata, Kolkata

MA 75/KOL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4222 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 26-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER
• Assessee Lawyers: D S DAMLE
• Keywords: Competent authority
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA [BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT & SHRI S.S. VISWANETHRA RAVI, JM] M.A. NO. 75/KOL/2019 (ARISING OUT OF ITA NO. 655/KOL/2018) ASSESSMENT YEAR: 2012-13 EVEREADY INDUSTRIES INDIA LIMITED..............................................................................APPELLANT 1, MIDDLETON STREET, KOLKATA 700 071. [PAN: AAACE 5778 N] DCIT, CIRCLE 11(1) KOLKATA.....................................RESPONDENT P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. APPEARANCES BY: SHRI D.S. DAMLE, FCA APPEARING ON BEHALF OF THE ASSESSEE. SHRI SHANKAR HALDER, JCIT, SR. DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : APRIL 26, 2019 DATE OF PRONOUNCING THE ORDER : MAY 10, 2019 ORDER PER P.M. JAGTAP, VICE-PRESIDENT BY THIS MISCELLANEOUS APPLICATION, THE ASSESSEE IS SEEKING RECTIFICATION OF THE MISTAKES ALLEGED TO HAVE CREPT IN THE ORDER OF THE TRIBUNAL DATED FEBRUARY 13, 2019 PASSED IN ITA NO. 655/KOL/2018. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 14 WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE VIDE PARAGRAPH NO. 22 TO 25 OF ITS ORDER DATED FEBRUARY 13, 2019. HE SUBMITTED THAT WHILE RENDERING THIS DECISION, THE TRIBUNAL HAS NOT CONSIDERED THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 5. HE CONTENDED THAT ALTHOUGH THE SAID GROUND WAS RAISED BY THE ASSESSEE SEPARATELY AND IT WAS DISMISSED BY THE TRIBUNAL, THE SAME PROJECTING A COMMON GRIEVANCE OF THE ASSESSEE WAS APPLICABLE TO OTHER ISSUES ALSO INCLUDING THE ISSUE RAISED IN GROUND NO. 14. HE CONTENDED THAT A SPECIFIC ERROR ALLEGEDLY POINTED OUT BY THE PR. CIT AS 2 MA NO. 75/KOL/2019 ASSESSMENT YEAR: 2012-13 EVEREADY INDUSTRIES INDIA LTD. ERROR NO. (VII) IN THE NOTICE ISSUED U/S 263 WAS THAT TAR AT CLAUSE 15(A) INDICATES THAT U/S 35(2AB) OF THE ACT, RS. 1.68 CRORES WAS CLAIMED IN THE P&L ACCOUNT. SAME CLAIM WAS MADE AGAIN IN THE COMPUTATION OF INCOME AND PROFIT WAS REDUCED. HE SUBMITTED THAT THE ASSESSEE IN REPLY FILED IN RESPONSE TO THE NOTICES ISSUED U/S 263 HAD POINTED OUT THAT THERE WAS NO SUCH DOUBLE CLAIM MADE U/S 35(2AB) AND WITHOUT POINTING OUT ANY INFIRMITY IN EXPLANATION OFFERED BY THE ASSESSEE IN ORDER TO PROVE THAT NO ERROR WAS COMMITTED BY THE AO ON THIS ISSUE AS POINTED OUT IN THE NOTICE U/S 263, THE LD. CIT(A) PROCEEDED TO TREAT THE ORDER OF THE AO TO BE ERRONEOUS ON THIS ISSUE ON AN ALTOGETHER NEW BASIS THAT CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 35(2AB) WAS ALLOWED BY THE AO WITHOUT MAKING PROPER AND ADEQUATE ENQUIRY. HE CONTENDED THAT SINCE THIS BASIS ADOPTED BY THE LD. PRINCIPAL CIT IN THE ORDER PASSED U/S 263 WAS ALTOGETHER DIFFERENT FROM THE ERROR ALLEGEDLY POINTED OUT BY HIM IN THE NOTICE U/S 263 IT WAS CHALLENGED BY THE ASSESSEE BY RAISING SPECIFIC GROUND AS GROUND NO. 5. HE CONTENDED THAT THE TRIBUNAL WHILE DECIDING THE ISSUE INVOLVED IN GROUND NO. 14, HOWEVER, DID NOT CONSIDER THE GRIEVANCE PROJECTED BY THE ASSESSEE IN GROUND NO. 5 WHICH WAS APPLICABLE EVEN TO THE ISSUE RAISED IN GROUND NO. 14 AND SUCH NON-CONSIDERATION HAS GIVEN RISE TO A MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL. HE ALSO POINTED OUT THAT THERE IS ANOTHER MISTAKE IN THE ORDER OF THE TRIBUNAL IN REPRODUCING THE PORTION OF THE IMPUGNED ORDER OF THE LD. CIT IN PARAGRAPH NO. 24 OF ITS ORDER WHICH IS NOT RELEVANT TO THE ISSUE WHICH WAS BEING DECIDED. 3. THE LEARNED DR, ON THE OTHER HAND, CONTENDED THAT THERE IS NO MISTAKE MUCH LESS A MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE 3 MA NO. 75/KOL/2019 ASSESSMENT YEAR: 2012-13 EVEREADY INDUSTRIES INDIA LTD. TRIBUNAL AS ALLEGED BY THE ASSESSEE IN THE PRESENT MISCELLANEOUS APPLICATION. HE CONTENDED THAT A SPECIFIC VIEW WAS TAKEN BY THE TRIBUNAL ON THE ISSUE INVOLVED IN GROUND NO. 14 OF THE ASSESSEES APPEAL AND THE SAME CANNOT BE REVIEWED U/S 254(2). HE ALSO CONTENDED THAT IF AT ALL THE TRIBUNAL FINDS THAT THERE IS A MISTAKE IN ITS ORDER AS POINTED OUT BY THE ASSESSEE IN THE PRESENT MISCELLANEOUS APPLICATION, THE ORDER OF THE TRIBUNAL ON THE RELEVANT ISSUE MAY BE RECALLED SO THAT THE MATTER CAN BE RE-CONSIDERED AFRESH. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE FOLLOWING GROUND WAS RAISED BY THE ASSESSEE AS GROUND NO. 14 IN ITS APPEAL: 14. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT WAS GROSSLY UNJUSTIFIED IN CONSIDERING THE ORDER TO BE ERRONEOUS FOR ALLOWING DEDUCTION U/S 35(2AB) EVEN THOUGH THE APPELLANT HAD FURNISHED BEFORE THE AO CERTIFICATE IN FORM-3CL ISSUED BY THE D.S.I.R. BEING THE COMPETENT AUTHORITY ENTRUSTED BY THE LEGISLATURE TO CERTIFY THE ALLOWABILITY OF EXPENSES FOR THE PURPOSE OF GRANT OF DEDUCTION U/S 35(2AB) OF THE ACT. 5. IT IS ALSO OBSERVED THAT IN THE ORDER PASSED U/S 263, THE ORDER OF THE AO PASSED U/S 143(3) READ WITH SECTION 144C(3) OF THE ACT WAS HELD TO BE ERRONEOUS BY THE LD. CIT ON THE ISSUE OF ASSESSEES CLAIM FOR DEDUCTION 35(2AB) ON THE GROUND THAT NO ENQUIRY WAS MADE BY THE AO TO VERIFY THE GENUINENESS OF THE CLAIM OF THE ASSESSEE. WHILE SUPPORTING THE ASSESSEES CASE ON THE ISSUE RAISED IN GROUND NO. 14, THE LEARNED COUNSEL FOR THE ASSESSEE HAD MADE AN ATTEMPT TO SHOW THAT PROPER AND SUFFICIENT ENQUIRY WAS MADE BY THE AO BEFORE ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 35(2AB) AND SINCE THE TRIBUNAL WAS NOT SATISFIED WITH THE CASE OF THE ASSESSEE AS MADE OUT BY ITS COUNSEL, GROUND NO. 14 WAS DISMISSED AND THE ORDER 4 MA NO. 75/KOL/2019 ASSESSMENT YEAR: 2012-13 EVEREADY INDUSTRIES INDIA LTD. OF THE LD. CIT ON THE ISSUE WAS UPHELD. HOWEVER, AS RIGHTLY POINTED OUT BY THE ASSESSEE IN THE PRESENT MISCELLANEOUS APPLICATION, THE ERROR ON THIS ISSUE AS POINTED OUT BY THE LD. CIT IN THE NOTICE U/S 263 WAS TAR AT CLAUSE 15(A) INDICATES THAT U/S 35(2AB) OF THE ACT, RS. 1.68 CRORES WAS CLAIMED IN THE PROFIT AND LOSS ACCOUNT. SAME CLAIM WAS MADE AGAIN IN THE COMPUTATION OF INCOME AND PROFIT WAS REDUCED. AS EXPLAINED ON BEHALF OF THE ASSESSEE BEFORE THE LD. PRINCIPAL CIT DURING THE COURSE PROCEEDINGS U/S 263, THERE WAS HOWEVER NO SUCH DOUBLE DEDUCTION MADE BY THE ASSESSEE IN AS MUCH AS THE ASSESSEE HAD ADDED BACK THE AMOUNT DEBITED TO THE PROFIT AND LOSS ACCOUNT TO THE NET PROFIT AND THEREAFTER, HAD CLAIMED WEIGHTED DEDUCTION AS PERMITTED U/S 35(2AB) OF THE ACT. THIS EXPLANATION OFFERED BY THE ASSESSEE WAS SUFFICIENT TO PROVE THAT THERE WAS NO ERROR COMMITTED BY THE AO AS ALLEGED BY THE LD. PRINCIPAL CIT IN THE NOTICE ISSUED U/S 263.THE LD. PRINCIPAL CIT HOWEVER DID NOT POINT OUT ANY SPECIFIC INFIRMITY IN THIS EXPLANATION OFFERED BY THE ASSESSEE AND PROCEEDED TO HOLD THE ORDER OF THE AO ERRONEOUS ON AN ALTOGETHER NEW AND DIFFERENT BASIS THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 35(2AB) WAS ALLOWED BY THE AO WITHOUT MAKING PROPER AND SUFFICIENT ENQUIRY TO VERIFY THE GENUINENESS OF THE SAID CLAIM. 6. AS RIGHTLY SUBMITTED BY THE ASSESSEE IN THE PRESENT MISCELLANEOUS APPLICATION AND FURTHER REITERATED BY ITS COUNSEL AT TIME OF HEARING, THE LD. CIT(A) WAS NOT JUSTIFIED IN REVISING THE ORDER OF THE AO ON THIS ISSUE BY HOLDING THE SAME TO BE ERRONEOUS ON A DIFFERENT AND NEW GROUND FOR WHICH NO NOTICE WAS GIVEN BY HIM TO THE ASSESSEE. IT IS OBSERVED THAT THIS POINT WAS SPECIFICALLY RAISED BY THE ASSESSEE IN GROUND NO. 5 OF ITS APPEAL AND SINCE THE SAME WAS RAISED 5 MA NO. 75/KOL/2019 ASSESSMENT YEAR: 2012-13 EVEREADY INDUSTRIES INDIA LTD. BY WAY OF A SEPARATE GROUND, THE SAME REMAINED TO BE CONSIDERED BY THE TRIBUNAL. WE, THEREFORE, FIND THAT THERE IS A MISTAKE IN THE ORDER OF THE TRIBUNAL AS POINTED OUT BY THE ASSESSEE IN THE PRESENT MISCELLANEOUS APPLICATION AND THE SAME BEING APPARENT FROM RECORD IS REQUIRED TO BE RECTIFIED U/S 254(2). 7. AS REGARDS THE CONTENTION RAISED BY THE LEARNED DR THAT THE ORDER OF THE TRIBUNAL MAY BE RECALLED FOR RECONSIDERATION OF THE ISSUE IF THE MISTAKE IS FOUND TO BE THERE, WE ARE OF THE VIEW THAT THE CONCLUSION THAT FOLLOWS ON THE RECTIFICATION OF THE MISTAKE AS POINTED OUT BY THE ASSESSEE IS CLEAR AND SIMPLE AND NO OTHER PURPOSE WILL BE SERVED BY RECALLING THE ORDER THAN TO ARRIVE AT SUCH CONCLUSION. WE, ACCORDINGLY, RECTIFY THE SAID MISTAKE AS WELL AS THE OTHER MISTAKE POINTED OUT BY THE ASSESSEE BY DELETING THE EXISTING PARAGRAPH NO. 24 AND 25 OF THE ORDER OF THE TRIBUNAL AND REPLACING THE SAME WITH THE FOLLOWING: 24.THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE FOLLOWING REASONS GIVEN BY THE LD. PRINCIPAL CIT IN HIS IMPUGNED ORDER WHILE NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE ON THIS ISSUE AND HOLDING THE ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS: AS REGARDS ISSUED POINTED OUT IN PARA 2(VII) SUPRA IT IS OBSERVED THAT EXPLANATION GIVEN BY THE ASSESSEE IN RESPECT OF SCIENTIFIC RESEARCH APPEARS TO BE ONLY PARTIALLY CORRECT. ON EXAMINATION OF DETAILS IN RESPECT OF EXPENDITURE ON ACCOUNT OF SCIENTIFIC RESEARCH IT IS SEEN THAT THE A.O. DURING ASSESSMENT PROCEEDING HAS NOT SPECIFICALLY ENQUIRED ABOUT THE DETAILS OF RESEARCH & DEVELOPMENT FACILITY ON WHICH THE CLAIM U/S 35(2AB) OF THE INCOME TAX ACT, 1961 HAS BEEN MADE BY THE ASSESSEE AND ALLOWED BY THE A.O. THE A.O. WAS REQUIRED TO CALL FOR COPY OF APPROVAL IN FORM NO. 3CM. IN THIS REGARD, IT IS RELEVANT TO OBSERVE THAT THOUGH THE ASSESSEE HAS FURNISHED COPY OF FORM NO. 3CL WHICH CONVEYS APPROVAL OF DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH BUT THE A.O. HAS NOT EXAMINED THE ISSUE BY CALLING FOR FORM NO. 3CM WHICH SPECIFICALLY CONTAINS THE LOCATION OF SUCH R&D FACILITY. FURTHER, NO ENQUIRY HAS BEEN MADE TO VERIFY THE 6 MA NO. 75/KOL/2019 ASSESSMENT YEAR: 2012-13 EVEREADY INDUSTRIES INDIA LTD. GENUINENESS OF THE CLAIM OF THE ASSESSEE MAKING THE ORDER ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 25. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ERROR AS POINTED OUT BY THE LD. PRINCIPAL CIT ON THIS ISSUE IN NOTICE ISSUED U/S 263 WAS THAT THE TAR AS PER CLAUSE 15(A) INDICATES THAT U/S 35(2AB) OF THE ACT RS. 1.68 CRORES WAS CLAIMED IN THE PROFIT AND LOSS AND SAME CLAIM WAS MADE AGAIN IN THE COMPUTATION OF INCOME AND PROFIT WAS REDUCED. IT IS OBSERVED THAT THE ASSESSEE IN REPLY TO THE NOTICE ISSUED U/S 263 POINTED OUT THAT THE AMOUNT DEBITED TO THE PROFIT AND LOSS ACCOUNT WAS FIRST ADDED BACK TO THE NET PROFIT AND THEREAFTER, WEIGHTED DEDUCTION @ 200% OF THE EXPENDITURE BEING 1.68 CRORES WAS CLAIMED AS PERMITTED U/S 35(2AB) OF THE ACT. THIS EXPLANATION FURNISHED BY THE ASSESSEE WAS SUFFICIENT TO SHOW THAT THERE WAS NO ERROR IN THE ORDER OF THE AO ON THIS ISSUE AS POINTED OUT BY THE LD. PRINCIPAL CIT IN THE NOTICE ISSUED U/S 263. EVEN THE LD. PRINCIPAL CIT DID NOT POINT OUT ANY SPECIFIC INFIRMITY IN THIS EXPLANATION FURNISHED BY THE ASSESSEE. HE HOWEVER STILL TREATED THE ORDER OF THE AO TO BE ERRONEOUS ON THIS ISSUE ON AN ALTOGETHER NEW AND DIFFERENT GROUND THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 35(2AB) WAS ACCEPTED BY THE AO WITHOUT MAKING ANY ENQUIRY TO VERIFY THE GENUINENESS OF THE SAID CLAIM. SINCE THIS ERROR ALLEGEDLY POINTED OUT BY THE LD. PRINCIPAL CIT IN THE FINAL ORDER PASSED U/S 263 WAS ALTOGETHER NEW AND DIFFERENT FROM THE ERROR POINTED OUT IN THE NOTICE U/S 263 AND NO SEPARATE NOTICE WAS ISSUED BY THE LD. PRINCIPAL CIT TO THE ASSESSEE POINTING OUT SUCH MISTAKE AND GIVING THE ASSESSEE AN OPPORTUNITY TO OFFER ITS EXPLANATION, WE ARE OF THE VIEW THAT THE ORDER OF THE LD. CIT PASSED U/S 263 ON SUCH NEW AND DIFFERENT GROUND IS NO SUSTAINABLE. GROUND NO. 14 OF THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 8. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH MAY, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE PRESIDENT DATED: 10/05/2019 BISWAJIT, SR. PS 7 MA NO. 75/KOL/2019 ASSESSMENT YEAR: 2012-13 EVEREADY INDUSTRIES INDIA LTD. COPY OF ORDER FORWARDED TO: 1. EVEREADY INDUSTRIES INDIA LTD., 1, MIDDLETON STREET, KOLKATA 700 071. 2. DCIT, CIRCLE 11(1), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / H.O.O. ITAT, KOLKATA