M/s. MRF Limited, CHENNAI V. DCIT, CHENNAI

MA 97/CHNY/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6872 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation; Additional depreciation; Difference of opinion; Change of opinion
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A : CHENNAI [BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER] M.P.NOS.96 TO 98/MDS/2011 [ARISING OUT OF I .T.A NOS. 1375 TO 1377/MDS/2010] ASSESSMENT YEARS : 2004-05, 2006-07 & 2007-08 M/S MRF LTD NO.124, GREAMS ROAD CHENNAI 600 006 [PAN AAACM4154G] VS THE DY. CIT LARGE TAX PAYER UNIT CHENNAI (PETITIONER) (RESPONDENT) PETITIONER BY : SHRI R.VIJAYARAGHAVAN RESPONDENT BY : SHRI SHAJI P. JACOB O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THESE MISCELLANEOUS PETITIONS HAVE BEEN P REFERRED BY THE ASSESSEE IN RELATION TO THE COMMON ORDER OF THE TRI BUNAL DATED 11.3.2011, PASSED IN I.T.A.NOS.1374 TO 1377/MDS/201 0, FOR ASSESSMENT YEARS 2002-03, 2004-05, 2006-07 AND 2007 -08. WE HAVE HEARD THEM TOGETHER AND ARE DISPOSING THEM OF BY A COMMON ORDER. M.P.NO.96/MDS/2011 2. THIS MISCELLANEOUS PETITION RELATES TO I.T.A.NO.137 5/MDS/2010, FOR ASSESSMENT YEAR 2004-05, THROUGH WHICH IT HAS B EEN PLEADED THAT SOME GROUNDS WERE NOT ADJUDICATED, HENCE, A MISTAKE HAS CREPT IN THE ORDER, WHICH IS RECTIFIABLE U/S 254(2) OF THE ACT . IN ASSESSMENT YEAR M.P 96 TO 98/11 :- 2 -: 2004-05, FOLLOWING GROUNDS WERE RAISED BY THE ASSES SEE, WHICH REMAINED UNADJUDICATED: '2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE REOPENING OF THE ASSESSMENT AS THE APPELLANT HAS FURNISHED ALL THE MATERIALS AND PARTI CULARS FULLY AND TRULY WHILE COMPLETING THE ASSESSMENT U/S 143(3). 2.1. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT ADDITION MADE IN THE REASSESS MENT HAS ARISEN ONLY DUE TO CHANGE OF OPINION AND NOT ON ACCOUNT OF CONCEALMENT OF ANY PARTICULARS BY THE AP PELLANT; HENCE THE ORDER IS TO BE QUASHED AS BEING WITHOUT JURISDICTION. 3. OUR ATTENTION WAS INVITED TO PARA 24 OF THE COMMON ORDER OF THE TRIBUNAL IN WHICH IT HAS BEEN MENTIONED THAT THE I SSUE OF REOPENING IS NOT INVOLVED IN ASSESSMENT YEARS 2004-05, 2006-07 A ND 2007-08. WE HAVE TREADED THROUGH THE TRIBUNAL ORDER AND HAVE FO UND THAT ITS PARA 24 READS AS UNDER: 24. IN I.T.A.NOS. 1375 TO 1377/MDS/2010, PERTAIN ING TO ASSESSMENT YEARS 2004-05, 2006-07 AND 2007-08, EXACTLY IDENTICAL ISSUES ON MERITS ARE INVOLVED, BU T REOPENING IS NOT AN ISSUE IN THESE APPEALS. HENCE, WITH SIMILAR REASONING, THESE APPEALS ALSO STAND DISMISS ED. 4. IN FACT, THE ISSUE RELATING TO REOPENING RAISED IN ASSESSMENT YEARS 2004-05, 2006-07 AND 2007-08 WERE VERILY HEAR D AND CONSCIOUSLY DECIDED ALSO. ON PERUSAL OF THE RECO RDS, WE HAVE FOUND THAT THE FACTS AND ARGUMENTS OF THE PARTIES REGARDI NG REOPENING IN M.P 96 TO 98/11 :- 3 -: ASSESSMENT YEARS 2004-05, 2006-07 AND 2007-08 ARE I DENTICAL. WE HAD ACTUALLY DECIDED THIS COMMON ISSUE BY NARRATING THE FACTS IN ASSESSMENT YEAR 2004-05 IN I.T.A.NO. 1375/MDS/2010 VIDE GROUND NO.2 AND 2.1. THE FACTS, CIRCUMSTANCES, EVIDENCE A ND THE REASONING OF BOTH SIDES FOR AND AGAINST REOPENING ARE, MUTATIS M UTANDIS, IDENTICAL TO THE FACTS IN ASSESSMENT YEAR 2002-03. THE REASO NINGS FOR CHALLENGING THE REOPENING ARE ALSO IDENTICAL IN THE SE YEARS. HENCE, IN PARA 24 THERE IS A TYPOGRAPHICAL MISTAKE AND IT IS NOT THE CASE OF NON- ADJUDICATION OF THIS COMMON LEGAL ISSUE. WE HAD HE ARD ON THE ISSUE IN ALL THE YEARS AND HAD CONSCIOUSLY DECIDED THE SAME AGAINST THE ASSESSEE. IN FACT, THERE IS A CLERICAL/TYPOGRAPHIC AL MISTAKE WHICH IS BEING RECTIFIED BY MODIFYING PARA 24 OF THE TRIBUNA L ORDER AS UNDER: 24. IN I.T.A.NO.1375/MDS/2010 PERTAINING TO ASSESSMENT YEAR 2004-05, IDENTICAL ISSUES BOTH ON LEGALITY AS WELL AS MERITS OF THE CASE ARE INVOLVED . THEREFORE, WITH SIMILAR REASONING, THIS APPEAL ALSO STANDS DISMISSED. IN OTHER APPEALS THE ISSUE REGARDING MANUFACTURE OF TYRES IS ENTITLED TO THE BENEFITS U/ S 80IA, IS DECIDED AGAINST THE ASSESSEE. M.P.NO.97/MDS/2011 5. THIS MISCELLANEOUS PETITION IS IN RELATION TO ASSES SMENT YEAR 2006-07 IN I.T.A.NO.1376/MDS/2010. IN THIS APPEAL , FOLLOWING GROUNDS WERE RAISED WHICH, IN FACT, REMAINED UNAJD UCIATED: M.P 96 TO 98/11 :- 4 -: 1 . THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CAS E. 2. THE COMMISSIONER OF INCOME [AX (APPEALS) ERRED I N CONFIRMING THE DISALLOWANCE OF AMORTIZATION OF LEAS E CHARGES PAID IN RESPECT OF LEASEHOLD LAND TAKEN ON LEASE BY THE APPELLANT AND USED IN ITS BUSINESS. 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT IS NOT THE OWNER OF THE LAND. THE APPELLANT HAS ONLY TAKEN IT ON LONG LEASES FROM THE GOVERNMENT AGENCIES. THEREFORE AMORTIZATION OVER TH E PERIOD OF LEASE SHOULD BE ALLOWED. 3. THE COMMISSIONER OF INCOME TAX(APPEALS) ERRED I N CONFIRMING THE DISALLOWANCE OF ADDITIONAL DEPRECIAT ION IN RESPECT OF ADDITIONS TO PLANT AND MACHINERY IN THE PREVIOUS ASSESSMENT YEAR (A.Y 2005-2006). 3.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAS CLAIMED ONL Y 50% OF THE ADDITIONAL DEPRECIATION IN THE PREVIOUS YEAR A Y 2005-06 AND IS THEREFORE ENTITLED TO CLAIM THE BALA NCE 50% IN THE CURRENT YEAR A. Y 2006-07. 4.1 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST ON ADDITIO NAL EXCISE DUTY U/S 438. 4.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT INTEREST PAID ON ADDITIONAL E XCISE DUTY IS NOT ADDITIONAL EXCISE DUTY UNDER CENTRAL EX CISE ACT; IT IS ONLY COMPENSATORY IN NATURE AND IS NOT D UTY AS REQUIRED U/S 438. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRMING THE REFUNDS ALLOWED IN SALES TAX ASSESSM ENT AS THE INCOME OF THE CURRENT YEAR AND ADDED TO THE TOT AL INCOME OF THE APPELLANT. 5.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THESE SALE TAX REFUNDS ARE TA KEN IN TO ACCOUNTS ON ACTUAL RECEIPT BASIS AND OFFERED FOR TAX AS AND WHEN IT IS RECEIVED. 6. THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL GROUNDS AT THE TIME OF HEARING'. M.P 96 TO 98/11 :- 5 -: 6. OBVIOUSLY, THIS IS A MISTAKE APPARENT FROM RECORD A ND RECTIFIABLE U/S 254 OF THE ACT. THEREFORE, WE RECALL THE TRIBU NAL ORDER IN RESPECT OF I.T.A.NO.1376/MDS/2010 FOR ASSESSMENT YEAR 2006 -07 FOR ADJUDICATION OF THE GROUNDS STATED ABOVE. ACCORDIN GLY, WE ALLOW THIS MISCELLANEOUS PETITION NO.97/MDS/2010. M.P.NO.98/MDS/2011 7. THIS MISCELLANEOUS PETITION FOR ASSESSMENT YEAR 2 007-08 IS FILED IN RELATION TO THE SAME TRIBUNAL ORDER, BUT I N RESPECT OF I.T.A.NO. 1377/MDS/2010. THROUGH THIS MISCELLANEOUS PETITION IT HAS BEEN ARGUED THAT THE FOLLOWING GROUNDS RAISED IN THIS AP PEAL REMAINED UNADJUDICATED: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW. FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF AMORTIZATION OF LEAS E CHARGES PAID IN RESPECT OF LEASEHOLD LAND TAKEN ON LEASE BY THE APPELLANT AND USED IN ITS BUSINESS. 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT IS NOT THE OWNER OF THE LAND. THE APPELLANT HAS ONLY TAKEN IT ON LONG LEASES FROM THE GOVERNMENT AGENCIES. THEREFORE AMORTIZATION OVER TH E PERIOD OF-LEASE SHOULD BE ALLOWED. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRMING THE DISALLOWANCE OF EXPENSES OF ` 34,58,444/- ALLEGED TO BE RELATABLE TO EARNING THE DIVIDEND INC OME, BY APPLYING RULE 8D. 3.1 THE COMMISSIONER' OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT U/S.14A ONLY THE ACTUAL EXPENDITURE SHOULD BE DISALLOWED. THE APPELLANT HAS NOT INCURRED ANY EXPE NDITURE FOR EARNING THE DIVIDEND INCOME. M.P 96 TO 98/11 :- 6 -: 3.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT-II VS. M/S . HERO CYCLES LIMITED - ITA NO.331 OF 2009(O&M) REPORTED IN 2009-TIOL604HC-P&H- IT HAS HELD THAT 'DISALLOWANCE U/S.14A REQUIRES FINDING OF INCU RRING OF EXPENDITURE WHERE IT IS FOUND THAT FOR EARNING EXEM PTED INCOME NO EXPENDITURE HAS BEEN INCURRED, DISALLOWAN CE U/S.14A CANNOT STAND.' 3.3 WITHOUT PREJUDICE TO THE ABOVE, THE COMMISSIONE R OF INCOME TAX (APPEALS) OUGHT TO APPRECIATED THAT NOTI FICATION NO.S.O.547(E) PRESCRIBING THE METHOD OF DETERMINING THE AMOUNT OF EXPENDITURE, UNDER SUB-SECTION (2) OF SEC TION 14A READ WITH RULE 8D HAS COME IN FORCE FROM 24 TH MARCH,2008 I.E., FROM ASSESSMENT YEAR 2008-09 AND THEREFORE NOT APPL ICABLE FOR THE ASSESSMENT YEAR 2007-08. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234C. 4.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO APPRECIATED THAT THE SHORTFALL IN PAYMENT OF INSTAL LMENTS OF ADVANCE TAX HAS ARISEN ON ACCOUNT OF EXCEPTIONAL IN COME OF ` 36.41 CRORES THE APPELLANT WAS ENTITLED TO RECEIVE ON ACCOUNT OF PURCHASE TAX REFUND BASED ON THE JUDGMENT OF THE SUPREME COURT DELIVERED ON 21.09.2006. HENCE LEVY O F INTEREST U/S 234C IS NOT CALLED FOR. 5. THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL GROUNDS AT THE TIME OF HEARING. 8. IT IS NOTED FROM THE LOG BOOK THAT WHILE ARGUING T HESE APPEALS IT WAS STATED THAT IN ALL THESE APPEALS EXACTLY IDENTI CAL ISSUES ARE INVOLVED THAT IS WHY THESE GROUNDS REMAINED UNADJUD ICTED. BE THAT AS IT MAY, IN CASE THE GROUNDS RAISED REMAIN UNDECIDED , THIS IS OBVIOUSLY A MISTAKE APPARENT ON RECORD WHICH IS RECTIFIABLE U /S 254(2) OF THE ACT. WE, THEREFORE, RECALL THE TRIBUNAL ORDER IN RESPECT OF I.T.A.NO. 1377/MDS/2010 FOR ASSESSMENT YEAR 2007-08 ONLY FOR A LIMITED PURPOSE OF DECIDING UNDECIDED GROUNDS RAISED AND WH ICH ARE RAKED UP M.P 96 TO 98/11 :- 7 -: IN THIS PETITION. WE DIRECT THE REGISTRY TO FIX T HE APPEALS IN I.T.A.NOS. 1376 AND 1377/MDS/2010 FOR ADJUDICATING THE ABOVE G ROUNDS. 9. IN THE RESULT, ALL THE THREE MISCELLANEOUS PETITI ONS STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-08- 2011. SD/- SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 23 RD AUGUST, 2011 RD COPY TO: PETITIONER/RESPONDENT/CIT(A)/CIT/DR