SAM INDUSTRIES LIMITED, MUMBAI v. ITO 1(3)(2), MUMBAI

CO 174/MUM/2016 | 2006-2007
Pronouncement Date: 28-10-2016 | Result: Dismissed

Appeal Details

RSA Number 17419923 RSA 2016
Assessee PAN AAACS7612P
Bench Mumbai
Appeal Number CO 174/MUM/2016
Duration Of Justice 15 day(s)
Appellant SAM INDUSTRIES LIMITED, MUMBAI
Respondent ITO 1(3)(2), MUMBAI
Appeal Type Cross Objection
Pronouncement Date 28-10-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 28-10-2016
Assessment Year 2006-2007
Appeal Filed On 13-10-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO 1275/MUM/2015 ASSESSMENT YEAR: 2006-07 THE ITO - 1(3)(2) ROOM NO. 541 AAYAKAR BHAVAN MUMBAI- 400 020. VS. M/S. SAM INDUS TRIES LTD. 402 DALAMAL CHAMBERS 29 NEW MARINE LINES MUMBAI- 400 020. PAN:- AAACS7612P (APPELLANT) (RESPONDENT) & CO NO 174/MUM/2016 (ITA NO. 1275/MUM/2015) ASSESSMENT YEAR: 2006-07 M/S. SAM INDUSTRIES LTD. 402 DALAMAL CHAMBERS 29 NEW MARINE LINES MUMBAI- 400 020. PAN:- AAACS7612P VS. THE ITO - 1(3)(2) ROOM NO. 541 AAYAKAR BHAVAN MUMBAI- 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. A. K. KARDAM. RESPONDENT BY : SHRI. BHUPENDRA SHAH DATE OF HEARING: 2 0/10 / 2016 DATE OF PRONOUNCEMENT: 28/10/20 16 O R D E R PER RAM LAL NEGI JM THE REVENUE HAS PREFERRED THE APPEAL ITA NO 1275/MUM/2015 AGAINST ORDER DATED 26/12/2014 PASSED BY THE LD. CI T(APPEALS)-3 MUMBAI FOR 2 ITA NO 1275/MUM/2015 & CO NO 174/MUM/2016 ASSESSMENT YEAR: 2006-07 THE ASST. YEAR 2006-07 WHEREBY THE LD. CIT(A) PART LY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 07/1 1/2012 PASSED U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT 1961 (IN SH ORT THE ACT). THE ASSESSEE HAS ALSO FILED CROSS OBJECTION NO 174/M/2016 AGAINS T THE SAME ORDER. SINCE THE APPEAL AND CROSS OBJECTION PERTAIN TO THE SAME ASSESSEE FOR THE SAME ASSESSMENT YEAR BOTH WERE CLUBBED AND HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . ITA NO. 1275/MUM/2015 A.Y. 2006-07 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY FILED ITS RETURN OF INCOME FOR THE RELEVANT ASST. YEAR DECLARING THE TO TAL INCOME AS NIL THE BOOK PROFIT U/S 115JB OF RS. 8 94 77 720/-. THE ASSESSME NT ORDER WAS ACCORDINGLY PASSED U/S 143(3) AFTER MAKING DISALLOWANCE OF RS. 3 09 180/- UNDER RULE 8D OF INCOME TAX RULES 1962 DETERMINING THE TOTAL INC OME AT RS. 8 97 86 900/-. SUBSEQUENTLY NOTICE U/S 148 WAS ISSUED TO THE ASSES SEE IN RESPONSE THEREOF THE ASSESSEE SUBMITTED THAT THE RETURN FILED ON 28. 11.2006 MAY BE TREATED AS THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 148. THE CASE WAS REOPENED INTER ALIA ON THE GROUND OF ESCAPEMENT OF INCOME. 3. IN RESPONSE TO NOTICE U/S 142(1) OF THE ACT T HE ASSESSEE FURNISHED THE DETAILS AND ON THE BASIS OF THE SAID DETAILS THE A. O MADE ADDITION OF RS. 1 87 365/- ON ACCOUNT OF SERVICE TAX UNPAID U/S 43B AND ALSO DISALLOWED THE OF SET OFF UNABSORBED DEPRECIATION FOR THE A.Y. 97-98 AMOUNTING TO RS. 1.86 CRORES HOLDING THAT AS PER AMENDED TO SECTION 71 BY THE FI NANCE ACT 1997 AND UNABSORBED DEPRECIATION FOR THAT ORDER COULD ONLY T O CARRY FORWARD FOR EIGHT ASSESSMENT YEARS. THE A.O FURTHER ASSESSED RS. 62 38 128/- AS INCOME FROM OTHER SOURCES WHICH HAD BEEN CLAIMED BY THE ASSESSE E AS BUSINESS INCOME. 3 ITA NO 1275/MUM/2015 & CO NO 174/MUM/2016 ASSESSMENT YEAR: 2006-07 4. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEF ORE THE LD. CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE DECIDED THE I SSUES RELATING TO DISALLOWANCE U/S 43B AND UNABSORBED DEPRECIATION FOR THE A.Y. 97 -98 IN FAVOUR OF THE ASSESSEE. THE REVENUE IS IN APPEAL BEFORE THE TRIBU NAL AGAINST FINDINGS OF THE LD. CIT(A) IN RESPECT OF UNABSORBED DEPRECIATION IN QUESTION RAISING THE FOLLOWING EFFECTIVE GROUND OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LEARNED CIT(A) IS JUSTIFIED IN ALLOWING SE T OFF UNABSORBED DEPRECIATION OF A.Y. 97-98 AGAINST INCOME OF ASSESS MENT YEAR 2006- 07 UNDER CONSIDERATION DESPITE THE AMENDMENT TO SEC TION 71 BY THE FINANCE ACT 1997 PERMITTING CARRY FORWARD OF UNABSO RBED DEPRECIATION FOR EIGHT ASSESSMENT YEARS ONLY WHICH PERIOD DOES NOT COVER THE ASSESSMENT YEAR UNDER CONSIDERATION?. 5. BEFORE US THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE FINDINGS OF A.O SUBMITTED THAT THE LD. CIT(A) HAS W RONGLY ALLOWED THE SAID APPEAL BY ALLOWING SET OFF OF UNABSORBED DEPRECIATI ON OF A.Y. 97-98 AGAINST INCOME OF ASSESSMENT YEAR 2006-07 IGNORING THE AME NDED PROVISION OF SECTION 71 BY FINANCE ACT 1997 PERMITTING CARRY FORWARD OF UNABSORBED DEPRECIATION FOR EIGHT ASSESSMENT YEARS ONLY AND THE EIGHT YEARS PERIOD DOES NOT COVER THE ASSESSMENT YEAR UNDER CONSIDERATION. 6. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSE SSEE RELYING ON THE DECISION RENDERED BY THE MUMBAI BENCH OF THE ITAT IN THE CAS E OF BAJAJ HINDUSTAN LTD. 47 TAXMAN.COM 333 SUBMITTED THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE MUMBAI BENCH OF ITAT IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN GENERAL MOTORS INDIA PVT. LTD. 4 ITA NO 1275/MUM/2015 & CO NO 174/MUM/2016 ASSESSMENT YEAR: 2006-07 (CIVIL APPEAL NO. 1773 OF 2012) AND THE ASSESSEES CASE IS COVERED BY THE SAID DECISION. 7. WE HAVE HEARD THE RIVAL SUBMISSION AND ALSO P ERUSED THE MATERIAL PLACED ON RECORD. THE LD. CIT(A) HAS ALLOWED THE THIS GROU ND OF APPEAL OF THE ASSESSEE HOLDING AS UNDER: 3.2 I HAVE PERUSED THE LAW IN THE MATTER. THIS ISS UE CAME UP BEFORE THE JURISDICTIONAL TRIBUNAL IN THE CASE OF BAJAJ HI NDUSTAN LTD. 47 TAXMAN.COM 333 WHEREIN THE TRIBUNAL HELD RELYING UPON THE DECISION OF THE GUJARAT HIGH COURT IN GENERAL MOTOR S INDIA PVT. LTD. CIVIL APPEAL NO. 1773 OF 2012 AS FOLLOWS: '9. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTEN TIONS HAVE BEEN CAREFULLY CONSIDERED. IT IS THE CONTENTION OF LD DR THAT AMENDED PROVISIONS OF SECTION 32(2) AS APPLICABLE FROM ASSE SSMENT YEAR 2002-03 SHOULD- NOT BE MADE APPLICABLE TO THE UNABS ORBED DEPRECIATION CARRIED FORWARD BY THE ASSESSEE FROM E ARLIER YEARS. TO SUPPORT SUCH CONTENTION THE LD. DR HAS RELIED MAIN LY ON THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CA SE OF TIMES GUARANTY LTD. (SUPRA) WHICH IS DIRECTLY ON THE ISSU E. HOWEVER SUBSEQUENTLY ON THE SAME ISSUE THE HON'BLE GUJARAT HIGH COURT HAS RENDERED THE DECISION IN THE CASE OF GENERAL MOTORS INDIA (P.) LTD.(SUPRA). CONSIDERING THE DECISION OF HON'BLE GU JARAT HIGH COURT DESPITE THERE BEING EXISTING DECISION OF SPECIAL BE NCH OF MUMBAI BENCH THE MUMBAI BENCHES HAVE TAKEN A VIEW THAT IN VIEW OF SUBSEQUENT DECISION OF HON'BLE GUJARAT HIGH COURT THE DECISION OF SPECIAL BENCH OF TRIBUNAL IN THE CASE OF TIMES GUAR ANTY LTD. (SUPRA) CANNOT BE FOLLOWED. FOR THIS PURPOSE REFERENCE HAS BEEN MADE BY LD. AR TO THE DECISION OF MUMBAI BENCH I.E. IN THE CASE HINDUSTAN UNILEVER LTD. (SUPRA) AND MILTON'S (P.) LTD. (SUPRA ). THE RELEVANT PORTION OF THE DECISION IN THE CASE OF MILTON'S (P. ) LTD. HAS ALREADY BEEN REPRODUCED. NO CONTRARY DECISION HAS BEEN BROU GHT TO OUR NOTICE. 5 ITA NO 1275/MUM/2015 & CO NO 174/MUM/2016 ASSESSMENT YEAR: 2006-07 10. SO FAR AS IT RELATES TO RELIANCE BY ID. DR ON T HE DECISIONS OF HON'BLE MADRAS HIGH COURT IN THE CASES OF (I) RPIL SIGNALLING SYSTEMS LTD. (II) PIONEER ASIA PACKAGING (P.) LTD. AND (III) S & S POWER SWITCHGEAR LTD. (SUPRA) IT MAY BE MENTIONED THAT THESE DECISIONS RELATED TO AMENDMENT BROUGHT INTO THE STA TUTE FROM ASSESSMENT YEAR 1997-98 AND NONE OF THE DECISIONS R ELATES TO AMENDMENT BROUGHT INTO STATUTE BY FINANCE ACT 2001 RELEVANT TO ASSESSMENT YEAR 2002-03 ONWARDS. WHEREAS THE DECISI ON OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE GENERAL MOTO RS INDIA (P.) LTD.(SUPRA) IS DIRECTLY ON THE AMENDMENT BROUGHT IN TO STATUTE BY FINANCE ACT 2001 RELATES TO ASSESSMENT YEAR 2002-0 3 ONWARDS AND IS DIRECTLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREFORE RELIANCE BY LD. CIT DR ON THE DECISIONS OF HON'BLE MADRAS HIGH COURT IS MISPLACED. 11. SO FAR AS IT RELATES TO ARGUMENT OF LD. DR THAT THE ISSUE BEFORE THE HON'BLE GUJARAT HIGH COURT WAS NOT RELATING TO INTERPRETATION OF AMENDMENT BOUGHT INTO STATUTE IN SECTION 32(2) BY F INANCE ACT 2001. IT MAY BE MENTIONED HERE THAT THIS CONTENTION OF LD. DR IS NOT CORRECT. THE RELEVANT PORTION OF DECISION OF GUJARA T HIGH COURT HAS ALREADY BEEN REPRODUCED IN PARA 7 OF THIS ORDER AND IT CAN BE SEEN FROM THESE OBSERVATIONS SPECIFIC ISSUE WAS CONSIDER ED AND DECIDED BY HON'BLE GUJARAT HIGH COURT. THE LD. CIT(A) WHILE RENDERING THE DECISION HAS RELIED UPON THE AFOREMENTIONED DECISIO N OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS IN DIA (P.) LTD.(SUPRA). NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE ID. DR. MUMBAI BENCH OF THE TRIBUNAL HAVE ALSO FOLLOWED THE SAID DECISION AND HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. THERE IS NO MATERIAL ON RECORD TO PERSUAD E US TO TAKE THE CONTRARY VIEW. THEREFORE WE DECLINE TO INTERFERE I N THE RELIEF GIVEN BY ID. CIT(A) AND DEPARTMENTAL APPEALS ARE DISMISSED. ' 3.3 RELYING UPON THE RATIO OF THE ABOVE CITED DECIS ION IT IS HELD THAT THE UNABSORBED DEPRECATION FOR A.Y.1997-98 IS ALLOW ED TO BE SET OFF AGAINST THE CURRENT YEARS INCOME. THIS GROUND OF AP PEAL IS THEREFORE ALLOWED. 6 ITA NO 1275/MUM/2015 & CO NO 174/MUM/2016 ASSESSMENT YEAR: 2006-07 8. WE HAVE GONE THROUGH THE FINDINGS OF LD. CIT(A ) WHO HAS DECIDED THE ISSUE IN QUESTION ISSUE IN ACCORDANCE WITH THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD.(SUPRA) FOLLOWED BY THE COORDINATE BENCH IN THE CASE OF BAJAJ HINDUSTAN LTD.(SUPRA) . SINCE THE ISSUE INVOLVED IN THIS APPEAL IS IDENTICAL TO THE GROUND OF APPEAL RAISED IN THE CASE OF BAJAJ HINDUSTAN LTD. (SUPRA) AND THE COORDINATE BENCH OF THE ITAT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE WE R ESPECTFULLY FOLLOW THE DECISION RENDERED BY THE COORDINATE BENCH AND UPHOLD THE FIN DINGS OF THE LD. CIT(A) AND HOLD THAT THAT THERE IS NO LEGAL OR FACTUAL INFIRMI TY IN THE IMPUGNED ORDER TO INTERFERE WITH THE SAME. WE THEREFORE DISMISS THE SOLE GROUND OF APPEAL OF THE REVENUE. CO NO. 174/MUM/2016. THE ASSESSEE HAS FILED THE PRESENT CROSS OBJECTION ON THE FOLLOWING GROUNDS:- 1. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED ASSESSING OFFICER ERRED REOPENING THE ASSES SMENT ONLY A. ON THE BASIS OF CHANGE OF OPINION BY OVERLOOKING DETAILS FILED IN THE ASSESSMENT COMPLETE U/S 143(3) ON 30/12/2008 B. ISSUING NOTICE DATED 30/03/2012 WHICH IS FOUR YE ARS AFTER THE END OF ASSESSMENT YEAR 2006-07 C. ON THE BASIS OF AUDIT OBJECTION D. NOT FURNISHING REASONS RECORDED FOR REOPENING. 2. WE NOTICED THAT THE CROSS OBJECTION IS TIME BAR RED AS THERE IS A DELAY OF 383 DAYS IN FILING OF PRESENT CO. THE ASSESSEE HAS NOT FILED ANY APPLICATION FOR CONDONATION OF DELAY IN FILING OF CROSS OBJECTION. IN THE ABSENCE OF ANY 7 ITA NO 1275/MUM/2015 & CO NO 174/MUM/2016 ASSESSMENT YEAR: 2006-07 REASONABLE EXPLANATION TO ESTABLISH SUFFICIENT CAUS E FOR DELAY THE CO CANNOT BE ENTERTAINED. HENCE THE CROSS OBJECTION IS BARRE D BY LLIMITATION. WE THEREFORE DISMISS THE CROSS OBJECTION IN LIMINE BEING NOT MAINTAINABLE. 3. IN THE RESULT THE APPEAL FILED BY THE REVENUE A ND CROSS OBJECTION FILED BY THE ASSESSEE FOR THE A.Y. 2006-07 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:28/10/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. ! # !$ / DR ITAT MUMBAI 6. %& ' / GUARD FILE. / BY ORDER ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI PRAMILA