M/s. Tamilnadu Cements Corpn. Ltd., CHENNAI v. ITO(OSD), CHENNAI

ITA 1544/CHNY/2007 | 1997-1998
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 154421714 RSA 2007
Assessee PAN AABCT1819J
Bench Chennai
Appeal Number ITA 1544/CHNY/2007
Duration Of Justice 4 year(s) 9 month(s) 30 day(s)
Appellant M/s. Tamilnadu Cements Corpn. Ltd., CHENNAI
Respondent ITO(OSD), CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-03-2012
Date Of Final Hearing 20-03-2012
Next Hearing Date 20-03-2012
Assessment Year 1997-1998
Appeal Filed On 31-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI BEFORE SHRI ABRAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY JUDICIAL MEMBER ITA NO.1544/MDS/2007 (ASSESSMENT YEAR : 1997-98) M/S. TAMIL NADU CEMENTS CORPORATION LTD. LLA BUILDING 735 ANNA SALAI CHENNAI-600 002. PAN: AABCT1819J VS. THE INCOME TAX OFFICER (OSD) COMPANY CIRCLE III(1) CHENNAI-600 034. (APPELLANT) (RESPONDENT) APPELLANT BY : DR. ANITA SUMANTH ADVOCATE RESPONDENT BY : SHRI E.S .NAGENDRA PRASAD CIT DR DATE OF HEARING : 20 TH MARCH 2012 DATE OF PRONOUNCEMENT : 30 TH MARCH 2012 O R D E R PER VIKAS AWASTHY JUDICIAL MEMBER: THE ABOVE MATTER IS REMITTED BY THE HONBLE JURISDICTIONAL HIGH COURT FOR CONSIDERATION OF THI S TRIBUNAL AFRESH ON MERITS IN ACCORDANCE WITH LAW. THE APPEA L WAS EARLIER DISPOSED OF BY THIS TRIBUNAL VIDE ORDER DAT ED 7 TH JANUARY 2009 FOR WANT OF CLEARANCE FROM HIGH POWER ED COMMITTEE TO PURSUE ITS APPEAL AS THE ASSESSEE BEI NG A PUBLIC SECTOR UNDERTAKING. AGGRIEVED BY THE ORDER OF THE TRIBUNAL ASSESSEE FILED AN APPEAL BEFORE THE HON BLE ITA NO.1544/MDS /2007 2 JURISDICTIONAL HIGH COURT IN TAX CASE (APPEAL) NO.4 71 OF 2009 WHEREIN THE HONBLE HIGH COURT VIDE ITS ORDER DATED 10 TH NOVEMBER 2009 AFTER TAKING NOTE OF THE FACT THAT THE HIGH POWERED COMMITTEE HAS PERMITTED THE ASSESSEE TO PU RSUE ITS APPEAL BEFORE THE TRIBUNAL SET ASIDE THE IMPU GNED ORDER AND REMITTED THE MATTER BACK TO THE TRIBUNAL FOR CO NSIDERATION ON MERITS IN ACCORDANCE WITH LAW. 2. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSE E IMPUGNING THE ORDER DATED 30 TH MARCH 2007 RELEVANT TO THE ASSESSMENT YEAR 1997-98 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS T HE ACT) BY THE LEARNED COMMISSIONER OF INCOME TAX-I CHENNAI. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT ASSESSME NT FOR THE ASSESSMENT YEAR 1997-98 WAS COMPLETED ON13.03.2 000 ADMITTING TOTAL INCOME UNDER SECTION 115JA. REASSES SMENT WAS COMPLETED ON 31.03.2005 AND SUBSEQUENTLY REVISE D ON 31.10.2005. IN THE ORIGINAL RETURN FILED BY THE ASS ESSEE THE ASSESSEE HAD CLAIMED CARRY FORWARD DEPRECIATION OF ` 15 36 91 995/- AND INVESTMENT ALLOWANCE OF ` 4 71 806/- AND SET IT OFF AGAINST INCOME FROM BUSINESS. THE INCOM E ITA NO.1544/MDS /2007 3 COMPUTED UNDER SECTION 115JA WAS ` 5 16 13 292/-. IN THE COURSE OF THE REASSESSMENT THE ASSESSING OFFICER S ET OFF BROUGHT FORWARD DEPRECIATION OF ` 10 89 92 040/- AND BUSINESS LOSS OF ` 64 83 291/- FOR THE ASSESSMENT YEAR 1995-96. 4. THE LEARNED CIT CHENNAI-I ISSUED NOTICE TO THE ASSESSEE UNDER SECTION 263 ON 5.2.2007. THE CONTENT S OF THE NOTICE ARE REPRODUCED BELOW:- THE REASSESSMENT IN YOUR CASE FOR THE CAPTIONED ASSESSMENT YEAR WAS COMPLETED ON 31.3.2005 AND SUBSEQUENTLY REVISED UNDER SECTION 154 ON 31.10.05 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE FOR THE FOLLOWING REASONS:- IN THE REGULAR COMPUTATION OF INCOME FOR THE CAPTIO NED ASSESSMENT YEAR THE ASSESSING OFFICER HAS DEDUCTED AN AMOUNT OF ` 10 88 34 771 BEING BROUGHT FORWARD DEPRECIATION AND UNABSORBED LOSSES OF EARLIER YEAR. ON VERIFICATION IT IS FOUND THAT THIS AMOUNT CONSISTE D OF UNABSORBED DEPRECIATION INVESTMENT ALLOWANCE AND BUSINESS LOSS OF VARIOUS YEARS FROM ASSESSMENT YEAR 1985-86 TO ASSESSMENT YEAR 1995-96. THE ACTUAL AMOUNT OF UNABSORBED DEPRECIATION INVESTMENT ALLOWANCE AND BUSINESS LOSS ALLOWABLE FOR THESE YEA RS HOWEVER LESSER THAN THE AMOUNT ACTUALLY ALLOWABLE. THE ITA NO.1544/MDS /2007 4 DETAILS OF THE AMOUNT ALLOWED AND AMOUNT ALLOWABLE AND THE DIFFERENCE IS GIVEN IN THE TABLE BELOW:- ASST. YEAR BUSINESS LOSS UNABSORBED DEPRECIATION INVESTMENT ALLOWANCE DIFFERENCE ALLOWED ALLOWABLE ALLOWED ALLOWABLE ALLOWED ALLOWABLE 1985-86 0 0 19164797 0 0 0 19164797 1986-87 0 0 11436951 0 0 0 11436951 1987-88 0 0 7595294 0 0 0 7595294 1988-89 0 0 0 0 0 0 1989-90 0 0 23939560 0 0 2494786 21444774 1990-91 0 0 13807325 0 157269 471806 13492788 1995-96 6483291 0 32890844 12844774 0 0 26529361 TOTAL 6483291 0 108834771 12844774 157269 2966592 99663965 THIS SHOWS THAT AN AMOUNT OF ` 9 96 63 965 HAS BEEN ALLOWED IN EXCESS OF THE AGGREGATE OF AMOUNT OF CAR RIED FORWARD LOSS UNABSORBED DEPRECIATION AND INVESTMEN T ALLOWANCE ALLOWABLE IN ACCORDANCE WITH THE ACT. YOU ARE THEREFORE REQUESTED TO SHOW WHY THE ASSESSMENT MADE ON 31.3.2005 SHOULD NOT BE SET ASID E TO COMPUTE THE CORRECT AMOUNT OF CARRIED FORWARD BUSINESS LOSS DEPRECIATION AND INVESTMENT ALLOWABL E IN ACCORDANCE WITH LAW. YOUR REPLY MAY THEREFORE PLEA SE REACH THIS OFFICE ON OR BEFORE 15.3.2007 FAILING WH ICH IT WILL BE CONSTRUED THAT YOU DO NOT HAVE ANY OBJECTIO N TO THE PROCEEDINGS UNDER SECTION 263. YOU MAY ALSO FIL E COPIES OF THE PROCEEDINGS OF BIFR IF ANY GRANTING A SCHEME OF CONCESSIONS UNDER THE INCOME TAX ACT AS WELL AS RELIEF IF ANY OTHERWISE DUE TO YOU WHICH WOULD HAVE THE RESULT OF ENHANCING THE AMOUNT OF BROUGHT ITA NO.1544/MDS /2007 5 FORWARD LOSS OR DEPRECIATION OR INVESTMENT ALLOWANC E ALLOWABLE FOR SET OFF AGAINST INCOME FOR THE ASSESS MENT YEAR 1997-98. 5. IN PURSUANCE TO THE NOTICE THE ASSESSEE FILED A LETTER DATED 27.03.2007 CLAIMING THAT CARRY FORWARD LOSSES OF THE ASSESSEE WERE ADMITTED FOR ASSESSMENT YEAR 1996-97 AS PER INTIMATION UNDER SECTION 143(1) DATED 14.12.1998 AN D AS THE AMOUNT STATED THEREIN HAS BECOME FINAL THE SAME SH OULD BE GIVEN EFFECT FOR THIS ASSESSMENT YEAR 1997-98. THE LEARNED CIT ON EXAMINATION OF THE RECORDS OF THE ASSESSEE N OTICED THAT THE UNABSORBED DEPRECIATION AND BUSINESS LOSS SET OFF BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE HAD CLAIMED S ET OFF OF UNABSORBED BUSINESS LOSS DEPRECIATION AND INVESTM ENT ALLOWANCE BEFORE SETTING OFF THE UNABSORBED DEPRECI ATION RELATING TO EARLIER YEARS. THE CIT RELIED UPON THE JUDGEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF SESHASAYEE PAPER & BOARDS LTD. VS. DCIT. 272 ITR 165 . AFTER GOING THROUGH THE RECORDS AND THE CONTENTIONS OF THE ASSESSEE TH E LEARNED CIT HELD AS UNDER:- ITA NO.1544/MDS /2007 6 3. ON CAREFUL CONSIDERATION OF THE ISSUE I AM OF THE VIEW THAT THE ASSESSEES CONTENTION CANNOT BE ACCEPTED. IN THE RETURN FOR ASSESSMENT YEAR 1996- 97 THE ASSESSEE CLAIMED BUSINESS LOSS OF ` 86 61 438 OF ASSESSMENT YEAR 1995-96 AND UNABSORBED DEPRECIATION RELATING TO EARLIER YEARS O F ` 6 23 78 300/- AND CLAIMED BALANCE OF ` 15 41 63 801 BEING UNABSORBED DEPRECIATION AND INVESTMENT ALLOWANCE TO BE CARRIED OVER TO ASSESSMENT YEAR 1997-98. THE ASSESSING OFFICER DOES NOT HAVE POWERS TO EXAMINE THE SET OFF OF UNABSORBED LOSSES IN THE INTIMATION ISSUED U/S.143(1). MOREOVER THE ISSUE IS NOT WHETHER THE SET OFF MADE IN THE EARLIER YEARS WAS CORRECT OR NO T BUT WHETHER THE AMOUNT OF ` 15 41 63 801/- BROUGHT FORWARD AND SET OFF IN ASSESSMENT YEAR 1997-98 WAS IN ACCORDANCE WITH LAW. THE UNABSORBED DEPRECIATION AND UNABSORBED INVESTMENT ALLOWANCE ARE NOT CARRIED FORWARD YEARWISE. IN THE CASE OF UNABSORBED DEPRECATION IT BECOMES PART OF CURRENT YEARS DEPRECIATION AND SET OFF AGAINST CURRENT YEARS INCOME EXCEPT WHEN THERE IS UNABSORBED BUSINESS LOSS OF EARLIER YEARS AVAILABLE FOR SET OFF - BECAUSE OF PRIORITY LAID DO WN BY SECTION 72(2). IN MY VIEW THE MISTAKES OF EARLI ER YEARS NEED NOT BE PERPETUATED BUT CORRECTED BY ITA NO.1544/MDS /2007 7 FOLLOWING THE CORRECT ORDER OF PRIORITY AS LAID DOW N IN THE LAW. WITH THESE OBSERVATIONS THE CIT REMANDED THE MATTE R TO THE ASSESSING OFFICER TO RECOMPUTE THE INCOME OF THE YE AR AFTER DETERMINING THE CORRECT AMOUNT OF BROUGHT FORWARD L OSS UNABSORBED DEPRECIATION AND INVESTMENT ALLOWANCE IN ACCORDANCE WITH LAW. AGGRIEVED BY THE ORDER OF THE CIT THE ASSESSE HAS COME IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FAIRLY CONCEDED THAT SHE IS NOT CHALLENGING THE ORDER OF T HE CIT ON MERITS. HOWEVER SHE SUBMITTED THAT THE CIT BY VIRT UE OF NOTICE ISSUED UNDER SECTION 263 INTENDED TO REOPEN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1985-86 ONW ARDS WHICH IS NOT PERMISSIBLE. SHE FURTHER SUBMITTED THA T THE CIT HAS NOT BEEN ABLE TO SHOW THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN ANY MANNER . 7. ON THE OTHER HAND THE LEARNED D.R. SUPPORTED TH E ORDER OF THE CIT AND SUBMITTED THAT NO ERROR HAS BEEN COM MITTED BY THE CIT IN ISSUING SHOW CAUSE NOTICE UNDER SECTION 263 AND REMITTING THE MATTER BACK TO THE ASSESSING OFFICER TO ITA NO.1544/MDS /2007 8 RECOMPUTE INCOME OF THE ASSESSEE AFTER DETERMINING THE CORRECT AMOUNT OF BROUGHT FORWARD LOSS UNABSORBED DEPRECIATION AND INVESTMENT ALLOWANCE IN THE ORDER OF PRIORITY LAID DOWN UNDER THE LAW. 8. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE NOTICE AND THE IMPUGNED ORDER PASSED BY THE LEARNED CIT. CHENNAI-I. IT WOULD BE RELEVA NT TO REFER TO THE PROVISIONS OF SECTION 263(1) WHICH ARE REPRODUC ED HEREIN BELOW:- 263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD A ND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLIN G THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. FOR INVOKING THE PROVISIONS OF SECTION 263 IT IS E SSENTIAL THAT THE FOLLOWING TWIN CONDITIONS SHOULD BE SATISFIED:- I) THE ORDER OF ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND ITA NO.1544/MDS /2007 9 II) THE ORDER OF THE ASSESSING OFFICER IS PREJUDIC IAL TO THE INTEREST OF THE REVENUE. IF ONE OF THE ABOVE CONDITIONS IS ABSENT I.E. IF TH E ORDER OF THE ASSESSING OFFICER IS ERRONEOUS BUT IS NOT PREJUDIC IAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIA L TO THE REVENUE THE PROVISIONS OF SECTION 263(1) OF THE AC T CANNOT BE INVOKED. THE PHRASE PREJUDICIAL TO THE INTEREST O F THE REVENUE HAS TO BE READ IN CONJUNCTION WITH ERRONEO US ORDER PASSED BY THE ASSESSING OFFICER. 9. IN THE INSTANT CASE IN THE REASSESSMENT THE ASS ESSING OFFICER HAS SET OFF BROUGHT FORWARD DEPRECIATION TO THE TUNE OF ` 10 89 92 040/- AND BUSINESS LOSS OF ASSESSMENT YEA R 1995- 96 OF ` 64 83 291/-. ON EXAMINATION OF THE RECORDS OF THE ASSESSE IT WAS NOTICED BY THE LEARNED CIT THAT THE AMOUNT OF UNABSORBED DEPRECIATION AND BUSINESS LOSS SET OFF B Y THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE DIFFERENCES AROSE ON R EWORKING OF THE UNABSORBED BUSINESS LOSS DEPRECATION AND INVES TMENT ALLOWANCE AFTER SETTING OFF OF THE SAME IN THE ORDE R OF PRIORITY LAID DOWN UNDER THE LAW. THUS WE ARE OF THE VIEW T HAT THE ITA NO.1544/MDS /2007 10 LEARNED CIT WAS RIGHT IN ISSUING NOTICE UNDER SECTI ON 263 OF THE ACT. THE ANXIETY OF THE COUNSEL FOR THE ASSESSE E THAT BY VIRTUE OF NOTICE DATED 5.3.2007 ISSUED UNDER SECTIO N 263 THE CIT INTENDS TO REOPEN THE ASSESSMENTS FOR THE ASSES SMENT YEAR 1985-86 ONWARDS IS UNFOUNDED. THE LEARNED CIT VIDE ORDER DATED 30.03.2007 HAD DIRECTED THE ASSESSING O FFICER TO RECOMPUTE THE INCOME OF THE RELEVANT ASSESSMENT YE AR AFTER DETERMINING THE CORRECT AMOUNT OF BROUGHT FORWARD L OSS UNABSORBED DEPRECATION AND INVESTMENT ALLOWANCE IN ACCORDANCE WITH LAW. 10. FINDING NO MERIT IN THE CONTENTIONS OF THE ASSE SSEE WE UPHOLD THE ORDER OF THE CIT AND DISMISS THE APPEAL FILED BY THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2012. SD/- SD/- (ABRAHAM P.GEORGE) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 30 TH MARCH 2012. SOMU COPY TO: (1) APPELLANT ( 4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.