DEEPAK EDUCATION LTD, MUMBAI v. CIT(A) 10, MUMBAI

ITA 2550/MUM/2015 | 2010-2011
Pronouncement Date: 29-11-2017 | Result: Dismissed

Appeal Details

RSA Number 255019914 RSA 2015
Assessee PAN AABCD0780A
Bench Mumbai
Appeal Number ITA 2550/MUM/2015
Duration Of Justice 2 year(s) 6 month(s) 24 day(s)
Appellant DEEPAK EDUCATION LTD, MUMBAI
Respondent CIT(A) 10, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 29-11-2017
Assessment Year 2010-2011
Appeal Filed On 05-05-2015
Judgment Text
INCOME-TAX APPELLATE TRIBUNAL -BBENCH MUMBAI . . BEFORE S/SHRI B.R. BASKARAN ACCOUNTANT MEMBER AN D RAMLAL NEGI JUDICIAL MEMBER ./I.T.A./2550/MUM/2015 /ASSESSMENT YEAR: 2010-11 DEEPAK EDUCATION LIMITED 316-320 1 ST FLOOR SUNBEAM APT. RAJA RAMMOHAN ROY RD. CHARNI RD. MUMBAI-400 004. PAN:AABCD 0780 A VS. INCOME TAX OFFICER-5(1)(3) AAYAKAR BHAVAN MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI T.A. KHAN-SR. DR ASSESSEE BY: SHRI S.C. TIWARI AND MS. RITUJA N. PAWAR / DATE OF HEARING: 29/11/2017 / DATE OF PRONOUNCEMENT: 29/11/2017 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) . . / PER B.R. BASKARAN AM - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 31/03/2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEAL S) -10 MUMBAI AND IT RELATES TO ASSESSMENT YEAR 2010-11. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. COMMISSIONER OF INCOME TAX(APPEALS) IN NOT ALLOWING DEDUCTION OF BROUGHT-FORWARD LOSSES/DEPRECIATION WHILE COMPUTING BOOK PROFIT U/S . 115JB OF THE ACT. 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD S. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONDUCTING COACHING CLASSES. IT FILED I TS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING NIL INCOME UNDER NORM AL PROVISIONS OF THE ACT AND NIL BOOK PROFIT U/S. 115JB OF THE ACT. THE ASSESSMENT W AS ORIGINALLY COMPLETED BY ASSESSING OFFICER ACCEPTING THE BOOK PROFIT DECLARE D BY THE ASSESSEE. THE LD. COMMISSIONER OF INCOME TAX NOTICED THAT THE ACCOUNT S OF THE ASSESSEE DID NOT SHOW ANY BROUGHT FORWARD LOSS/DEPRECIATION. ACCORDINGLY HE TOOK THE VIEW THAT THE AO HAD WRONGLY ALLOWED THE CLAIM FOR DEDUCTION OF BROUGHT FORWARD LOSS/DEPRECIATION. 2550/M/15 DEEPAK EDUCATION LTD 2 HENCE HE REVISED THE ASSESSMENT ORDER U/S. 263 OF THE ACT. CONSEQUENT THERETO THE PRESENT ASSESSMENT ORDER WAS PASSED BY THE ASSESSIN G OFFICER WHEREIN HE DETERMINED THE BOOK PROFIT U/S. 115JB OF THE ACT AT RS.27.78 L AKHS BY REJECTING THE CLAIM FOR DEDUCTION OF BROUGHT FORWARD LOSS/DEPRECIATION. 3. THE FACTS RELATING TO THIS ISSUE REQUIRES FURTHER E LABORATION. THE ASSESSEE HAD ACCUMULATED LOSSES OF RS.5.58 CRORES AND EQUITY SHA RE CAPITAL OF RS.7.00 CRORES IN THE PAST. IN VIEW OF THE HUGE LOSSES THE ASSESSEE MAD E AN APPLICATION U/S.100 OF THE COMPANIES ACT 1956 FOR REDUCTION OF CAPITAL. THE S AID CLAIM WAS APPROVED BY THE HON'BLE BOMBAY HIGH COURT VIDE ITS ORDER DATED 30- 01-2003. CONSEQUENT THERETO THE ASSESSEE SET OFF THE ACCUMULATED LOSS OF RS.5.58 CR ORES AGAINST EQUITY SHARE CAPITAL OF RS.7.00 CRORES. AS A RESULT THEREOF THE EQUITY SHA RE CAPITAL WAS REDUCED TO RS.1.42 CRORES AND THE ACCUMULATED LOSS WAS SHOWN AT NIL FI GURE IN THE BALANCE SHEET. 4. HOWEVER WHILE COMPUTING BOOK PROFIT U/S 1 15JB OF THE ACT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DID NOT RECOGNIZE THE C APITAL REDUCTION AND ACCORDINGLY CLAIMED SET OFF OF BROUGHT FORWARD LOSS OR DEPRECIA TION WHICHEVER IS LESS FROM THE NET PROFIT AS PER PROVISIONS OF SECTION 115JB OF THE AC T. THE ASSESSING OFFICER REJECTED THE SAME SINCE THE BOOKS OF ACCOUNT DID NOT SHOW A NY BROUGHT-FORWARD LOSSES/DEPRECIATION. THE ORDER OF THE AO WAS ALSO CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS). AGGRIEVED THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 5. THE LD. AUTHORISED REPRESENTATIVE (AR) PLACED RELIA NCE ON THE DECISION RENDERED BY THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF SURAT TEXTILE MILLS LTD. VS. DCIT (2016) (70 TAXMANN.COM 158) IN ORDER TO CONTEN D THAT THE CAPITAL REDUCTION CARRIED OUT IN ORDER TO REHABILITATE THE COMPANY SH OULD BE IGNORED FOR THE PURPOSE OF SECTION 115JB OF THE ACT. 6. ON THE CONTRARY THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) SUBMITTED THAT THE BOOK PROFIT U/S. 115JB OF THE ACT HAS TO BE COMPUTED FRO M THE FINANCIAL STATEMENTS PREPARED 2550/M/15 DEEPAK EDUCATION LTD 3 AS PER THE PROVISIONS OF COMPANIES ACT. HE SUBMITT ED THAT THE ASSESSEE HAD SET OFF THE BROUGHT FORWARD LOSSES AGAINST SHARE CAPITAL WAY BA CK IN 2003 ITSELF AND HENCE THE BALANCE SHEET OF THE YEAR UNDER CONSIDERATION DID N OT SHOW ANY BROUGHT FORWARD LOSSES/DEPRECIATION. IN THE ABSENCE OF ANY BROUGHT FORWARD LOSSES/DEPRECIATION IN THE FINANCIAL STATEMENTS THERE IS NO SCOPE FOR THE ASS ESSEE TO SEEK DEDUCTION OF A NON- EXISTENT FIGURE. 7. HAVING HEARD RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THERE IS MERIT IN THE CONTENTIONS OF THE LD. DR. IN THE CASE OF SURAT TE XTILE MILLS LTD. VS. DCIT (SUPRA) THE ALL CREDIT BALANCES WERE ACCUMULATED AND TRANSFERRE D TO REHABILITATION SCHEME ACCOUNT AND THE PROFIT AND LOSS ACCOUNT WAS ADJUST ED AGAINST THE SAME AS PER SCHEME APPROVED BY BIFR FOR RE-HABILITATION OF THE ASSESSE E UNDER SICK INDUSTRIES ACT. SUCH ADJUSTMENTS WERE NOT MADE AS PER THE REQUIREMENTS O F COMPANIES ACT. THAT FACT WEIGHED IN FAVOUR OF THE ASSESSEE. IN THE INSTANT CASE THE ASSESSEE ITSELF HAS FILED PETITION BEFORE THE HON'BLE HIGH COURT OF BOMBAY FO R REDUCTION OF SHARE CAPITAL BY ADJUSTING ACCUMULATED LOSSES AS PER THE PROVISIONS OF COMPANIES ACT. AFTER RECEIPT OF APPROVAL FROM THE HON'BLE BOMBAY HIGH COURT THE AS SESSEE HAS WIPED OFF THE ACCUMULATED LOSSES BY TRANSFERRING IT TO EQUITY SHA RE CAPITAL THEREBY REDUCING THE SHARE CAPITAL ACCOUNT. AS SUBMITTED BY THE LD. DR ALL THESE TRANSACTIONS HAVE HAPPENED WAY BACK IN 2003. ALL THESE ADJUSTMENTS H AVE BEEN CARRIED OUT AS PER THE PROVISIONS OF COMPANIES ACT AND AFTER SUCH ADJUSTME NT; THERE WOULD NOT BE ANY ACCUMULATED LOSS AS CONTENDED BY THE ASSESSEE. 8. NOW WE ARE CONCERNED WITH DETERMINATION OF BO OK PROFIT FOR ASSESSMENT YEAR 2010-11. ADMITTEDLY THE FINANCIAL STATEMENT PREPARE D FOR THE YEAR UNDER CONSIDERATION DOES NOT CONTAIN ANY ENTRY TOWARDS ACCUMULATED LOS SES. AS STATED EARLIER THERE DOES NOT EXIST ANY ACCUMULATED LOSS IN THE EYES OF LAW AFTER GIVING EFFECT TO THE ORDER PASSED BY HONBLE BOMBAY HIGH COURT FOR CAPITAL RED UCTION. FOR THESE REASONS WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS JUSTIFIED I N UPHOLDING THE ORDER O THE ASSESSING OFFICER IN REJECTING THE CLAIM OF THE ASSESSEE. ACC ORDINGLY WE UPHOLD THE ORDER PASSED BY THE LD.CIT(A). 2550/M/15 DEEPAK EDUCATION LTD 4 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER 2017. 29 2017 SD/- SD/- ( / RAM LAL NEGI ) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED :29.11.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 4. THE CONCERNED CIT / 5. DR B BENCH ITAT MUMBAI / . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER / DY./ASST. REGISTRAR /ITAT MUMBAI.