M/s. BTP India Ltd., CHENNAI v. ACIT, CHENNAI

ITA 272/CHNY/2010 | 2005-2006
Pronouncement Date: 24-02-2012 | Result: Allowed

Appeal Details

RSA Number 27221714 RSA 2010
Assessee PAN AAACR1622G
Bench Chennai
Appeal Number ITA 272/CHNY/2010
Duration Of Justice 1 year(s) 11 month(s) 21 day(s)
Appellant M/s. BTP India Ltd., CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 24-02-2012
Date Of Final Hearing 16-02-2012
Next Hearing Date 16-02-2012
Assessment Year 2005-2006
Appeal Filed On 05-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI N. S. SAINI ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NOS. 268 269 270 271 & 272/MDS/2010 ASSESSMENT YEARS : 2001-02 2002-03 2003-04 2004- 05 & 2005-06 M/S. BTP INDIA LTD. (NOW KNOWN AS M/S. CLARIANT CHEMICALS (I) LTD. KENCES TOWERS 2 ND FLOOR 1 RAMAKRISHNA STREET T. NAGAR CHENNAI-600 017. V. THE ASSISTANT COMMISSIONER OF INCOME-TAX C COMPANY CIRCLE-I(2) CHENNAI. (PAN: AAACR1622G) A N D I.T.A. NO. 2189/MDS/2008 ASSESSMENT YEAR : 2000-01 THE ASSISTANT COMMISSIONER OF M/S. BTP INDIA LTD. INCOME-TAX COMPANY CIRCLE-I(2) (NOW KNOWN AS M/S. CLARIANT CHENNAI. CHEMICALS (I) LTD. CHENNAI-600 017. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI R. VIJAYARAGHAVAN ADVOCATE DEPARTMENT BY : SHRI OMKARESHWAR CHIDRA CIT-DR DATE OF HEARING : 16-02-2012 DATE OF PRONOUNCEMENT : 2 4/02/2012 O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : ITA NO. 2189/MDS/2008 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-VI CHENNAI IN ITA NO. 13/08-09 DATED 18-07-2008 FOR TH E ASSESSMENT YEAR 2000- I.T.A. NOS.2189/MDS/2008 & 268-272/MDS/2010 2 01. ITA NOS. 268 TO 272/MDS/2010 ARE APPEALS FILE D BY THE ASSESSEE AGAINST THE ORDERS OF THE LEARNED CIT(APPEALS)-III CHENNAI IN APPEAL NOS. 525/07- 08/A.III 526/07-08/A.III 524/07-08/A.III 528/07- 08/A.III AND 529/07-08/A.III DATED 17-11-2009 FOR THE ASSESSMENT YEARS 2001-02 2002-03 2003-04 2004-05 AND 2005-06. 2. SHRI R. VIJAYARAGHAVAN ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI ONKARESHWAR CHIDRA LEARNED CIT-DR REPRESE NTED ON BEHALF OF THE REVENUE. 3. IT WAS SUBMITTED THAT THE APPEAL OF THE REVENUE IN ITA NO. 2189/MDS/2008 WAS THE MAIN APPEAL AND THE APPEALS O F THE ASSESSEE IN ITA NOS. 268 TO 272/MDS/2010 ARE APPEALS FOR SUBSEQUENT YEARS WHICH ARE IN EFFECT GIVING CONSEQUENTIAL EFFECT TO THE FINDING IN THE A PPEAL OF THE REVENUE IN ITA NO. 2189/MDS/2008. IT WAS THE SUBMISSION THAT APPEALS IN ITA NOS. 268 TO 272/MDS/2010 WERE BASICALLY FOR THE CONSEQUENTIAL E FFECT OF QUANTIFYING AND ALLOWING THE CORRECT CARRY FORWARD LOSS. 4. ITA NO. 2189/MDS/2008: IN REGARD TO THE REVENUES APPEAL IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSESSEE COMPA NY HAD RECEIVED AN AMOUNT OF ` 9 CRORES FROM ITS HOLDING COMPANY BEING M/S. BTP P LC. MANCHESTER. IT WAS SUBMITTED THAT THE ASSESSEE HAD RECEIVED THIS AMOUN T OF ` 9 CRORES FROM THE HOLDING COMPANY FOR REDUCING ITS LOSSES WHICH IS PU RELY ON REVENUE ACCOUNT. IT WAS THE SUBMISSION THAT THE AMOUNT WAS RECEIVED AFT ER THE START OF THE BUSINESS I.T.A. NOS.2189/MDS/2008 & 268-272/MDS/2010 3 OF THE ASSESSEE COMPANY FOR MEETING REGULAR EXPENSE S. IT WAS THE SUBMISSION THAT AS THE AMOUNT RECEIVED BY THE ASSESSEE FROM TH E HOLDING COMPANY WAS ROUTED THROUGH THE PROFIT & LOSS APPROPRIATION ACCO UNT THE ASSESSING OFFICER HAD HELD THE SAME TO BE A REVENUE RECEIPT AND CONSE QUENTLY BROUGHT THE SAME TO TAX. IT WAS THE SUBMISSION THAT THE CONSEQUENT EFFECT WAS THE REDUCTION IN THE CARRY FORWARD LOSSES. IT WAS THE SUBMISSION TH AT ON APPEAL THE LEARNED CIT(A) HAD HELD THAT THE RECEIPT OF THE SUBSIDY FRO M THE HOLDING COMPANY WAS IN FACT RE-IMBURSEMENT OF THE LOSSES OF THE ASSESSEE C OMPANY BY THE HOLDING COMPANY. IT WAS THE SUBMISSION THAT THE LEARNED CI T(A) HAD RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF ADDL. CIT V. HANDICRAFTS AND HANDLOOM EXPORT CORPORATION REPORTED IN 133 ITR 590 AS ALSO THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF C IT V. ANAND AND CO. REPORTED IN 233 ITR 18 AND HAD DELETED THE ADDITION. IT WAS THE SUBMISSION THAT THE SUBSIDY RECEIVED BY THE ASSESSEE FROM THE PARENT CO MPANY WAS SIMILAR TO A GOVERNMENT SUBSIDY AFTER THE START OF THE BUSINESS AND THE SAME WAS LIABLE TO BE TREATED AS INCOME. HE VEHEMENTLY SUPPORTED THE ORD ER OF THE ASSESSING OFFICER. IT WAS THE ALTERNATE PRAYER THAT THE ASSESSEE HAD N OT PRODUCED ALL THE DETAILS REGARDING THE SUBSIDY BEFORE THE ASSESSING OFFICER AND THE ISSUE COULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR R E-ADJUDICATION. 5. IN REPLY THE LEARNED AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO THE PAPER BOOK FILED WHICH CONTAINED THE EXTRACT OF THE BOARD RESOLUTION OF M/S. I.T.A. NOS.2189/MDS/2008 & 268-272/MDS/2010 4 CLARIANT WHICH IS THE COMPANY THAT HAD TAKEN OVER THE BUSINESS OF BTP PLC. WHEREIN IT HAS BEEN RESOLVED THAT AN AMOUNT OF 100 MILLION WILL BE RECEIVED FROM THE GROUP COMPANY WORLDWIDE OF BTP PLC. SUBJECT TO NECESSARY APPROVALS FROM RESERVE BANK OF INDIA AND OTHER GOVERNMENT AUTHORIT IES IF ANY. AND THAT THE COMPANY PREPAYS ALL OUTSTANDING FOREIGN CURRENCY LO AN OF IDBI AND RUPEE TERM LOANS OF ICICI UTI & SBI. HE FURTHER DREW OUR ATT ENTION TO THE CERTIFICATE OF FOREIGN INWARD REMITTANCE ISSUED BY THE HONKONG AND SHANGHAI BANKING CORPORATION LTD. DATED 23-02-2000 FOR THE TRANSFER OF THE AMOUNT OF ` 9 CRORES. HE ALSO DREW OUR ATTENTION TO PAGE 3 OF THE PAPER B OOK WHICH WAS THE COPY OF THE NO OBJECTION ISSUED BY THE RBI FOR THE SAID AMO UNT AS ALSO THE COPY OF THE APPLICATION MADE TO THE RBI FOR THE NO OBJECTION WH EREIN IT IS SPECIFICALLY MENTIONED THAT THE SAID AMOUNT OF 9 CRORES WILL BE USED FOR PRE-PAYMENT OF LOAN FROM INDIAN FINANCIAL INSTITUTION WORKING CAPI TAL AND CAPITAL EXPENDITURE. IT WAS THE FURTHER SUBMISSION THAT THE A MOUNT RECEIVED BY THE ASSESSEE FROM THE HOLDING COMPANY WAS FOR MAKING GOOD OF THE LOSSES OF THE SUBSIDIARY COMPANY BEING THE ASSESSEE COMPANY AND IT WAS NOT REPATRIABLE AMOUNT AND WAS THE CONTRIBUTION TO THE CAPITAL OF THE ASSESSEE COMPANY WHICH WAS ERODED BY THE LOSSES. HE VEH EMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). HE PLACE D RELIANCE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF HANDICRAFTS AND HANDLOOM EXPORT CORPORATION REFERRED TO SUPRA. I.T.A. NOS.2189/MDS/2008 & 268-272/MDS/2010 5 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IN THE APPEAL IS SQUARELY COVERED BY THE DECI SION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF HANDICRAFTS AND HANDLOOM EXPORT CORPORATION REFERRED TO SUPRA AND AS IT IS NOTICED THAT THE HOLDING COMPAN Y HAS ONLY REIMBURSED THE LOSSES MADE BY THE ASSESSEE COMPANY IT IS IN THE N ATURE OF CONTRIBUTION TOWARDS CAPITAL. THIS IS ALSO SUPPORTED BY THE COPY OF THE APPLICATION MADE BY THE ASSESSEE TO THE RBI FOR THE PURPOSE OF GETTING NO O BJECTION. IN THE CIRCUMSTANCES AS IT IS NOTICED THAT THE LEARNED CI T(A) HAS ONLY APPLIED THE PRINCIPLES LAID DOWN BY THE HON'BLE DELHI HIGH COUR T IN THE CASE OF HANDICRAFTS AND HANDLOOM EXPORT CORPORATION REFERRED TO SUPRA WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 7. IN REGARD TO THE ARGUMENT THAT THE ISSUE MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER WE ARE OF THE VIEW THAT AS ALL THE FACTS AND EVIDENCES WERE BEFORE THE ASSESSING OFFICER AND IT WAS ONLY ON THE BASIS OF THE SAME FACTS AND EVIDENCES THAT THE LEARNED CIT(A) HAS DELETED THE A DDITION AND NO FRESH FACTS HAVE BEEN PRODUCED BEFORE ANY OF THE APPELLATE AUTH ORITIES THERE WAS NO NECESSITY TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE- ADJUDICATION. IN THE CIRCUMSTANCES THE APPEAL OF THE REVENUE IS DISMISSED. 8. ITA NOS. 268 TO 272/MDS/2010: AS IT IS NOTICED THAT THE ISSUES IN THE APPEALS FI LED BY THE ASSESSEE ARE ONLY IN REGARD TO THE CONSEQUENTIAL EFFECT OF THE A DDITION OF ` 9 CRORES IN THE I.T.A. NOS.2189/MDS/2008 & 268-272/MDS/2010 6 ASSESSMENT YEAR 2000-01 AND WHICH HAS BEEN DELETED BY THE LEARNED CIT(A) AND WHOSE ORDER HAS BEEN UPHELD BY US SUPRA THE QUANT IFICATION OF THE CARRY FORWARD LOSS WOULD HAVE TO BE RE-DONE. IN THE CIRC UMSTANCES FOR GIVING EFFECT TO THE CONSEQUENTIAL CARRY FORWARD LOSS TO BE QUANTIFI ED AND CARRIED FORWARD THE ISSUE IN THE APPEALS IN ITA NOS. 268 TO 272/MDS/201 0 FOR THE ASSESSMENT YEARS 2001-02 TO 2005-06 IS RESTORED TO THE FILE OF THE A SSESSING OFFICER FOR QUANTIFICATION AND ALLOWING CARRY FORWARD LOSS AFTE R GIVING THE EFFECT TO THE ORDER OF THIS TRIBUNAL IN ITA NO. 2189/MDS/2008 FOR THE A SSESSMENT YEAR 2000-01. 9. IN THE CIRCUMSTANCES THE APPEAL OF THE REVENUE IN ITA NO. 2189/MDS/2008 IS DISMISSED AND THE APPEALS OF THE A SSESSEE IN ITA NOS. 268 TO 272/MDS/2010 ARE ALLOWED FOR STATISTICAL PURPOSES. 10. THE ORDER WAS PRONOUNCED IN THE COURT ON 24/02 /2012. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 24 TH FEBRUARY 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE