DCIT 14(2), MUMBAI v. GINI SILK MILLS, MUMBAI

ITA 2880/MUM/2010 | 2006-2007
Pronouncement Date: 27-07-2011 | Result: Dismissed

Appeal Details

RSA Number 288019914 RSA 2010
Assessee PAN AAAFG1125G
Bench Mumbai
Appeal Number ITA 2880/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 15 day(s)
Appellant DCIT 14(2), MUMBAI
Respondent GINI SILK MILLS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 27-07-2011
Date Of Final Hearing 14-07-2011
Next Hearing Date 14-07-2011
Assessment Year 2006-2007
Appeal Filed On 12-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI RAJENDRA SINGH (AM) AND SMT. ASHA VIJA YARAGHAVAN (JM) ITA NO.2880/MUM/2010 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME TAX -14(2) EARNEST HOUSE 3 RD FLOOR NARIMAN POINT MUMBAI-21. ..( APPELLANT ) VS. M/S. GINI SILK MILLS LTD. 421 TABTIA JOGANI INDL. PREMISES J.R. BORICHA MARG OPP. KASTURBA HOSPITAL LOWER PAREL MUMBAI-400011. ..( RESPONDENT ) P.A. NO. (AAAFG 1125 G) APPELLANT BY : SHRI A.K. NAYAK RESPONDENT BY : SHRI S .M. BANDI O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R DATED 20.1.2010 FOR THE ASSESSMENT YEAR 2006-07. THE ONLY DISP UTE RAISED BY THE REVENUE IN THIS APPEAL IS REGARDING CARRY FORWA RD OF LOSS DETERMINED AS PER REVISED RETURN. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE FOR THE RELEVANT YEAR HAD DECLARED LOSS OF RS.91 25 492/- IN TH E RETURN OF INCOME FILED ON 31.10.2006. SUBSEQUENTLY THE ASSESSEE FIL ED REVISED RETURN UNDER THE PROVISIONS OF SECTION 139(5) IN WHICH T HE LOSS WAS REVISED TO RS.1 20 72 071/-. THE ASSESSEE EXPLAINED THAT IT HAD CONVERTED LAND HELD BY IT AS CAPITAL ASSET ON 31.5.1997 INTO STOCK-IN- ITA NO.2880/MUM/10 A.Y:06-07 2 TRADE. THE LAND AFTER CONVERSION INTO STOCK-IN-TRADE H AD BEEN SOLD DURING ASSESSMENT YEARS 2004-05 TO 2006-07. UNDER THE PR OVISIONS OF SECTION 45(2) WHEN CAPITAL ASSET IS CONVERTED INTO STOCK-IN -TRADE PROFIT AND GAIN ARISING FROM SUCH CONVERSION IS CHARGEABL E TO TAX AS INCOME OF PREVIOUS YEAR IN WHICH SUCH STOCK IS SOLD AND FO R THE PURPOSE OF COMPUTATION OF CAPITAL GAIN THE FAIR MARKE T VALUE OF THE ASSET ON THE DATE OF CONVERSION SHALL BE DEEMED TO BE FU LL VALUE CONSIDERATION RECEIVED OR RECEIVABLE AS RESULT OF TRANSF ER OF ASSET. IT WAS FURTHER EXPLAINED THAT FAIR MARKET VALUE OF THE LAND ON THE DATE OF CONVERSION WAS RS.9.00 CRORES AS PER REPORT OF REGISTERED V ALUER AND FAIR MARKET VALUE OF LAND AS ON 1.4.1981 AS PER REGISTERED VALUERS REPORT WAS RS.80 05 400/- . THERE WAS THUS LONG TERM CAPITAL GAINS OF RS.6 35 01 994/- AFTER CONSIDERING THE INDEXED COST OF A CQUISITION WHICH WAS SPREAD DURING 2004-05 TO 2006-07. THE LONG TERM CAPITAL GAINS FOR ASSESSMENT YEAR 2006-07 WHICH IS THE YEAR UNDER CONSIDERATION WAS RS.70 61 422/-. THE ASSESSEE HAD THEREF ORE SEGREGATED LONG TERM CAPITAL GAINS WHICH HAD BEEN EARLI ER CONSIDERED AS BUSINESS INCOME. THE BUSINESS LOSS WAS THUS INCREASED TO RS.1 20 72 071/-. THE ASSESSING OFFICER HOWEVER OBSERVED THAT THE REVISED RETURN WAS FILED BEYOND TIME ALLOWED UNDER SECT ION 139(5) AND AFTER THE PROCEEDINGS WERE INITIATED UNDER SECTION 143( 3). HE THEREFORE HELD THAT REVISION OF RETURN WAS NOT VOLUN TARY AND ACCORDINGLY HE ALLOWED THE LOSS ONLY AS PER ORIGINAL RE TURN TO BE CARRIED FORWARD THOUGH THE ACTUAL LOSS DETERMINED IN ASSESSMENT U NDER SECTION 143(3) WAS RS.1 20 071/-. 2.1 THE ASSESSEE DISPUTED THE DECISION OF THE ASSESSING OFFICE R AND THE CIT(A) ON THE EXAMINATION OF RECORDS OBSERVED THAT THE ASSESSEE HAD FILED RETURN OF INCOME ON 31.10.2006 WHICH WAS WIT HIN THE TIME ITA NO.2880/MUM/10 A.Y:06-07 3 ALLOWED UNDER SECTION 139(1). THE RETURN WAS REVISED O N 20.12.2007 WHICH WAS ALSO WITHIN TIME ALLOWED UNDER SECTION 139(5). THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DETERMINED THE LOSS AT RS.1 20 72 070/-. HOWEVER HE CA RRIED FORWARD LOSS ONLY TO THE EXTENT OF LOSS DECLARED IN THE ORIGINA L RETURN. THE CIT(A) FURTHER OBSERVED THAT THE CASE OF THE ASSESSEE WAS CO VERED BY THE DECISION OF CHANDIGARH BENCH OF THE TRIBUNAL IN CA SE OF SAT PAL SACHDEVA VS. ACIT IN ITA NO.979 OF 2007 IN WHICH IT W AS HELD THAT ONCE REVISED RETURN WAS FILED WITHIN TIME ALLOWED UNDE R SECTION 139(5) IT TOOK THE PLACE OF ORIGINAL RETURN WHICH MEANT THA T THE ORIGINAL RETURN WAS SUBSTITUTED BY REVISED RETURN. THE TRIBUNAL ALSO OB SERVED THAT EVEN IF THE ASSESSEE HAD NOT FILED REVISED RETURN THE ASSESSING OFFICER WAS REQUIRED TO COMPUTE THE LOSS CORRECTLY UNDER THE PRO VISIONS OF LAW AND SUCH LOSS DETERMINED IN ASSESSMENT WAS REQUIRED TO BE CAR RIED FORWARD. THE CIT(A) FOLLOWING THE SAID DECISION OF TH E TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL. 3. BEFORE US THE LD. DR APPEARING FOR THE REVENUE AR GUED THAT UNDER THE PROVISIONS OF SECTION 80 ONLY THE LOSS DETERMI NED IN PURSUANCE OF RETURN FILED IN ACCORDANCE WITH PROVISIONS OF SECTION 139(3) COULD BE ALLOWED TO BE CARRIED FORWARD. IT WA S THUS POINTED OUT THAT ANY EXCESS LOSS DETERMINED IN PURSUANCE OF RETURN FIL ED UNDER SECTION 139(5) COULD NOT BE ALLOWED. THERE WAS THEREFOR E NO MISTAKE IN THE ORDER OF THE ASSESSING OFFICER. IT WAS ALSO SUBMITT ED THAT CHANDIGARH BENCH OF THE TRIBUNAL ON WHICH RELIANCE HA D BEEN PLACED BY THE ASSESSEE HAD NOT CONSIDERED THE PROVISIONS OF SECTION 80. HE FURTHER PLACED RELIANCE ON THE JUDGMENT OF HONBLE HIG H COURT OF CALCUTTA IN CASE OF KOPPIND (P.) LTD. VS. CIT (1994) [ 77 TAXMANN 359] ITA NO.2880/MUM/10 A.Y:06-07 4 IN SUPPORT OF THE CASE OF THE REVENUE. THE LD. AR FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT THE JUDGMENT OF THE HON BLE HIGH COURT OF CALCUTTA WHICH WAS IN RELATION TO THE RETURN FILED UNDER SECTION 148 OF THE ACT WAS DISTINGUISHABLE. IT WAS ALSO SUBMITTED THAT THE CASE OF THE ASSESSEE WAS FULLY COVERED BY THE DECISION OF CHANDIGAR H BENCH OF THE TRIBUNAL IN THE CASE OF SAT PAL SACHDEVA (SUPRA). 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING CARRY F ORWARD OF LOSS DETERMINED AS PER REVISED RETURN FILED UNDER SECTION 13 9(5). THE PROVISIONS OF SUB SECTION (3) OF SECTION 139 PROVIDES THAT IN CASE A PERSON REQUIRES THAT LOSS INCURRED UNDER THE HEAD PROF IT AND GAINS OF BUSINESS AND PROFESSION BE CARRIED FORWARD HE IS REQUIRE D TO FILE RETURN OF LOSS IN THE PRESCRIBED FORM BEFORE DUE DATE O F FILING OF INCOME UNDER SECTION 139(1). IN THIS CASE THE RETURN HAD BEEN FILED ON 31.10.2006 WHICH IS WITHIN THE TIME ALLOWED UNDER SECTI ON 139(1). THEREFORE THE LOSS RETURNED BY THE ASSESSEE IS REQUIRED T O BE CARRIED FORWARD. THE ASSESSEE IN THIS CASE HAD REVISED ORIGINAL R ETURN UNDER SECTION 139(5) AND THE REVISION IS WITHIN TIME ALLOWED UNDER THE SAID SECTION. THE ISSUE IS WHETHER THE LOSS DETERMINED IN PURSUA NCE OF RETURN FILED UNDER SECTION 139(5) CAN BE CARRIED FORWAR D OR ONLY LOSS DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURN FILED U NDER SECTION 139(3). 4.1 WE FIND THAT THIS ISSUE HAS ALREADY BEEN EXAMINED B Y CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF SAT PA L SACHDEVA (SUPRA) IN WHICH THE TRIBUNAL AFTER REFERRING TO SEV ERAL JUDGMENTS OF HONBLE HIGH COURTS HELD THAT ONCE REVISED RETURN WAS FI LED WITHIN TIME ALLOWED UNDER SECTION 139(5) IT TOOK PLACE OF ORIGINA L RETURN I.E. THE ITA NO.2880/MUM/10 A.Y:06-07 5 ORIGINAL RETURN WAS SUBSTITUTED BY THE REVISED RETURN. THE TRIBUNAL ALSO OBSERVED THAT EVEN IF THE ASSESSEE HAD NOT FILED REV ISED RETURN THE ASSESSING OFFICER WAS REQUIRED TO DETERMINE THE CORRE CT LOSS FILED IN THE ORIGINAL RETURN AND THE LOSS SO DETERMINED WAS R EQUIRED TO BE CARRIED FORWARD. IN THIS CASE THE ASSESSING OFFICER HAD COMP LETED THE ASSESSMENT UNDER SECTION143(3) IN WHICH THE LOSS DETERMINED WAS RS.12 07 007/- WHICH IS THE SAME AS LOSS DECLARED BY THE ASSE SSEE AS PER REVISED RETURN. THERE IS THEREFORE NO REASON FO R THE ASSESSING OFFICER TO NOT CARRY FORWARD THE LOSS DETERMINED IN THE ASSESSMENT WHEN THE ORIGINAL RETURN HAD BEEN FILED IN TIME UND ER THE PROVISIONS OF SECTION 139(3). EVEN SECTION 80 ON WHICH MUCH RELIANCE H AS BEEN PLACED BY THE LD. DR ONLY PROVIDES THAT ONLY LOSS DETE RMINED IN PURSUANCE OF RETURN FILED IN ACCORDANCE WITH THE PROVISIO NS OF SECTION 139(3) SHALL BE CARRIED FORWARD. THE SAID SECTION DOES N OT SAY THAT ONLY LOSS DECLARED IN THE RETURN UNDER SECTION 139(3) CAN BE CARRIED FORWARD. ONCE A RETURN OF LOSS HAS BEEN FILED WITHIN T IME ALLOWED SECTION 139(3) THE ASSESSEE IS ENTITLED TO CARRY FORWARD L OSS AS DETERMINED IN THE ASSESSMENT. IN CASE THE RETURN IS REVISE D BY THE ASSESSEE WITHIN TIME ALLOWED UNDER SECTION 139(5) THE O RIGINAL RETURN IS SUBSTITUTED BY REVISED RETURN AND THE LOSS DETERMINED BY ASSESSING OFFICER IN THE ASSESSMENT HAS TO BE CARRIED FORWARD. IN THIS CASE THE ASSESSING OFFICER HAS ACCEPTED THE LOSS DECLARED BY THE ASSESSEE AS PER REVISED RETURN IN THE REGULAR ASSESSMENT UNDER SECTION 143(3) AND THEREFORE THE SAID LOSS HAS TO BE CARRIED FORWARD AND NOT ONLY LOSS DECLARED AS PER ORIGINAL RETURN. THE DECISION OF THE C HANDIGARH BENCH OF THE TRIBUNAL IN CASE OF SAT PAL SACHDEVA (SUPRA) FULLY COVERS THE CASE OF THE ASSESSEE. THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN CASE OF KOPPIND (P.) LTD. (SUPRA) RELIED ON BY THE LD . DR IS DISTINGUISHABLE AS IN THAT CASE THE LOSS HAD BEEN DECLARE D IN RESPONSE ITA NO.2880/MUM/10 A.Y:06-07 6 TO RETURN FILED UNDER SECTION 148 AND NOT UNDER THE P ROVISIONS OF SECTION 139(3). IN VIEW OF THE FOREGOING DISCUSSION WE DO NOT SEE ANY INFIRMITY IN ALLOWING THE CLAIM OF CARRYFORWARD OF LO SS. THE ORDER OF CIT(A) IS THEREFORE UPHELD. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.7.2011. SD/- SD/- (ASHA VIJAYARAGHAVAN) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 27.7.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.