Cochin Shipyard Ltd, Cochin v. ACIT, Ernakulam

ITA 342/COCH/2010 | 2005-2006
Pronouncement Date: 17-02-2012

Appeal Details

RSA Number 34221914 RSA 2010
Assessee PAN AAACC6905B
Bench Cochin
Appeal Number ITA 342/COCH/2010
Duration Of Justice 1 year(s) 8 month(s) 19 day(s)
Appellant Cochin Shipyard Ltd, Cochin
Respondent ACIT, Ernakulam
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2012
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 17-02-2012
Date Of Final Hearing 14-02-2012
Next Hearing Date 14-02-2012
Assessment Year 2005-2006
Appeal Filed On 28-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND B.R.BASKAR AN AM I.T.A. NO. 342/COCH/2010 ASSESSMENT YEAR -2005-06 COCHIN SHIPYARD LTD. PERUMANNOOR KOCHI-682 015. [PAN: AAACC 6905B] VS. .THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-2(1) ERNAKULAM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI RADHESH BHATT FCA REVENUE BY SMT. VIJAYAPRABHA JR. DR DATE OF HEARING 14/02/2012 DATE OF PRONOUNCEMENT 17 /02/2012 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25.3.2010 PASSED BY LD. CIT KOCHI U/S 263 OF THE ACT AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. THE ASSESSEE IS CHALLENGING THE INITIATION OF REVISION PROCEEDINGS UNDER VARIOUS GROUNDS. HOWEVER DURING THE COURSE OF HEARING THE LD. A.R D ID NOT PRESS THE GROUNDS NUMBERED AS 4 AND 5. IN SUPPORT OF HIS SUBMISSIONS HE HAS MADE NECESSARY ENDORSEMENT ON THE GROUNDS OF APPEAL BY AFFIXING HIS SIGNATURE. ACCOR DINGLY THE GROUNDS NUMBERED AS 4 AND 5 ARE DISMISSED AS WITHDRAWN. 2. THE GROUNDS NUMBERED AS 1 AND 2 ARE GENERAL IN NATURE AND HENCE THEY DO NOT REQUIRE ANY ADJUDICATION. FINALLY WE ARE LEFT WITH GROUND NO.3 WHICH READS AS UNDER:- I.T.A. NO.342/COCH/2010 2 3.THE LEARNED CIT ERRED IN HOLDING THAT THERE IS N O PROVISION IN THE ACT FOR WRITE OFF OF NON-USABLE ITEMS AND ALSO TH AT THE ASSESSING OFFICER HAS NOT LOOKED INTO WHETHER THE WRITE OFF OF NON-U SABLE ITEMS ARE IN THE NATURE OF CAPITAL EXPENDITURE WITHOUT CORRECTLY AP PRECIATING THE FACTS OF THE CASE. THE AMOUNT OF LOOSE TOOLS FOUND NO LO NGER USABLE AND WRITTEN OFF TOWARDS BREAKAGE AND OBSOLESCENCE IS A N ALLOWABLE EXPENDITURE AND THERE IS NO ERROR SO FAR AS IT IS P REJUDICIAL TO THE INTEREST OF REVENUE IN THE ORDER OF THE ASSESSING O FFICER ALLOWING SUCH EXPENDITURE. 3. THE FACTS RELATING TO THE SAID ISSUE ARE STA TED IN BRIEF. THE ADMINISTRATIVE COMMISSIONER WHILE EXAMINING THE ASSESSMENT RECORD NOTICED THAT THE ASSESSEE HAS CLAIMED A SUM OF RS.95 66 593/- AS DEDUCTION TOWARD S WRITE-OFF OF NON-USABLE ITEMS. THE ADMINISTRATIVE COMMISSIONER FELT THAT THE THERE IS NO SPECIFIC PROVISION UNDER THE ACT UNDER WHICH THE SAID CLAIM WAS ALLOWABLE. HE ALSO NOTICED THAT THE AO HAS FAILED TO EXAMINE THE IMPUGNED ISSUE. ACCORDINGLY HE FELT T HAT THE ABOVE SAID DEDUCTION ALLOWED BY THE AO IS NOT IN ORDER. ACCORDINGLY AFTER HEAR ING THE ASSESSEE THE LD CIT DIRECTED THE AO TO EXAMINE THE ABOVE SAID CLAIM AFRESH. THE ASSESSEE IS AGGRIEVED BY THE SAID DIRECTION OF THE LD. CIT. 4. THE LD. COUNSEL APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED THAT THE IMPUGNED ISSUE RELATING TO THE DEDUCTION OF WRITE OFF NON-US ABLE ITEMS IS A DEBATABLE ISSUE AND HENCE IT FALLS OUTSIDE THE SCOPE OF THE REVISION PR OCEEDINGS. ON THE OTHER HAND THE LD D.R SUBMITTED THAT THE ASSESSMENT ORDER IS RENDERED ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE SINCE THE AO HAS FAILED TO EX AMINE THE IMPUGNED ISSUE WHILE COMPLETING THE ASSESSMENT. AT THE TIME OF HEARIN G THE LD A.R FAIRLY CONCEDED THAT THE AO DID NOT MAKE ANY ENQUIRY DURING THE COURSE OF AS SESSMENT PROCEEDINGS ON THE IMPUGNED ISSUE. HOWEVER HE REITERATED HIS SUBMISS ION THAT THE IMPUGNED ISSUE IS DEBATABLE IN NATURE AND HENCE WOULD FALL OUTSIDE TH E PURVIEW OF REVISION PROCEEDINGS U/S 263 OF THE ACT. I.T.A. NO.342/COCH/2010 3 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE UNDISPUTED FACT REMAINS THAT THE AO DID NOT EXAMINE THE IMPUGNED ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FOR RESOLVING TH E ISSUE BEFORE US WE CAN GAINFULLY REFER TO THE DECISION RENDERED BY HONBLE SUPREME C OURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD VS. CIT (248 ITR 83). THE FOLLO WING OBSERVATIONS MADE BY THE HONBLE APEX COURT ARE RELEVANT HERE:- THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED B Y THE ASSESSING OFFICER IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BE ING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYI NG THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY TH E ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE FOR EXAMPLE WHEN AN INCOME-TAX OFFICER AD OPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFF ICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUS TAINABLE IN LAW. 6. THUS THE NON-APPLICATION OF MIND ON THE PART OF THE AO ALSO RENDERS THE ASSESSMENT ORDER TO BE ERRONEOUS ONE. FURTHER WH AT IS IMPORTANT IS THAT AO SHOULD HAVE APPLIED HIS MIND AND SHOULD HAVE TAKEN ONE PLAUSIBLE VIEW ON THE MATTER UNDER DISPUTE. THE NATURE OF THE ISSUE I.E . WHETHER IT IS DEBATABLE OR NOT BECOMES RELEVANT ONLY WHEN THE AO HAS APPLIED HIS M IND. IN THE INSTANT CASE ADMITTEDLY THE AO DID NOT APPLY HIS MIND ON THE IMP UGNED ISSUE WHICH RENDERS THE ASSESSMENT ORDER TO BE ERRONEOUS ONE. HENCE W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT ON THIS ISSUE. I.T.A. NO.342/COCH/2010 4 7. IN THE RESULT THE APPEAL OF THE ASSESSEE I S DISMISSED. PRONOUNCED ACCORDINGLY ON 17-02-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 17TH FEBRUARY 2012 GJ COPY TO: 1. COCHIN SHIPYARD LTD. PERUMANNOOR KOCHI-682 015 . 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE -2(1) ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX KOCHI. 4. D.R. I.T.A.T. COCHIN BENCH COCHIN. 5. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) ITAT COCHIN