Visu International Ltd., Hyd, Hyderabad v. DCIT, Circle-3(3), Hyderabad, Hyderabad

ITA 394/HYD/2016 | 2011-2012
Pronouncement Date: 26-10-2016 | Result: Allowed

Appeal Details

RSA Number 39422514 RSA 2016
Assessee PAN AABCV1500A
Bench Hyderabad
Appeal Number ITA 394/HYD/2016
Duration Of Justice 7 month(s) 2 day(s)
Appellant Visu International Ltd., Hyd, Hyderabad
Respondent DCIT, Circle-3(3), Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 26-10-2016
Date Of Final Hearing 02-06-2016
Next Hearing Date 02-06-2016
Assessment Year 2011-2012
Appeal Filed On 24-03-2016
Judgment Text
ITA NO 394 OF 2016 VISU INTERNATIONAL LTD HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO.394/HYD/2016 (ASSESSMENT YEAR: 2011-12) M/S. VISU INTERNATIONAL LIMITED HYDERABAD PAN: AABCV 1500 A VS DY. COMMISSIONER OF INCOME TAX CIRCLE 3(3) HYDERABAD FOR ASSESSEE : SHRI P. MURALI MOHAN RAO FOR REVENUE : SMT. G. APARNA RAO (CIT) DR O R D E R PER SMT. P. MADHAVI DEVI J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED BY THE ORDER OF TH E CIT U/S 263 OF THE I.T. ACT DATED 8.3.2016 DIRECTING THE AO TO INQUIRE INTO AND VERIFY THE RELEVANT FACTS WITH REFERENCE TO THE TWO ISSUES DISCUSSED IN THE SHOW CAUSE NOTICE AND PASS THE ORDER AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY CARRYING ON THE BUSINESS OF CONSULTANCY IN GLOBAL E DUCATION FILED ITS RETURN OF INCOME FOR THE A.Y 2011-12 ON 29 .09.2011 ADMITTING A TOTAL LOSS OF RS.1 38 45 782. THE RETUR N WAS PROCESSED U/S 143(3) OF THE ACT AND DISALLOWANCE OF EXPENDITURE DATE OF HEARING : 05.10.2016 DATE OF PRONOUNCEMENT : 26.10.2016 ITA NO 394 OF 2016 VISU INTERNATIONAL LTD HYDERABAD PAGE 2 OF 5 MADE U/S 40(A)(IA) FOR NON DEDUCTION OF TAX AT SOUR CE AS PER THE PROVISIONS OF SECTION 195J OF THE ACT. THEREAFTER THE LOSS WAS REDUCED TO RS.99 98 986. THEREAFTER THE CIT BY VIR TUE OF THE POWERS VESTED IN HIM U/S 263 OF THE I.T. ACT PERUS ED THE ASSESSMENT RECORD OF THE ASSESSEE FOR THE A.Y 2011-1 2 AND OBSERVED THAT THE AO HAS ALLOWED (I) DEPRECIATION @ 60% ON ADDITIONS MADE TO COMPUTERS AND ITS PERIPHERALS IN THE DEPRECIATION SCHEDULE AND ALSO (II) DEPRECIATION ON INTANGIBLE ASSET THOUGH THE ASSET WAS NOT COMPLETED AND STILL IS IN THE STATE OF PROGRESS I.E. PRE-OPERATIVE STAGE. THEREFORE HE WAS OF THE OPINION THAT THE ASSESSMENT ORDER IS ERRONEOUS IN S O FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE ACC ORDINGLY ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE. IN REPLY THERE TO THE ASSESSEE FILED ITS LETTER DATED 03.02.2016 SUBMITTING THAT T HE ASSESSEE HAS FILED ALL THE DETAILS DURING THE SCRUTINY PROCEEDIN GS WHEN THE INFORMATION WAS CALLED FOR BY THE AO AND THAT THE A O HAS CONSIDERED THE SAME BEFORE COMPLETING THE ASSESSMEN T. THE ASSESSEE ALSO PRODUCED THE COPY OF THE QUESTIONNAIR E ISSUED BY THE AO. IT WAS ALSO SUBMITTED THAT AS FAR AS DEPREC IATION @ 60% ON ADDITIONS TO COMPUTERS AND COMPUTER PERIPHERALS IS CONCERNED THE ISSUE HAD ARISEN IN THE ASSESSEES O WN CASE FOR THE A.Y 2009-10 AND THE ITAT HAD HELD THAT THE ASSESSEE WAS ENTITLED FOR DEPRECIATION @ 60%. AS REGARDS DEPRECIATION ALSO ON INTANGIBLE ASSET IS CONCERNED IT WAS SUBMITTED THAT THE DEPRE CIATION WAS CLAIMED ON TANGIBLE AND INTANGIBLE ASSETS AND THE A O AFTER VERIFICATION HAS ALLOWED THE DEPRECIATION @ 60% ON INTANGIBLE ASSET ONLY. THEREFORE ACCORDING TO HIM THE FINDIN G OF THE CIT THAT THE ASSESSMENT ORDER IS ERRONEOUS IS NOT CORRECT. FU RTHER THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO ITA NO 394 OF 2016 VISU INTERNATIONAL LTD HYDERABAD PAGE 3 OF 5 PAGE 10 OF THE REVISION ORDER WHEREIN THE CIT HAS R ECORDED THAT THE PERUSAL OF THE ASSESSMENT RECORD SHOWS THAT NO FURTHER INQUIRY WAS DONE BY THE AO ON BOTH THE ISSUES. HE S UBMITTED THAT THOUGH THIS CLEARLY SHOWS THAT THE AO HAS MADE THE INQUIRY THE CIT HAS HELD THE ASSESSMENT ORDER TO BE ERRONEOUS O NLY AS HE WAS OF THE OPINION FURTHER INQUIRIES OUGHT TO HAVE BEEN MADE BY THE AO. IN SUPPORT OF HIS CONTENTIONS AS ABOVE THE LE ARNED COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWI NG CASE LAWS: I) HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD VS. CIT REPORTED IN 109 TAXMANN.COM 66 II) HON'BLE A.P. HIGH COURT IN THE CASE OF SPECTRA SHARES & SCRIPS P LTD REPORTED IN 36 TAXMANN.COM 348 III) HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. DEVELOPMENT CREDIT BANK LTD REPORTED IN 196 TAXMAN.COM 329 IV) HON'BLE DELHI HIGH COURT IN THE CASE OF INCOME TAX OFFICER VS. DG HOUSING PROJECTS LTD REPORTED IN 20 TAXMANN.COM 587. 3. FURTHER ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE THE CIT HAS NOT ARRIVED AT OR FORMED AN O PINION THAT THE ASSESSMENT ORDER IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE BUT HAS DIRECTED THE AO TO VERIFY AND DECIDE THE IS SUE IN ACCORDANCE WITH LAW. THUS SUCH A FINDING IS ALSO N OT SUSTAINABLE. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE OR DERS OF THE CIT AND SUBMITTED THAT THOUGH THE AO HAS CALLED FOR INFORMATION REGARDING THE ASSETS ON WHICH THE DEPRECIATION HAS BEEN CLAIMED HE HAS NOT EXAMINED THE RATE OF DEPRECIATION ALLOWA BLE ON SUCH ASSETS. THEREFORE THE ASSESSMENT ORDER IS CLEARLY ERRONEOUS AND ALL THAT THE CIT HAS DIRECTED IS TO VERIFY AND DECI DE THE ISSUE IN ACCORDANCE WITH LAW THEREFORE NO PREJUDICE IS CAU SED TO THE ASSESSEE. ITA NO 394 OF 2016 VISU INTERNATIONAL LTD HYDERABAD PAGE 4 OF 5 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD WE FIND THAT DURING THE ASSESSMENT PROCE EDINGS U/S 143(3) OF THE ACT THE AO HAD ISSUED A NOTICE U/S 1 43(3) ALONG WITH A QUESTIONNAIRE WHEREIN ITEM NOS.3 & 4 THE AS SESSEE WAS DIRECTED TO FURNISH THE BILLS/INVOICES FOR ADDITION S MADE TO COMPUTERS AND VEHICLES ALONG WITH THE BANK A/C STAT EMENT AND FIXED ASSET SCHEDULE AND THE COMPOSITION OF THE CAP ITAL WORK IN PROGRESS AND ALSO AS TO WHEN THE CAPITAL WAS USED F OR BUSINESS PURPOSES AND THE SOURCES FOR THE PURCHASE OF THE CA PITAL WORK IN PROGRESS. WE ALSO FIND FROM PAGE 8 OF THE PAPER BOO K THAT THE ASSESSEE HAS GIVEN THE SCHEDULE OF FIXED ASSETS WHE REIN THE CAPITAL WORK IN PROGRESS WAS SHOWN AS RS.1.65 CRORE S. THESE DETAILS ARE ALSO AVAILABLE AT PAGE 28 OF THE PAPER BOOK WHEREIN BREAK-UP OF THE DETAILS OF CAPITAL WORK IN PROGRESS WAS GIVEN. THUS IT IS SEEN THAT THE AO HAD CALLED FOR DETAILS AND THE ASSESSEE HAS FURNISHED THE SAME BEFORE THE AO. THER EFORE THE PRESUMPTION TO BE DRAWN IS THAT THE AO HAS APPLIED HIS MIND TO THE SAID DETAILS BUT HAS NOT MENTIONED ANYTHING IN THE ASSESSMENT ORDER. AS PER THE JUDGMENT OF THE HON'BL E TELANGANA & A.P. HIGH COURT IN THE CASE OF SPECTRA SHARES & S CRIPS (P) LTD (SUPRA) THE AO IS NOT REQUIRED TO GIVE DETAILED RE ASONS FOR ACCEPTING THE CONTENTIONS OF THE ASSESSEE. FURTHER THE HON'BLE DELHI HIGH COURT IN THE CASE OF DG HOUSING PROJECTS LTD HAS HELD THAT IT IS NOT SUFFICIENT IF THE CIT HAD DOUBTS ABO UT THE VALUATION BUT TO REVISE AN ASSESSMENT ORDER THE CIT SHOULD H AVE EXAMINED THE ASPECT HIMSELF AND GIVEN A FINDING THAT THE ORD ER PASSED BY THE AO WAS ERRONEOUS AND ALSO PREJUDICIAL TO THE IN TEREST OF THE REVENUE. IN THE CASE BEFORE US ALSO THE CIT THOUGH HAS FOUND THE ITA NO 394 OF 2016 VISU INTERNATIONAL LTD HYDERABAD PAGE 5 OF 5 ASSESSMENT ORDER TO BE ERRONEOUS ON THE GROUND THAT THE AO HAS NOT MADE FURTHER INQUIRIES HAS NOT GIVEN A FINDING AS TO HOW THE ASSESSMENT ORDER HAS CAUSED PREJUDICE TO THE INTERE ST OF THE REVENUE. FOR INITIATING THE REVISION PROCEEDINGS U/S 263 OF THE ACT THE CIT SHOULD BE SATISFIED THAT THE ASSESSMEN T ORDER IS BOTH ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE. AFTER GOING THROUGH THE MATERIAL ON RECORD WE FIND THAT THE ASSESSEE HAS PROVIDED ALL THE DETAILS AND THE AO HA S APPLIED HIS MIND TO THE SAID DETAILS AND THEREFORE AND THE ASS ESSMENT ORDER IS NOT ERRONEOUS AND THERE IS NO PREJUDICE CAUSED T O THE REVENUE. AS BOTH THE CONDITIONS FOR REVISION ARE NOT SATISFI ED THE REVISION ORDER IS NOT SUSTAINABLE AND HENCE SET ASIDE. 5. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER 2016. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD DATED 26 TH OCTOBER 2016. VINODAN/SPS COPY TO: 1 M/S.P.MURALI & CO. CAS 6-3-655/2/3 1 ST FLOOR SOMAJIGUDA HYDERABAD 500082 2 DY. CIT CIRCLE 3(3) HYDERABAD 3 PR. CIT -5 HYDERABAD 4 ADDL.CIT RANGE 17 HYDERABAD 5 THE DR ITAT HYDERABAD 6 GUARD FILE BY ORDER