M/s. ABC Telecom Pvt. Ltd, New Delhi v. ITO, New Delhi

I.T.A. NO.4174 /DEL/09 1/6 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P. TOLANO JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.4174 /DEL/2009 ASSESSMENT YEAR : 2006-07 M/S ABC TELECOM PVT. ITO LTD. G-84 MASJID MOTH WARD-1(1) G.K. PARET-III NEW DELHI. NEW DELHI. V/ (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABCA AABCA AABCA AABCA- -- -0617 0617 0617 0617- -- -R RR R APPELLANT BY : MS. DEEPTI CHAMRIA C.A. RESPONDENT BY : MS. ANUSHA KHURANA SR. DR. ORDER PER A.K. GARODIA AM: THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A)-II. NEW DELHI DATED 26.8.2009 FOR ASSESSMENT YEAR 2006-07 . 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THAT THE ORDER OF THE LD CIT(A) IV NEW DELHI IS BA D IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORD INGLY THE SAME NEED TO BE RECTIFIED. 2. THAT THE LD CIT(A) HAS ERRED IN DISALLOWING THE LOSS OF `.5 45 409/- AS AGAINST THE INCOME OFFER TO TAX OF `. 58 305/-. 3. THE LD CIT(A) HAS ERRED IN REJECTING THE CLAIM OF TH E ASSESSEE AND THE DECISION OF CIT V. BHARAT ALUMINUM CO. LTD. . I.T.A. NO.4174/DEL/09 2/6 4. CIT HAS ERRED IN UPHOLDING THAT THERE WAS NO CASE FOR SUBMITTING A REVISED COMPUTATION OF INCOME AFTER THE TIME LIMIT FOR FILING THE REVISED RETURN HAD EXPIRED. 5. THE LD CIT(A) HAS ERRED IN DISALLOWING THE CLAIM OF A SSESSEE ON THE CONTENTION THAT REVISED COMPUTATION MADE BY THE ASSESSEE WAS NOT DULY VERIFIED BY THE ASSESSING OFFICER. 3. BRIEF FACTS AS NOTED BY THE ASSESSING OFFICER IN THE A SSESSMENT ORDER ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BU SINESS OF SOFTWARE DEVELOPMENT. IT IS ALSO NOTED BY THE ASSESSING OF FICER THAT THE ASSESSEE FILED ELECTRONIC RETURN DECLARING AN INCOME OF `.9122/- ON 30.11.2006. THE ASSESSING OFFICER HAS ALSO NOTED THAT TH E ASSESSEE COMPANY HAS EARNED AN INCOME OF `.57616/- AS DIVIDEND WHICH IS EXEMPT. THE ASSESSING OFFICER ASKED THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 17.10.2008 AS TO WHY DISALLOWANCE U/S 14A OF THE INCOME TAX ACT 1961 SHOULD NOT BE MADE. IT IS FURTHER NOT ED BY THE ASSESSING OFFICER THAT VIDE ITS LETTER DATED 21.11.2008 THE A SSESSEE HAS SUBMITTED A WORKING OF DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D. THE ASSESSING OFFICER MADE DISALLOWANCE OF `.8151/- U/S 14A BY FOLLOWING RULE 8D. THERE IS NO DISPUTE ON THIS ASPEC T BEFORE US. THEREAFTER IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSE E WAS ASKED TO EXPLAIN CERTAIN DISCREPANCIES AS SHOWN IN THE C OMPUTATION OF INCOME. IT IS FURTHER NOTED BY THE ASSESSING OFFICER TH AT VIDE LETTER DATED 21.11.2008 THE ASSESSEE HAS SUBMITTED REVISED WORKI NG OF COMPUTATION OF INCOME BY STATING THAT THERE WAS SOME M ISTAKES IN FILING OF RETURN OF INCOME AND THEREFORE THE REVISE D WORKING ALONG WITH THE ORIGINAL WORKING IS ENCLOSED. IT IS NOTED BY THE ASSESSING OFFICER THAT AS PER THE ORIGINAL WORKING INCOME WAS DECLARED AT `.58 305/- WHILE AS PER THE REVISED WORKING LOSS OF `.5 45 409/- HAS BEEN DECLARED. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT DURING THE COURSE OF HEARING IT WAS ALSO ADMITTED BY LD AR OF TH E ASSESSEE THAT . I.T.A. NO.4174/DEL/09 3/6 THE RETURN OF INCOME ELECTRONICALLY FILED AT `.9122 /- IS ALSO ERRONEOUS. THEREAFTER IT IS HELD BY THE ASSESSING OFFICER THAT ME RELY FILING OF REVISED WORKING OF COMPUTATION OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS DOES NOT ENTITLE THE ASSESSEE TO CLA IM LOSS OF `.5 45 409/- AND SINCE NO REVISED RETURN HAS BEEN FILE D BY THE ASSESSEE WITHIN THE TIME ALLOWED U/S 139(5) OF THE ACT THE R EVISED WORKING OF INCOME IS NOT ACCEPTABLE AND THE INCOME DECLARED ORI GINALLY AT `.58 305/- IS ACCEPTED. ACCORDINGLY THE ASSESSING OFFI CER ASSESSED THE INCOME OF THE ASSESSEE AT `.66 460/- AFTER MAKING ADDIT ION OF `.8151/- U/S 14A. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE LD CIT (A) BUT WITHOUT SUCCESS AND NOW THE AS SESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY LD AR OF THE ASSESSEE THAT COMPUTAT ION OF TOTAL INCOME AS PER RETURN OF INCOME FILED BY THE ASSESSEE ELE CTRONICALLY DECLARING INCOME OF `.9122/- IS AVAILABLE ON PAGE NO .11 OF THE PAPER BOOK. IT IS ALSO SUBMITTED THAT AS PER THE SAME LOSS O F `.1 082 257/- WAS DECLARED UNDER THE HEAD INCOME FROM BUSINESS AND TO TAL CAPITAL GAINS OF `.9 94 851/- WAS DECLARED UNDER THE HEAD IN COME FROM CAPITAL GAINS AND INCOME FROM OTHER SOURCES WAS DECLARED AT `.9 6 528/-. IT IS SUBMITTED THAT AFTER SETTING OFF OF THE ENTIRE BUSINESS LOSS OF `.10 82 257/- AGAINST THE INCOME OF THE ASSESSEE UNDER T HE HEAD INCOME FROM CAPITAL GAINS AND INCOME FROM OTHER SOUR CES THE NET INCOME WAS SHOWN IN THE COMPUTATION AT `.9122/- WHICH IS AVAILABLE ON PAGE NO.11 OF THE PAPER BOOK. IT IS ALSO SUBMITTED TH AT THE REVISED COMPUTATION IS AVAILABLE ON PAGE NO.14 OF THE PAPER BOOK AND IN THE SAME IT CAN BE SEEN THAT THE MAJOR AMOUNT OF DIFFERE NCE IS WITH REGARD TO DEPRECIATION AS PER I.T. RULES WHICH IS `.11 72 252 /- AS PER ORIGINAL COMPUTATION OF INCOME AND `.14 65 424/- AS PER REVISE D COMPUTATION. IT IS SUBMITTED THAT EVEN IF THE REVISED COMPUTATION I S NOT TREATED AS REVISED RETURN OF INCOME THEN ALSO DEDUCTION ON ACCO UNT OF DEPRECIATION HAS TO BE ALLOWED AS PER THE IT RULES EV EN IF A WRONG . I.T.A. NO.4174/DEL/09 4/6 DEDUCTION IS CLAIMED IN THE ORIGINAL RETURN OF INCOM E. IT IS ALSO SUBMITTED THAT IN THE INTEREST OF JUSTICE THE ASSESSING O FFICER SHOULD BE DIRECTED TO FRAME THE ASSESSMENT DE NOVO AFTER CONSID ERING THE REVISED COMPUTATION OF INCOME FILED BY THE ASSESSEE IN T HE COURSE OF ASSESSMENT PROCEEDINGS. AS AGAINST THIS LD DR OF THE REVE NUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IT IS NOT ED BY THE ASSESSING OFFICER IN THE FIRST PARA OF THE ASSESSMENT ORDER THAT T HE ASSESSEE HAS FILED ELECTRONIC RETURN DECLARING INCOME OF `.9122/ -. ON PAGE NO.2 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS COMPUTED THE INCOME OF THE ASSESSEE AT `.66 480/- ON THIS BASIS THAT THE INCOM E RETURNED BY THE ASSESSEE IS `.58 305/- AND AFTER MAKING DISALLOWANCE OF `.8155/- U/S 14A OF THE ACT HE HAS COMPUTED THE TAXABLE INCOM E OF THE ASSESSEE AT `.66 460/-. WE FAIL TO UNDERSTAND AS TO FROM WHERE THE ASSESSING OFFICER HAS TAKEN THIS FIGURE OF `.58 305/- BEI NG THE INCOME RETURNED BY THE ASSESSEE WHEN THE ASSESSING OFFICER HIMSEL F IS STATING IN PARA NO.1 OF THE ASSESSMENT ORDER THAT THE ASSESSEE FIL ED ELECTRONIC RETURN OF INCOME DECLARING INCOME OF `.9122/-. THE REAFTER THE ASSESSING OFFICER HAS REFERRED TO A REVISED WORKING AND O RIGINAL WORKING OF INCOME FILED BY THE ASSESSEE ON 21.11.2008 A ND THE ASSESSING OFFICER HAS PROBABLY TAKEN THIS FIGURE OF INCOM E OF `.58 305/- FROM THIS WORKING OF ORIGINAL COMPUTATION FILED ON 2 1.11.2008. AS PER THE REVISED WORKING THE ASSESSEE HAS SHOWN LOSS OF `.5 45 4 09/-. THESE ORIGINAL AND REVISED WORKING OF THE ASSESSEE ARE AV AILABLE ON PAGE NO.14 OF THE PAPER BOOK AND WE FIND THAT THE M AIN DIFFERENCE IS IN DEPRECIATION AS PER INCOME TAX RULES WHICH IS `.11 72 252/- IN THE ORIGINAL WORKING OF THE ASSESSEE AND `.14 65 424/- IN T HE REVISED WORKING OF THE ASSESSEE. IT IS THE DUTY OF THE ASSESSING OF FICER TO ALLOW CORRECT DEPRECIATION TO THE ASSESSEE WHICH IS ALLOWABLE AS PER IT RULES AND SUCH ALLOWANCE OF DEPRECIATION IS NOT DEPENDENT U PON THE WORKING . I.T.A. NO.4174/DEL/09 5/6 OF THE ASSESSEE ALONE. ONE MORE DIFFERENCE IS IN THE AMO UNT OF INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN REDUCED FROM PROFIT AS PER P&L A/C TO WORK OUT INCOME FROM BUSINESS. THE SAME WAS TAKEN AT `.9 94 851/- IN THE ORIGINAL COMPUTATION AND IT IS R EDUCED BY THE ASSESSEE FROM THE PROFIT AS PER P&L ACCOUNT TO WORK OUT THE BUSINESS PROFIT. BUT AS PER THE REVISED WORKING IT WAS CONSIDER ED AT `.11 05 319/-. THE THIRD DIFFERENCE IS REGARDING DED UCTION MADE BY THE ASSESSEE OF `.2 00 074/- FROM LOSS FROM BUSINESS AND BUSINESS L OSS WAS DETERMINED AT `.10 70 605/- AFTER REDUCING `.2 00 0 74/- FROM GROSS LOSS OF `.12 70 679/- COMPUTED PRIOR TO THIS REDUCTION. I N THE REVISED COMPUTATION NO SUCH REDUCTION WAS MADE. THE BASIS OF THIRD ADJUSTMENT OF `.2 00 074/- COULD NOT BE EXPLAINED BY LD AR BUT HE SUBMITTED THAT IF THE MATTER IS RESTORED BACK TO THE A SSESSING OFFICER THE SAME CAN BE EXPLAINED. WE FIND THAT IN A SITUATIO N WHERE NO REVISED RETURN WAS FILED BY THE ASSESSEE AND ONLY REVISED COMPUTATION IS FILED THE ASSESSING OFFICER IS NOT BOUND TO ACCEPT T HE SAME AS HELD BY HON'BLE APEX COURT IN THE CASE OF GOETZE INDIA LT D.V. CIT 284 ITR 323 (SC) BUT AS PER THIS VERY JUDGMENT THIS IS NOT W ITHIN THE POWER OF THE ASSESSING AUTHORITY BUT IT DOES NOT IMPINGE ON THE P OWER OF ITAT U/S 254. HENCE WE FEEL THAT CONSIDERING THE FACTS OF THE PRESENT CASE THE REVISED COMPUTATION FILED BY THE ASSESSEE SHOULD BE ADMITTED AND THE CLAIM MADE THEREIN SHOULD BE EXAMINED AND IF ALL OWABLE AS PER LAW THE SAME SHOULD BE ALLOWED TO THE EXTENT ALLOWAB LE AS PER LAW. WITH THESE OBSERVATIONS WE SET ASIDE THE ORDER OF LD CI T(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFF ICER FOR A FRESH DECISION IN ACCORDANCE WITH LAW AS PER ABOVE DISCUSSION AFTER ALLOWING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOW ED FOR STATISTICAL PURPOSES. . I.T.A. NO.4174/DEL/09 6/6 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DAY OF 11TH FEBRUARY 2011. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 11 .2.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER (ITAT NEW DELHI).