ACIT CENT. CIR. - 14, MUMBAI v. M/s. WOCKHARDT LIFE SCIENCES LTD., MUMBAI

ITA 5798/MUM/2006 | 1998-1999
Pronouncement Date: 16-04-2010 | Result: Dismissed

Appeal Details

RSA Number 579819914 RSA 2006
Assessee PAN TANOS5798A
Bench Mumbai
Appeal Number ITA 5798/MUM/2006
Duration Of Justice 3 year(s) 5 month(s) 9 day(s)
Appellant ACIT CENT. CIR. - 14, MUMBAI
Respondent M/s. WOCKHARDT LIFE SCIENCES LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 16-04-2010
Date Of Final Hearing 15-04-2010
Next Hearing Date 15-04-2010
Assessment Year 1998-1999
Appeal Filed On 06-11-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH: MUMBAI BEFORE SHRI R S SYAL ACCOUNTANT MEMBER AND SHRI D K AGARWAL JUDICIAL MEMBER ITA NOS 5798 AND 5797/MUM/2006 (ASSESSMENT YEARS: 1998-99 AND 2000-01) ASSTT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -14 ROOM NO.1102 11TH FLOOR OLD CGO ANNEXE BLDG MUMBAI -400 020 VS M/S WOCKHARDT LTD (SUBSEQUENTLY KNOWN AS WOCKHARDT LIFE SCIENCES LTD AND NOW KNOWN AS CAROL INFO SERVICES LTD WOCKHARDT TOWERS BANDRA BLDG MUMBAI -400 051 PAN: AAACW 2472 M APPELLANT RESPONDENT APPELLANT BY: MR SRINIVAS REDDY MR KANCHUN KAUSHAL RESPONDENT BY: MR DHANESH BAFNA MR JITESH JHANKHARIA ORDER PER R S SYAL ACCOUNTANT MEMBER THESE TWO APPEALS BY THE REVENUE RELATE TO ASSESSM ENT YEARS 1998-99 AND 2000-01. FOR THE SAKE OF CONVENIENCE THESE APP EALS HAVE BEEN CLUBBED FOR DISPOSAL BY A CONSOLIDATED ORDER. ASSESSMENT YEAR 1998-99 : 2. THE REVENUE IS AGGRIEVED AGAINST THE ORDER PASSE D BY THE LEARNED CIT (A) HOLDING THAT THE ISSUE OF NOTICE U/S 148 WAS BA RRED BY LIMITATION. ITA NOS 5797 AND 5798/M/2006 M/S CAROL INFO SERVICES LTD 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE RETURN IN THIS CASE WAS FILED DECLARING TOTAL INCOME OF RS 6.24 CRORES AS P ER SECTION 115JA. ASSESSMENT U/S 143(3) WAS COMPLETED ON 15.3.1999 ON INCOME OF RS 7.82 CRORES U/S 115JA. THE ASSESSING OFFICER ISSUED NOT ICE U/S 148 AFTER RECORDING THE REASONS ON 15.7.2004. ASSESSMENT U/S 143(3) R W S 147 WAS COMPLETED DETERMINING INCOME U/S 115JA AT RS 9.26 CRORES. TH E ASSESSEE ASSAILED THE ACTION OF THE ASSESSING OFFICER IN INITIATING THE R EASSESSMENT BEYOND A PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT Y EAR ON THE STRENGTH OF THE PROVISO TO SECTION 147 WHICH CONTENTION WAS ACCEPT ED BY THE LEARNED CIT (A) WHO HELD THE NOTICE AS BARRED BY LIMITATION. THE R EVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. COPY OF REASONS FOR REOPENING OF ASSESS MENT DATED 15.7.2004 HAS BEEN MADE AVAILABLE BY THE LEARNED AUTHORISED REPRE SENTATIVE. SUCH REASONS ARE REPRODUCED AS UNDER: IN THIS CASE ORIGINAL ASSESSMENT WAS COMPLETED U/ S 143(3) ON 15.3.99 DETERMINING A TOTAL INCOME OF RS NIL UNDER REGULAR PROVISIONS OF THE ACT AND ON TOTAL INCOME OF RS 7 82 07 796/- UNDER SECTI ON 115JA. IN THE ORIGINAL ASSESSMENT ASSESSEES INCOME FROM BUSINES S/GROSS TAXABLE INCOME WAS DETERMINED AT RS 13 43 69 288/-. AGAINS T THE INCOME ASSESSEES CLAIM U/S 80HH 80IA & 80G WAS ARRIVED A T RS 30 95 84 231/- AND ACCORDINGLY DEDUCTION UNDER CHAP TER VIA WAS RESTRICTED TO THE SAID BUSINESS INCOME OF RS 13 43 69 288/-. HOWEVER IN THE ACCOUNTS ASSESSEE HAS CREDITED RS 17.72 CRO RES AS OTHER INCOME. THIS INCLUDE INCOME TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THE ASSTT. YEARS 1996-97 1997- 98 THE SAID INCOME HAS BEEN TAXED AS INCOME FROM OTHER SOURCES AND N O CHAPTER VIA WAS ALLOWED / FOUND ELIGIBLE. IN THE BLOCK ASSESSMENT THE ASSESSING OFFICER HAS ARRIVED AT INCOME FROM OTHER SOURCES AT RS 12 42 48 533/-. THE INCO ME FROM BUSINESS IS ARRIVED AT RS 1 01 20 755/- (GROSS TOTAL INCOME RS 13 43 69 288/- - INCOME FROM OTHER SOURCES RS 12 42 48 533/-). IN T HE CIRCUMSTANCES ITA NOS 5797 AND 5798/M/2006 M/S CAROL INFO SERVICES LTD 3 THE INCOME FROM OTHER SOURCES AMOUNTING TO RS 12 42 48 533/- IS TAXABLE SEPARATELY AS IN THE PAST AND AS PER THE ST AND TAKEN BY THE DEPARTMENT. HOWEVER IN THE ASSESSMENT ORDER PASSE D ON 15.3.99 ONLY AN AMOUNT OF RS 7 82 07 796/- IS TAXED U/S 115 JA OF THE ACT. THUS THE INCOME OF RS 12 12 18 533/- HAS ESCAPED A SSESSMENT. FURTHER IN THE BLOCK ASSESSMENT R&D EXPENSES OF R S 1 44 75 300/- WHICH HAVE NOT BEEN ALLOCATED PROPERLY WAS TAXED PR OTECTIVELY WHICH HAVE BEEN DELETED BY THE CIT (A) CENTRAL III MUMBA I. THIS IS ALSO TO BE CONSIDERED AND DECIDED IN THE REGULAR ASSESSMENT. IN THE BLOCK ASSESSMENT A SUM OF RS 3 15 65 437/- (TOTAL INCOME RS 12 42 48 533/- LESS RS 7 82 07 796/- TAXED U/S 115J A AND RS 1 44 75 300/- WAS ALSO TAXED AS PROTECTIVELY WHICH WAS ALSO DELETED BY THE CIT (A) CENTRAL IN THE APPELLATE ORDER DATED 23 .1.2004. HE ALSO HELD THAT THE ISSUES ARE TO BE DECIDED IN REGULAR A SSESSMENT AS HELD IN THE BLOCK ASSESSMENT. IN VIEW OF THE ABOVE FACTS I HAVE REASON TO BELIEV E THAT INCOME OF RS 12 42 48 533/- ESCAPED ASSESSMENT; R&D EXPENSES BOT H AND REVENUE ARE NOT ALLOCATED PROPERLY AND CONSEQUENTLY DEDUCTI ON UNDER CHAPTER VI-A ARE ALSO NOT WORKED OUT AS PER LAW. THE CIT C ENTRAL I MUMBAI HAS ACCORDED PERMISSION TO REOPEN THE ASSESSMENT PROCEE DINGS U/S 117 AS PER LETTER NO.CIT (C)-I/PROCEEDINGS U/S 148/2004-05 DATED 12.07.2004. 5. THERE IS NO DISPUTE ON THE FACT THAT ORIGINAL AS SESSMENT IN THIS CASE WAS COMPLETED U/S 143(3). PROVISO TO SECTION 147 INTE R ALIA PROVIDES THAT WHERE AN ASSESSMENT IS COMPLETED U/S 143(3) NO ACTION SH ALL BE TAKEN UNDER THIS SECTION AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT. ON THE PERUSAL OF THIS STATUTORY PROVISION IT IS OBVIOUS THAT NO ACTION CAN BE TAKEN U/S 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELE VANT ASSESSMENT YEAR IF THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) UNLESS THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. ADVERTING TO THE FACTS OF THE INST ANT CASE WE OBSERVE THAT THE ASSESSMENT YEAR UNDER CONSIDERATION IS 1998-99 . ORIGINAL ASSESSMENT IN ITA NOS 5797 AND 5798/M/2006 M/S CAROL INFO SERVICES LTD 4 THIS CASE WAS COMPLETED U/S 143(3) ON 15.3.1999. T HE REASONS FOR REOPENING OF THE ASSESSMENT WERE RECORDED ON 15.7.2004 WHICH IS OBVIOUSLY A PERIOD AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. WE HAVE THEREFORE TO EXAMINE AS TO WHETHER REASON S RECORDED BY THE ASSESSING OFFICER DEPICT ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT. THE FIRST REASON NOTED BY THE ASSESSING OFFICER IS AGAINST TH E ALLOWING OF DEDUCTION U/SS 80HH 80IA & 80G BY HIM IN THE ORIGINAL ASSESSMEN T ON THE GROSS TOTAL INCOME WHICH WAS CLAIMED BY THE ASSESSEE AS SUCH WHEREAS IT ALSO INCLUDED SOME INCOME TAXABLE UNDER THE HEAD `INCOME FROM OT HER SOURCES. IT IS APPARENT THAT WHEN THE ASSESSEE MADE DISCLOSURE OF ITS TOTAL INCOME UNDER THE HEAD BUSINESS INCOME WHICH IN THE OPINION OF THE ASSESSING OFFICER WAS NOT CORRECT CANNOT BE CONSTRUED AS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT. THE SECOND POINT TAKEN INTO ACCOUNT BY THE ASSESSING OF FICER IS THE TAXABILITY OF INCOME OF RS 12.24 CRORES UNDER THE HEAD INCOME FR OM OTHER SOURCES. FROM HERE ALSO IT CAN BE SEEN THAT THE OFFERING OF INCOME FROM ONE HEAD OR THE OTHER HEAD CANNOT BE CATEGORISED AS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE LAST POINT TAKEN NOTE OF BY THE ASSESSING OFFICER IS THE RESEARCH & DEVELOPMENT EXP ENSES WHICH WERE NOT ALLOCATED PROPERLY AND WERE TAXED BY HIM PROTECTIV ELY WHICH ADDITION WAS DELETED BY THE CIT (A). HERE AGAIN WE ARE UNABLE TO FIND ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THE CASE OF THE ASSESSEE IS STRICTLY COVERED UNDER THE PROVISO TO SECTION 147 AND HENCE THE LEARNED CIT (A) WAS JUSTIFIED IN HOLDING THE NOTICE ISSUED U/S 148 AS BARRED BY LIMITATION. ITA NOS 5797 AND 5798/M/2006 M/S CAROL INFO SERVICES LTD 5 ASSESSMENT YEAR 2000-01 6. THE ONLY GROUND RAISED IN THIS APPEAL IS AGAINST THE DIRECTION OF THE LEARNED CIT (A) FOR ALLOWING DEDUCTION U/S 80IB ON THE GROSS TOTAL INCOME INSTEAD OF RESTRICTING IT TO THE EXTENT OF POSITIVE BUSINESS INCOME. 7. THE FACTS APROPOS THIS APPEAL ARE THAT THE ASSE SSEE SHOWED GROSS TOTAL INCOME AT RS 9.54 CRORES AND CLAIMED DEDUCTION U/S 80HHC 80G & 80IB TOTALLING TO RS 12.03 CRORES WHICH WERE RESTRICTED TO SUM OF RS 9.54 CRORES THEREBY DISCLOSING TOTAL INCOME AT RS NIL. THE A SSESSING OFFICER OBSERVED THAT THE `OTHER INCOMES OF THE ASSESSEE WERE TO T HE TUNE OF RS 93.50 LAKHS WHICH COMPRISED OF DIVIDEND AND OTHERS. HE THEREF ORE DID NOT ALLOW THE DEDUCTION U/S 80IB ON THE INCOME TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AMOUNTING TO RS 93.50 LAKHS AND COMPUTED T HE INCOME AT THAT LEVEL. IN THE FIRST APPEAL THE LEARNED CIT (A) FOLLOWIN G THE ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE DIRECTED THE ASSES SING OFFICER TO ALLOW DEDUCTION U/S 80IB ALSO ON THE INCOME TAXED UNDER T HE HEAD INCOME FROM OTHER SOURCES. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE LEARNED CIT (A ) HAS FOLLOWED THE ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE BY W HICH IT HAS BEEN HELD THAT THE DEDUCTION OUGHT TO BE ALLOWED ON THE GROSS TOTA L INCOME AND NOT RESTRICTED TO THE INCOME TAXABLE UNDER THE HEAD PROFITS OR GA INS FROM BUSINESS AND PROFESSION. COPIES OF THE ORDERS PASSED BY THE TR IBUNAL HAVE BEEN MADE AVAILABLE IN THE PAPER BOOK. THE LEARNED DEPARTMEN TAL REPRESENTATIVE HAS ALSO FAIRLY CONCEDED THAT THE FACTS AND CIRCUMSTANC ES OF THIS APPEAL ARE FULLY COVERED BY THE ORDER PASSED BY THE TRIBUNAL IN ASSE SSEES OWN CASE IN EARLIER YEARS. WE THEREFORE APPROVE THE VIEW TAKEN BY TH E LEARNED CIT (A) ON THIS ISSUE. ITA NOS 5797 AND 5798/M/2006 M/S CAROL INFO SERVICES LTD 6 9. IN THE RESULT BOTH THE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 16TH DAY OF APRIL 2010. SD/- (D K AGARWAL) JUDICIAL MEMBER SD/- (R S SYAL) ACCOUNTANT MEMBER MUMBAI DATE: 16TH APRIL 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -IX MUMBAI. 4) THE CIT-IX MUMBAI. 5) THE D.R. G BENCH ITAT MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T. MUMBAI ITA NOS 5797 AND 5798/M/2006 M/S CAROL INFO SERVICES LTD 7 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 15.04.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 15.04.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER *