ACIT, Trivandrum v. Kerala Hitech Industries Ltd, Trivandrum

ITA 601/COCH/2010 | 2002-2003
Pronouncement Date: 29-03-2012

Appeal Details

RSA Number 60121914 RSA 2010
Assessee PAN AABCK2217K
Bench Cochin
Appeal Number ITA 601/COCH/2010
Duration Of Justice 1 year(s) 4 month(s) 11 day(s)
Appellant ACIT, Trivandrum
Respondent Kerala Hitech Industries Ltd, Trivandrum
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2012
Appeal Filed By Department
Bench Allotted DB
Tribunal Order Date 29-03-2012
Assessment Year 2002-2003
Appeal Filed On 18-11-2010
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. 601/COCH/2010 ASSESSMENT YEAR : 2002-03 THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1(1) TRIVANDRUM VS. M/S. KERALA HI-TECH INDUSTRIES LTD. (NOW BRAHMOS AEROSPACE LTD.) CHACKAI TRIVANDRUM. [PAN: AABCK 2217K] (REVENUE-APPELLANT) (REVENUE- RESPONDENT) REVENUE BY SMT. VIJAYAPRABHA JR. DR ASSESSEE BY SHRI P.VENUGOPAL CA DATE OF HEARING 22/03/2012 DATE OF PRONOUNCEMENT 29/03/2012 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 5.8.2010 PASSED BY LD CIT(A)-1 TRIVANDRUM AND IT RELATES TO THE ASSES SMENT YEAR 2002-03. 2. THE REVENUE IS ASSAILING THE DECISION OF LD CIT(A) IN DIRECTING THE AO TO ALLOW CARRY FORWARD OF LOSS WHICH WAS DETERMINED ON THE B ASIS OF PROVISIONAL ACCOUNTS. 3. THE FACTS RELATING TO THE SAME ARE DISCUSSED IN BRIEF. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING ENGINEERIN G GOODS. IT FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WITHIN THE PRESCRI BED TIME DECLARING A LOSS OF RS.2 96 55 033/-. IN THE SCRUTINY PROCEEDINGS THE AO NOTICED THAT THE STATUTORY AUDIT OF I.T.A. NO. 601/COCH/2010 2 THE COMPANY WAS NOT COMPLETED BY THE TIME THE RETUR N OF INCOME WAS FILED. THE ASSESSEE HAD FILED PROVISIONAL FINANCIAL STATEMENTS ALONG WI TH THE TAX AUDIT REPORT WHICH MAY UNDERGO CHANGE DURING STATUTORY AUDIT. SINCE THE S AID FINANCIAL STATEMENTS WERE PROVISIONAL IN NATURE THE AO HELD THAT THE LOSS RE TURNED BY THE ASSESSEE CANNOT BE ALLOWED TO BE CARRIED FORWARD. 4. IN THE APPEAL PROCEEDINGS BEFORE LD CIT(A) THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER IS REQUIRED TO INTIMATE THE DEFEC TS TO THE ASSESSEE U/S 139(9) OF THE ACT AND HAVING NOT INTIMATED SO THE AO WAS NOT LEGALLY CORRECT IN TAKING ADVERSE DECISION AGAINST THE ASSESSEE. THE LD CIT(A) WAS CONVINCED WITH THE SAID CONTENTIONS AND ACCORDINGLY DIRECTED THE AO TO ALLOW THE CARRY FORW ARD OF LOSS TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS. ADMITT EDLY THE RETURN OF INCOME WAS FILED BY THE ASSESSEE WITH PROVISIONAL FINANCIAL STATEMENTS SINCE THE STATUTORY AUDIT WAS NOT COMPLETED BY THAT DATE. IT IS ALSO UNDISPUTED FACT THAT THE PROFIT/LOSS DECLARED IN THE PROVISIONAL FINANCIAL STATEMENTS MIGHT UNDERGO A CH ANGE DURING THE COURSE OF AUDIT. THERE CANNOT BE ANY DISPUTE THAT UNDER THE INCOME T AX ACT THE INCOME/LOSS OF THE ASSESSEE HAS TO BE DETERMINED ON THE BASIS OF AUDIT ED FINANCIAL STATEMENTS. HENCE IN OUR VIEW THE AO WAS NOT RIGHT IN LAW IN COMPLETING THE ASSESSMENT ON THE BASIS OF PROVISIONAL STATEMENTS PARTICULARLY IN VIEW OF THE FACT THAT THE AUDITED FINANCIAL STATEMENTS WERE AVAILABLE BEFORE COMPLETION OF THE ASSESSMENT. WHEN IT WAS POINTED OUT TO THE CONTESTING PARTIES BOTH THE PARTIES EXPRESS ED NO OBJECTION IN REMITTING THE MATTER TO THE FILE OF AO FOR DETERMINATION OF CORRECT AMOUNT OF LOSS ON THE BASIS OF AUDITED ACCOUNTS. 6. THE CARRY FORWARD OF LOSS IS GOVERNED BY THE PROVISIONS OF THE INCOME TAX ACT. IN OUR VIEW THE AO CAN DENY CARRY FORWARD OF LOSS ONL Y IN ACCORDANCE WITH THE SAID PROVISIONS. IN THE INSTANT CASE THE AO HAS NOT TA KEN SUPPORT OF ANY PROVISIONS IN THE ACT TO SHOW THAT THE ASSESSEE IS NOT ENTITLED TO CARRY FORWARD THE LOSS. HENCE IN OUR VIEW THE I.T.A. NO. 601/COCH/2010 3 DECISION OF THE AO TO DENY THE RIGHT OF CARRY FORWA RD OF LOSS DOES NOT APPEAR TO BE IN ACCORDANCE WITH LAW. SINCE THE ENTIRE ISSUE IS SE T ASIDE TO THE FILE OF AO WE DO NOT FIND IT NECESSARY TO EXPRESS ANY VIEW ON THE DECISION OF LD CIT(A) ON THIS ISSUE. 7. IN VIEW OF THE FOREGOING DISCUSSIONS WE SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE ENTIRE ISSUE TO THE FILE OF AO WITH THE DIRECTION TO ASSESS THE INCOME/LOSS OF THE ASSESSEE ON THE BASIS OF AUDITED FINANCIAL STATEMEN TS AND OTHER MATERIALS IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE DETAILS THAT MAY BE CALLED FOR BY THE AO. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 29/3/12 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 29TH MARCH 2012 GJ COPY TO: 1. M/S. KERALA HI-TECH INDUSTRIES LTD. (NOW BRAHMO S AEROSPACE LTD.) CHACKAI TRIVANDRUM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE -1(1) TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX TRIVANDRUM. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) I.T.A.T. COCHIN