DEVI ELECTRONICS P. LTD, GUJRAT v. ITO 5(1)(3), MUMBAI

ITA 6481/MUM/2009 | 1998-1999
Pronouncement Date: 23-12-2010 | Result: Allowed

Appeal Details

RSA Number 648119914 RSA 2009
Bench Mumbai
Appeal Number ITA 6481/MUM/2009
Duration Of Justice 1 year(s) 6 day(s)
Appellant DEVI ELECTRONICS P. LTD, GUJRAT
Respondent ITO 5(1)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 23-12-2010
Date Of Final Hearing 28-07-2010
Next Hearing Date 28-07-2010
Assessment Year 1998-1999
Appeal Filed On 17-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI R.S.SYAL ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 6481/MUM/2009 (ASSESSMENT YEARS: 1998-99) DEVI ELECTRONICS PVT LTD. E-7/08 GIDC ELECTRONICS PVT LTD SECTOR-26 GANDHINAGAR GUJARAT-382044. PAN: AAACD00720F APPELLANT VS INCOME TAX OFFICER WARD 5(1)(3) AAYAKAR BHAVAN M K ROAD MUMBAI-400020 RESPONDENT ASSESSEE BY : MS.AARTI VISSANJI RESPONDENT BY : SHRI JITENDRA YA DAV. O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 24.09.2009 OF CIT(A)-IX ARISING FROM TH E PENALTY ORDER DATED 29.1.2008 PASSED UNDER SECTION 271(1)(C ) OF THE ACT FOR THE ASSESSMENT YEAR 1998-99. 2. ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS THE LD. CIT(A) ERRED IN CONFIRMING LEV Y OF PENALTY OF RS.8 60 400/- U/S 271(1)(C) OF THE INCOME TAX ACT 1961 ITA NO. 6481/MUM/2009 (ASSESSMENT YEARS: 1998-99) 2 3. FACTS LEADING TO THIS PENALTY ARE THAT DURING TH E YEAR UNDER CONSIDERATION THE ASSESSEE WAS CARRYING OUT THE BUSINESS OF MANUFACTURE OF TELEVISION AND AUDIO PRO DUCTS. DUE TO INCURRING CONTINUOUS LOSSES THE ASSESSEE CO MPANY DECIDED TO GIVE ITS FACTORY ON LEASE TO M/S VIDEOC ON INTERNATIONAL LIMITED AND HAS AGREED TO RECEIVE BUS INESS CONDUCTING RECEIPTS PER MONTH ON THE BASIS OF TUR NOVER OF TV MANUFACTURED BY M/S VIDEOCON INTERNATIONAL LIMITED DURING THE SCRUTINY ASSESSMENT THE AO HELD THAT THE LOSS INCURRED BY THE ASSESSEE IN THE EARLIER YEARS IN TV MANUFACTURI NG BUSINESS CANNOT BE SET OFF AGAINST THE INCOME OF THE ASSESSEE RECEIVED FROM THE BUSINESS CONDUCTING RECE IPT BECAUSE THE ASSESSEE IS NO LONGER IN THE BUSINESS O F MANUFACTURING OF TV. THE MATTER WAS CARRIED TO THIS TRIBUNAL AND THIS TRIBUNAL UPHELD THE ORDER OF THE AO IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO ADJUST THE BUSINESS LOSS OF THE EARLIER YEARS. HOWEVER THIS TRIBUNAL DIRECTED THE AO TO EXAMINE IF THE ASSESSEE IS EN TITLED TO SET OFF BROUGHT FORWARD UNABSORBED DEPRECIATION AGAINST THE INCOME FROM BUSINESS CONDUCTING RECEIPT. THE AO WHILE GIVING EFFECT TO THE ORDER OF THIS TRIBUNAL HELD T HAT AS PER THE PROVISIONS OF SECTION 32 OF THE IT ACT AS EXISTED DURING THE PERIOD FROM 1.4.1997 TO 1.4.2001 UNABSORBED DEPRECI ATION CANNOT BE ADJUSTED AGAINST THE INCOME FROM HO USE PROPERTY. CONSEQUENTLY THE AO LEVIED THE PENALTY O F ITA NO. 6481/MUM/2009 (ASSESSMENT YEARS: 1998-99) 3 RS.8 60 400/- IN RESPECT OF DISALLOWANCE OF CLAIM O F UNABSORBED DEPRECIATION VIDE ORDER DATED 29.01.2008 . THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFORE THE CIT(A) WHO HAS CONFIRMED THE PENALTY VIDE IMPUGNED ORDER. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT RECORD. AT THE OUTSIDE THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THE ISSUE OF SET OFF O F CARRIED FORWARD UNABSORBED DEPRECATION AGAINST THE BUSINES S CONDUCTING RECEIPT HAS BEEN DECIDED BY THE CIT(A) IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE WHICH HAS B EEN CONFIRMED BY THIS TRIBUNAL VIDE ORDER DATED 6.8.20 09 IN ITA NO.2163/MUM/2008 (AY 1998-99). WE NOTE THAT THIS T RIBUNAL IN THE SECOND ROUND OF LITIGATION HAS DECIDED THIS ISSUE IN PARAGRAPH 3 OF THE ORDER DATED 6.08.2009 (SUPRA). THE PARAGRAPHS 3 IS REPRODUCED BELOW: 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. I T IS OBSERVED THAT A SIMILAR ISSUE AS INVOLVED IN THE PRESENT CASE HAD COME UP FOR CONSIDERATION BEFORE THE KOLKATA BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT V/S PODDAR PROJECTS 92 ITD 468 WHEREIN IT WAS HELD AFTER HAVING CONSIDERED THE CLARIFICATION GIVEN BY THE FINANCE MINISTER IN A SPEECH DELIVER WHILE MOVING T HE FINANCE (NO.2) BILL 1996 IN THE LOK SABHA AND GIV ING HARMONIOUS MEANING AND REASONING TO THE AMENDED SECTION 32(2) FROM 1.4.97 THAT DEPRECIATION ALLOWANCE ALLOWED TO THE ASSESSEE UP TO AND INCLUSI VE AY 1996-97 WHICH REMAINED UNABSORBED AND WAS BROUGHT FORWARD TO AY 1997-98 AND SUBSEQUENT AYS UP TO AY 2004-05 COULD BE SET OFF AS PER PREAMENDE D SECTION 32(2) AND CONSEQUENTLY IT COULD BE SET OFF AGAINST TAXABLE BUSINESS PROFITS OR INCOME UNDER AN Y ITA NO. 6481/MUM/2009 (ASSESSMENT YEARS: 1998-99) 4 OTHER HEAD FOR AY 1997-98 AND SEVER SUBSEQUENT AYS. AS NO OTHER DECISION OF THE TRIBUNAL OR ANY OT HER HIGHER FORUM HAS BEEN BROUGHT TO OUR NOTICE BY THE LEARNED DR TAKING A CONTRARY VIEW ON THIS ISSUE W E RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL IN THE CASE OF PODDAR PROJECTS LTD(SUPRA) AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ALLOWING ASSESSEE S CLAIM FOR SET OFF OF UNABSORBED DEPRECIATION CARRI ED FORWARD FROM THE EARLIER YEARS AGAINST INCOME FROM OTHER HEADS 5. THE ORDER DATED 6.8.2009 PASSED IN ITA NO.2163/MUM/2008 (AY 1998-99) IS FORMING THE PART O F THIS RECORD. WHEN THE CLAIM OF THE ASSESSEE IS FINALLY ALLOWED THEN THE ADDITION ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED IS NO MORT EXISTS. ACCORDINGLY THE PENALTY LEVIED U/ S 271(1)(C ) IS NOT SUSTAINABLE AND THEREFORE DELETED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON 23.12.2010 SD SD (R.S.SYAL) (VIJ AY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ON THIS 23 RD DAY OF DEC 2010 SRL:221210 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI