BEEKAYLON SYNTHETICS P.LTD, MUMBAI v. ASST CIT CIT 1(1), MUMBAI

ITA 7558/MUM/2013 | 2008-2009
Pronouncement Date: 31-07-2015 | Result: Allowed

Appeal Details

RSA Number 755819914 RSA 2013
Assessee PAN AAACB2976M
Bench Mumbai
Appeal Number ITA 7558/MUM/2013
Duration Of Justice 1 year(s) 7 month(s) 7 day(s)
Appellant BEEKAYLON SYNTHETICS P.LTD, MUMBAI
Respondent ASST CIT CIT 1(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-07-2015
Assessment Year 2008-2009
Appeal Filed On 24-12-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI SANJAY GARG JUDICIAL MEMBER ITA NO.7558/M/2013 ASSESSMENT YEAR: 2008-09 M/S. BEEKAYLON SYNTHETICS PVT. LTD. 10 JASVILLE 2 ND FLOOR 9 NEW MARINE LINES OPP. LIBERTY CINEMA MUMBAI 400 020 PAN: AAACB 2976M VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 1(1) MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAKESH JOSHI A.R. REVENUE BY : SHRI PAVAN KUMAR BEERLA D.R. DATE OF HEARING : 27.05.2015 DATE OF PRONOUNCEMENT : 31.07.2015 O R D E R PER SANJAY GARG JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 18.11.2013 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008- 09. THE ASSESSEE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) PASSED UNDER SECTION 154 OF THE INCOME TAX ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD E-FILED ITS RETURN OF INCOME ON 20.09.08 WHICH WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED BY THE AO O N 27.09.10 ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS. NIL AND BOOK PR OFITS AT RS.3 89 88 943/-. ITA NO.7558/M/2013 M/S. BEEKAYLON SYNTHETICS PVT. LTD. 2 THEREAFTER THE AO OBSERVED ON VERIFICATION OF THE RECORD THAT THE DISALLOWANCE UNDER SECTION 14A AMOUNTING TO RS.18 07 031/- AS WE LL AS RS.48 93 866/- ON ACCOUNT OF DIMINUTION IN VALUE OF CURRENT INVESTMEN T AND RS.3 00 542/- ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS HAD REMAINE D TO BE ADDED TO THE NET PROFIT FOR COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB. HE ACCORDINGLY ISSUED NOTICE UNDER SECTION 154/155 OF THE ACT TO T HE ASSESSEE. AFTER CONSIDERING THE REPLY OF THE ASSESSEE HE ACCEPTED THE CONTENTION OF THE ASSESSEE IN RELATION TO DISALLOWANCE ON ACCOUNT OF DIMINUTION IN VALUE OF CURRENT INVESTMENT. HOWEVER HE REJECTED THE CONTE NTION OF THE ASSESSEE IN RELATION TO THE PROPOSED ADDITION UNDER SECTION 14A OF THE ACT AS WELL AS ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS AND ACCORDI NGLY ADDED THE ABOVE STATED AMOUNTS INTO THE BOOK PROFITS UNDER SECTION 115JB A ND ASSESSED THE INCOME OF THE ASSESSEE ACCORDINGLY. AGAINST THE ACTION OF THE AO IN MAKING ADDITION INT O THE BOOK PROFITS UNDER SECTION 115JB BY WAY OF INVOKING THE PROVISIONS OF SECTION 154 THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 3. THE LD. CIT(A) HOWEVER VIDE IMPUGNED ORDER UPH ELD THE ORDER OF THE AO. THE ASSESSEE HAS THUS COME IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. SO FAR AS THE ISSUE RELATING TO THE ADDIT ION ON ACCOUNT OF DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D COMPUTED AT RS. 18 07 031/- INTO THE BOOK PROFITS UNDER SECTION 115JB IS CONCERNED THE LD. A .R. OF THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IS QUITE DEBATABLE. THE A O HAD GOT NO JURISDICTION TO MAKE SUCH AN ADDITION WHILE INVOKING SECTION 154 OF THE ACT AS THE SCOPE OF SAID SECTION IS VERY LIMITED. HE HAS FURTHER CONTE NDED THAT EVEN THE ISSUE OF ADDITION OF PROVISION OF DOUBTFUL DEBTS INTO THE BO OK PROFITS UNDER SECTION 115JB WAS ALSO A QUITE DEBATABLE ISSUE. HE HAS FUR THER HAS RELIED UPON THE ITA NO.7558/M/2013 M/S. BEEKAYLON SYNTHETICS PVT. LTD. 3 DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. HLL COMNET SYSTEMS AND SERVICES LTD. [2008] 174 TAXMAN 118 (S C) WHERE IN THE ABOVE ISSUE OF PROVISION OF DOUBTFUL BAD DEBTS WHETHER TO BE ADDED WHILE COMPUTING BOOK PROFITS UNDER SECTION 115JB HAS BEEN DECIDE IN FAVOUR OF THE ASSESSEE. THE LD. A.R. HAS ALSO CONTESTED THE CHARGING OF INT EREST UNDER SECTION 220(2) OF THE ACT. THE LD. D.R. ON THE OTHER HAND HAS RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. THE LD. D.R. HAS RELIED UPON THE DECI SION OF THE TRIBUNAL IN THE CASE OF FERANI HOTELS PVT. LTD. IN ITA NO.857/M/2 013 ORDER DATED 17.11.2014 WHEREIN THE TRIBUNAL HAS HELD THAT THE D ISALLOWANCE COMPUTED UNDER SECTION 14A READ WITH RULE 8D IS TO BE ADDED WHILE COMPUTING BOOK PROFITS UNDER SECTION 115JB. ON THE OTHER HAND THE LD. A.R. HAS RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF QUIPPO TELECOM INFRASTRUCTURE VS. ACIT IN ITA NO.4931/DEL/2010 ORDER DATED 29.07.11 AND FURTHER I N THE CASE OF JSW ENERGY LTD. VS. ACIT IN ITA NO.244/BANG./2010 ORDE R DATED 22.02.13 WHEREIN THE OTHER BENCHES OF THE TRIBUNAL HAVE HELD THAT THE DISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D IS NOT TO BE ADDED WHILE COMPUTING THE BOOK PROFITS UNDER SECTION 115JB. IT HAS BEEN HELD THAT THE ONLY ACTUAL EXPENDITURE DEBITED TO DO THE P & L ACCOUNT IS TO B E TAKEN INTO CONSIDERATION WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB . 6. THE ABOVE DECISIONS CITED BY BOTH THE SIDES SHOW THAT THE ISSUE IS QUITE DEBATABLE WHICH HAS YET TO BE SETTLED BY THE HIGH C OURTS/SUPREME COURT. THERE ARE CONTRARY DECISIONS OF THE TRIBUNAL IN FAV OUR OF BOTH THE PARTIES. UNDER SUCH CIRCUMSTANCES IN OUR VIEW IT WAS BEYON D THE POWERS OF THE AO ITA NO.7558/M/2013 M/S. BEEKAYLON SYNTHETICS PVT. LTD. 4 EXERCISABLE UNDER SECTION 154 TO MAKE AN ADDITION O N A DEBATABLE ISSUE THE ORIGINAL ASSESSMENT IN THIS CASE HAD BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT. MERELY BECAUSE THE OTHER VIEW IS POSSIBL E THAT ITSELF CANNOT BE A GROUND TO RECTIFY THE ORDER UNDER SECTION 154 OF TH E ACT AS THE SAME CANNOT BE SAID TO BE A MISTAKE APPARENT ON RECORD. SIMILARLY THE ADDITION MADE ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS WHETHER TO BE ADDED WHILE COMPUTING BOOK PROFITS UNDER SECTION 115JB HAS BEEN A QUITE D EBATABLE ISSUE. UNDER SUCH CIRCUMSTANCES THE INVOKING OF PROVISIONS OF SECTIO N 154 BY THE AO ON DEBATABLE ISSUE WAS BEYOND HIS JURISDICTION.. IN O UR VIEW IT IS NOT A CASE OF ANY MISTAKE APPARENT ON THE RECORD. THE AO PASSED T HE ASSESSMENT ORDER U/S 143(3) OF THE ACT ON THE BASIS OF MATERIAL AVAILABL E BEFORE HIM. IT HAS BEEN TIME AND AGAIN HELD BY THE HIGHER COURTS THAT IF TH E ALLEGED MISTAKES REQUIRE INVESTIGATION INTO FACTS OR DETERMINATION OF LAW OR DISCUSSION OF DEBATABLE POINTS ARE INVOLVED OR TWO OPINIONS ARE POSSIBLE ON THE ISSUE THEN SUCH POINTED MISTAKES CANNOT BE SAID TO BE MISTAKES APPARENT ON RECORD WHICH CAN BE RECTIFIED UNDER SECTION 154 OF THE INCOME TAX ACT. HENCE THE ORDER PASSED BY THE AO UNDER SECTION 154 IS NOT SUSTAINABLE IN THE EYES OF LAW AND THE SAME IS ACCORDINGLY SET ASIDE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 31.07.2015. * KISHORE SR. P.S. ITA NO.7558/M/2013 M/S. BEEKAYLON SYNTHETICS PVT. LTD. 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR ITAT MUMBAI.