WEIZMANN LTD, MUMBAI v. ADDL CIT 1(3), MUMBAI

ITA 770/MUM/2012 | 2008-2009
Pronouncement Date: 31-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 77019914 RSA 2012
Assessee PAN AAACW1260H
Bench Mumbai
Appeal Number ITA 770/MUM/2012
Duration Of Justice 1 year(s) 8 month(s) 27 day(s)
Appellant WEIZMANN LTD, MUMBAI
Respondent ADDL CIT 1(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 31-10-2013
Date Of Final Hearing 18-09-2013
Next Hearing Date 18-09-2013
Assessment Year 2008-2009
Appeal Filed On 03-02-2012
Judgment Text
G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUMBAI .. !'# $ $ $ $ %&. !.'.. $( ) !'# !* BEFORE SHRI P.M. JAGTAP AM AND DR. S.T.M. PAVALAN JM !./ I.T.A. NO. 768/MUM/2012 ( )( $- )( $- )( $- )( $- / / / / ASSESSMENT YEAR : 2001-02 M/S WEIZMANN LTD. EMPIRE HOUSE 214 DR. D.N. ROAD ENT. A.K. NAYAK MARG FORT MUMBAI 400 001. ( ( ( ( / VS. DY. COMMISSIONER OF INCOME TAX- RG. 1(3) AAYAKAR BHAVAN MUMBAI 400 020. #. !./ PAN : AAACW1260H ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) !./ I.T.A. NO. 742/MUM/2012 ( )( $- )( $- )( $- )( $- / / / / ASSESSMENT YEAR : 2008-09 DY. COMMISSIONER OF INCOME TAX- RG. 1(3) AAYAKAR BHAVAN MUMBAI 400 020. ( ( ( ( / VS. M/S WEIZMANN LTD. EMPIRE HOUSE 214 DR. D.N. ROAD ENT. A.K. NAYAK MARG FORT MUMBAI 400 001. #. !./ PAN : AAACW1260H ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) !./ I.T.A. NO. 770/MUM/2012 ( )( $- )( $- )( $- )( $- / / / / ASSESSMENT YEAR : 2008-09 M/S WEIZMANN LTD. EMPIRE HOUSE 214 DR. D.N. ROAD ENT. A.K. NAYAK MARG FORT MUMBAI 400 001. ( ( ( ( / VS. DY. COMMISSIONER OF INCOME TAX- RG. 1(3) AAYAKAR BHAVAN MUMBAI 400 020. #. !./ PAN : AAACW1260H ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA DEPARTMENT BY : SHRI RAJIV KUMAR SADHU ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 2 !($ 2 / // / DATE OF HEARING : 18-09-2013 34- 2 / DATE OF PRONOUNCEMENT : 31-10-2013 [ '5 / O R D E R PER P.M. JAGTAP A.M . : .. !'# OUT OF THESE THREE APPEALS TWO APPEALS BEING ITA N O. 742/MUM/2012 (REVENUES APPEAL) AND ITA NO. 770/MUM/2012 (ASSESS EES APPEAL) ARE CROSS APPEALS WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) -2 MUMBAI DATED 2- 11-2011 FOR A.Y. 2008-09 WHILE THE THIRD APPEAL BEI NG ITA NO. 768/MUM/2012 IS THE APPEAL FILED BY THE ASSESSEE WH ICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 2 MUMBAI DATED 2-11-2011 WHEREBY HE UPHELD THE RECTIFICATION ORDER PASSED BY THE A.O. 154 OF THE I NCOME TAX ACT 1961 (THE ACT). 2. IN GROUND NO. 1 OF ITS APPEAL FOR A.Y. 2008-09 THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS. 1 84 65 131/- MADE BY THE A.O. ON ACCOUNT OF ASSESS EES CLAIM FOR DEPRECIATION U/S 32(1)(II) OF THE ACT. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF DEALING IN FOREIGN EXCHANGE. THE RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 29-11-2008 D ECLARING TOTAL INCOME OF RS. 9 48 61 257/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS CLAIMED D EPRECIATION OF RS. 1 84 65 131/- @ 25% ON THE DEALERSHIP NETWORK PURCH ASED BY IT IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2007-08 FROM AFL. T HE EXPLANATION OFFERED BY THE ASSESSEE IN SUPPORT OF THE SAID CLAIM FOR DEPRE CIATION BEFORE THE A.O. WAS THAT THE AFL HAD VAST REPRESENTATIVE/DEALER NETWORK IN INDIA AND THE SAME ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 3 WAS ACQUIRED BY THE ASSESSEE FOR EXPANDING ITS BASE AND BUSINESS. IT WAS CONTENDED THAT THE SAID NETWORK WAS IN THE NATURE O F LICENCE AND FRANCHISEE AND THE SAME WAS ELIGIBLE FOR DEPRECIATION @ 25% U/ S 32(1)(II) OF THE ACT. ACCORDING TO THE A.O. THE ASSESSEE HOWEVER COULD NOT PROVE THAT ANY RIGHT OF THE NATURE AS PROVIDED IN SECTION 32(1)(II) OF THE ACT WAS ACQUIRED BY IT AND THAT THE RIGHT OR ADVANTAGE SO ACQUIRED WAS DEPRECI ABLE OVER A PERIOD OF TIME. HE THEREFORE DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON THE DEALERSHIP NETWORK. ON APPEAL THE LD. CIT(A) DELET ED THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE FOLLOWING THE ORDER OF HI S PREDECESSOR IN ASSESSEES OWN CASE FOR A.Y. 2007-08 WHEREIN A SIMILAR CLAIM O F THE ASSESSEE FOR DEPRECIATION @25% ON DEALERSHIP NETWORK WAS ALLOWED BY HIS PREDECESSOR TREATING THE DEALERSHIP NETWORK AS INTANGIBLE ASSET ELIGIBLE FOR DEPRECIATION U/S 32(1)(II) OF THE ACT. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT A SIMILAR ISSUE WAS INVOLVED IN ASSESSEES OWN CASE FOR A.Y. 2007-08 WH EREIN THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON DEALERSHIP NETWORK IS ALLOWED BY THE TRIBUNAL VIDE ITS ORDER DATED 30-3-2012 PASSED IN ITA NO. 35 71/MUM/2011 HOLDING THAT THE CONSIDERATION PAID BY THE ASSESSEE TO AFL WAS FOR THE PURPOSE OF ENHANCING ITS NETWORK IN THE FIELD OF MONEY TRANSAC TION BUSINESS BY ACQUIRING RIGHTS OR INFRASTRUCTURE OR OTHER ADVANTAGES ATTACH ED TO THE MARKETING NETWORK AND SINCE THE SAME WAS IN THE NATURE OF INT ANGIBLE ASSET AS CONTEMPLATED U/S 32(1)(II) OF THE ACT THE ASSESSEE WAS ENTITLED TO DEPRECIATION THEREON @25%. RESPECTFULLY FOLLOWING THE SAID DECI SION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A .Y. 2007-08 ON A SIMILAR ISSUE WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT( A) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON DEALERSHIP NETWORK U/S 32(1)(II) OF THE ACT AND DISMISS GROUND NO. 1 OF REVENUES APPEAL. ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 4 4. IN GROUND NO. 2 OF ITS APPEAL FOR A.Y. 2008-09 THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE FOR DEPRECIATION AT HIGHER RATE OF 60% ON PRINTERS SCA NNERS UPS ETC. 5. THE CLAIM OF THE ASSESSEE FOR DEPRECIATION AT HI GHER RATE OF 60% ON PRINTERS SCANNERS UPS ETC. WAS DISALLOWED BY THE A.O. AS ACCORDING TO HIM THE SAID ITEMS COULD NOT BE TREATED AS COMPUTERS. ON APPEAL THE LD. CIT(A) HOWEVER ALLOWED THE CLAIM OF THE ASSESSEE FOR DEPR ECIATION AT HIGHER RATE OF 60% ON PRINTERS SCANNERS UPS ETC. RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BSES YAMUNA POWER LTD. (IT APPEAL NO. 1267/2010 DATED 31 ST AUGUST 2010) WHEREIN IT WAS HELD THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTERS SCANN ERS SERVER ETC. VERY MUCH FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM AND CO NSEQUENTLY THEY ARE ELIGIBLE FOR DEPRECIATION AT HIGHER RATE OF 60%. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL AVAILABLE ON RECORD WE ARE OF THE VIEW TH AT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF BSES YAMUNA POWER LTD. (SUPRA) AND R ESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A ) ALLOWING THE ASSESSEES CLAIM FOR DEPRECIATION AT HIGHER RATE OF 60% ON PRI NTER SCANNERS UPS ETC. GROUND NO. 2 OF REVENUES APPEAL IS ACCORDINGLY DIS MISSED. 7. THE SOLITARY ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE FOR A.Y. 2008- 09 RELATES TO THE DISALLOWANCE OF RS. 3 35 822/- MA DE BY THE A.O. U/S 14-A OF THE ACT AND CONFIRMED BY THE LD. CIT(A). 8. FROM THE BALANCE SHEET OF THE ASSESSEE AS ON 31 ST MARCH 2008 FILED ALONG WITH THE RETURN OF INCOME IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS MADE INVESTMENT OF RS. 4.46 CRORES IN EQUITY SH ARES THE DIVIDEND INCOME ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 5 ON WHICH IS EXEMPT TO TAX. NO DISALLOWANCE ON ACCO UNT OF EXPENSES INCURRED IN RELATION TO THE SAID INVESTMENT HOWEVER WAS MA DE BY THE A.O. AS REQUIRED BY THE PROVISIONS OF SECTION 14-A OF THE ACT. THE A.O. THEREFORE WORKED OUT SUCH EXPENSES TO BE DISALLOWED U/S 14-A OF THE ACT ON ACCOUNT OF INTEREST AT RS. 2 24 090/- AND ON ACCOUNT OF OTHER EXPENSES AT RS. 1 11 732/- BY APPLYING RULE 8-D OF THE INCOME TAX RULES 1962 AND MADE A DISALLOWANCE TO THAT EXTENT. ON APPEAL THE LD. CIT(A) CONFIRMED T HE SAID DISALLOWANCE MADE BY THE A.O. U/S 14-A OF THE ACT. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH RU LE 8-D OF THE INCOME TAX RULES 1962 IS APPLICABLE TO THE YEAR UNDER CONSIDE RATION I.E A.Y.2008-09 AS CONTENDED BY THE LD. D.R. THE CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE ENTIRE INVESTMENT IN EQUITY SH ARES HAVING BEEN MADE BY THE ASSESSEE OUT OF ITS OWN FUNDS NO DISALLOWANCE ON ACCOUNT OF INTEREST U/S 14-A R.W. RULE 8-D OF THE INCOME TAX RULES 1962 CA N BE MADE. IN SUPPORT OF HIS CONTENTION THE LD. COUNSEL FOR THE ASSESSEE HA S RELIED ON THE ORDER OF THE TRIBUNAL DATED 21-10-2011 PASSED IN ITA NO. 4751/M/ 2010 IN ASSESSEES OWN CASE FOR A.Y. 2006-07 WHEREIN THE DISALLOWANCE ON ACCOUNT OF INTEREST MADE U/S 14-A WAS DELETED BY THE TRIBUNAL AFTER HAV ING FOUND THAT OWN FUNDS TO THE EXTENT OF RS. 60.75 CORES WERE AVAILAB LE WITH THE ASSESSEE COMPANY IN THE FORM OF SHARE CAPITAL AND RESERVES A T THE RELEVANT TIME WHICH WAS SUFFICIENT TO MADE THE INVESTMENT OF RS. 57.67 CRORES IN THE EQUITY SHARES. A PERUSAL OF THE RELEVANT BALANCE SHEET OF THE ASSESSEE AS ON 31 ST MARCH 2008 PLACED ON RECORD BEFORE US SHOWS THAT S UFFICIENT FUNDS OF RS. 22.62 CRORES IN THE FORM OF SHARE CAPITAL AND RESER VES WERE AVAILABLE WITH THE ASSESSEE AT THE RELEVANT TIME TO MAKE THE INVESTMEN T OF RS. 4.46 CRORES IN THE EQUITY SHARES. THIS BEING SO WE RESPECTFULLY FOLL OW THE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE FOR A.Y. 2006-07 AND ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 6 DELETE THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF INTEREST EXPENDITURE U/S 14-A OF THE ACT. 10. AS REGARDS THE DISALLOWANCE MADE ON ACCOUNT OF OTHER EXPENSES U/S 14-A OF THE ACT WE ARE OF THE OPINION THAT THE SAM E MADE BY THE A.O. BY APPLYING RULE 8-D OF THE INCOME TAX RULES 1962 CAN NOT BE DISTURBED AS THE SAID RULE IS APPLICABLE TO THE YEAR UNDER CONSIDERA TION I.E A.Y. 2008-09. WE THEREFORE SUSTAIN THE DISALLOWANCE MADE BY THE A.O . AND CONFIRMED BY THE LD. CIT(A) U/S 14-A OF THE ACT TO THE EXTENT OF RS. 1 1 1 732/- AND PARTLY ALLOW THE APPEAL OF THE ASSESSEE. 11. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E FOR A.Y. 2001-02 WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) D ATED 2-11-2011 WHEREBY HE UPHELD THE RECTIFICATION ORDER PASSED BY THE A.O. U /S 154 OF THE ACT. 12. THE ASSESSMENT COMPLETED BY THE A.O. U/S 143(3) OF THE ACT VIDE AN ORDER DATED 27-2-2004 FOR A.Y. 2001-02 WAS THE SUBJ ECT MATTER OF THE APPEAL BEFORE THE TRIBUNAL AND WHILE DISPOSING OF THE SAID APPEAL THE TRIBUNAL VIDE ITS ORDER DATED 28-8-87 PASSED IN ITA NO. 9507/MUM/ 2004 RESTORED THE FOLLOWING ISSUES TO THE FILE OF THE A.O. FOR DECIDI NG THE SAME AFRESH AS PER LAW AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE:- 1. DETERMINATION OF DEDUCTION U/S 80-HHC AT NIL AS AGAINST CLAIM OF THE ASSESSEE AT RS. 1 81 85 233/. 2. DECIDING ISSUE OF ALLOWABILITY OF DEPB AS EXPORT INCENTIVES AS CONTEMPLATED BY PROVISO TO SECTION 80HHC. 3. DEDUCTION OF 90% OF DEPB RECEIPTS BY INVOKING EX PLANATION (BAA) OF SECTION 80HHC. 4. DISALLOWANCE OF RS. 5 44 075/- AS EXPENSES RELAT ING TO EARNING OF DIVIDEND INCOME. 5. DISALLOWANCE OF RS. 5 44 075/- AS EXPENSES IN EA RNING THE DIVIDEND INCOME IN THE COMPUTATION OF BOOK PROFIT U/S 115JB. 6. DISALLOWANCE OF DEDUCTION U/S 80HHC IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. 13. IN PURSUANCE OF THE ORDER OF THE TRIBUNAL DATED 29-8-2007 AN ORDER WAS PASSED BY THE A.O. U/S 143(3) R.W.S. 254 OF THE ACT ON 30-12-2008 COMPUTING THE TOTAL INCOME OF THE ASSESSEE AT A LOS S OF RS. 18 13 92 586/- AFTER MAKING A DISALLOWANCE OF RS. 4 79 925/- U/S 1 4-A OF THE ACT. THE BOOK PROFIT COMPUTED ORIGINALLY AT RS. 22 05 86 175/- U/ S 115JB OF THE ACT HOWEVER WAS NOT DISTURBED BY THE A.O. AFTER NOTICI NG THIS MISTAKE COMMITTED ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 7 BY HIM A RECTIFICATION ORDER U/S 154 OF THE ACT WA S PASSED BY THE A.O. ON 19-8-2010 MAKING ADDITION OF RS. 4 79 925/- TO THE BOOK PROFIT OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE U/S 14-A OF THE ACT. IN THE SAID RECTIFICATION ORDER THE A.O. ALSO MADE ANOTHER ADD ITION OF RS. 1 28 60 000/- TO THE BOOK PROFIT OF THE ASSESSEE ON ACCOUNT OF PR OVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT RELYING ON THE AMENDMENT MA DE IN THE PROVISIONS OF SECTION 115JB OF THE ACT THAT WITH RETROSPECTIVE EF FECT ON 1-4-2001. THE ASSESSEE ACCEPTED THE ADDITION MADE BY THE A.O. TO THE BOOK PROFIT ON ACCOUNT OF DISALLOWANCE U/S 14-A OF THE ACT BY WAY OF RECTIFICATION U/S 14-A OF THE ACT. HE HOWEVER CHALLENGED THE ORDER PASS ED BY THE A.O. U/S 154 OF THE ACT BY PREFERRING AN APPEAL BEFORE THE LD. CIT( A) DISPUTING THE ADDITION OF RS. 1 28 60 000/- MADE BY THE A.O. TO THE BOOK PROF IT ON ACCOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT. THE LD. CIT(A) DID NOT FIND MERIT IN THE SAID APPEAL OF THE ASSESSEE AND DISMISSED THE S AME HOLDING THAT THERE WAS NO MISTAKE IN THE RECTIFICATION ORDER PASSED BY THE A.O. U/S 154 OF THE ACT MAKING THE ADDITION ON ACCOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT TO THE BOOK PROFIT KEEPING IN VIEW THE R ETROSPECTIVE AMENDMENT MADE IN THE RELEVANT PROVISIONS W.E.F. 1-4-2001. A GGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 14. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER U/S 143(3) R.W.S. 254 OF THE ACT WAS PASSED BY THE A.O. AS PER THE SPECIFIC DIRECTIONS GIVEN BY THE TRIBUNAL WHILE RESTORING ONLY THE LIMI TED ISSUES TO THE FILE OF THE A.O. HE SUBMITTED THAT THE ISSUE RELATING TO THE A LLOWABILITY OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT WAS NOT BEFOR E THE TRIBUNAL AND SINCE THE SAME WAS NOT RESTORED BY THE TRIBUNAL TO THE FI LE OF THE A.O. THE CONSIDERATION OF THE SAME WAS BEYOND THE SCOPE OF O RDER PASSED BY THE A.O. U/S 143(3) R.W.S. 254 OF THE ACT. HE CONTENDED THA T THERE WAS THUS NO MISTAKE IN THE ORDER PASSED BY THE A.O. U/S 143(3) R.W.S. 254 OF THE ACT AND THE RECTIFICATION ON THE ISSUE OF ADDITION TO BE MA DE ON ACCOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT FOR COMPU TING BOOK PROFIT U/S ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 8 115JB OF THE ACT WAS NOT PERMISSIBLE. IN SUPPORT O F THIS CONTENTION HE RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAKSERIA COTTON MILLS LTD. (1980) 124 ITR 570. 15. THE LD. D.R. ON THE OTHER HAND STRONGLY SUPPO RTED THE IMPUGNED ORDER OF THE LD. CIT(A) UPHOLDING THE ORDER OF THE A.O. P ASSED U/S 154 OF THE ACT MAKING RECTIFICATION ON THE ISSUE OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT RELYING ON THE DECISION OF HONBLE KARNA TAKA HIGH COURT IN THE CASE OF CIT VS. MYSORE IRON & STEEL LTD. (1986) 157 ITR 531. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT I N THE CASE OF MYSORE IRON & STEEL LTD. (SUPRA) CITED BY THE LD. DR THE ISSUE W AS WHETHER WHERE AFTER AN ORIGINAL ASSESSMENT AN ORDER OF RECTIFICATION HAS BEEN MADE AND SUBSEQUENTLY THERE IS A REASSESSMENT U/S 147 OF TH E INCOME TAX ACT 1961 THE TIME LIMIT PROVIDED U/S 154 OF THE ACT SHOULD B E COMPUTED FROM THE DATE OF THE EARLIER ORDER OF RECTIFICATION OR FROM THE D ATE OF THE ORDER OF REASSESSMENT AND IT WAS HELD IN THIS CONTEXT BY THE HONBLE KARNATAKA HIGH COURT THAT ONCE AN ASSESSMENT IS REOPENED THE INIT IAL ORDER OF ASSESSMENT STANDS AUTOMATICALLY CANCELLED AND THE ORDER OF REA SSESSMENT WILL HAVE TO TAKE ITS PLACE. THE ISSUE INVOLVED IN THE CASE OF M YSORE IRON & STEEL LTD. (SUPRA) THEREFORE WAS ENTIRELY DIFFERENT AND THE DECISION RENDERED BY THE HONBLE KARNATAKA HIGH COURT THEREIN HAS NO APPLICA TION TO THE ISSUE INVOLVED IN THE PRESENT CASE. 17. ON THE OTHER HAND WE FIND THAT THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAKSERIA COTTON MILLS LTD. (SU PRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE IS DIRECTLY APPLICABLE IN THE PRES ENT CASE. IN THE SAID CASE ASSESSMENT WAS ORIGINALLY COMPLETED BY THE I.T.O. F OR A.Y. 1952-53 BY AN ORDER DATED NOVEMBER 23 1956 DETERMINING THE TOTAL INCOME OF THE ASSESSEE. ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 9 IN THE SAID ASSESSMENT REBATE WAS GRANTED BY THE A .O. WHILE COMPUTING THE TAX PAYABLE BY THE ASSESSEE. THE ASSESSEE FILED AN APPEAL BEFORE THE AAC AGAINST THE ORDER OF ASSESSMENT WHICH WAS RESTRICTE D TO CERTAIN MATTERS OTHER THAN THE REBATE GRANTED BY THE ITO. THE MATTER OF R EBATE WAS NOT AGITATED BEFORE THE AAC AND THE AACS DECISION DID NOT DEAL WITH IT. PURSUANT TO THE AACS DECISION THE ITO PASSED AN ORDER ON MARCH 10 1961. ON MARCH 8 1965 THE ITO INITIATED RECTIFICATION PROCEEDINGS F OR THE PURPOSE OF WITHDRAWING THE REBATE GRANTED TO THE ASSESSEE AND IN THIS CONTEXT IT WAS HELD BY THE HONBLE BOMBAY HIGH COURT THAT THE REBATE GR ANTED BY THE A.O. VIDE AN ORDER DATED NOVEMBER 23 1956 HAVING NOT AFFECTE D BY THE ORDER OF THE AAC THE ORDER OF THE A.O. ON THIS ISSUE HAD NOT ME RGED WITH THE ORDER OF THE AAC. IT WAS HELD THAT THE MISTAKE IN GRANTING THE REBATE THEREFORE WAS IN THE ORDER OF THE A.O. PASSED ON NOVEMBER 23 1956 A ND NOT IN THE ORDER PASSED ON MARCH 10 1961 AND THE RECTIFICATION OF MI STAKE IF ANY IN GRANTING THE REBATE THEREFORE COULD BE MADE IN THE ORDER DAT ED NOVEMBER 23 1956 AND NOT IN THE ORDER DATED MARCH 10 1961. IN THE PRES ENT CASE ALSO THE ISSUE RELATING TO ALLOWABILITY OF DEDUCTION ON ACCOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT WHILE COMPUTING THE BOOK PR OFIT U/S 115JB OF THE ACT WAS NOT THE SUBJECT MATTER OF APPEAL BEFORE THE TRI BUNAL AND THERE BEING NO DIRECTION GIVEN BY THE TRIBUNAL ON THIS ISSUE WHIL E RESTORING THE MATTER TO THE FILE OF THE A.O. WE ARE OF THE VIEW THAT IT CANNOT BE SAID THAT THERE WAS ANY MISTAKE IN THE ORDER OF THE A.O. PASSED U/S 143(3) R.W.S. 254 OF THE ACT ON 30-12-2008 IN ALLOWING THE DEDUCTION ON ACCOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT CALLING FOR ANY RECTIFIC ATION U/S 154 OF THE ACT. SUCH MISTAKE IF ANY WAS IN THE ORDER ORIGINALLY P ASSED BY THE A.O. U/S 143(3) OF THE ACT ON 27-2-2004 AND NOT IN THE ORDER PASSED ON 30-12-2008. THE RECTIFICATION MADE BY THE A.O. ON THIS ISSUE TO THE ORDER PASSED U/S 143(3) R.W.S. 254 OF THE ACT BY AN ORDER DATED 19-8 -2010 PASSED U/S 154 OF THE ACT THUS WAS NOT PERMISSIBLE AND THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ORDER OF THE A.O. U/S 154 OF THE ACT MAKING RECTIFICATION ON THIS ITA 768/MUM/2012 ITA 742 /MUM2012 & ITA 770/ MUM/2012 M/S WEI ZMANN LTD. 10 ISSUE. WE THEREFORE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION MADE ON ACCOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT TO THE BOOK PROFIT OF THE A SSESSEE BY WAY OF RECTIFICATION ORDER U/S 154 OF THE ACT. 18. IN THE RESULT APPEAL OF THE ASSESSEE FOR A.Y. 2001-02 IS ALLOWED APPEAL OF THE ASSESSEE FOR A.Y. 2008-09 IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE FOR A.Y. 2008-09 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER 2013. . '5 2 34- 6'(7 31-10-2013 4 2 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) ) !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 6'( DATED 31-10-2013. $.)(.!./ RK SR. PS '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9-/ COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. ; () / THE CIT(A)2 MUMBAI. 4. ; / CIT 1 MUMBAI 5. 9$> 0))( / DR ITAT MUMBAI G BENCH 6. % ? / GUARD FILE. '5(! '5(! '5(! '5(! / BY ORDER !19 0) //TRUE COPY// @ @ @ @/ // /!A !A !A !A ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI