M/s Karnataka Forest Development Corporation Limited, Bangalore v. ACIT, Bangalore

ITA 81/BANG/2011 | 2004-2005
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 8121114 RSA 2011
Assessee PAN AAACK9424B
Bench Bangalore
Appeal Number ITA 81/BANG/2011
Duration Of Justice 1 year(s) 1 month(s) 29 day(s)
Appellant M/s Karnataka Forest Development Corporation Limited, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-03-2012
Date Of Final Hearing 14-03-2012
Next Hearing Date 14-03-2012
Assessment Year 2004-2005
Appeal Filed On 31-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SMT. P MADHAVI DEVI JUDICIAL MEMBER AND SHRI JASON P BOAZ ACCOUNTANT MEMBER ITA NO.81/BANG /2011 (ASST. YEAR - 2004-05) M/S KARNATAKA FOREST DEVELOPMENT CORP. LTD. VANAVIKAS 18 TH CROSS MALLESWARM BANGALORE-560 003. . APPELLANT PAN NO. AAACK 9424B. VS. THE COMMISSIONER OF INCOME-TAX CIRCLE-11(5) BANGALORE. RESPONDENT APPELLANT BY : SHRI BALRAM R RAO ADVOCATE RESPONDENT BY : SHRI SARAVANAN B JCIT DATE OF HEARING : 14-03-2012 DATE OF PRONOUNCEMENT : 30-03-2012 O R D E R PER P MADHAVI DEVI JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX - I AT BANGALORE ITA NO.81/B/11 2 DATED 2.11.2010. THE APPEAL ARISES OUT OF THE ORDE R PASSED U/S 143(3) OF THE INCOME-TAX ACT 1961. 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN CONFIRMING THE ORDER OF THE AO THAT THE R EVISED RETURN FILED BY THE ASSESSEE U/S 139(5) OF THE ACT WAS NONEST. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A DOMESTIC COMPANY WHICH IS ENGAGED IN THE BUSINESS OF FOREST PRODUCTS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.10.2004 D ECLARING AN INCOME OF RS.16 61 006/-. A REVISED RETURN WAS FILED ON 2 4.10.2005 DECLARING A LOSS OF RS.32 92 809/-. DURING THE ASSESSMENT PR OCEEDINGS U/S 143(3) OF THE INCOME-TAX ACT THE ASSESSING OFFICER OBSERVED THAT IN THE ORIGINAL RETURN OF INCOME THE ASSESSEE HAS SHO WN POSITIVE INCOME WHILE IN THE REVISED RETURN THE ASSESSEE AS SHOWN P OSITIVE INCOME FROM BUSINESS BUT A HUGE LOSS UNDER INCOME FROM OTH ER SOURCES WHICH HAS RESULTED IN NEGATIVE INCOME. HE OBSERVED THAT THE INTEREST PAYMENT ON PROJECT LOANS WAS RELATABLE TO THE BUSIN ESS ACTIVITIES OF THE ASSESSEE AND THEREFORE THE INTEREST PAID ON BUSIN ESS LOAN CANNOT BE SET OFF AGAINST INCOME FROM OTHER SOURCES. HE AL SO OBSERVED THAT THE ASSESSEE HAS CLAIMED LOSS FROM HIRING BULLDOZERS AN D THIS IS NOT ITA NO.81/B/11 3 ALLOWABLE AS THESE BULLDOZERS WERE SPECIFICALLY SAN CTIONED FOR ITS PLANTATION WORK/BUSINESS ACTIVITIES. IN VIEW OF TH E SAME HE HELD THAT THE INCOME RETURNED IN THE ORIGINAL RETURN IS TO BE ADOPTED AS THE LOSSES ACCOUNTED UNDER THE HEAD INCOME FROM OTHER SOURCES ARE RELATABLE TO ITS BUSINESS ACTIVITIES AND NOT OTHER SOURCES. HE ACCORDINGLY COMPUTED THE TAXABLE INCOME OF THE ASSESSEE. 4. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) CHALLENGING THE NON CONSIDERATION OF THE REVISED RE TURN FILED U/S 139(5) OF THE INCOME-TAX ACT BY THE ASSESSING AUTHORITY. THIS GROUND WAS RAISED AS ADDITIONAL GROUND BEFORE THE CIT(A). IN THE ADDITIONAL GROUND THE ASSESSEE ALSO CHALLENGED THE DISALLOWAN CES AND ADDITIONS MADE BY THE ASSESSING AUTHORITY. THE ASSESSEE ALSO SUBMITTED WRITTEN SUBMISSIONS BEFORE THE CIT(A) AND THE CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO ON THESE WRITTEN SUBMISSIONS. T HE ASSESSING OFFICER SUBMITTED THE REMAND REPORT AND THE ASSESSE E ALSO SUBMITTED HIS REJOINDER TO THE REMAND REPORT. AFTER CONSIDE RING THE RIVAL SUBMISSIONS THE CIT(A) OBSERVED THAT IN THE ORIGIN AL RETURN OF INCOME THE ASSESSEE HAS SHOWN INCOME FROM BUSINES S AND INCOME FROM OTHER SOURCES AS SUCH INTEREST INCOME FROM F .DS. ETC. IN THE REVISED RETURN A NEW ITEM HAS BEEN INTRODUCED UNDE R THE SOURCE SALE ITA NO.81/B/11 4 OF RUBBER TREE UNDER THE HEAD BUSINESS INCOME. AFTER APPLYING RULE 7A OF THE INCOME-TAX RULES 1962 AND UNDER THE HEAD OTHER SOURCES DRASTIC CHANGES HAVE BEEN MADE. HE OBSERVED THAT F OR THE FIRST TIME IT HAS BEEN SHOWN THAT THE ASSESSEE OWNS BULLDOZERS W HICH IT GIVEN ON HIRE AND EARNS HIRING CHARGES AND ALSO CLAIMED HUGE DEPRECIATION AND EXPENSES INCURRED IN MAINTENANCE OF THESE BULLDOZER S BESIDES NETTING OF THE INTEREST INCOME RECEIVED FROM FDS WITH THE I NTEREST PAID TO THE BANKS FOR LOAN RECEIVED FROM BANK FOR RUBBER PLANTA TION. HE OBSERVED THAT AFTER CLAIMING THE LOSS IT IS PLEADED THAT TH E LOSS RETURN SHOULD HAVE BEEN CONSIDERED AND LOSS SHOULD HAVE BEEN DETE RMINED BY THE AO FOR CARRY FORWARD. THE ASSESSEE IN THE REJOINDE R TO THE REMAND REPORT HAS SUBMITTED THAT THE ASSESSEE HAS FILED RE VISED RETURN WITHIN THE TIME PRESCRIBED U/S 139(5) OF THE ACT AND BEFOR E THE CONCLUSION OF THE ASSESSMENT AND THEREFORE THE AO SHOULD HAVE C ONSIDERED THE REVISED RETURN WHILE FRAMING THE ASSESSMENT ORDER. AFTER CONSIDERING THIS SUBMISSION OF THE ASSESSEE THE CIT(A) HELD TH AT THE REVISED RETURN IS A LOSS RETURN WHICH SHOULD HAVE BEEN FILED WITH IN THE TIME SPECIFIED U/S 139(3) OF THE ACT AND THEREFORE THE LOSS RETU RN FILED BEYOND THE TIME LIMIT PRESCRIBED U/S 139(3) OF THE ACT WAS NUL L AND VOID. HE ALSO HELD THAT THE CLAIM OF THE ASSESSEE FOR THE LOSS RE TURN IS ALSO NOT ACCEPTABLE AND EVEN IF IT IS FOUND TO BE GENUINE T HEN SUCH LOSS IN THIS ITA NO.81/B/11 5 YEAR CANNOT BE ALLOWED TO BE CARRIED FORWARD TO SUB SEQUENT YEAR FOR SET OFF AS THE LOSS RETURN WAS NOT FILED WITHIN THE TIME SPECIFIED U/S 139(3) OF THE INCOME-TAX ACT. 5. AGGRIEVED THE ASSESSEE IS IN SECOND APPEAL BEF ORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REIT ERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORI TIES BELOW PLACED RELIANCE UPON THE DECISION OF THE TRIBUNAL IN THE C ASE OF SUJANI TEXTILES PVT. LTD. VS. ACIT REPORTED IN 88 ITD 317 WHEREIN IT WAS HELD THAT IF THE ASSESSEE HAS FILED A LOSS RETURN U NDER SUB SEC. (3) OF SEC. 139 WITHIN THE PERIOD PROVIDED UNDER THE ACT A ND IF THE ASSESSEE HAS FILED A REVISED LOSS RETURN UNDER SUB SEC. (5) THEREOF AGAIN WITHIN THE PRESCRIBED TIME LIMIT THE ASSESSING OFFICER IS BOUND TO TAKE COGNIZANCE OF THE REVISED RETURN BECAUSE THE ORIGI NAL RETURN IS REPLACED BY THE REVISED RETURN. HE ALSO PLACED REL IANCE UPON THE DECISION OF A BENCH OF THIS TRIBUNAL IN THE ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 WHEREIN THE TRIBUNAL H AS DIRECTED THE AO TO RECONSIDER THE CLAIM OF THE ASSESSEE UNDER RU LE 7A OF THE INCOME-TAX RULES. HE SUBMITTED THAT EVEN IF THE ASS ESSEE HAS NOT CLAIMED THE LOSS AND IF FROM THE FACTS INVESTIGATED AT THE TIME OF ITA NO.81/B/11 6 ASSESSMENT IT EMERGES THAT THE ASSESSEE IS ENTITLED TO A PARTICULAR RELIEF PROVIDED IN LAW IT IS OBLIGATORY ON THE PART OF T HE ASSESSING OFFICER TO DRAW THE ATTENTION OF THE ASSESSEE TO THE LAWFUL RELIEF OR DEDUCTION ALTHOUGH THE ASSESSEE DID NOT CLAIM IT. FOR THIS P URPOSE HE PLACED RELIANCE UPON THE COMMENTARY ON INCOME-TAX LAW BY C HATURVEDI & PITHISAIA AT PAGES 1434. 7. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE CLAIM OF T HE ASSESSEE CANNOT BE ENTERTAINED AND THAT THE DECISIONS RELIED UPON B Y THE LEARNED COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE ON FAC TS. 8. THE ASSESSEE WAS ASKED TO PRODUCE THE COPIES OF ORIGINAL RETURN OF INCOME AND ALSO THE REVISED RETURN OF INCOME FIL ED BEFORE THE AO AND ASSESSEE HAS ACCORDINGLY FILED THE SAME BEFORE US ON 14.3.2012. 9. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS WE FIND THAT THE ASSESSEE HAS FILED IT S ORIGINAL RETURN OF INCOME SHOWING POSITIVE TAXABLE INCOME WHILE IN T HE REVISED RETURN OF INCOME THE ASSESSEE CLAIMED LOSS TO BE CARRIED F ORWARD. THE MAIN REASON FOR HOLDING THAT THE REVISED RETURN WAS NONEST IS THAT A LOSS ITA NO.81/B/11 7 RETURN HAS TO BE FILED WITHIN THE TIME SPECIFIED IN SUB SEC. (3) OF SEC. 139 THE INCOME-TAX ACT. FOR PROPER APPRECIATION OF LAW THE PROVISION OF SEC. 139(3) IS REPRODUCED HERE UNDER : (1) -------- (2) -------- (3) IF ANY PERSON WHO HAS SUSTAINED A LOSS IN ANY PREVIOUS YEAR UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OR UNDER THE HEAD CAPITAL GAINS AND CLAIMS THAT THE LOSS OR ANY PART THEREOF SHOULD BE CARRIED FORWARD UNDER SUB-SEC. (1) OF SEC. 72 OR SUB SEC.(2) OF SEC. 73 OR SUB SEC.(1) OR SUB SEC.(3) OF SEC. 74 OR SUB-SEC. (3) OF SEC. 74A HE MAY FURNISH WITHIN THE TIME ALLOWED UNDER SUB SEC. (1) A RETURN OF LOSS IN THE PRESCRIBED FORM A ND VERIFIED IN THE PRESCRIBED MANNER AND CONTAINING SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AN ALL THE PROVISIONS OF THIS ACT SHALL APPLY AS IF IT WER E A RETURN UNDER SUB SEC.(1). 10. FROM A LITERAL READING OF THE ABOVE PROVISION IT IS TO BE SEEN THAT WHETHER ANY PERSON CLAIMS A LOSS FOR ANY PREVI OUS YEAR AND ALSO CLAIMS THAT THE LOSS OR ANY PART THEREOF SHOULD BE CARRIED FORWARD THEN THE RETURN HAS TO BE FURNISHED WITHIN THE TIME ALLO WED UNDER SUB SEC. (1) OF THE SEC. 139 OF THE INCOME-TAX ACT. IN THE C ASE BEFORE US THE ITA NO.81/B/11 8 ORIGINAL RETURN FILED BY THE ASSESSEE WAS U/S 139(1 ) BUT THERE WAS NO CLAIM OF LOSS OR LOSS TO BE CARRIED FORWARD. THERE FORE IT CANNOT BE TREATED AS A RETURN U/S 139(3) OF THE ACT. THE ASS ESSEE HAS FILED REVISED RETURN UNDER SUB. SEC. (5) OF SEC. 139 OF T HE INCOME-TAX ACT. SUB SEC. (5) OF SEC.139 READS AS UNDER : IF ANY PERSON HAVING FURNISHED A RETURN UNDER SUB SEC. (1) OR IN PURSUANCE OF A NOTICE ISSUED UN DER SUB SEC(1) OF SEC. 142 DISCOVERS ANY OMISSION OR ANY W RONG STATEMENT THEREIN HE MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION O F THE ASSESSMENT WHICHEVER IS EARLIER : PROVIDED THAT WHERE THE RETURN RELATES TO THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL 1988 OR ANY EARLIER ASSESSMENT YEAR THE REFERENCE TO ONE YEAR AFORESAID SHALL BE CONSTRUED AS A REFERENCE TO TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 11. THE LEARNED COUNSEL FOR THE ASSESSEE RELYING UPON THE PROVISIONS OF SUB SEC. (5) OF SEC. 139 OF THE INCOM E-TAX ACT HAS SUBMITTED THAT THE ASSESSEE HAS FILED THE ORIGINAL RETURN UNDER SUB SEC. ITA NO.81/B/11 9 (1) OF THE SEC. 139 AND SUBSEQUENTLY HAVING DISCOVE RED THE OMISSION OF THE CLAIM OF LOSS HAS FILED A REVISED RETURN WIT HIN THE TIME PRESCRIBED THEREUNDER AND THEREFORE ACCORDING TO HIM THE REVISED RETURN HAS TO BE CONSIDERED. UNDISPUTEDLY THE ASS ESSEE HAS FILED ORIGINAL RETURN UNDER SUB. SEC. (1) OF SEC. 139 OF THE INCOME-TAX ACT IN THE SAID RETURN OF INCOME THE ASSESSEE HAS NOT CLAIMED THE LOSS. SUB SEC. 5 PROVIDES THAT WHERE THE ASSESSEE DISCOVE RS ANY OMISSION OR A WRONG STATEMENT THEN HE CAN FILE A REVISED RETUR N. WHERE THE WRONG STATEMENT OR OMISSION RESULTS IN THE CLAIM OF LOSS THEN WHETHER THE RETURN FILED UNDER SEC. 139(5) IS TO BE CONSIDERED OR NOT IS TO BE NOW SEEN. AS HELD BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF SUNANDA RAM DEKA 210 ITR 988 THE REQUIREMENT U/S 139(5) IS THAT THE OMISSION OR WRONG STATEMENT IN THE ORIGINAL RET URN MUST BE DUE TO A BONAFIDE INADVERTENCE OR MISTAKE ON THE PART OF THE ASSESSEE. IN THE CASE BEFORE US THE ASSESSEE HAS CLAIMED THAT I T HAS ERRONEOUSLY OMITTED TO CLAIM THE LOSS FROM THE HEAD INCOME FR OM OTHER SOURCES. WHETHER OMISSION OF SUCH A CLAIM OF LOSS IN THE ORI GINAL RETURN OF INCOME IS BONAFIDE OR NOT IS TO BE SEEN. FROM THE REVISED RETURN OF INCOME IT IS NOTICED THAT THE ASSESSEE HAS NOT ONL Y CLAIMED THE LOSS OF THE RELEVANT ASSESSMENT YEAR I.E 2004-05 TO BE CARR IED FORWARD BUT HAS ALSO CLAIMED THE LOSS OF THE ASSESSMENT YEAR ITA NO.81/B/11 10 2003-04 TO BE CARRIED FORWARD. THUS IT IS TO BE P RESUMED THAT THE ASSESSEE WAS HAVING THE KNOWLEDGE OF THE LOSS FOR T HE ASSESSMENT YEAR 2003-04 WHICH WAS TO BE CARRIED FORWARD AND CLAIMED IN THE ASSESSMENT YEAR 2004-05. THEREFORE WHEN IT FILED THE RETURN U/S 139(1) OF THE INCOME-TAX ACT IT SHOULD HAVE TAKEN THIS LOSS INTO CONSIDERATION AND SHOULD HAVE FILED THE RETURN U/S 139(3) OF THE INCOME-TAX ACT. HAVING FILED THE ORIGINAL RETURN O F INCOME U/S 139(1) THE ASSESSEE CANNOT LATER ON FILE THE REVIS ED RETURN OF INCOME CLAIMING THE LOSS ON THE GROUND THAT IT WAS DISCOV ERED SUBSEQUENTLY. THIS ARGUMENT OF THE ASSESSEE IS NOT ACCEPTABLE FOR THE REASONS STATED ABOVE. IN VIEW OF THE SAME WE ARE IN COMPLETE AGR EEMENT WITH THE FINDINGS OF THE CIT(A) THAT WHEN THE ASSESSEE IS CL AIMING THE LOSS FOR THE RELEVANT ASSESSMENT YEAR AND ALSO CLAIMING THE LOSS TO BE CARRIED FORWARD OF THE LOSS OF 2003-04 AND 2004-05 RESPECTI VELY THEN THE ASSESSEE WAS REQUIRED TO FILE THE RETURN U/S 139(3) OF THE INCOME-TAX ACT THEREFORE THE REVISED RETURN FILED U/S 139(5) CANNOT BE ACCEPTED AND HAS TO BE TREATED AS NULL AND VOID. IN VIEW OF THE SAME WE UPHOLD THE FINDINGS OF THE CIT(A) AND ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. THE DECISIONS RELIED UPON BY THE LEARNE D COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE ON FACTS. IN THE CAS E OF SUJANI TEXTILE PVT. LTD. THE TRIBUNAL HAS GIVEN A FINDING THAT WH ERE THE ASSESSEE HAD ITA NO.81/B/11 11 FILED THE LOSS RETURN U/S 139(3) WITHIN THE TIME AL LOWED BY LAW AND THE REVISED RETURN OF INCOME SHOWING HIGHER AMOUNT OF L OSS WAS ALSO FILED WITHIN THE TIME ALLOWED BY LAW THEN THE REVISED RET URN REPLACES THE ORIGINAL RETURN. BUT IN THE CASE BEFORE US THE AS SESSEE HAS NOT FILED THE RETURN U/S 139(3) OF THE ACT WITHIN THE TIME AL LOWED BY LAW BUT HAS FILED THE REVISED RETURN CLAIMING THE LOSS U/S 139( 5) OF THE ACT THEREFORE IT CANNOT BE SAID THAT THE REVISED RETUR N OF INCOME REPLACED THE ORIGINAL RETURN OF INCOME AND THEREFORE THE R ATIO OF THE DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. AS FAR AS THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 IS CONCERNED WE FIND THAT THE ASSESSE E HAS MADE THE CLAIM OF DEDUCTION UNDER RULE 7A OF THE INCOME-TAX RULE 1962 DURING THE ASSESSMENT PROCEEDING BUT THE AO HAD NOT CONS IDERED THE SAME AT THE TIME OF MAKING THE ASSESSMENT AND THEREFORE THE TRIBUNAL HAD DIRECTED THE AO TO CONSIDER THE SAME. BUT IN THE RE LEVANT ASSESSMENT YEAR IT IS THE CASE OF THE ASSESSEE FILING THE R EVISED RETURN U/S 139(5) OF THE INCOME-TAX ACT CLAIMING THE APPLICATION OF R ULE 7A AND AS WE HAVE ALREADY HELD THAT THE REVISED RETURN OF INCOME IS NONEST THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. IN VIEW OF THE SAME THE ASSESSEES APPEAL IS DISMISSED. ITA NO.81/B/11 12 12. IN THE RESULT THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH MAR 2012. SD/- SD/- (JASON P BOAZ) (MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 30/03/2012 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR I TAT BANGALORE.