The DCIT, (OSD) Range-8,, Ahmedabad v. Sambhav Media Limited, Ahmedabad

MA 241/AHD/2010 | 2004-2005
Pronouncement Date: 09-09-2011 | Result: Allowed

Appeal Details

RSA Number 24120524 RSA 2010
Bench Ahmedabad
Appeal Number MA 241/AHD/2010
Duration Of Justice 10 month(s) 7 day(s)
Appellant The DCIT, (OSD) Range-8,, Ahmedabad
Respondent Sambhav Media Limited, Ahmedabad
Appeal Type Miscellaneous Application
Pronouncement Date 09-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 09-09-2011
Assessment Year 2004-2005
Appeal Filed On 01-11-2010
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI D.K. TYAGI JM AND A.K. GARODIA A.M . ASSTT. CIT CIRCLE-8 (OSD) AHMEDABAD. SAMBHAV MEDIA LTD. SAMBHAV HOUSE OPP. JUDGES BNGALOWS PREMCHANDNAGAR VASTRAPUR AHMEDABAD. APPELLANT VS. RESPONDENT APPELLANT BY :- SHRI VINOD TANWANI DR RESPONDENT BY:- SMT. URVASHI SHODHAN AR DATE OF HEARING 9/9/2011. DATE OF PRONOUNCEMENT -9/9/2011 O R D E R PER D.K. TYAGI JUDICIAL MEMBER . THIS MISCELLANEOUS APPLICATION ARISING OUT OF ORDE R PASSED BY THE TRIBUNAL IN ITA NO.2571/AHD/2007 DTD. 07/05/2010 HAS BEEN FILED BY THE REVENUE. IT THIS MISCELLANEOUS APPLICATION IT H AS BEEN STATED THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INC OME AT NIL AFTER TAKING BENEFIT OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION. THE BUSINESS INCOME OF THE ASSESSEE F OR ASST. YEAR 2004-05 WAS SHOWN AT RS.1 13 97 963/-. THE AO MADE TOTAL AD DITION OF M.A. NO.241/AHD/2010 IN ITA NO.2571/AHD/2007 ASST. YEAR 2004-05 M.A. NO.241/AHD/2010 IN ITA NO.2571/AHD/2007 ASST. YEAR 2004-05 2 RS.62 33 288/-. THUS THE TOTAL BUSINESS INCOME WAS ASSESSED AT 1 76 31 251/- (RS.1 13 97 963/- + RS.62 33 288/-). THUS AFTER ALLOWING SET OFF OF BUSINESS LOSS AND UNABSORBED DEPRECIATION AT RS.1 74 96 566/- THE INCOME ASSESSED WAS DETERMINED AT RS.1 34 685/-. TH E ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) DEL ETED THE ADDITION AMOUNTING TO RS.52 50 594/- OUT OF TOTAL ADDITIONS MADE BY THE AO. THE DEPARTMENT CARRIED THE MATTER BEFORE THE TRIBUNAL A ND THE TRIBUNAL DISMISSED THE APPEAL AFTER OBSERVATION OF THE FACT THAT THE TAX EFFECT IS RS.64 263/-. FURTHER THE TRIBUNAL ALSO OBSERVED THA T THERE IS NO SUBSTANTIAL QUESTION OF LAW INVOLVED AND ISSUES ARE MERELY FACTUAL. THE TRIBUNAL ERRED IN OBSERVING THAT TAX EFFECT AT RS.6 4 263/- ONLY WHEREAS THE ACTUAL TAX EFFECT COMES TO RS.18 83 616/- (NOTIONAL ). RECENTLY THE HONBLE SUPREME COURT IN THE CASE OF JOINT COMMISSIONER OF INCOME-TAX VS. SAHELI LEASING & INDUSTRIES LTD. (2010) 324 ITR 17 0 HELD THAT WHETHER THE INCOME RETURNED WAS A PROFIT OR A LOSS WAS REAL LY OF NO CONSEQUENCE. THEREFORE EVEN IF NO TAX WAS PAYABLE PENALTY WAS STILL LEVIABLE. HENCE FOR DETERMINATION OF TAX EFFECT NOTIONAL TAX EFFEC T HAVE TO BE TAKEN INTO CONSIDERATION. IT IS THEREFORE PRAYED TO CONSIDER THE ADMISSION OF MISCELLANEOUS APPLICATION OF THE DEPARTMENT U/S 254 (2) OF THE I.T. ACT AND RECTIFY THE ABOVE ORDER TO THE EXTENT AS REQUESTED ABOVE. M.A. NO.241/AHD/2010 IN ITA NO.2571/AHD/2007 ASST. YEAR 2004-05 3 2. HEARD BOTH THE PARTIES AND PERUSED THE RECORD. R ECENTLY THE REVENUE HAD CHALLENGED BEFORE THE HONBLE GUJARAT H IGH COURT THE JUDGMENT OF THE TRIBUNAL DATED 19 TH MARCH 2009 IN THE CASE OF CIT-III VS. REAL VALUE MARKETING SERVICES LTD. WHEREIN THE TRIBUNAL VIDE ITS IMPUGNED JUDGMENT DISMISSED REVENUES APPEAL ONLY O N THE GROUND THAT EVEN AFTER CONSIDERING THE DISPUTED AMOUNTS THE AS SESSEE WOULD CONTINUE TO HAVE INCURRED LOSS DURING THE ASSESSMENT YEAR IN QUESTION WHICH HAPPENED TO THE YEAR 2002-03. THE HONBLE GUJARAT H IGH COURT IN TAX APPEAL NO.2093 OF 2009 VIDE ORAL ORDER DATED 19/7/2 011 OBSERVED AS UNDER :- 1.0 REVENUE HAS CHALLENGED JUDGMENT OF THE TRIBUNA L DATED 19 TH MARCH 2009. BY IMPUGNED JUDGMENT THE TRIBUNAL WAS PLEASED TO DISMISS REVENUES APPEAL ONLY ON THE GROUND THAT E VEN AFTER CONSIDERING THE DISPUTED AMOUNTS THE ASSESSEE WOUL D CONTINUE TO HAVE INCURRED LOSS DURING THE ASSESSMENT YEAR IN QU ESTION WHICH HAPPENED TO THE YEAR 2002-03. 2.0 THE TRIBUNAL ONLY ON THE ABOVE NOTED PREMISE TREATED THE REVENUE'S APPEAL AS INVOLVING LOW TAX EFFECT. 3.0. FINDING THAT THE NOTIONAL TAX EFFECT WOULD BE APPROXIMATELY RS. 7.32.000/-. WE HAD FRAMED FALLOWING QUESTION OF LAW AND ISSUED NOTICE FOR FINAL DISPOSAL BY AN ORDER DATED 29 TH MARCH 2011: WHETHER THE APPELLATE TRIBUNAL IS RIGHT IN LAW AND ON FACTS FN DISMISSING THE TAX APPEAL OF THE REVENUE ON THE GR OUND OF NOTIONAL TAX EFFECT EXCEEDED THE MONETARY LIMIT PRESCRIBED B Y THE BOARD? 4.0 THOUGH SERVED NO ONE APPEARS FOR THE RESPONDENT. IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE US IN TAX AP PEAL NO.1601 OF 2009 AND CONNECTED APPEALS. THE BENCH IN JUDGMEN T DATED 9 TH MAY 2011 OBSERVED AS UNDER: 34. FROM THE ABOVE CIRCULARS TWO FOLD QUESTIONS A RISE. FIRSTLY WE ARE REQUIRED TO ANSWER THE QUESTION IF CIRCULARS RANGING FROM 27.3.2000 TILL 16.7.2007 DEBARRED THE DEPARTMENT FROM FILING APPEALS IN CASES OF NEGATIVE INCOME M.A. NO.241/AHD/2010 IN ITA NO.2571/AHD/2007 ASST. YEAR 2004-05 4 OF THE ASSESSEE. THE SECOND ASPECT OF THE MATTER IS WHETHER THE BOARD IN ITS SUBSEQUENT CIRCULAR DATED 15.5.200 8 PROVIDED THAT SIMILARLY IN LOSS CASES NOTIONAL TA X EFFECT SHOULD BE TAKEN INTO ACCOUNT DID THE BOARD DESIRE FOR THE FIRST TIME THAT THE APPEALS BE PERMITTED TO BE PRES ENTED IN CASES OF LOSS ONLY ON AND FROM 15.4.2008 AND NOT BE FORE. IN OTHER WORDS THE QUESTION IS WHETHER ABOVE QUOTED P ORTION IN THE BOARD CIRCULAR DATED 15.4.2008 IS CLARIFICATORY IN NATURE OR NOT? 35. CLOSE PERUSAL OF THE CIRCULARS ISSUED PRIOR TO 15.5.2008 NOTED HEREINABOVE WOULD REVEAL THAT SUCH CIRCULARS PROVIDED FOR DIFFERENT CONDITIONS ON WHICH THE REVE NUE COULD PREFER APPEALS BEFORE THE TRIBUNAL AND COURTS WHICH INCLUDED THE MONETARY LIMITS SPECIFIED FROM TIME TO TIME. NOWHERE DO THESE CIRCULARS SPECIFY THAT IRRESPECTI VE OF THE DEGREE OF DIVERGENCE BETWEEN THE ASSESSING OFFICER AND CIT MERELY BECAUSE IN EITHER CASE THE ASSESSEE IS HELD TO HAVE SUFFERED LOSS APPEAL BEFORE THE TRIBUNAL WOULD NOT BE PRESENTED. STARTING WITH CIRCULAR DATED 27-3-2000 WE FIND THAT THE SAID CIRCULAR PROVIDED FOR LIMITS FOR PREF ERRING APPEALS TO THE TRIBUNAL REFERENCE BEFORE THE HIGH COURT AND APPEAL BEFORE THE SUPREME COURT AS LONG AS THE TAX EFFECT EXCEEDED RS.1 00 000/- RS.2 00 000/- AND RS.5 00 0 00/- RESPECTIVELY. PARAGRAPH 3 OF THE SAID CIRCULAR SPEC IFIED THE CATEGORIES WHERE IRRESPECTIVE OF THE REVENUE EFFECT SUCH APPEALS COULD BE PURSUED. THE TERM TAX EFFECT SPE CIFIED IN CIRCULAR DATED 27-3-2000 IS NOWHERE DEFINED AND EXP LAINED IN ANY OF THE PRECEDING AND SUCCEEDING CIRCULARS. W E MUST THEREFORE UNDERSTAND THIS TERM IN THE CONTEXT OF T HE INTENTION OF THE BOARD IN LIMITING THE TAX APPEALS. 36. WE MUST ALSO REMIND OURSELVES THAT BOARD CIRCUL ARS ARE NOT STATUTES THOUGH BY VIRTUE OF SECTION 268A IT MAY HAVE CERTAIN STATUTORY FORCE. COMMON THREAD RUNNING THROUGH ALL THE CIRCULARS PRESENTED BEFORE US IS TH AT THE BOARD DESIRED THAT SUBJECT TO CERTAIN EXCEPTIONS T AX APPEALS IN WHICH EFFECT OF TAX IS LOWER THAN THE PR ESCRIBED LIMIT SUCH APPEALS WHETHER BEFORE THE TRIBUNAL HIG H COURT OR THE SUPREME COURT SHOULD NOT BE PRESENTED. FOR EXAMPLE IN CIRCULAR DATED 27-3-2000 IT IS PROVIDED THAT APP EALS WILL BE FILED ONLY IN CASES WHERE TAX EFFECT EXCEEDS THE REVISED MONETARY LIMITS I.E. RS.2 00 000/- FOR THE APPEAL T O BE FILED M.A. NO.241/AHD/2010 IN ITA NO.2571/AHD/2007 ASST. YEAR 2004-05 5 BEFORE THE APPELLATE TRIBUNAL RS.4 00 000/- FOR THE APPEAL OR REFERENCE BEFORE THE HIGH COURT AND RS.10 00 000/- INCASE OF APPEALS TO THE SUPREME COURT. SUCH LIMIT CAME TO BE REVISED BY CIRCULAR DATED 24-10-2005 WHICH PROVIDED FOR MONETARY LIMITS OF TAX EFFECT OF RS.2 00 00/- RS.4 00 000/- AND RS.10 00 000/- FOR APPEALS TO THE TRIBUNAL HIG H COURT AND SUPREME COURT RESPECTIVELY. NONE OF THESE CIRCU LARS PROVIDED THAT BY VIRTUE OF ASSESSMENT OR LOSS BY TH E ASSESSING OFFICER DIFFERENT FROM THAT DECLARED BY THE ASSESSEE EVEN IF THE POSSIBLE TAX EFFECT IS HUGE NO APPEALS SHOULD BE PRESENTED BEFORE THE TRIBUNAL HIGH COURT OR THE SUPREME COURT; MERELY BECAUSE ULTIMATELY THE INCOME OR THE ASSESSEE WAS NEGATIVE. WE HAVE NO HESITATION IN COM ING TO THE CONCLUSION THAT NONE OF THE CIRCULARS PRESENTED BEFORE US INTENDED TO BAR THE TAX APPEALS EVEN WHERE POTENTIA L TAX EFFECT WOULD BE ENORMOUS SIMPLY BECAUSE IN THE YEA R IN QUESTION THE ASSESSEE HAD EARNED NEGATIVE INCOME. 37. THE ISSUE CAN BE LOOKED FROM A SLIGHTLY DIFFERE NT ANGLE. IN ABSENCE OF THE BOARDS CIRCULARS ISSUED WHICH NOW CAN BE STATED TO BE COVERED UNDER SECTION 268A OF T HE ACT THERE ARE NO LIMITATIONS ON REVENUE CARRYING THE IS SUE IN APPEAL EITHER BEFORE THE APPELLATE TRIBUNAL THE HI GH COURT THE SUPREME COURT. TO HOLD THAT A PARTICULAR APPEAL IS NOT MAINTAINABLE BY VIRTUE OF THE LIMITATIONS IMPOSED B Y THE BOARD IN ITS CIRCULAR SUCH LIMITATION MUST BE TRAC ED INTO CIRCULAR ITSELF. IN OTHER WORDS UNLESS AND UNTIL TH E APPEAL IS FOUND TO BE OPPOSED TO THE DIRECTIVES ISSUED BY THE BOARD IN ITS DIFFERENT CIRCULARS PREVAILING FROM TIME TO TIM E SUCH AN APPEAL CANNOT BE CATEGORIZED AS NOT MAINTAINABLE. 38. CIRCULARS OF THE BOARD NOWHERE PROVIDE THAT IN CASE OF RETURN OR LOSS AUTOMATICALLY PER SE IRRESPECTIVE OF DIFFERENCE IN THE ASSESSING OFFICERS PERCEPTION AN D THAT OF THE CIT (APPEALS) OF THE COMPUTATION OF LOSS FURTH ER APPEAL WOULD BE SHUT OUT. 39. THE CONTENTION THAT BY VIRTUE OF SUBSEQUENT CLARIFICATIONS CONTAINED IN CIRCULARS DATED 15-5-20 08 AND 9- 2-2011 THE POSITION PREVAILING PRIOR TO SUCH CIRCUL ARS GETS AMPLIFIED AND THAT THEREFORE IN CASES OF LOSS RETUR NS THE BOARDS INSTRUCTIONS DID NOT ENVISAGE FURTHER APPEA L ALSO DOES NOT IMPRESS US. WE MAY RECALL THAT IN THE CIRC ULAR DATED M.A. NO.241/AHD/2010 IN ITA NO.2571/AHD/2007 ASST. YEAR 2004-05 6 15-5-2008 IT IS PROVIDED THAT IN THE CASE OF LOSS NOTIONAL TAX EFFECT SHOULD BE TAKEN INTO ACCOUNT. THIS CLARIFICA TION TO OUR MIND CONTAINED IN CIRCULAR DATED 15-5-2008 AND ABS ENCE OF ANY SUCH CLARIFICATION IN THE PREVIOUS CIRCULARS I S OF NO CONSEQUENCE. SUCH A CLAUSE CAN AT THE BEST BE SEE N AS CLARIFICATORY DECLARATION BY THE BOARD TO PUT THE C ONTROVERSY BEYOND ANY SHADOW OF DOUBT OR DEBATE. IT CANNOT HO WEVER BE STATED THAT ONLY ON AND FROM 15-5-2008 THE BOARD DESIRED THAT ON THE BASIS OF NOTIONAL TAX EFFECT IN CASES O F LOSS THE APPEALS SHOULD BE FILED. IN THE PREVIOUS CIRCULARS TO REITERATE NO SUCH INTENTION EMERGES. ONLY BECAUSE CLARIFICATION CAME IN THE SUBSEQUENT CIRCULAR DATED 15-5- 2008 WOULD NOT MEAN THAT PREVIOUSLY THE BOARD DESI RED THAT SUCH APPEALS SHOULD BE FILTERED OUT. XXX XXX XXX 43. IN THE RESULT COMMON QUESTION FRAMED IN ALL AP PEALS IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST TH E ASSESSEES. IT IS HELD THAT MERELY BECAUSE EVEN AS P ER THE ASSESSING OFFICERS ORDERS ULTIMATELY INCOME OF TH E ASSESSEE IS NEGATIVE THE REVENUES APPEAL BEFORE THE APPELL ATE TRIBUNAL WOULD NOT BE BARRED BY THE BOARDS CIRCULA R UNDER SECTION 268A OF THE ACT. IT IS HOWEVER CLARIFIED THAT THE NOTIONAL TAX EFFECT WOULD HAVE TO BE ABOVE THE LIMI TS PRESCRIBED BY THE BOARD FROM TIME TO TIME FOR PRESE NTATION OF SUCH APPEALS. IN ALL THESE CASES SINCE IT IS STATED THAT THE NOTIONAL TAX EFFECT WOULD BE HIGHER THAN THE LIMITS PRESCRIBED BY THE BOARD IN DIFFERENT CIRCULARS WE ARE OF THE VIEW THAT THE TRIBUNAL COMMITTED AN ERROR IN DISMISSING THE R EVENUES APPEALS AS BEING NOT MAINTAINABLE. WE MAY RECORD TH AT NONE OF THE APPEALS CAME TO BE DECIDED BY THE TRIBUNAL O N MERITS. 5.0. ISSUE BEING COMMON THIS TAX APPEAL IS ALSO AL LOWED. THE QUESTION IS CONSIDERED IN FAVOUR OF THE REVENUE JUD GMENT OF THE TRIBUNAL IS SET ASIDE. PROCEEDINGS ARE REMANDED TO THE TRIBUNAL FOR CONSIDERING APPEAL OF THE REVENUE ON MERITS. TA X APPEAL IS DISPOSED OF ACCORDINGLY. 3. SINCE THERE IS NO DISPUTE ABOUT THE FACT THAT NO TIONAL TAX EFFECT IN THE APPEAL UNDER CONSIDERATION IS RS.18 83 616/- F OLLOWING THE ABOVE M.A. NO.241/AHD/2010 IN ITA NO.2571/AHD/2007 ASST. YEAR 2004-05 7 JUDGMENT OF HONBLE GUJARAT HIGH COURT WE RECALL O UR ABOVE ORDER DATED 7/5/2010 AND ALLOW THE MISCELLANEOUS APPLICATION FI LED BY THE REVENUE. THE APPEAL IS FIXED FOR HEARING ON 16 TH NOVEMBER 2011. THE DATE WAS PRONOUNCED IN THE OPEN COURT. THE REGISTRY IS DIREC TED TO FIX THE APPEAL ACCORDINGLY. 4. IN THE RESULT THE MISCELLANEOUS APPLICATION FIL ED BY THE REVENUE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 9/9/2011 SD/- SD/- (A. K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 9/9/2011 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD M.A. NO.241/AHD/2010 IN ITA NO.2571/AHD/2007 ASST. YEAR 2004-05 8 1.DATE OF DICTATION 9/9/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 12/9/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..