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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”: HYDERABAD
Before: SHRI SATBEER SINGH GODARA & LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”: HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER and LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No. 1281/H/2017 Assessment Year: 2009-10 Dy. Commissioner of Vs. Icomm Tele Ltd., Income-tax, Circle – 2(1), Hyderabad. Hyderabad. PAN – AAECA 1326Q (Appellant) (Respondent) ITA Nos. 1040 & 1041/H/2017 Assessment Years: 2004-05 & 2005-06 Icomm Tele Ltd., Vs. Dy. Commissioner of Hyderabad. Income-tax, Circle – 2(1), Hyderabad. PAN – AAECA 1326Q (Appellant) (Respondent) Revenue by: Shri R. Dipak and Shri Sunil Kumar Pandey Assessee by: Shri Narayanamurthy Date of hearing: 27/04/2021 Date of pronouncement: 22/07/2021
O R D E R PER L.P. SAHU, AM: These appeals filed by the assessee as well as revenue for AYs 2009-10, 2004-05 and 2005-06 are directed against
:- 2 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . CIT(A) – 9, Hyderabad’s separate orders, dated 30/03/2017 involving proceedings u/s 154, and 143(3)rws 153A rws 263 of the Income Tax Act, 1961 ; in short “the Act”. ITA No. 1281/Hyd/2017 by the revenue
Brief facts of the case are that assessment was completed u/s 143(3) r.w.s. 153A. This order was rectified u/s. 154 on 21.02.2013, whereby credit for additional TDS claimed was allowed. The Assessing Officer vide this order omitted to grant interest u/s. 244A on self assessment tax paid. Subsequently, one more order u/s. 154 was passed on 12.06.2014, wherein the mistakes of taking the returned income wrongly and wrong credit of taxes was rectified Vide this order, Assessing Officer granted 244A interest on the TOS from April 2009 to February 2013. (Assessing Officer vide first rectification order allowed 244A interest from February 2013 only). However, Assessing Officer did not grant interest u/s. 244A on the Self Assessment tax paid. Assessee vide letter dated 18.07.2014 requested the Assessing Officer to rectify the above order dated 12.06.2014 and grant interest u/s. 244A on Self Assessment tax also. Assessing Officer after considering the request of the assessee passed rectification order on 25.03.2015 vide which assessee's request for grant of 244A on Self Assessment tax paid was acceded to, but interest on the TDS credit was given from the date of claim of TDS as
:- 3 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . against the date of deduction of tax. The reason stated for this by the Assessing Officer is that the assessee claimed credit of TDS amounting to Rs. 3,56,58,252/- in the return filed which was later revised to Rs. 8,92,02,230/vide application dated 06.02.2013. As the delay from 01.04.2009 to 21/02/2013 in claiming credit of additional amount of TDS (Rs. 5,35,43,978/-) is attributable to the assessee, Assessing Officer granted interest u/s. 244A on the additional amount of TDS from 21.02.2013 onwards only.
Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A) and contended before the CIT(A) as under: “It is argued that there is no mistake apparent from record in granting full interest on TDS claimed in the earlier order and hence rectification order dated 25.03.2015 is invalid. It is also argued that the proposal to reduce interest is not mistake apparent from record as the attribution of delay is a debatable Issue and hence would not come under purview of section 154. Assessee in support of Its arguments relied on the decisions of Birla Corporation Ltd., (66 Taxmann.com 276), DBS Bank (66 Taxmann.com 173), Otis Elevators Ltd (60 Taxmann.com 272), Nathpa Jhakri JV (36 Taxmann.com 45), wherein it was held that the delay is attributable to whom is a debatable issue and hence the same is out of scope of section 154. It is also argued that section 244A does not mandate that the claim of TDS should be made only in the return. It is further submitted the delay is not attributable to the assessee as the department gives credit to the TDS only when reflected in 26AS. The updation of Form 26AS is beyond the control of the assessee and hence the delay in updation should not be attributed to the assessee.
:- 4 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad .
After considering the submissions of the assessee, the CIT(A) directed the AO to allow interest u/s 244A as was allowed in the earlier 154 order for the full period by observing as under: “5. I have considered the arguments of the assessee and have gone through the decisions relied upon. As held by Hon'ble Bombay High Court in Nathpa Jhakri (JV) case the issue of delay is attributable to whom is a debatable issue and hence is out of scope of rectification. Therefore, I hold that Assessing Officer should not have restricted interest u/s. 244A by attributing the delay to the assessee by an order passed u/s 154. Hence, Assessing Officer is directed to allow interest u/s. 244A as was allowed in the earlier 154 order for the full period.”
Aggrieved by the order of CIT(A), the revenue is in appeal before the ITAT by raising the following grounds as under:
“1. "Whether, on the facts and circumstances of the case and in law, the CIT(A) is correct in allowing interest u/ s. 244A for the period of delay attributable to the assessee either wholly or in part.?" 2. Any other ground that may be urged at the time of hearing.”
The ld. DR relied on the order of AO while the ld. AR of the assessee relied on the order of CIT(A).
:- 5 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . 7. We have considered the rival submissions and perused the material on record. As submitted by the ld. AR of the assessee that the delay is not attributable to the assessee as the department gives credit to the TDS only when reflected in 26AS. The updation of Form 26AS is beyond the control of the assessee and hence the delay in updation should not be attributed to the assessee. Therefore, we find no infirmity in the order of the CIT(A) in directing the AO to allow interest u/s 244A as was allowed in the earlier 154 order for the full period and upholding the order of the CIT(A), the grounds raised by the revenue on this issue are dismissed.
In the result, appeal of the revenue is dismissed.
ITA Nos. 1040 & 1041/Hyd/2017 for AY 2004-05 & 2005-06
Briefly the facts of the case are that assessments u/s 143(3) rw.s. 153A were completed on 30.12.2011 for both the assessment years, determining income under normal provisions as well as u/s. 115JB at Rs. Nil. Assessing Officer allowed adjustment of brought forward losses and depreciation of Rs 2,49,01,778/- and Rs. 14,76,30,052/- for A.Y. 2004-05 and 2005-06 respectively. Commissioner of Income Tax (Central) vide order u/s. 263 dated 25.03.2014 held that the orders passed by Assessing Officer for both the assessment years were erroneous and prejudicial to the
:- 6 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . interest of revenue insofar as the carry forward and set off of losses for the purposes of section 115JB had wrongly allowed. Commissioner of Income Tax(Central), therefore, set aside both the assessment orders with a direction to Assessing Officer to re-examine the issue relating to carry forward and set off of losses and pass appropriate assessment orders and re-compute book profits accordingly. The present assessment orders under appeal were passed in consequence of above referred 263 order.
9.1 During the reassessment proceedings, the AO asked the assessee to furnish details of brought forward business losses and unabsorbed depreciation from AY 1997-98 to 2003-04. After submitting the details, which were extracted by the CIT(A) at page 2 of his order, the assessee submitted that there is brought forward business loss of Rs. 16,61,40,1321/- and unabsorbed depreciation of Rs 20,46,47,066/- It is claimed that as per the Provisions of 115JB book profit has to be reduced by amount of brought forward loss or unabsorbed depreciation whichever is less Therefore, in the case of the assessee, the brought forward business loss of Rs. 16,61,40,132/- being lower than the unabsorbed depreciation is entitled to be set off and hence the Assessing Officer while passing the original assessment orders has rightly set off the business 105s to the extent of Rs. 2,49,01,778/- for A.Y. 2004-05 and Rs 14,76,30,052/- for AY 2005-06 to the extent of availability 01 book profit
:- 7 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . and has correctly arrived at nil income u/s. 115JB for both the years. As the book profit was worked out correctly in the original assessment order, it is requested that the same may be followed even in the assessment taken up in consequence of 263 proceedings.
9.2 The Assessing Officer after considering the contentions of the assessee, held that the amount of loss or unabsorbed depreciation whichever is less as per the books should be reduced from book profit and as per explanation 2 clause to section 115JB(2), the loss shall not include depreciation. Therefore, it is held by Assessing Officer that, the brought forward loss and unabsorbed deprecation as on 01.04.2003 shall be determined by adjusting the same with the incomes earned during the intervening years. Based on the details furnished by the assessee, it is observed by the Assessing Officer that for FY 1998-99, 2000-2001 and 2002-03, the assessee had positive income which has been reduced proportionately from brought forward business loss and unabsorbed depreciation and the balance losses have been carried forward to the next year. For example as on 01/04/1998, the unabsorbed depreciation stood at Rs. 24,36,20,291/- and brought forward business loss at Rs. 23,60,09,172/-. For AY 1998-99, assessee had income of Rs. 8,72,62,825/- which was reduced by the assessee in proportion of business loss and depreciation at Rs. 4,43,24,279/- and Rs. 4,29,38,546/- and the balance losses
:- 8 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . were carried forward to the next year. Similarly in FY 2000- 2001 and 2002-03 the brought forward losses were reduced proportionately. AO, after consideration of the facts of the case, held that this method of reducing the losses in proportionate manner is not accepted procedure and is not as per the intentions of the Act. When this was brought to the notice of the assessee, it filed a revised working of the brought forward losses from F.Y. 1995-96 onwards, which was extracted by the CIT(A) in his order at page 4.
9.3 Based on the working, it was submitted that as on 01.04.2003 the assessee had total loss of Rs. 37,07,87,214/- which comprises of depreciation of Rs. 13,47,78,042/- and business loss of Rs. 23,60,09,172/-. As the brought forward business loss being lower than the depreciation, it is claimed that the Assessing Officer rightly reduced the depreciation of Rs. 2,49,01,778/- and Rs 14,76,30,052/- for AY 2004 05 and 2005-06 respectively.
9.4 Assessing Officer, after considering this information held that the assessee as at 31/03/1996 had total loss of Rs. 27,25,78,636/ (comprising depreciation of 6.75,73,922/- and business loss of Rs. 20,50,04,714/-). As the assessee in its books of account had profit of Rs. 37,02,38,167/- as on 01.04.1005 the loss of 1995-96
:- 9 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . (amounting to Rs. 27,25,713,636/-) was absorbed with the surplus of earlier years. The assessee therefore transferred Rs. 3,02,00,000/- and Rs. 61,83,487/- to general reserves account and dividend payable account respectively. Even after these transfers there was a net surplus of Rs. 6,72,76,044/- as on 31.03.1996. During the F.Y. 1996-97 assessee incurred total loss of Rs 22,28,76,497/- which was absorbed to the extent of Rs. 6,72,76,044/- of surplus and Rs. 6,15,30,000/- of general reserve account. Therefore, it was held by the AO that as on 31/03/1997 assessee was left with unabsorbed depreciation of Rs. 9,40,70,453/- which should be the starting point of working out loss for subsequent years. By taking this amount, as the starting figure the losses and deprecation as on 01/04/2003 were worked out as under by the AO: Year ending Depreciation Loss as per Total as per books books excluding depreciation 31/03/1997 9,40,70,453 - 9,40,70,453 31/03/1998 14,95,49,838 23,60,09,172 38,55,59,010 31/03/1999 12,92,52,448 (21,65,15,273 (8,72,62,825) 31/03/2000 13,66,22,093 (12,82,34,406) 83,87,609 31/03/2001 12,45,29,565 (21,44,03,378) (8,98,73,813) 31/03/2002 10,57,08,545 (2,76,06,416) 7,81,02,129 31/03/2003 8,12,11,430 (9,94,06,457) (1,81,95,027 Total as on 82,09,44,372 (45,01,56,758) 37,07,87,616 01/04/2003
9.5 Referring to the above table, the AO observed that the total loss of Rs. 37,07,87,616/- as on 31/03/2013
:- 10 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . comprises of unabsorbed depreciation of Rs. 82,09,44,372/- and a positive income of Rs. 45,01,56,768/-. As the brought forward business loss as on 01/04/2003 is nil (in view of positive income) and unabsorbed depreciation is Rs. 82,09,44,372/-; AO held that the lower of both being Nil can only be set off u/s 115JB and hence the assessee is not entitled for reduction of any amount from its book profits for AY 2004-05 as well as for the AY 2005-06. Therefore, in view of provisions of section 115JB(2)(iii), AO held that nil/loss/depreciation can be set off and hence the AO arrived at book profit u/s 115JB at Rs. 2,49,01,778/- and Rs. 35,99,09,089/- for AYs 2004-05 and 2005-06 respectively.
Aggrieved by the order of AO, the assessee preferred appeals before the CIT(A) and contended that the set off given originally by the Assessing Officer was in accordance with law and as per the decision of Hon'ble Mumbai Tribunal in Amline case (supra) and hence the same should be upheld. It is thus, submitted that 115JB calculation made by the Assessing Officer in the present orders under appeal should be held to be incorrect and accordingly cancelled.
After considering the submissions of the assessee, the CIT(A) confirmed the order of AO by observing as under: “7.3 I have considered the arguments of the assessee and have gone through the calculation of losses as
:- 11 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . submitted by the assessee and as arrived at by the AO. I have also carefully gone through the decisions of ITAT in case of Amline Textiles and Kerby Building Systems. It is also seen that the CIT(C) in the order u/s 263 dated 25/03/2014 held that the set off of losses as done by the AO for Ay 2004-05 and 2005-06 is erroneous and prejudicial to the interests of revenue. This order is accepted by the assessee and is not contested before any appellate forum. Both the AO and the assessee agree on the cumulative figure of brought forward loss + unabsorbed depreciation. There being no dispute about the total figure, the contention is on the issue of allocating the total loss between business loss and unabsorbed depreciation. The assessee took the base figure as on 31/03/2003 and calculated/allocated the losses backwards upto 31/03/1997 whereas the AO took the base figure of 31/03/1996 and arrived at the depreciation and business loss separately for each AY. There is no dispute on the figure of total loss of Rs. 9,40,70,453/- as on 31/03/1997. Once this figure is held to be correct it can be seen that this entirely constitutes depreciation loss only. Taking this as the starting figure, the AO has correctly calculated the depreciation and the loss excluding depreciation at the end of each FY upto 31/03/2003. Therefore, the cumulative loss excluding depreciation is arrived at a positive figure of Rs. 45,01,56,758/- as on 01/04/2003. Similarly, cumulative depreciation loss is arrived at Rs. 82,09,44,372/- by Assessing Officer as on 01.04 2003 Based on the above calculations it is correctly held by the Assessing Officer that the assessee was left only with unabsorbed depreciation of Rs. 82.09 crore. whereas the business loss excluding depreciation is held to be NIL being a positive figure. Assessee did not point out any specific mistake in the above calculation made by Assessing Officer On careful consideration of the principle laid down by the Hon'ble Mumbai ITAT in Amline Textiles case it is held that the calculation made by Assessing Officer is according to the rule of interpretation approved by the Hon'ble tribunal It is
:- 12 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . also seen that the Hon'ble Hyderabad tribunal in Kirby Building Systems case h8S followed the principle laid down by Mumbai Tribunal The assessee during the appellate proceedings claimed that the decision of Kirby is not applicable to the facts of its case. However, it is not explained by the assessee as to why the said decision is not applicable to the assessee. On going through both these decisions it is seen that the loss as per books is to be calculated year by year after excluding the depreciation. The Assessing Officer's calculation at losses is held to be as per the principles laid down by the Mumbai tribunal i.e., calculation of loss after excluding the depreciation. Therefore, I do not find any inconsistency in the calculation of loss arrived at by the Assessing Officer and hence uphold the same Thus, the calculation of the book profits by Assessing Officer u/s. 115JB at Rs. 2,49,0,118/- and Rs. 35,99,08,089/- for A.Y. 2004-05 and 2005-06 respectively is confirmed.”
Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT for both the years under consideration by raising the following grounds of appeal: 1. The order of the learned Commissioner of Income-tax ( Appeals) is erroneous in law and on the facts of the case. 2. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax ( Appeals) erred in confirming the methodology adopted by the Assessing Officer in arriving at the book profit liable for tax u/s 115JB. 3. The learned Commissioner of Income-tax ( Appeals) erred in considering loss or depreciation on cumulative basis for all the years put together rather than arriving at brought forwards unabsorbed depreciation or loss
:- 13 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . composed in the opening balance of loss as at 01.04.2003. 4. The learned Commissioner of Income-tax ( Appeals) erred in confirming the action of the Assessing Officer that the appellant is not entitled any set-off of least of brought forward business loss or depreciation as per Section 115JB while arriving at the book profit for the year. 5. The learned Commissioner of Income-tax ( Appeals) erred in stating that the judicial decisions relied upon by the appellant are not in favour of the appellant and ought to have followed the ratio laid down by Hon'ble Tribunal and allowed the appeal. 6 The learned Commissioner of Income-tax ( Appeals) erred in not directing the Assessing Officer to grant credit of Minimum Alternate Tax u/s 115JAA in the subsequent assessment years, against the current year's MAT liability as per the assessment order. 7. Any other ground of appeal that may be pleaded with the prior approval by the Hon'ble Tribunal during the course of appellate proceedings. The appellant craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if considered necessary.”
Before us, the ld. AR of the assessee submitted that the working as made by the AO is not correct. The computation of loss or unabsorbed depreciation as at the beginning of any previous year requires segregation of opening balance of loss into depreciation and loss. He argued that the set off given originally by the AO was in accordance with law and as per the decision of Hon’ble
:- 14 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad .
Mumbai Tribunal in Amline Case and hence the same should be upheld.
The ld. DR, on the other hand, relied on the orders of revenue authorities.
We have considered the rival submissions and perused the material on record and gone through the orders of revenue authorities. We observe that the assessee has furnished details of the unabsorbed depreciation and business forward losses before the AO on two different dates, first vide letter dated 24/07/2014 and second one on 11/11/2014, which have been extracted by the AO in his order at paras 3.1 and 4.1 respectively. The AO has calculated the unabsorbed depreciation and business forward losses at para 8 of assessment order and the CIT(A) has confirmed the order of the AO. At the time of hearing, the ld. AR of the assessee has also produced before us a statement showing the details of unabsorbed depreciation and accumulated losses, which is as under: During the year Set off During the year Carried forward Accumulated Particu- Depre- Loss/profit Depre- Loss Depre- Loss Depre- Loss lars ciation ciation ciation ciation AY 1997- 94070453 0 - - 94070453 - 94070453 - 98 1998- 149549838 236009172 - - 149549838 236009172 243620291 236009172 99 1999- 129252448 (216515273) 129252448 87262825 - -87262825 243620291 148746347 2000 2000- 136622093 (128234406) 128234406 - 8387687 - 252007978 148746347 01 2001- 124529565 (214403378) 124529565 89873813 - -89873813 252007978 58872534 02 2002- 10570854 (27606416) 27606416 - 78102129 - 330110107 58872534 03
:- 15 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad .
2003- 81211430 (99406857) 81211430 18195427 - -18195427 330110107 40677107 04 AY 2004-05 Unabsorbed depreciation 33, 01,10,107 Accumulated loss 4,06,77,107 Total 37,07,87,214 =========== As per clause (iii) of Explanation 1 of section 115JB, amount of loss brought forward to unabsorbed depreciation, whichever is less as per books of account is liable to be reduced from the profits and accordingly, amount of loss brought forward of Rs. 4,06,77,107/- being the lower, is available for setting off of profits of the AY 2005-06.”
15.1 After going through all the submissions of the assessee before the lower authorities as well as before us, we find that the figures are not in consonance with each other as calculated by the AR of the assessee. Therefore, to find out the genuineness of the figures which are extracted as above, we remit this issue to the file of the AO for verification/genuineness of the figures as quoted supra in the table by the ld. AR of the assessee. If the figures are found to be correct, the AO is directed to allow the claim of the assessee u/s 115JB(2)(iii) in accordance with law after providing reasonable opportunity of being heard to the assessee. Thus, the grounds raised by the assessee on this issue in both the appeals under consideration are treated as allowed for statistical purposes.
In the result, appeal of the revenue in ITA No. 1281/Hyd/2017 is dismissed and the appeals of the assessee in ITA Nos. 1040 & 1041/Hyd/2017 are allowed
:- 16 -: ITA Nos. 1040 & 1041/H/2017 and another Icomm Tele Ltd., Hyderabad . for statistical purposes in above terms. A copy of this common order be placed in the respective case files. Pronounced in the open court on 22nd July, 2021.
Sd/- Sd/- (S. S. GODARA) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 22nd July, 2021. kv copy to : 1 Icomm Tele Ltd., Icomm House, Plot No. 31, Phase 1, Kamalapuri, Srinagar Colony, Hyderabad – 500 073 2 DCIT, Circle – 2(1), Hyderabad. 3 CIT(A) – 9, Hyderabad. 4 Pr. CIT - 2, Hyderabad. 5 ITAT, DR, Hyderabad 6 Guard File.