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Income Tax Appellate Tribunal, DELHI “A” BENCH: NEW DELHI
Before: SHRI G.S.PANNU & SHRI KUL BHARAT
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “A” BENCH: NEW DELHI
(THROUGH VIDEO CONFERENCING)
BEFORE SHRI G.S.PANNU, PRESIDENT & SHRI KUL BHARAT, JUDICIAL MEMBER
ITA No.4446/Del/2018 [Assessment Year : 2007-08] ADM Agro Industries Latur & Vizag vs DCIT, Pvt.Ltd., (Previously known as Tinna Circle-1(2), Oil & Chemicals Pvt.Ltd.), New Delhi-110002. B-1, Khaitan House, Defence Colony, New Delhi-110024. PAN-AAACT0700F APPELLANT RESPONDENT Appellant by Ms. Ananya Kapoor, Adv. & Sh. Tarun Chanana, Adv. Respondent by Mrs. ALka Gautam, Sr.DR Date of Hearing 13.10.2021 Date of Pronouncement 31.12.2021
ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2007-
08 is directed against the order of Ld. CIT(A)-1, New Delhi dated 26.04.2016.
The assessee has raised following grounds of appeal:-
“That the rectification order dated 16.03.2016 passed by the Assessing Officer ("AO") u/s 154/143(3)/250 of the Income Tax Act, 1961 ("the Ace) and the disallowance made therein is illegal, bad in law, without jurisdiction and barred by time limitation. 2. That on the facts and circumstances of the case, the rectification order passed by the AO u/s 154 of the Act dated 16.03.2016 is barred by limitation as the assessment order cannot be rectified by a notice u/s 154 dated 07.03.2016, which is admittedly beyond the
ITA No.4446/Del/2018 [Assessment Year : 2007-08] period of four years as stipulated in section 154. Hence the order u/s 154 is barred by limitation, and hence the same is invalid and liable to be set aside. 3. That the time limitation u/s 154 has to be seen from the date of the original assessment order u/s 143(3) and not from the appeal effect order, as the issue was not subject matter of appeal before the Commissioner of Income Tax (Appeals) 'CIT(Appeals)" . 4. That on the facts and circumstances of the case, the CIT(Appeals) has erred on facts and in law in upholding AO' s order invoking section 154 of the Act to make disallowance u/s 32(2) when the said issue is highly debatable and therefore, the order passed u/s 154 is illegal, bad in law and liable to be set aside. 5. That the CIT(Appeals) has failed to appreciate that there was no mistake apparent from record which could have been rectified u/s 154 by the AO hence the order passed u/s 154 is beyond the scope of the said scheme, hence the same is liable to be set aside. 6. That, on the facts and circumstances of the case, the CIT(Appeals) has erred on facts and in law in upholding the action of AO disallowing set off of unabsorbed depreciation amounting to Rs. 3,83,54,673/- claimed for A.Y. 1995-96, 1996-97 and 1998-99 against the profits for A.Y. 2007-08 by ignoring the amendment made in section 32(2). 7. That, on the facts and circumstances of the case, the AO as well as CIT(Appeals) have failed to appreciate that the unabsorbed depreciation available as on 1 April 2001 would be governed by the provisions of section 32(2) of the Act as amended by the Finance Act, 2001
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ITA No.4446/Del/2018 [Assessment Year : 2007-08] and has therefore erred in upholding the disallowance of claim of set off of unabsorbed depreciation amounting to Rs. 3,83,54,673/-. 8. That, without prejudice, the disallowance of carry forward of depreciation has also been wrongly worked out. 9. That the Appellant craves leave to alter, amend or withdraw all or any objections herein or add any further grounds as may be considered necessary either before or during the hearing.”
Facts of the present case are that the assessee filed its return of income
on 31.10.2007 declaring NIL income after adjusting unabsorbed depreciation to
the extent of Rs.3,83,54,673/-. During the course of assessment proceedings
u/s 143(3) of the Income Tax Act, 1961 (“the Act”), disallowance amounting to
Rs.25,76,13,085/- was made on account of cash purchases made from
farmers. The Assessing Officer (“AO”) vide order dated 05.02.2015 passed the
appeal effect order u/s 250 r.w.s. 143(3) of the Act. Subsequently, a notice u/s
154/155 of the Act dated 07.03.2016 was issued by the AO for rectification of
certain mistake apparent from record in the assessment order passed for the
subject Assessment Year. As per the said notice, the claim of set off of
unabsorbed depreciation amounting to Rs.3,83,54,673/- for Assessment Years
1995-96, 1996-97 and 1998-99 against the profits of Assessment Year 2007-08
was stated to be a mistake apparent from record. Since in view of the AO, the
unabsorbed depreciation as on 31.03.1997 and the period starting from 1997-
98 to 2001-02 was allowed to be carried forward for eight Assessment Years
only. Hence, the AO proceeded to pass an order u/s 154 of the Act, dated
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ITA No.4446/Del/2018 [Assessment Year : 2007-08] 16.03.2016 for Assessment Year 2007-08 wherein the set off of unabsorbed
depreciation pertaining to Assessment Years 1995-96, 1996-97 and 1998-99
was denied.
Aggrieved against this, the assessee preferred appeal before Ld.CIT(A),
who after considering the submissions, dismissed the appeal.
Aggrieved against this, the assessee preferred appeal before the Tribunal.
Ground No. 1 to 5 are against legality of the action for rectifying the
mistake.
Ld. Counsel for the assessee submitted that the impugned order passed
u/s 154 of the Act is clearly barred by limitation. It is submitted that even
otherwise also issue of allowability of set off of appreciation is a debatable
issue, hence, is beyond the scope of provision of Section 154 of the Act.
Ld. Counsel for the assessee submitted that Ld.CIT(A) was not justified in
confirming the action of the Assessing Officer .
Per contra, Ld. Departmental Representative opposed these submissions
and supported the orders of the authorities below. He submitted that the order
is within the time prescribed under the Act.
We have heard rival submission and perused the material available on
record and supported the orders of the authorities below.
The grievance of the assessee is that impugned order passed by the A.O
is illegal and barred by time. Section 154(7) of the Act prescribes the
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ITA No.4446/Del/2018 [Assessment Year : 2007-08] limitations for the passing order u/s 154 of the Act. For the sake of clarity,
same is reproduced here as under:-
“(7) Save as otherwise provided in section 155 or sub-
section (4) of section 186, no amendment under this section
shall be made after the expiry of four years 6 from the end
of the financial year in which the order sought to be
amended was passed.”
A plain reading of the Section makes it clear no order can be made after
the expiry of four years from the end of the Financial Year in which orders
sought to be amended was passed. In this case, the Assessing Officer sought to
amend the order dated 25/3/2013. Hence, the limitation would start
from1/4/2014 and would expire on 31st March, 2017. However, impugned
order is dated 16/3/2016. Therefore, the grounds of the assessee are devoid of
any merit. Hence, dismissed.
Ground No. 6 & 7 are on merit of the disallowance of depreciation by the
Ld.CIT(A)
Ld. Counsel for the assessee submitted that the Ld.CIT(A) declined the
claim of the assessee by relying upon the judgment of the Special Bench of this
Tribunal. However, the Hon’ble High Court of Madras has decided the issue in
the case of CIT Vs Tamil Nadu Small Industries Cooperation vide order dated
20/7/2021 in T. C. A No. 236/2017 in favour of the assessee by following its
earlier order in the case of Arway Heart Hospital Ltd. Vs. Assistant
Commissioner of Income Tax 127 Taxman.com805 & 2020 122 Taxman.com
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ITA No.4446/Del/2018 [Assessment Year : 2007-08]
212 (Madras) Commissioner of Income Tax Vs. Sanmar Chemical Industries
Ltd.
Ld. Departmental Representative opposedthe submissions and supported
the order of the authorities below.
We have heard the rival submissions and perused the material available
on record and gone through the orders of the authorities below. We find that
the Ld.CIT(A) has relied upon the judgment of the Special Bench of this
Tribunal in the case of DCIT VS. Times Guaranty Ltd. However, the Hon’ble
Madras High Court has ruled in favour of the assessee in the case of CIT Vs.
Tamil Nadu Small Industries Corporation Ltd. in T.C.A No. 236/2017.
Therefore, respectfully, following the judgment of the Hon’ble Madras High
Court in the case of CIT Vs. Tamil Nadu Small Industries Corporation Ltd. WE
hereby direct the Assessing Officer to delete the disallowance and allow setting
off of unabsorbed depreciation as claimed by the assessee.
Ground No. 8 is in respect of error in computation of disallowance of
carry forward of depreciation. Since, we have allowed Ground No. 7. This
ground has become infructuous, hence, dismissed.
Ground No. 9 is general in nature, needs no separate adjudication.
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ITA No.4446/Del/2018 [Assessment Year : 2007-08]
In the result, the appeal of the assessee is partly allowed.
Above decision was pronounced on conclusion of Virtual Hearing in the
presence of both the parties on 31st December, 2021.
Sd/- Sd/-
(G.S.PANNU) (KUL BHARAT) PRESIDENT JUDICIAL MEMBER
* Amit Kumar/R.N * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
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