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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
आदेश/ORDER
PER SUSHMA CHOWLA, VP The present appeal filed by Revenue is against order of CIT(A)-XI, New Delhi dated 19.11.2013 relating to assessment year 1995-96 against the order passed under section 143(3) r.w.s 254 of the Income-tax Act, 1961 (in short ‘the Act’).
The only issue raised in the present appeal filed by the Revenue is against the deletion of addition made on account of unabsorbed investment allowance amounting to Rs. 4,18,31,075/-. Briefly in the facts of the case, the present appeal is the second round of proceedings before
ITA No.914/Del/2014 Assessment Year 1995-96
the Tribunal in which the assessee had made the claim on account of
adjustment of unabsorbed investment allowance of Rs. 4,18,31,075/-. The
Assessing Officer in the first round disallowed the said claim which is
confirmed by the CIT(A). The Tribunal, however, remitted the matter back
to the file of the Assessing Officer, which reads as under:-
“……We therefore direct the Assessing Officer to allow the benefit of unabsorbed investment allowance of erstwhile Flow more Polysters Ltd. in terms of section 32A(6) of the Act and if the conditions specified in section 32A(6) are complied with the amount of unabsorbed investment allowance be allowed in the hands of the assessee.”
The proceedings were taken up by the Assessing Officer and he
issued a show cause notice to the assessee to explain as to why the said
expenditure be allowed as business expenditure. The relevant para of the
show cause notice is as under:-
“3. In respect of the unabsorbed investment allowance amounting to Rs.4,18,31,075/- disallowed by the AO. and subsequently confirmed by the Ld. CIT(A), in para 25 of its order the Hon’ble ITAT has directed the AO to allow the benefit of unabsorbed investment allowance of erstwhile M/s. Flowmore Polyester Limited in terms of section 32A(6) of the Act and that if the conditions specified in section 32A(6) are complied with, the amount of unabsorbed investment allowance be allowed in the hands of the assessee company. In view of these directions of the Hon'ble ITAT you are required to prove as to how each of the conditions specified in section 32A(6) of the Act are complied with. Sufficient and necessary documentary evidences may also be filed. Please note that in case sufficient and necessary details/documentary evidences are not provided by you it will not be possible to accept your claim.”
The assessee in reply explained the issue and submitted as under:-
“……Further to our response dated 4th Nov, 2009 in this regard we further invite your attention to the copy of the order of the AO for the year ended 1989 in the case of Flowmore filed with yourself alongwith the above response, your goodself will agree that after examining the requirement of section 32A(4) only AO must have allowed the investment Allowance.” 2
ITA No.914/Del/2014 Assessment Year 1995-96
The Assessing Officer however disallowed the claim of the assessee
as under:-
“The involved issue and the reply/ details filed by the assessee have been considered. The reply filed and details made available by the assessee were found not sufficient to conclude that the various conditions as specified in section 32A(6) and the sections 32A(4), 32A(3) as referred in section 32A(6) are fulfilled in this case. The assessee was asked vide letter dated 10/05/2010 to prove as to how each of those conditions are complied with. The assessee was also asked to file sufficient and necessary documentary evidences and to note that in case sufficient and necessary details /documentary evidences were not provided by the assessee it would not be possible to accept the claim. Since, the assessee has not filed sufficient and necessary details/documentary evidences it is not possible to ascertain whether conditions specified on this behalf are fulfilled or not. Accordingly, the claim made by the assessee is not being allowed. However, it may be mentioned that as and when the assessee makes proper compliance, the issue will be examined in accordance with the directions of the Hon’ble ITAT and relief will be allowed accordingly.” 6. The matter travelled to the CIT(A) and the explanation of the
assessee was the contention of section 32A(6) had to be complied with and
since the assessee had complied the said condition and furnished proper
evidence in this regard, the claim of the assessee should have been
allowed. The CIT(A) sought remand report from the AO which is
reproduced at pages 6 and 7 of the appellate order. The assessee filed a
rejoinder which is reproduced at page 7 of the appellate order. The AO had
laid emphasis on section 72A of the Act for non-allowance of unabsorbed
investment allowance. The assessee stressed that once the Tribunal had
directed the allowance of unabsorbed investment allowance in the hands
of the assessee company, then the AO had to only look at the fulfillment of
the conditions u/s 32A(6) of the Act, which he failed to do so. The CIT(A)
deliberated upon the issue in para 10 and held that the AO had failed to
examine the issue properly and had relied on the provisions of section 72A
ITA No.914/Del/2014 Assessment Year 1995-96
of the Act and not the provisions of section 32A(6)of the Act. The
CIT(A)allowed the claim of the assessee against which the Revenue is in
appeal.
Mr. Saras Kumar, Sr. DR appeared for the Revenue and Mr. Satyan
Sethi & Mr. A.T. Panda, Advocates appeared for the assessee and put
forwarded their contentions.
We have heard the rival contentions and perused the orders of the
authorities below.
The limited issue which arises in the present case is the allowance of
claim of the assessee of unabsorbed investment allowance of Rs.
4,18,31,075/-. In view of the provisions of section 32A(6) of the Act, the
matter travelled back to the AO as per the directions of the Tribunal which
we have already reproduced in the paras above. The AO had to see
whether the assessee had fulfilled the conditions of section 32A(6)but he
laid emphasis on the provisions of section 72 A of the Act, which is mis-
placed. The relevant submissions of the assessee in this regard are as
under:-
“2. This is known fact that Flowmore Polyester Limited merged with the assessee company w.e.f. 01.04.1994. 3. From the balance sheet of the assessee which has already been examined during assessment proceeding, it is apparent that during the year under appeal the appellant has invested in plant and machinery amounting to Rs. 10124.36 Lakhs which is much more than the required investment of Rs. 314 Lacs for allowing the unabsorbed investment allowance. The assessing officer has not shown any disagreement in his assessment order about the amount of addition in the plant and machinery.”
ITA No.914/Del/2014 Assessment Year 1995-96
The CIT(A) has deliberated upon the issue vide para 10 which reads
as under:-
“10.Ground No. 4 of the appeal is against the allowability of unabsorbed investment allowance of erstwhile M/s Flowmore Polyesters Ltd. in terms of section 32A (6) of the Act. It is observed that the issue has not been taken by the AO in a proper way as per directions of the Hon’ble ITAT. The AO had been very casual in concluding the issue in the following words: "Since, the assessee has not filed sufficient and necessary details/documentary evidences, it is not possible to ascertain whether conditions specified on this behalf are fulfilled or not. Accordingly, the claim made by the assessee is not being allowed. However, it may be r mentioned that as and when the assessee makes proper compliance, the issue will be examined. in accordance with the direction of the Hon'ble ITAT and relief will be allowed accordingly. " I fail to understand under which section of the Act, the AO was going to examine the issue after completion of the assessment!! During the appellate proceedings, the AO was given opportunity to offer his comments whether the condition for investment allowance are fulfilled. I am surprised to note that the AO (the incumbent who has submitted the remandreport) completely went beyond the directions of Hon’ble ITAT and repeated the provisions of section72A of the Act which the AO had relied upon in the original assessment order andwhich were adjudicated upon by the Hon’ble ITAT. The specific issue which remained to be decidedwas whether various conditions as specified in section 32A(6) and the section32A(4), 32A(3) as referred in section 32A(6) of the Act are fulfilled in the appellant’s case.The appellant has elaborately shown that the conditions specified in section 32A(6) of the Act are fulfilled by it. Therefore, the claim of the appellant is fully justified. The AO was notjustified in denying the appellant’s claim without really examining the issue. Ground No. 4 of the appeal is allowed.”
The learned DR for the Revenue has failed to controvert the findings
of the CIT(A). Once the assessee has fulfilled the conditions of section
32A(6) of the Act, the claim merits to be allowed in the hands of the
assessee. Accordingly, we find no merit in the present appeal filed by the
Revenue.
ITA No.914/Del/2014 Assessment Year 1995-96
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 27th April, 2020.
Sd/- Sd/- (B.R.R.KUMAR) (SUSHMA CHOWLA) लेखा सद�य/ACCOUNTANT MEMBER उपा�य�/VICE PRESIDENT �द�ल� / �दनांकDated : 27th April, 2020 * Amit Kumar*
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order is forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु�त(अपील) / The CIT(A) 4. मु�य आयकर आयु�त / The Pr. CIT 5. �वभागीय ��त�न�ध,आयकर अपील�य अ�धकरण,�द�ल�/ DR, ITAT, Delhi 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER,
स�या�पत ��त//True Copy//
सहायकरिज��ार, आयकर अपील�य अ�धकरण ,�द�ल� Assistant Registrar, ITAT, Delhi