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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI H. S. SIDHU & SHRI N.K. BILLAIYA
ORDER PER H.S. SIDHU, JM: This appeal is filed by assessee against the Order dated 09.12.2014 passed by the Ld. CIT(A)-XX, New Delhi relating to Assessment Year 2010-11.
2. The grounds raised read as under:-
“1. The Id. Assistant Commissioner of Income Tax, Circle-
39(1), New Delhi (hereafter the ACIT), who initiated and completed the proceedings under section 154 of the Income Tax Act, 1961 (hereinafter the Act) had no jurisdiction over the case of the Assessee inter alia because: a) The Id. ACIT had no territorial jurisdiction, b) On 21-08-2013, the date of issuing the notice as well as on 29-11-2013, the date of order under section 154 of the Act, the jurisdiction over the case of the Assessee was with the Id. Joint Commissioner of Income Tax, Range -39, New Delhi vide order dated
14-08-2013 of the Id. Commissioner of Income Tax, c) The assessment order being rectified by the Id. AC IT- is null and void ab-initio because the same is in pursuance of the notice u/s 143(2) of the Act issued by the Id. Income Tax Officer, Ward - 39(3), New Delhi who had neither pecuniary nor territorial jurisdiction over the case of the Assessee.
1.1 The observation by the Id. Commissioner of Income
Tax (Appeals) - XX, New Delhi [hereinafter the CIT (A)] that the ACIT as well as the JCIT had concurrent jurisdiction, is against the law and is without any material on record.
The order u/s 154 by the Id. ACIT is bad in law inter
alia because: a) The Id. ACIT as well as Id. CIT (A) failed to appreciate the fact that the deduction u/s 80IB of the Act in respect of interest from debtors and, on FDR was allowed in the assessment order after considering
(vide para 10), the detailed submissions made by due
Assessee vide letter dated 18-3.2013, in response to the query by the AO. b) The Id AC1T as well as Id. CIT (A) further failed to appreciate that the provisions of section 154 of the Act are applicable to the mistake, which is apparent, glaring, obvious, self evident or ex facie that it is un- capable of argument or proof; and are not applicable to debatable issues or when two view are possible, c) the ld. CIT as well as the Id. CIT(A) further failed to appreciate that the proceedings under the provisions of section 154 of the Act cannot be initiated on the directions of the Audit Note, d) The Id CIT(A) erred in observing that the Id. ACT has not concluded anything in the assessment order regarding deduction u/s. 80IB of the Act in respect of interest from debtors and debtors and fixed deposits with Bank.
3. The Ld. ACIT as well as the Ld. CIT(A) erred in disallowing deduction u/s. 80IB of the Act in respect of interest from debtors and interest on FDR.
4. The Ld. ACIT erred in charging interest u/s 234D of the Act and in withdrawing interest u/s. 244A of the Act; and without prejudice the same are excessive.
5. The order passed by the Ld. ACIT as well as Ld. CIT(A)
is against the facts of the case as well as law.
The brief facts of the case are that the assessment in this case was completed u/s. 143(3) of the Income Tax Act, 1961 (in short “Act”) at an income of Rs. 2,27,25,710/- on 29.3.2013. Subsequently, it revealed by the AO that the assessee claimed excess deduction of Rs. 22,70,984/- u/s. 80IB of the Act. Accordingly, notice u/s. 154/155 of the I.T. Act, 1961 issued on 21.8.2013 and served upon the assessee fixing the date for hearing on 3.9.2013. In response to this, the partner of the assessee vide letter dated 30.8.2013 requested for clarification and the same was sent on 18.11.2013 asking the assessee to file its submission on or before 28.11.20013. In reply, the assessee requested an adjournment for 15 days. AO observed that since ample opportunities as well as time was allowed to the assessee to file its reply and proper reply was not submitted therefore, the rectification order is passed on the basis of the facts available on the record. The AO further observed that since the mistake is apparent from the record so he has no other alternate except to disallow the excess deduction of Rs. 22,70,984/- and added back the same to the income of the assessee and assessed the income of the assessee at Rs. 2,49,96,694/- u/s. 154/143(3) of the Act vide order dated 29.11.2013. Against the aforesaid order dated 29.11.2013, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 09.12.2014 has partly allowed the appeal of the assessee. Aggrieved with the impugned order, the Assessee is in appeal before the Tribunal.
Ld. Counsel for the assessee submitted that the lower authorities failed to appreciate the fact that the deduction u/s 80IB of the Act in respect of interest from debtors and, on FDR was allowed in the assessment order after considering (vide para 10), the detailed submissions made by the Assessee vide letter dated 18-3.2013, in response to the query by the AO and the deduction u/s. 80IB of the Act in respect of income from interest received from debtors and on fixed deposits with banks was allowed in preceding years i.e. AY 2005- 06 to 2008-09. It was further submitted that provisions of section 154 of the Act are applicable to the mistake, which is apparent, glaring, obvious, self evident or ex facie that it is un-capable of argument or proof; and are not applicable to debatable issues or when two view are possible. It was further submitted that the proceedings under the provisions of section 154 of the Act cannot be initiated on the directions of the Audit Note, and also submitted that AO have not concluded anything in the assessment order regarding deduction u/s. 80IB of the Act in respect of interest from debtors and debtors and fixed deposits with Bank. In view of above, he requested to cancel the orders of the authorities below and allow the deduction u/s. 80IB of the Act.
On the other hand, Ld. DR relied upon the orders of the authorities below.
We have heard both the parties and perused the records, especially the order of the authorities below. The ground no. 1 to 1.1 were not pressed, hence, the same are dismissed as such. The ground no. 2 & 3 are argued before us which are discussed in the foregoing paragraphs. We find that assessee is a partnership firm, engaged in the manufacturing of Aluminium alloy ingot from scrap and trading in Aluminium cooper, brass, zinc etc. Scrap. The assessee filed return of income claiming deduction u/s. 80-IB of the Act at the rate of 25% in respect of income from manufacturing. The deduction claimed u/s. 80-IB of the Act included interest of Rs. 5,67,746/- being 25% of Rs. 22,70,984/-. During the hearing, the assessee was directed to explain why interest income should not be excluded from the profits for calculating deduction u/s. 80-IB of the Act. In response, the Assessee vide his letter dated 18.3.2013 made the detailed submissions. After considering the submissions, the Assessing Officer assessed the interest received from debtors and on fixed deposits with banks as income from business; and allowed the deduction u/s. 80-IB of the Act by observing as under:-
“10. The claim for deduction u/s. 80IB of the Act has been examined in light of the submissions made and details/documents filed. The assessee firm is engaged in manufacturing activities and fulfils all the conditions prescribed by section 80IB of the Income Tax Act, 1961 for the deduction. The submission of the Assessee firm regarding allowability of deduction u/s. 80IB of the Act in respect of interest from debtors and fixed deposit with bank has been considered and examined vis-vis books of accounts. In view of the above detailed discussion, it is established that the industrial undertaking of the firm fulfils all the conditions specified for deduction u/s. 80IB and consequently is eligible for deduction u/s. 80IB of the Act. The deduction under section 80IB of the I.T. Act, 1961 has also been allowed to the assessee firm during the year years completed under scrutiny. The details and other information submitted by the assessee firm regarding the speculative loss of Rs.
25,17,370/- claimed by the assessee firm during the financial year under consideration has also been verified and examined vis-a-vis books of accounts presented by the AR of the assessee firm for examination during the assessment proceedings.”
6.1 We also note that the deduction u/s. 80-IB of the Act in respect of income from interest received from debtors on fixed deposits with banks was allowed in preceding years i.e. AY 2005-06 to 2008-09.
However, the AO vide his order dated 29.11.2013 u/s. 154 of the Act disallowed deduction of Rs. 22,70,984/- u/s. 80-IB of the Act on the allegation that subsequently it revealed that the Assessee claimed excess deduction and Ld. CIT(A) in appeal has restricted the disallowance of deduction u/s. 80-IB of the Act to the amount claimed at Rs. 5,67,746/-. In view of above, we are of the considered view that the AO made the assessment u/s. 143(3) of the Act and took a conscious and considered view to allow deduction u/s. 80IB of the At in respect of interest from debtors and fixed deposits with Banks; and therefore, now the same cannot be said to be mistake apparent from record; this is clear case of change of opinion; the order does not even mention the nature of amount disallowed; the order does not show any basis, reason or logic to arrive at a conclusion that deduction allowed u/s. 80IB of the Act is mistake apparent from record much less patent and glaring; the assessment order does not point any mistake of fact or application of any law. Hence, in our view there is no mistake apparent on record rectifiable u/s. 154 of the Act, therefore, we quash the orders of the authorities below and allow the deduction in dispute u/s. 80IB of the Act in respect of the interest received from debtors and on fixed deposit with banks. Accordingly, the grounds no. 2 & 3 raised by the assessee are allowed. Our aforesaid view is fortified by the decision of the Hon’ble Delhi High Court in the case of CIT vs. Krishak Bharti Co-operative Ltd. (2004)
266 ITR 208 (Del.) wherein, it has been held as under:-
“2....The only issue which arose for consideration before the Tribunal was whether a part of the relief granted to the respondent / assessee under section 80-I of the Act could be withdrawn by taking recourse of s. 154 of the Act. The Tribunal, by placing reliance on various decisions of the Apex Court and of this Court has come to the conclusion, and rightly so, that since the question whether an assessee is entitled to deduction under section 80-I or not, is debatable, the relief granted under the section could not be said to be a mistake apparent from the record, within the meaning of s. 154 of the Act.
3. While interpreting the scope of s. 154 of the Act, the Supreme Court in T.s. Balaram, ITO vs. Volkart Brothers (1971) 82 ITR 50 (SC), held that a mistake apparent on the record within the meaning of s. 154 of the Act must be an “obvious” and “patent” mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. In the light of the settled law position, no fault can be found with the impugned order. The appeal is accordingly dismissed.”
In the result, the appeal filed by the Assessee stands allowed.