Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Shri P.M. Jagtap, Vice-(KZ) & Shri S.S. Viswanethra Ravi
Per Shri P.M. Jagtap, Vice-President (KZ):- This appeal filed by the assessee is directed against the order of ld. Principal Commissioner of Income Tax-2, Kolkata dated 31.03.2015 passed under section 263 of the Income Tax Act, 1961.
The assessee in the present case is a Company, which is engaged in the business of manufacturing of tea and engineering goods. The return of income for the year under consideration was filed by it on 27.09.2010 declaring a loss of Rs.5,39,95,743/- and after setting off the unabsorbed
ITA No. 798/KOL/2015 A.Y. 2010-2011 Andrew Yule & Co. Limited
depreciation, the nil income was declared by the assessee. In the assessment completed under section 143(3) vide an order dated 13.03.2013, the total income of the assessee was determined by the Assessing Officer at Rs.7,82,89,048/- after making various additions/disallowances. The record of the said assessment came to be examined by the ld. Principal CIT and on such examination, he found that the income earned by the assessee from profit on sale of investment of Rs.68.42 crores and deducted in the computation of income was not considered by the Assessing Officer in the assessment order for the purpose of taxation under the head “Long-term Capital Gains”. According to the ld. Principal CIT, long-term capital gain on sale of the said investment after deducting the indexed cost of acquisition was to the tune of Rs.58.20 crores and since the same was not exempt under section 10(38), the assessment order passed by the Assessing Officer under section 143(3) was erroneous as well as prejudicial to the interest of the Revenue. She, therefore, issued a show-cause notice under section 263 on 23.12.2013 requiring the assessee to offer its explanation in the matter. In reply, it was submitted on behalf of the assessee-company that the issue of taxability or otherwise of the profit on the sale of shares of Phoenix Yule Ltd. and Dishergarh Power Supply Co. Ltd. was under consideration of BIFR and the BIFR vide its order dated 24th September, 2013 had directed the Income Tax Department to consider the claim of the assessee for exemption under section 45 of the Act. It was submitted that a detailed submission was filed by the Income Tax Department in this regard and the matter was still pending before the BIFR. This submission made on behalf of the assessee did not find favour with the ld. Principal CIT. She held that this matter had not been examined by the Assessing Officer at all during the course of assessment proceedings and such non- examination by the Assessing Officer rendered the assessment order passed by him under section 143(3) erroneous as well as prejudicial to the interest of the revenue. She accordingly set aside the said order vide an order dated 31.03.2015 passed under section 263 with a direction to
ITA No. 798/KOL/2015 A.Y. 2010-2011 Andrew Yule & Co. Limited
the Assessing Officer to complete the assessment afresh by passing a speaking order after giving the assessee necessary opportunity of being heard. Aggrieved by the order of the ld. Principal CIT under section 263, the assessee has preferred this appeal before the Tribunal.
The ld. Counsel for the assessee submitted that the long-term capital gain earned by the assessee from the sale of shares in question was claimed to be exempt and the matter relating to the said claim was pending before BIFR. He submitted that the Assessing Officer was aware of this position and after examining the relevant details, he took a considerate decision to allow the claim of the assessee for exemption under the impression that it would be allowed by BIFR. He invited our attention to the copy of notice issued by the Assessing Officer under section 142(1) on 25.10.2011 placed at page no. 46 of the paper book and pointed out that the details of quoted and unquoted shares were called for by the Assessing Officer during the course of assessment proceedings. He also invited our attention to the copy of reply dated 22.11.2012 filed by the assessee placed at pages no. 49 & 50 of the paper book to show that the relevant details required by the Assessing Officer were duly furnished by the assessee. He also invited our attention to the letter dated February 23, 2012 written by the Secretary of the Department of Heavy Industry to the Secretary of the Department of Revenue (copy at page no. 304 of the paper book) recommending consideration of assessee’s claim favourably to obviate financial hardship and derailment of the revival process. He also referred to the letter dated March 13, 2013 received by the assessee from Jt. Director of Income Tax (Recovery) (copy at pages no. 191 & 192 of the paper book) and reply given by the assessee vide letter dated April 04, 2013 (copy at pages no. 193 & 194 of the paper book) to show that the issue relating to the assessee’s claim for exemption was still in dispute. He contended that the issue relating to the assessee’s claim for the said exemption thus was examined by the Assessing Officer during the course of assessment proceedings and being
ITA No. 798/KOL/2015 A.Y. 2010-2011 Andrew Yule & Co. Limited
aware of the latest development, the claim of the assessee for exemption was allowed by him by taking a conscious and well considered view. He contended that there was thus no error in the order of the Assessing Officer as alleged by the ld. Principal CIT calling for revision under section 263 of the Act. In support of this contention, the ld. Counsel for the assessee relied on the decision of the Hon’ble Calcutta High Court in the case of CIT –vs.- Mulchand Bagri [68 Taxman 215].
The ld. D.R. contended that the claim of the assessee for exemption on account of long-term capital gain arising from the sale of shares was rejected by the BIFR and there was no positive development whatsoever in the matter by the time the assessment order under section 143(3) was passed by the Assessing Officer. He contended that there is nothing on record to show that the Assessing Officer had some basis to get an impression that the assessee’s claim was being allowed by BIFR. He contended that the Assessing Officer, in fact, had not made any enquiry whatsoever on this issue as rightly pointed out by the ld. Principal CIT in her impugned order. He contended that the claim of the assessee for exemption has not been finally accepted by the BIFR, which clearly shows that the order passed by the Assessing Officer allowing the claim of the assessee for exemption without making any enquiry in the matter was erroneous as well as prejudicial to the interest of the revenue and the ld. Principal CIT was fully justified in setting aside the same by exercising the powers conferred upon her under section 263 of the Act.
We have considered the rival submissions and also perused the relevant material available on record. Although the ld. counsel for the assessee has relied on the notice dated 25.10.2011 issued by the Assessing Officer under section 142(1) of the Act (copy at pages no. 46 to 48 of the paper book) and the reply dated 22.11.2012 filed by the assessee (copy at pages no. 49 & 50 of the paper book) to contend that the issue relating to the assessee’s claim for exemption on account of
ITA No. 798/KOL/2015 A.Y. 2010-2011 Andrew Yule & Co. Limited
long-term capital gain arising from the sale of shares was enquired into and examined by the Assessing Officer, we find that what the Assessing Officer had called for were only the details of quoted and unquoted shares from the assessee and what the assessee had furnished in this regard vide its reply dated 22.11.2012 was only that there were no purchase of quoted and unquoted shares during the year under consideration except the sale of shares of Phoenix Yule Ltd. and Dishergarh Power Supply Co. Ltd. of 1,19,43,074 and 3,01,119 respectively. Besides this, there is nothing brought on record to show that any enquiry whatsoever was made by the Assessing Officer to ascertain the profit arising from the sale of the said shares and taxability of the same in the hands of the assessee-company. There is also nothing brought on record to show that the Assessing Officer was aware of the claim made by the assessee for the exemption of the said profit from tax and any positive development in the matter, which could give an impression to the Assessing Officer that the claim of the assessee for such exemption was likely to be allowed by BIFR. As a matter of fact, the case of the assessee was already processed with the approval of CBDT for implementation of the sanctioned scheme and the decision was communicated by the Income Tax Department to the BIFR as well as to the assessee-company on 14.03.2011 denying relief under section 111A, 112 and 10(38) of the Income Tax Act. It appears that the assessee, however, still sought relief under section 45 of the Income Tax Act and the same was also finally denied by the Income Tax Department vide letter dated 20.05.2013 clarifying that no relief under section 45 of the Income Tax Act was envisaged in the sanctioned scheme of BIFR. As rightly contended by the ld. D.R., there was thus no positive development whatsoever to show that the claim of the assessee for exemption was under consideration and the same was likely to be allowed at the relevant time when the assessment order came to be passed by the Assessing Officer under section 143(3) on 13.03.2013.
ITA No. 798/KOL/2015 A.Y. 2010-2011 Andrew Yule & Co. Limited
In the case of Mulchand Bagri (supra) relied upon by the ld. Counsel for the assessee in support of the assessee’s case, a finding was recorded by the Tribunal that the Assessing Officer had actually made an enquiry into the sale of silver utensils and since this finding of fact by the Tribunal had not been challenged, the Hon’ble Calcutta High Court held that the Commissioner was not right in his conclusion that the case of the assessee had been accepted by the Assessing Officer without any enquiry. The facts involved in the present case, however, are different, inasmuch as, the Assessing Officer, as already noted by us, had not made any enquiry on the issue of profit earned by the assessee from the sale of shares and taxability of the same in the hands of the assessee. There is also nothing on record to show that there was any basis, which resulted in giving an impression to the Assessing Officer that the claim of the assessee for exemption as per the sanctioned scheme of BIFR was likely to be allowed. Keeping in view all these facts of the case, we are of the view that the order of the Assessing Officer passed under section 143(3) allowing the claim of the assessee for exemption on this issue was erroneous as well as prejudicial to the interest of the revenue and the ld. Principal CIT was fully justified in setting aside the same vide her impugned order passed under section 263. We, therefore, uphold the said order of the ld. Principal CIT and dismiss this appeal of the assessee.
In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on December 07, 2018.
Sd/- Sd/- (S.S. Viswanethra Ravi) (P.M. Jagtap) Judicial Member Vice-President (KZ) Kolkata, the 7th day of December, 2018
Copies to : (1) Andrew Yule & Co. Limited, ‘Yule House’, 8, Dr. Rajendra Prasad Sarani, Kolkata-700 001
ITA No. 798/KOL/2015 A.Y. 2010-2011 Andrew Yule & Co. Limited
(2) Principal Commissioner of Income Tax-2, Kolkata, Aayakar Bhawan, 3 rd Floor, P-7, Chowringhee Square, Kolkata-700 069
(3) Commissioner of Income Tax- , (4) The Departmental Representative (5) Guard File By order
Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.