M/S AUTOGRAPH CARS (INDIA) ,MUMBAI vs. NATIONAL FACELESS APPEAL CENTRE (NFAC) INCOME TAX DEPARTMENT, MUMBAI

आयकर अपीलीय अिधकरण मुंबई पीठ “ए ”,मुंबई �ी िवकास अव�थी, �ाियक सद� एवं सु�ी प�ावती. एस, लेखाकार सद� के सम� IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & MS. PADMAVATHY.S, ACCOUNTANT MEMBER आअसं.2928/मुं/2023 (िन.व. 2013-14) ITA NO.2928/MUM/2023 (A.Y.2013-14) M/s. Autograph Cars (India) Private Limited, C/o. R.K.Khanna & Associates, 402, Regent Chambers, Nariman Point, Mumbai 400 021 PAN: AAFCA-0420-J ...... अपीलाथ�/Appellant बनाम Vs. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Deputy Commissioner of Income Tax, Circle 14(1)(1), Mumbai – 400 020 ..... �ितवादी/Respondent

अपीलाथ� �ारा/ Appellant by : Shri Raja B. Singh �ितवादी�ारा/Respondent by : Shri Manoj Kumar Sinha सुनवाई की ितिथ/ Date of hearing : 13/12/2023 घोषणा की ितिथ/ Date of pronouncement : 05/01/2024 आदेश/ORDER PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 26/06/2023,for Assessment Year 2013-14.

2 ITA NO.2928/MUM/2023 (A.Y.2013-14) further submitted that in ground No.3 of appeal the assessee has assailed the findings of authorities below in making addition of Rs.1,73,17,062/- u/s. 41(1) of the Income Tax Act, 1961 [ in short ‘the Act’]. There were outstanding liabilities for the preceding Assessment Years which were either written back or were paid in the subsequent Assessment Years i.e. Assessment Year 2014- 15, 2016-17 and 2018-19. The Assessing Officer erred in holding that it is a case of remission and made addition u/s.41(1) of the Act. The assessee carried the issue in appeal before the CIT(A). The CIT(A) allowed part relief to the extent liabilities were repaid in subsequent Assessment Years, but confirmed the addition qua amounts written back. 2.1 In respect of ground No.4 of appeal, the ld.Authorized Representative of assessee submitted that the addition made by the CIT(A) in respect of depreciation does not emanates from the assessment order. The assessee had raised ground of appeal before the First Appellate Authority in respect of carry forward of unabsorbed depreciation. The CIT(A) in para-5 of the impugned order disallowed assessee’s claim of depreciation u/s. 32 of the Act stating that no activities were carried during the year as the assets were not actually put to use. The said findings of the CIT(A) are contrary to the pleadings and the fact on record. 2.2 The ld.Authorized Representative of the assessee submitted that in ground No.6 of appeal, the assessee is seeking rectification of arithmetical error in order by the CIT(A). While confirming addition u/s. 41(1) of the Act, the CIT(A) has mentioned the amount as Rs.2,07,88,247/- instead of Rs.1,73,36,499/-. Thus, an excessive amount of Rs.34,51,748/- has been mentioned in the order of CIT(A).

3 ITA NO.2928/MUM/2023 (A.Y.2013-14) 3. Shri Manoj Kumar Sinha representing the Department strongly supported the impugned order and prayed for dismissing appeal of the assessee. 4. We have heard the submissions made by rival sides and have examined the orders of authorities below. Ground No.1 and 7 of appeal are general in nature, hence, require no separate adjudication. 5. The ld.Authorized Representative of the assessee has made a statement at Bar that he is not pressing ground No.2 and 5 of appeal. In view of the statement made by the ld.Authorized Representative of the assessee ground No.2 and 5 are dismissed as not pressed. 6. In ground No.3 of appeal the assessee has assailed addition made u/s. 41(1) of the Act. During the course of assessment proceedings the Assessing Officer observed that the assessee has shown Rs.1,17,25,016/- as other liability and Rs.2,06,96,153/- was shown as payable in Note- 6 of the Balance Sheet. Since, the said liabilities were outstanding for more than three years, the Assessing Officer made addition of aggregate of the aforesaid amounts u/s. 41(1) of the Act. The contention of the assessee is that the aforesaid amounts were either repaid in subsequent Assessment Years or were written back, hence, it is not a case of remission of liability. In the first appellate proceedings, the assessee furnished proof of repayment of the amounts aggregating to Rs.1,50,81,670/- The CIT(A) granted partial relief to the extent the assessee was able to substantiate repayments and confirmed the addition to the extent of Rs.2,07,88,247/-. The ld.Authorized Representative of the assessee pointed that the CIT(A) has erred in not considering the amounts that have been written back. Considering the submissions of the assessee, we deem it appropriate to restore this issue to the Assessing Officer for verification of the amounts written back by the assessee. The Assessing

4 ITA NO.2928/MUM/2023 (A.Y.2013-14) Officer after examining the records shall grant relief to the assessee to the extent amounts have been written back. The ground No.3 of appeal is allowed for statistical purpose in the terms aforesaid. 7. The ground No.6 of appeal is connected to the issue raised in ground No.3. The contention of the assessee is that the CIT(A) has committed arithmetical error in quantifying the addition u/s. 41(1) of the Act . Instead of Rs.1,73,36,499/-, the CIT(A) has confirmed addition of Rs.2,07,88,27/-. The assessee has already filed rectification petition u/s. 154 of the Act before the Assessing Officer /CIT(A). The Assessing Officer /CIT(A) is directed to decide the aforesaid application of the assessee expeditiously, preferably within a period of six months from the date of receipt of this order. The ground No.6 of appeal is accordingly allowed for statistical purpose. 8. The ground No.4 of appeal is with respect to disallowance of deprecation u/s. 32 of the Act by the CIT(A) . The contention of assessee is that the assessee had claimed carry forward of unabsorbed depreciation of preceding Assessment Years, the same was disallowed by the Assessing Officer. In the First Appellate proceedings, the CIT(A) allowed carry forward of depreciation but disallowed assessee’s claim of depreciation of current year u/s.32 of the Act stating that the assessee was not carrying out any activity during the year and the assests were not actually put to use. From close examination of the documents on record we find that in assessment proceedings there is no discussion regarding disallowance of current year’s depreciation u/s. 32 of the Act. The issue before Assessing Officer was with regard to carry forward of business loss and unabsorbed depreciation. The Assessing Officer has dealt with the issue in para-8 of the assessment order. The assessee inter-alia raised a ground before the CIT(A) assailing disallowance of carry forward of unabsorbed depreciation. The CIT(A) allowed assessee’s

5 ITA NO.2928/MUM/2023 (A.Y.2013-14) claim of carry forward of depreciation u/s. 32(2) of the Act in para 4.4 of the impugned order. Thereafter, the CIT(A) in para-5 of the impugned order disallowed assessee’s claim of depreciation u/s. 32 of the Act observing that no activities were carried out during the year and the assets of the company were actually not put to use. We find that the findings of CIT(A) in para-5 does not emanate from the findings of Assessing Officer in assessment order. No notice of enhancement was issued to the assessee by CIT(A) for disallowance either. The observations of the CIT(A) in para -5 of the impugned order are unwarranted, hence, the findings in para-5 of the impugned order are quashed. The assessee succeeds on ground No.4 of appeal. 9. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on Friday the 05th day of January, 2024.

Sd/- Sd/- (PADMAVATHY. S) (VIKAS AWASTHY) लेखाकार सद�/ACCOUNTANT MEMBER �ाियक सद�/JUDICIAL MEMBER

मुंबई/Mumbai, िदनांक/Dated: 05/01/2024 Vm, Sr. PS(O/S) �ितिलिप अ�ेिषतCopy of the Order forwarded to : अपीलाथ�/The Appellant , 1. 2. �ितवादी/ The Respondent. आयकर आयु�CIT 3. िवभागीय �ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 4. गाड� फाइल/Guard file. 5..

BY ORDER, //True Copy// (Dy./Asstt.Registrar) ITAT, Mumbai