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Income Tax Appellate Tribunal, “C”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI, JM Dr. A.B.Road, Prabhadevi
आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 1998-99, in the matter of order passed u/s. 154 r.w.s. 250 of the IT Act. 2. The following grounds have been taken by the assessee:- GROUND NO 1- CONDONATION OF DELAY a) The LO. CIT(A) erred in dismissing the appeal filed by your appellant on 01.11.2012 before him for contesting the order passed u/s. 154 r.w.s. 250 of the AO. dt. 27.03.2003 by not condoning the delay in filing the appeal and holding that the said appeal was filed beyond the permissible time and further erred in law and on facts by not liberally interpreting the provisions of s. 249(3) and not appreciating the fact that your appellant had a sufficient and reasonable cause for not presenting the appeal within the stipulated statutory period in as much as it was under a bonafide belief that having filed an appeal to ITAT against the order involving quantum of M/s. Crompton Greaves Ltd., deduction u/s. 80HH, 80l and 80lA, no other appeal was to be filed on the same issue till such time the order was passed by the ITAT. b) Your appellant submits that: i. It was pursuing an alternative remedy before a higher forum against order dt. 08.02.2002 passed u/s. 250 by CIT(A) in relation to the quantum of deduction u/s. 80HH, 80l and 80lA and therefore was under a bonafide belief that it was not required to separately contest the order dt. 27.03.2003 of the Id. AO. involving the one and same issue before CIT(A). ii. Your appellant was prevented by a sufficient and reasonable cause for the delay on account of pursuit of the alternative remedy up to the date of receipt of the Honb'e ITAT's order on 16.03.2012 involving the adjudication of the same issue that was under dispute and was under a bonafide belief that it had not to file a separate appeal against order dt.27.03.2003 for giving effect to appellate order, iii. There was no negligence nor any inaction on part of the appellant, iv. The appellant was pursuing other remedies under the law and hence there was sufficient and reasonable cause for not filing the present appeal in time, v. If the delay is not condoned, the appellant will have no other option to seek remedy under law and would be deprived of natural justice, vi. Even if the appeal is admitted the same would be decided on the merits of the case and therefore admission of the same would not prejudice the interest of the revenue department. c) Your appellant pleads that the delay in filing the appeal before the CITCA) be condoned as your appellant was prevented by sufficient and reasonable cause in filing the appeal in time and the CIT(A) be directed to admit the said appeal and adjudicate the same. GROUND NO 2 - Income not considered and expenses deducted for calculation of profits eligible for deduction u/s 80HH. 80I & 80IA M/s. Crompton Greaves Ltd., a) The Ld. CIT(A) erred in law and on facts in not adjudicating the ground on merit and dismissing the appeal by ignoring the action of the A.O.; i. in restricting the deduction u/s 80HH ,80I & 80lA to Rs.9,46,26,957 instead of allowing the deduction in full of Rs.16,91,02,466, ii. in restricting the deduction u/s 80HH ,80I & 80lA in the proceedings u/s 154, iii. in not giving full effect to the appellate order passed u/s 250 dt 08.02.2002 while passing an order dt 27.02.2002 for giving effect to the said appellate order, iv. in assuming that the expenses unrelated to the New Industrial undertaking, namely corporate expenses, regional administration expenses, interest on corporate funds, common R & D expenses and advertisement expenses were incurred for the purposes of earning income derived from such undertakings and further erred in reducing the income of such undertakings by such expenses, v. in excluding the income from profit on sale of asset, insurance claims and interest from the income derived from the New Industrial undertakings and as such reducing the quantum of deduction u/s 80HH ,80I & 80IA. b) Your appellant submits that: i. the said expenditure namely corporate expenses, regional administration expenses, interest on corporate funds, common R & D expenses and advertisement expenses were not incurred for the purpose of earning income from new industrial undertaking and therefore were not liable to be deducted in determining the profits derived from such undertakings, and further submits that income from sale of asset, insurance claims and sundry interest was derived from the said industrial undertakings and was eligible for deduction u/s 80HH,80I and 80IA. ii. due to the allocation of the said expenses and due to exclusion of the said receipts the profits eligible for deduction u/s 80l,80IA and 80HH were reduced. c) Your appellant pleads that the said expenditure and the said income should not be deducted from income of New Industrial Undertaking and prays that such income be accepted as M/s. Crompton Greaves Ltd., returned and the claim for deduction u/s 80HH ,801 & 80lA be allowed at Rs. 16,91,02,466/- as computed by your appellant. Your appellants crave leave to add, alter or to modify any of the foregoing grounds of appeal if required.
Rival contentions have been heard and record perused.
In this appeal, assessee is basically aggrieved for dismissing the appeal by the CIT(A) on the ground of limitation. Facts in brief are that in the original assessment framed u/s.143(3), AO declined assessee’s claim of deduction u/s.80HH, 80I & 80IA against the order of AO, assessee approached to the CIT(A) vide order dated 08/02/2002. CIT(A) restored the matter back to the AO to review the matter and recomputed the deduction. In the order giving effect to the order of CIT(A), the AO granted partial relief, however, after the CIT(A) remanded the matter to the AO vide order dated 08/02/2002, assessee also approached to the Tribunal challenging the order of CIT(A). On realizing the fact that the grievance of assessee company regarding deduction claimed u/s. 80HH, 80I and 80IA continues and had remained unaddressed, the assessee company immediately filed an appeal before CIT(A)- 12 on 01.11.2012 against Impugned Order u/s. 154 r.w.s 250 dt. 27.03.2003 which was received on 31.03.2003 after alleged delay of 9 ½ years. Appeal was however filed within 230 days of receipt of the said ITAT order. The Ld. CIT(A) vide his order dt. 30.04.2014 dismissed the appeal filed by assessee company by not condoning the delay in filing the appeal and holding that the said appeal was filed beyond the permissible time.
M/s. Crompton Greaves Ltd., 5. Against the order of CIT(A), assessee is in further appeal before us.
We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that while dismissing the assessee’s appeal vide order dated 30/04/2014, the CIT(A) has observed that pendency of appeal before ITAT was taken a plea for not filing the appeal against the impugned order. The CIT(A) also observed that the present appeal against the impugned order was filed even after lapse of 7 ½ months after receipt of ITAT’s order. We found that the assessee-company contested the issue in appeal to ITAT in appeal filed in time hoping to set aside the directions of CIT(A) of remanding the issue to file of A.O. has the company succeeded in appeal, the order of the CIT(A) and hence of AO giving effect would have become redundant and therefore there could not have been any need to file any appeal against the order of Ld. A.O giving effect to CIT(A)’s order. After the order was passed by the ITAT, assessee company on realizing the fact that the claim of deduction u/s. 80HH, 80I and 80lA had continued and had remained unaddressed, the assessee company had only two options in that circumstance that either to file an appeal before CIT(A) which assessee company has done or to file an appeal u/s. 260A to the High Court. The decision of filing an appeal before CIT(A) had been taken in consultation with the Chartered Accountant and the Advocate and the discussion had taken some time for ascertaining the correct course of action between High Court appeal and CIT(A). The decision had taken sometime and sometime had also been devoted in preparation of the M/s. Crompton Greaves Ltd., appeal and compiling the papers from old records and sometime had also been taken for obtaining the company's Managing Director signatures who was travelling outside India. As per our considered opinion, the assessee company was pursuing alternative remedy and pursuit of remedy was a reasonable cause and assessee has established the fact of such pursuit with necessary evidence.
It can be seen from the said order of the Hon' ITAT that the assessee company's grievance about the quantum of deduction under chapter VIA in respect of 80HH, 80I & 80IA continues and had remained to be addressed.
We found that the assessee company was prevented by a sufficient and reasonable cause for the delay on account of pursuit of the alternative remedy up to the date of receipt of the Hon'ble ITAT's order on 08.02.2012 involving the adjudication of the same issue that was under dispute and was under a bonafide belief that it had not to file a separate appeal against order dt. 27.03.2003 for giving effect to appellate order. If delay is not condoned, the assessee company will have no other option to seek remedy under law and would be deprived of natural justice. Even if appeal is admitted the same would be decided on the merits of the case and therefore admission of the same would not prejudice the interest of the revenue department.
Under these facts and circumstances, following the judicial pronouncements laid down in the following decisions delay deserves to be M/s. Crompton Greaves Ltd., condoned. Accordingly, we restore the matter back to the file of the CIT(A) for deciding on merits. a. Chamanlal Bras Pvt Ltd v. The Punjab State (1961), 12 STC 643 (Punj.) b. Ashok Automobiles (Ranchi) Pvt Ltd, 174 ITR 566,567. c. K.S.P. ShanmugavelNadar, 153 ITR 596 (Mad.) d. BrijIndar Singh v. Kanshi Ram, AIR 1917 PC 156 e. AsiBai v. Gomathi, AIR 1979 Mad 115,116 f. Punjab State Co-operative Milk Producers Federation Ltd v. State of Punjab, (1999) 116 STC 324,326 (Punj.) g. Collector, Land Acquisition v. Mst. Katiji, 167 ITR 471,472-73 (SC) 10. In the result, appeal of the assessee is allowed in part for statistical purposes.