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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: DR. MANISH BORAD, HON’BLE & SHRI SONJOY SARMA, HON’BLE
O R D E R
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The present appeal is directed at the instance of the assessee against the order of the Pr. Commissioner of Income Tax, Kolkata - 4, [hereinafter the “ld. Pr. CIT”] dt. 01/03/2019, passed u/s 263 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2013-14.
2. The facts in brief are that the assessee is a non-banking finance company engaged interalia in the business of infrastructure, construction and finance. Original return of income for Assessment Year 2013-14 furnished on 30/11/2013 declaring total income of Rs.17,90,96,700/- under the normal provisions and book profit u/s 115JB of the Act at Rs.17,70,62,687/-. Subsequently, return of income was revised on 30/03/2015 declaring Nil income under normal provisions and book profit remained unchanged. Case of the assessee Assessment Year: 2013-14 SREI Infrastructure Finance Limited 2 was selected for scrutiny through CASS followed by valid issuance of notice u/s. 143(2) and 142(1) of the Act. Various details were called for through questionnaire issued u/s 142(1) to which necessary compliance were made. After making certain additions/disallowance assessment was completed on 30/12/2016. Subsequently, ld. Pr. CIT called for assessment records and on the basis of his verification of the material available on record, he was of the view that the order of the assessment is erroneous so far as prejudicial to the interest of the revenue on various grounds which have been noted by the by the ld. Pr. CIT in the show-cause notice issued on 05/02/2019. During the course of the revisionary proceedings, the assessee filed replies on various dates stating that in some of the issues raised in the showcause notice, this Tribunal in assessee’s own case has taken a view favourable view to the assessee and, therefore, the assessment order cannot be held to be erroneous and prejudicial to the interest of the revenue. The following chart depicts the issue raised by the ld. Pr. CIT and the response given on various dates by the assessee and the relevant pages are available in the paper book furnished before us:- Assessee's s. Issues raised Queries raised/ Remarks Annexure response No. reference Pase 94-108 o f Non-addition of Explanation as to why provision for Reply dated the Paper provision , for NPA of Rs. 24.03 Crs debited to P & 12-12-2016 book (refer pase NPA in computing L A/c should not be added in 1. 103-107 o f the paper book) Book Profits u/s computing Book Profits u/s 115JB 115JB - Party wise details of provision for Pase 109-114 Reply dated NPA o f the Paper 23-12-2016 Book) Refer pase 110 o f the Paper book) 2. Pase 182-186 Short Term Explanation of computation of STCL Reply dated o f the Paper Capital Loss of Rs. 11.03 Crs & reconciliation of 04-11-2016 Book) Refer pase claimed for sale of such loss with computation of 183 o f the Paper book) land and building income and justification of same Assessment Year: 2013-14 SREI Infrastructure Finance Limited 3 (Refer notice u/s 142(1) dated 14- 09-2016)- Page 159 2.1. After considering these details, the ld. Pr. CIT has held that the issue raised in the show-cause notice need proper enquiry and thus directed the Assessing Officer to framed a fresh assessment order in accordance with the directions given in the impugned order.
Aggrieved the assessee is now in appeal before this Tribunal raising the following grounds:- “1. That on the facts and in the circumstances of the case, the Learned Principal Commissioner of Income Tax - 4, (here- in- after referred to as Ld. Pr. CIT) was not justified in initiating proceedings u/s 263 of the Act as the Assessing Officer (here-in-after referred to as A.O.) had duly considered all the materials during the course of the assessment proceedings.
Assessment Year: 2013-14 SREI Infrastructure Finance Limited 4
That on the facts and in the circumstances of the case, the impugned order passed u/s 263 is grossly arbitrary and bad in law in relation to the issues raised and adjudicated therein and needs to be summarily deleted since the order passed by A.O. was neither erroneous nor prejudicial to the interest of the revenue.
3. That on the facts and in the circumstances of the case and without prejudice to Ground No. 1 & 2 taken here-in-above, the Ld. Pr. CIT was not justified in setting aside all issues as specified vide Para 2 of the order u/s 263 on merits to the file of the A.O. for proper enquiry without himself deciding any issue on merits. 4. That on the facts and in the circumstances of the case and without prejudice to Ground No. 1 to 3 taken here-in-above, the Ld. Pr. CIT was not justified and grossly erred in referring the matter to AO to verify non adjustment of Provision for Non-Performing Assets of Rs. 24,02,58,026/- in computing Book Profits u/s 115JB. 5. That on the facts and in the circumstances of the case and without prejudice to Ground No. 1 to 3 taken here-in-above, the Ld. Pr. CIT was not justified in referring the matter on account of short term capital loss to the file of the A.O. to verify the applicability of Sec. 50C without appreciating the fact that the said provisions does not apply to transfer of leasehold right in relation to land and buildings. 6. That on the facts and in the circumstances of the case and without prejudice to Ground No. 1 to 3 taken here-in-above, the Ld. Pr. CIT was not justified and grossly erred in referring the matter to the A.O. to verify whether amount withdrawn from Debt Redemption Reserve of Rs. 9,27,00,000/- is liable to be included in computing Book Profit u/s115JB. 7. That on the facts and in the circumstances of the case and without prejudice to Ground No. 1 to 3 taken here-in-above, the Ld. Pr. CIT was not justified and grossly erred in referring the matter to the A.O. to verify whether the appellant is eligible for additional depreciation u/s 32(l)(iia) of Rs. 4,34,49,784/- on leased windmills engaged in generation of power. 8. That on the facts and in the circumstances of the case and without prejudice to Ground No. 1 to 3 taken here-in-above, the Ld. Pr. CIT was not justified and grossly erred in referring the matter to the A.O. to verify the taxability of the income received from venture capital fund.
Assessment Year: 2013-14 SREI Infrastructure Finance Limited 5 9. That on the facts and in the circumstances of the case and without prejudice to the Ground No. 1 to 3 taken here-in-above, the Ld. Pr. CIT was not justified and grossly erred in referring the matter to the A.O. to verify the taxability of capital profit in computing Book Profits u/s 115JB.
That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the Grounds stated here-in-above, either before or at the time of hearing of this appeal.”
At the outset, the ld. Counsel for the assessee referred to paper books and submissions and also taking us through a brief synopsis stated that the order of the Assessing Officer is not erroneous and prejudicial to the interest of the revenue for the reason that either for some of the issues, this Hon’ble Tribunal has already allowed in favour of the assessee for Assessment Year 2008-09 and 2011-12 and in some issues the ld. Assessing Officer in the set aside proceedings has already accepted the plea of the assessee and has not made the addition for the issues raised in the show-cause notice and for some issues, a detailed enquiry has been conducted and a view permissible under law has been taken and also in some cases, the Hon’ble High Courts have decided such issues which are squarely applicable on the facts of the case of the assessee. To summarize, he stated that the order of the Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue and thus, the impugned order deserves to be quashed. 4.1. On the other hand, the ld. D/R vehemently argued relying on the revisionary order passed by the ld. Pr. CIT u/s 263 of the Act.
We have heard rival contentions and perused the material available on record. The ld. Counsel for the assessee has not challenged the assumption of jurisdiction u/s 263 of the Act and thus, Assessment Year: 2013-14 SREI Infrastructure Finance Limited 6 Ground Nos. 1, 2 & 3 of the Act deserve to dismissed as not pressed. As far as the remaining grounds, the common grievance of the assessee is that the ld. Pr. CIT was not justified and grossly erred in referring the matter to the Assessing Officer for fresh assessment order. A brief note on the various issues has been filed by the assessee and the same is reproduced as follows:- “Summarised details of issues raised and examined in detail by the Ld. Assessing Officer during the course of assessment proceedings u/s 143(3) in the form of a table for ease of reference as under: Grounds 1-3 are general in Grounds Issues raised Queries raised/ Remarks Paper Book Remarks Assessee's response reference page No. 4 Allowed by ITAT Disallowance of Explanation as to why Reply dated 100-102 and in assessee's own Provision for Non- provision for NPA of Rs. 12-12-2016 110-111 case for AY 2008- Performing Assets 24.03 Crs debitedtoP&L A/c and 23-12- 09 and AY 2011-12 (NPA) in should not be added in 2016 dated 31-12-2019, computing Book computing Book Profits u/s refer Case Law Profits u/s 115TB 115TB No. 1 page 7 5 159,183 Duly examined by Disallowance of Explanation of computation Reply dated AO during Short Term Capital of STCLof Rs. 11.03 Crs & 04- ~ 11- assessment. Loss claimed in reconciliation of such loss 2016 and Refer Case Law Return of Income with computation of income 06-10-2015 No. 2 and 3 for transfer of and justification of same rights in land and (Refer notice u/s 142(1) dated building 14-09-2016) Section 50C of the Act not applicable on transfer of leasehold rights. 6. 111,223 Allowed in order Claim of exclusion Explanation regarding clause Reply dated passed u/s of Debt under Explanation 1 of Sec. 07-12-2016 263/143(3) of the Redemption 115TB by virtue of which Act dated 24-12- Reserve (DRR) in adjustment of amount DRR 2019, refer page 65 computation of was made in computing Book of Case Laws P/B book profits Profit u/s 115JB (Refer notice u/s115TB u/s 142(1) dated 14-09-2016) 7. Deduction of Only balance 10% Reply 160 and Not prejudicial additional depreciation is dated 06- balance 10% 180 to the interest claimed u/s 32(l)(iia) on 10-2015 of revenue, refer Additional assets acquired and used judgment HC of Depreciation on for less than 180 days in Karnataka in windmill Assessment Year: 2013-14 SREI Infrastructure Finance Limited 7 capitalized in AY 2012-13. the case of AY 2012-13 Rittal India, Further, the basis of claim Page 37 of the is also evident from notes case law p/b. appended to Annexure -2 of Tax Audit Report Refer ITAT, submitted before the AO. Kolkata judgment in the case of Century Enka Ltd (copy enclosed) 8. Taxability of Explanation regarding Reply 210 Allowed in Income from nature of share of loss of dated 02- order 12-2016 Venture Capital Alternative Investment passed u/s 263/143(3) of Funds Funds ('ATF') (Refer the Act dated notice u/s 142(1) dated 24-12- 14-09-2016) 2019, refer page 68 of Case Laws P/B 9. Exclusion of Explanation regarding Reply 220,230 Duly examined Capital Profits exclusion of profit on dated 07- by AO during 12-2016 of from account of sale of assessment - AO took a computation of investments from possible view. Book Profits u/s computation of income 115JB u/s 115TB. (Refer notice Refer HC of u/s 142(1) dated 14-09- Calcutta in the 2016) case of J L Morrison (India) Ltd vs ACIT [2014] 46 taxmann.com 215 (Calcutta)
Now, from perusal of the above details as well as considering the paper book filed by the assessee, we will adjudicate each of the grounds.
Ground No. 4 relates to the disallowance of provision for non- performing assets (NPA) in computing books profits u/s 115JB of the Act. The ld. Counsel for the assessee at the outset submitted that the issue is squarely covered by the decision of the ITAT in the assessee’s own case for Assessment Year 2008-09 and 2011-12. The ld. D/R,