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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: DR. MANISH BORAD, HON’BLE & SHRI SONJOY SARMA, HON’BLE
| आयकर अपीलीय अिधकरण "यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER & SHRI SONJOY SARMA, HON’BLE JUDICIAL MEMBER I.T.A. No. 1004/Kol/2019 Assessment Year: 2013-14 SREI Infrastructure Finance Limited Pr. Commissioner of Income 86C, Vishwakarma Vs Tax -4, Kolkata Topsia Road (South) Topsia Kolkata - 700046 [PAN: AAACS1425L] अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee by : Shri S.K. Tulsiyan, Advocate & Ms. Puja Somani, A/R Revenue by : Shri Abhijit Kundu, CIT, D/R सुनवाई क" तारीख/Date of Hearing : 26/10/2023 घोषणा क" तारीख /Date of Pronouncement: 25/01/2024 आदेश/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
I.T.A. No. 1004/Kol/2019 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
I.T.A. No. 1004/Kol/2019 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. 3. 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.
I.T.A. No. 1004/Kol/2019 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.
I.T.A. No. 1004/Kol/2019 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. 10. 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. 5. 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,
I.T.A. No. 1004/Kol/2019 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
I.T.A. No. 1004/Kol/2019 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. 7. 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,
I.T.A. No. 1004/Kol/2019 Assessment Year: 2013-14 SREI Infrastructure Finance Limited 8 though not leaving his grounds, could not place on record any contrary material to support its case. We find that the Tribunal in the assessee’s own case for Assessment Year 2008-09 and 2011-12 in ITA No. 1318/Del/2012 & ors.; order dt. 31/12/2019, while adjudicating identical issue, has held as under:- “24. The Ld. AR also relied on the decision of Hon'ble Delhi High Court in CIT -vs.- MGF India Ltd. (2018) Taxmann.com 405 (Del) which allowed Provision for NPA in computing book profits. Ld. Departmental Representative relied on the CIT(A)'s order and earlier order of ITAT dated 27-02-2019 which we have already discussed in our earlier paras and the same is not being repeated for the sake of brevity. We note that provision for NPA is made as per Direction 9 of RBI prudential norms-'.and disclosed separately- as.- liabilities in the balance sheet as per Direction 10 of the said prudential norms., The Non- Performing Assets, against which the provision is made remains intact without any reduction. Based on the above factual and legal position, we are of the view that provision for Non-performing assets cannot be said to be provision for diminution in value of assets to attract disallowance as per clause (i) of Explanation 1 to sec. 115JB(2) of the Act. In other words, by making a provision for NPA, there will be no reduction in NPA. Hence, clause (i) of Explanation to Sec. 115JB(2) does not apply since there is no reduction in value of asset. Accordingly, this ground of the assessee is allowed and Assessing Officer is directed to delete addition made of Rs. 13,71,00,000/- in computing book profit u/s 115JB of the Act. These grounds of assessee are allowed.” 8. Consistent with the view taken by the Tribunal in the assessee’s own case for Assessment Year 2008-09 and 2011-12 (supra), we are of the considered view that the ld. Pr. CIT erred in holding the order of the Assessing Officer as erroneous and prejudicial to the interest of the revenue based on this issue raised in Ground No. 4. I.T.A. No. 1004/Kol/2019 Assessment Year: 2013-14 SREI Infrastructure Finance Limited 9 9. Ground Nos. 6 & 8 have not been pressed as the Assessing Officer has dealt with the claim and agreed with the contentions of the assessee in his order u/s 263/143(3) of the Act dt. 24/12/2019. 10. Ground No. 7 relates to additional depreciation on windmill capitalized in Assessment Year 2012-13. The ld. Counsel for the assessee submitted that the ld. Assessing Officer has taken one of the views permissible under law and the same is not prejudicial to the interest of the revenue. Reliance in this respect is placed on the decision of the Hon’ble Karnataka High Court in the case of CIT vs. M/s. Rittal India Pvt. Ltd. (2016) 380 ITR 423 (Kar.) wherein, on the issue that whether an assessee is eligible to claim balance of the additional depreciation, the Hon’ble Court held as follows:- “The language used in clause (iia) of the said section clearly provides that 'a further sum equal to 20 per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii)'. The word 'shall' used in the said clause is very significant. The benefit which is to be granted is 20 per cent additional depreciation. By virtue of the proviso referred to above, only 10 per cent can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that the balance 10 per cent additional deduction can be availed in the subsequent assessment year, otherwise the very purpose of insertion of clause (iia) would be defeated because it provides for 20 per cent deduction which shall be allowed.” 11. Similar is the view taken by the Co-ordinate Bench of the ITAT Kolkata in the case of Century Enka Ltd. vs. DCIT (2015) 37 ITR 644 (Kol) and DCIT vs. Birla Corporation Limited [ITA No. 581/Kol/2011]. Respectfully following the above judgment of the Hon’ble Karnataka High Court as well as the decision of the jurisdictional ITAT, we are of the considered view that the ld. Pr. CIT erred in holding the order of the Assessing Officer as erroneous and prejudicial to the interest of the revenue based on this issue raised in Ground No. 7. I.T.A. No. 1004/Kol/2019 Assessment Year: 2013-14 SREI Infrastructure Finance Limited 10 12. In respect of Ground No. 5 which relates to the issue of disallowance and short term capital loss claimed in the return for transfer of rights in land and building and in Ground No. 9, the issue referred is exclusion of capital profits from computation of books profits u/s 115JB of the Act, the ld. Pr. CIT has observed that the ld. Assessing Officer has failed to make proper enquiry in respect of these two issues. The ld. Counsel for the assessee submitted that the Assessing Officer has examined these issues after conducting proper enquiries during the original assessment proceedings 143(3)/144C of the Act, and has taken a permissible view and, therefore, the assessment order is not prejudicial to the interest of the revenue. This Tribunal in the case of J.L. Morisson (India) Ltd. vs. ACIT in ITA No. 786/Kol/2010, has held that “….It is now settled law that if, while making the assessment, the AO examines the accounts and other details, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the ld. C.I.T., while exercising his power under sec. 263 of the Act, is not permitted to substitute his own view about the computation of income in place of the income assessed by the A.O., unless the order of the A.O. is patently unsustainable in law”. The ld. D/R, could not controvert these submissions of the ld. Counsel for the assessee. Respectfully following the decision extracted supra in the case of J.L. Morrisson, and also considering the documents filed in the paper book demonstrating that for the issues raised in Ground Nos. 5 & 9, necessary enquiries were conducted by the Assessing Officer, we are of the considered view that the ld. Pr. CIT erred in holding the order of the Assessing Officer as erroneous and prejudicial to the interest of the I.T.A. No. 1004/Kol/2019 Assessment Year: 2013-14 SREI Infrastructure Finance Limited 11 revenue based on this issue raised in the instant Ground Nos. 5 & 6 as ld. Assessing Officer has conducted proper enquiry and after proper application of mind has taken a permissible view. Thus, the ld. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act for these issues. Accordingly, the impugned order passed u/s 263 of the Act is quashed and the assessment order dt. 30/12/2016 is restored. 13. In the result appeal of the assessee is allowed. Order pronounced in the Court on 25th January, 2024 at Kolkata. (SONJOY SARMA) ACCOUNTANT MEMBER Kolkata, Dated 25/01/2024 *SC SrPs आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant 2. ""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील ( ) / The CIT(A)- 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड" फाई/ Guard file.
आदेशानुसार/ BY ORDER,