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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI JOGINDER SINGH & SHRI ASHWANI TANEJA (ACOUNTANT MEMBER)
O R D E R Per ASHWANI TANEJA, AM
This appeal has been filed by the revenue against the order of the Ld.Commissioner of Income-tax IT(Appeals) [hereinafter called CIT(A)] order dated 15-02-2012 passed against the order of the Assessing Officer(hereinafter called Assessing Officer) u/s 154 of the Income-tax Act, 1961 dated 11-03-2010 for A.Y. 2005-06 on the following grounds:
“1(a).On the facts and in the circumstances of the case and in law, the Id. CIT (A) erred in deleting the addition of' 2,82,31,142/-, made U/S 115JB by way of disallowance of brought forward un absorbed depreciation, without appreciating that as per the provisions of sec. 79, loss prior to A.Y 1999-00 is not allowed to be carried forward and set off." l(b). "On the facts and in the circumstances of the case and in law, the Id. CIT (A) erred in deleting the enhancement made to the book profit u/s 154 by way of disallowance of brought forward un absorbed depreciation, without appreciating that the disallowance was made after issue of proper notice u/s 154 and after giving proper opportunity of being heard to the assessee."
2. "The appellant prays that the order of CIT CA) on the above ground be set aside and that of the Assessing Officer be restored".
During the course of hearing, ld.DR submitted that the Assessing Officer had rightly denied the benefit of brought forward unabsorbed depreciation applying the provisions of section 79 under which disallowance was made in A.Y. 1999-2000 wherein carry forward of loss was denied.
On the other hand, the Ld.counsel of the assessee brought to the notice of the bench that the Assessing Officer misunderstood the facts of the case in A.Y. 1999-2000. The Assessing Officer had rejected the claim of carry forward of unabsorbed losses by applying the provisions of section 79. Against the said order appeal was filed before the Ld. CIT(A) wherein order of the Assessing Officer was reversed and Assessing Officer was directed to allow carry forward of earlier year losses. The ld.counsel also drew our attention on a chart showing year-wise break up of unabsorbed losses and unabsorbed depreciation showing that the total amount of unabsorbed depreciation aggregating to Rs.308.89 lakhs was lower than the unabsorbed business loss aggregating to Rs.2,476.40 lakhs and therefore, unabsorbed depreciation was rightly reduced from the amount of book profit taxable u/s 115JB. There was no mistake in the assessment order passed u/s 143(3) much less, a mistake apparent from record, and therefore, order passed u/s 154 was legally and factually incorrect and, therefore, rightly reversed by the Ld.CIT(A;hence, the order of the Ld.CIT(A) should be upheld and appeal of the revenue should be dismissed.
We have gone through the orders passed by lower authorities and statements made by both the sides before us. In this case, original assessment order was passed u/s 143(3) dt. 31-12-2008. Subsequently, the Assessing Officer issued notice u/s 154 on 11-03-2010 proposing to rectify the earlier assessment order on the ground that credit for unabsorbed deprecation / loss was wrongly granted and that mistake was required to be corrected. On the same date, i.e. on 11-03-2010 without giving any opportunity to the assessee and without waiting for any reply of the assessee, the Assessing Officer passed order u/s 154 by giving credit of lesser amount of unabsorbed depreciation, i.e. for Rs.2,65,57,858 to compute the book profit liable to be taxed u/s 115JB.
Being aggrieved, the assessee filed appeal before the ld.CIT(A) wherein complete facts were analysed by Ld.CIT(A) and it was noted by him that the ld.AO misunderstood the facts of the case and wrongly passed order u/s 154 whereas set off of unabsorbed depreciation aggregating to Rs.308.89 lakhs was rightly granted by the Assessing Officer himself in the original order passed u/s 143(3). The brief submissions of the assessee before the Ld.CIT(A) and finding of Ld.CITA)are reproduced as under:-
4.1 (C) The appellant's AR further argued that even on merits there is no mistake in the figure of Rs.3,08,89,000/-- representing the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account, considered for working out the figure of book profit u/s.115JB in assessment order dated 31.12.200B and hence 'here was absolutely no case for rectification of this figure. During the course of appellate proceedings, the appellant's AR submitted an authenticated statement from the statutory auditors of the appellant company mentioning figures of business loss as well as unabsorbed depreciation right from AYr.1 994-95 (first year of appellant company ) to date. The A.R. further submitted photocopies of Profit and Loss Account of the appellant company for all these years to support this statement. The A.R. submitted that the statement clearly shows that even after adjustment of profits for A.Yrs.2000-01, 2001-(12, 2002-02, 2003-04 and 2004-05 the unabsorbed business loss was Rs.24,76,40,OOO/- whereas the unabsorbed depreciation was Rc;.3,OB,89,OOO/-. Since the figure of unabsorbed depreciation' was lesser of the two, the same was rightly claimed as deduction in ITR Jar AYr.2005-06 11ed by the appellant company and the same was rightly accepted by the Add!. CIT., after due verification in assessment order dated 31.12.200B.
4.2 I have considered the AO.'s order as well as appellant’s ARs submission. Having considered both and after taking note of the appellant AR's arguments, I am of the considered view that the A O.'s action of passing the order u/s.154 of the Act was completely lacking in respect of providing a reasonable opportunity to he appellant as it was a primary requirement on her pat of he Assessing Officer in view of the explicit provisions of section 154(1) and 154(3) of the Act. Thus, taking note of the Apex Court judgement in the case of T.S. Balaram, ITO vs. Volkat Brothers (19761) reported in 82 ITR page 50 and Hero Cycles Ltd & Others reported in 228 ITR page 463, I am of the considered view that the A.O. has not exercised his power available u/s.154 correctly as the provisions of section 154 restricts the power of the AO. to mistakes apparent from the record. Hence, even on this pretext also, the AO.'s order cannot be held to be justified and sustainable. Further, even in the appellate proceedings, the appellant's AR filed a detailed chart of calculation of amount eligible for deduction u/s. '115JB of the Act since the appellant company's inception from F.Yr.1993-94 to F.Yr.2003-04 which is based on the audited accounts of the appellant company which were filed by the appellant company while filing return of income. Having taken note of this chart submitted by the AR, I also find that the claim of the appellant company in aforesaid para 4.1 of this order is completely justified and correct. All these facts for calculation of amount eligible for deduction u/s.115JB were avai!able with the A.O alongwith the return of income filed. The appellant's submission of the chart is annexed with this order as Annexure "A". Having taken note of the same, I find that even on t.ie basis of appellant's record, the AO. was completely unjustified while rectifying the aforesaid order. Thus, after taking note of the appellant's submission, AO.'s order and all the facts available on record, I consider it proper and appropriate to hold that the A.O. was completely unjustified in his action in rectifying the assessment order. Accordingly, the same is deleted. Thus, appellant's this ground of appeal is decided in favour of the appellant.”
6. It is thus noted from the perusal of the above that the CIT(A) had analysed the facts in detail and found that there was no mistake in the original assessment order and credit of the unabsorbed depreciation was rightly granted to the assessee at Rs.308.89 lakhs. It is further noted by us on perusal of order passed by ld.CIT(A) dated 30-09-2004 for A.Y. 1999-2000 in the case of assessee company reveals that the claim of carry forward of losses which was rejected by the Assessing Officer u/s 79 was allowed by ld.CIT(A), with following observations :
“The next ground of appeal is directed against the disallowance of brought forward losses. The AO had invoked section 79 of the IT Act and has disqualified the earlier losses for carry forward and set off because share holding pattern of the appellant company was substantially changed. It was submitted by the appellant that the said provisions are not applicable to public ltd company and therefore it is entitled to carry forward the losses even on change of share holding pattern. Since the appellant is a public Ltd company listed on stock exchange the carry forward of earlier losses cannot be denied to the appellant in terms of section 79. . The AO is directed to allow the carry forward of earlier years losses. “
7. It was further stated at the bar by the Ld.counsel that abovesaid order of Ld.CIT(A) attained finality as no appeal was filed by the revenue against the said order. The facts stated by the Ld.counsel were not disputed by the Ld.DR. Thus, the position that emerges before us is that assessee was entitled to get the credit of unabsorbed depreciation or unabsorbed losses, whichever is less. It is seen on the basis of chart which was attached as Annexure “A” by Ld.CIT(A) to his order that amount of unabsorbed business loss was for Rs.24,76,40,000 as against amount of unabsorbed deprecation of Rs.308.89 lakhs. Thus, the amount of unabsorbed depreciation was less and, therefore, assessee was eligible to get the benefit of the same a deduction from the book profits to compute the taxable amount of book profits u/s 115JB. Thus, there was no mistake, much less a mistake apparent on record, and therefore, the Ld.CIT(A) had rightly quashed the order passed u/s 154. No interference is called for in the order of the ld.CIT(A), and therefore, the same is hereby upheld.
In the result, appeal filed by the revenue is dismissed. Order pronounced on this 15th day of June, 2016.