EMCEE PHARMACEUTICALS PVT. LTD.,KOLKATA vs. ACIT, CIRCLE - 11, KOLKATA, KOLKATA

Against the order passed by the Assessing Officer under section 154, an appeal was preferred by the assessee before the ld. CIT(Appeals) and after considering the submissions made by the assessee and perusing the relevant material available on record, the ld. CIT(Appeals) dismissed the said appeal and upheld the order passed by the Assessing Officer under section 154 for the following reasons given in paragraph no. 4 of his impugned order:- “4. It is seen that the appellant is in receipt of financial assistance under West Bengal Government Industrial Promotion (Assistance to Industrial Unit) Scheme 1994 since AY 1995-96. For AY 1995-96 to 1997- 98, this receipt was not offered for tax. For AY 98-99, the AO added this receipt as revenue receipt which was confirmed by CIT(A). The Hon'ble ITAT vide order dated 21/02/2005, allowed the appeal of the appellant. In the intermittent time, the appellant filed returns under advice to pay taxes on disputed items as a measure of abundant financial prudence. The appellant made an application uls 264 to CIT who directed the AO to pass appropriate order within two weeks. The AO in the order u/s 154 dated 19/09/2006 for AY 2000-01 has held that "since the issue under consideration is debatable as to whether it is a revenue on capital receipt, the Department has filed appeal before the Hon'ble High Court". The AO has held that "since your petition as beyond the scope of section 154, no rectification u/s 154 is possible. Your rectification petition is disposed off accordingly." This appeal is against the order u/s 154 dated 19/09/2006 for AY 2000-01. However, in the grounds of appeal and statement of facts, the AYs mentioned are 2000-01 and 2001-02. There is no mistake in the order u/s 154 dated 19/09/2006 for AY 2000-01 as a debatable issue cannot be decided u/s 154. The appeal is dismissed”. ./2016 Assessment year: 2000-2001 Page 4 of 7 Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

The ld. counsel for the assessee, at the outset, submitted that a similar issue relating to the exemption of the amount of financial assistance received under the Scheme from tax being a capital receipt has since been decided by the Hon’ble Calcutta High Court in the case of CIT – vs.- Rasoi Limited (ITA No. 258 of 2001 dated 19th May, 2011). He contended that the assessment made by the Assessing Officer bringing to tax the amount of financial assistance received under the Scheme in the hands of the assessee for the year under consideration, i.e. A.Y. 2000-01 thus is contrary to the decision of the Hon’ble Jurisdictional High Court rendered subsequently and there is a mistake in the assessment made by the Assessing Officer, which is rectifiable under section 154. In support of this contention, he relied on the decision of the Hon’ble Gujarat High Court in the case of Suhrid Geigy Limited –vs.- CIT reported in 237 ITR 834 and the Hon’ble Supreme Court in the case of ACIT –vs.- Saurashtra Kutch Stock Exchange Limited reported in 305 ITR 227, wherein it was held that if the point is covered by a decision of the jurisdictional High Court rendered prior or even subsequent to the relevant order, it could be said to be a mistake apparent from the record. When it was brought to his notice that the claim for exemption on account of the amount of financial assistance in question was not even made by the assessee in the return of income filed for the year under consideration, the ld. counsel for the assessee relied on the decision of the Hon’ble Supreme Court in the case of Jute Corporation of India Limited –vs.- CIT reported in 187 ITR 688 and National Thermal Power Co. Limited –vs.- CIT reported in 229 ITR 383, wherein it was held that the new claim made by the assessee by way of additional ground, which was not made before the Assessing Officer could be entertained by the appellate authority.

The ld. D.R., on the other hand, strongly supported the impugned order of the ld. CIT(Appeals) upholding the order passed by the Assessing ./2016 Assessment year: 2000-2001 Page 5 of 7 Officer under section 154 rejecting the claim of the assessee for rectification on the issue under consideration. He contended that facts involved in the case of Rasoi Company Limited (supra) decided by the Hon’ble Calcutta High Court are different from the facts of the assessee’s case and it, therefore, cannot be said that the issue under consideration relating to the assessee’s claim for exemption on account of the financial assistance received under the Scheme is covered in favour of the assessee by the decision rendered by the Hon’ble Jurisdictional High Court in the said case. He contended that the said issue is still debatable and the same, therefore, is beyond the scope of rectification permissible under section 154. He also contended that the claim for the said exemption was not made by the assessee-company itself in the return of income filed for the year under consideration and in the absence of such claim, it cannot be said that there was a mistake on the part of the Assessing Officer in not allowing such claim and the question of rectification under section 154 does not arise.

I have considered the rival submissions and also perused the relevant material available on record. It is observed that in the return of income filed for the year under consideration, the amount of financial assistance in question received under the Scheme was offered to tax by the assesese and there was no claim made by the assessee for exemption of the said amount being capital receipt either in the return of income or even during the course of assessment proceedings. The claim for such exemption was made by the assessee for the first time only by way of application filed for rectification under section 154. No doubt, the assessee can make such new claim during the course of appellate proceedings, which are extension of the assessment proceedings as held by the Hon’ble Supreme Court in the case of Jute Corporation of India Limited (supra) and National Thermal Power Co. Limited (supra). But this proposition cannot be extended and applied to the rectification proceedings under section 154, the scope of which is limited to rectify the mistakes, which are apparent from the record. In the present case, ./2016 Assessment year: 2000-2001 Page 6 of 7 when the claim for exemption of the amount of financial assistance in question was not made at all by the assessee either in the return of income or even during the course of assessment proceedings, it cannot be said that there was any mistake on the part of the Assessing Officer in not allowing such exemption, which is apparent from record that can be rectified under section 154. The ratio of the decision of the Hon’ble Gujarat High Court in the case of Suhrid Geigy Limited (supra) and that of the Hon’ble Supreme Court in the case of ACIT –vs.- Saurashtra Kutch Stock Exchange Limited(supra) also cannot be any help to the assessee as in the absence of any claim made by the assessee for exemption before the Assessing Officer, there was no occasion for the Assessing Officer to express any view on such claim and the question that such view being contrary to the decision of the Hon’ble Jurisdictional High Court rendered subsequently giving rise to the mistake apparent from the record would not arise. As such considering all the facts of the cases, I am of the view that the application filed by the assessee under section 154 seeking rectification on the issue under consideration had no merit and the ld. CIT(Appeals) was fully justified in upholding the order passed by the Assessing Officer under section 154 rejecting the said application. The impugned order of the ld. CIT(Appeals) is, therefore, upheld and this appeal filed by the assessee is dismissed.

In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on June 17, 2016.