Income Tax Appellate Tribunal - Kolkata
The Moran Tea Co. (I) Ltd.(Now Merged ... vs Assessee on 25 July, 2012
I . T. A . N o . : 4 4 0 / K o l . / 2 0 1 2
A s s e s s m e nt y e a r : 2 0 0 7- 0 8
Page 1 of 5
IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA 'C' BENCH, KOLKATA
Before Shri Pramod Kumar (Accountant Member),
and Shri Mahavir Singh (Judicial Member)
I.T.A. No .: 44 0/ Kol. / 2012
Assessme nt year : 20 07-08
Th e Mo ran Tea Co . ( I) Ltd., .........................................App ellant
(now merg ed wi th McLeod Russ el India Ltd .)
C/o. McLeod Ru ssel In dia Limi ted,
4, Mang oe Lan e, Su ren dra Mo han Ghosh Sa rani,
Kolka ta-700 001
[PAN : AABCT 2 119 D]
-Vs.-
Commissioner of Income Tax -II.........................................Responden t,
P-7, C how ringhe e Squa re,
Kolka ta-700 069
Appearances by:
Shri A.K. Gupta, for the appellant
Shri Ajoy Kumar Singh, CIT(D.R.), for the respondent
Date of co ncluding t he hea ri ng : July 25, 2012
Date of prono unci ng the o rde r : July 27, 201 2
O R D E R
Per Pramod Kumar:
1. By way of this appeal, the assessee-appellant has challenged correctness of the order dated 27.02. 2012 passed by the Commissioner I . T. A . N o . : 4 4 0 / K o l . / 2 0 1 2 A s s e s s m e nt y e a r : 2 0 0 7- 0 8 Page 2 of 5 of Income Tax under section 263 read with section 143(3) of the Income Tax Act, 1961, for the assessment year 2007-08.
2. Briefly stated the material facts are like this. On 10.02.2012, the Commissioner issued a show-cause notice calling upon the assessee to requ ire show-cause as to why the assessment order passed under section 143(3) not be subjected to the revision proceedings. In a very brief and somewhat cryptic notice, the Commissioner had observed that "I have called for and examined the assessment record for assessment year 2007-08. It appears that the order passed by the Assessing Officer is erroneous in so far as it is pr ejudicial to the interest of revenue". Even though the said show-cause notice did not deal with any specific issues in the assessment order, it appears that during the course of the proceedings, the assessee explained as follows :-
"1.0. Interest of Rs.39,69 ,0 00/- add ed b ack in th e order u/s 1 43(3), lat er del et ed by th e Id. CIT(A).
1.1. After scrutiny of t he records, th e Assessing Officer h as disall ow ed an am ount of Rs.39,69 ,000 /-, in the assessment order u/s 143(3), b eing interest o n Rs.3,78,00,00 0/- and added it b ac k to the total composite i ncome of th e assessee, bef ore applying Rul e 8 of the Income t ax Rul es, 1 962.
1.2. Against the assessm ent order u/s 143(3), the assessee h as filed an app eal b ef ore the L d. Commi ssi on er of Inc ome tax (Appeal s) --IV, wherein the Ld. CIT(A) has del et ed the di sall owance on contention which is as stated h erein bel ow 'There is no p ro visi on in th e Income tax Act whi ch permits th e AO t o tax n otion al or hypoth etical in come. Wh at can be brought t o tax is only the real income which has b een accrued duri ng the rel ev ant y ear.
I also not e that th e ap pell ant h ad sub st anti al funds of its own out of whi ch it could lend int erest-free ICDs to I . T. A . N o . : 4 4 0 / K o l . / 2 0 1 2 A s s e s s m e nt y e a r : 2 0 0 7- 0 8 Page 3 of 5 bodi es corporate. On these f acts, theref ore, I do not find an y sub st anc e in th e AO's acti on of assessing noti onal interest of Rs.39,69,000/- w hich the ap pell ant n ev er earned [emp hasis, add ed] 1.3. In pu rsuan ce of th e ab ov e ord er of CIT(A), we h av e filed a p etit ion before y ou r g ood self to kindly give effect t o the ord er of Ld, CIT(A) vid e lett er dated 16-05-201 0 fiIed on 16-06-201 0, and on 29-10-2010 . On givin g effect t o th e same, the ab ov e di sall ow anc e w ould be nullified.
1.4 In the light of the ab ov e submi ssi on, it is ob serv ed th at sinc e t here i s no disall ow anc e on such ground, th e questi on of submitting any clarificati on does n ot ari se in this case. In case y ou r good self req uires any furth er clarificati on, the same w ould b e provided at th e earli est b ef ore yo ur good self.
2.0. Di sallowan ce mad e i n the 143(3) ord er o f Rs.1.15,310 /- u/s 1 4A, bef ore applicati on of Rule 8
2.1. In the assessm ent order u/s 143(3), di sallow anc e has b een mad e by the Ld. Assessi ng Offi cer u/s.14 A, on the c ontention th at suc h ex pen ses are rel ated to' th e earning of ex empt i ncome.
2.2. Th ese expenses w ere a d educti on from th e business i ncom e, and on being di sall ow ed w ere add ed back to th e business income. H enc e, rul e 8 i s rightly appli ed in th e ab ov e ci rcum st ances. I n light of th e ab ov e su bmissi on, it is ob served th at th ere i s n o qu esti on of und er a ssessm ent of income. In case yo ur goodself requires any fu rth er cl arific ation, th e sam e would b e provid ed at th e earli est bef ore y our g oodself.
Hop e the ab ov e submi ssi on cl arifi es. Fu rther submi ssi on w ould be provided on hearing from y ou".
3. CIT was, however, not satisfied with the submissions so made by the assessee and even thou gh he noted that the issues are covered in favour of the assessee by the appellate orders. He proceeded to exercise his revision powers by, inter alia, observing as follows :-
"Before me, it was contended on behalf of the assessee that these is sues are covered by the decision of the learned CIT(A) and the Hon'ble ITAT.
I . T. A . N o . : 4 4 0 / K o l . / 2 0 1 2 A s s e s s m e nt y e a r : 2 0 0 7- 0 8 Page 4 of 5 I have considered the submission and perused the record. It is found that the decisions of the learned C IT(A) and the Hon'ble ITAT have not been accepted by the Department and appeals u/s. 260A have been file d before the Hon'ble High Cour t. The very fact that the issue have gone beyond the revenue authorities for adjudication entails that the final word has to come from the court(s). The law on this dispute is not settled as yet.
The A.O. is directed to exclusively compute the tax on the addition/ disallowance of Rs.39,69,000/- and Rs.1,53,310/- without application of Rule 8 to these amounts. The assessment is revised accordingly".
The assessee is not satisfied with the stand taken by the ld. CIT and is in appeal before us.
4. We have heard the rival contentions and considered facts of the case in the light of applicable legal position. A plain reading of the impugned revision order shows that the ld. CIT has travelled well beyond his jurisdiction and exercise in the matter of revision p owers under section 263. The law is fairly well settled that when Assessing Officer takes a possible view of the matter, even thou gh ld. CIT may not agree with the same, the p owers under section 263 cannot be invoked. It was so held by the Hon'ble Supreme C ou rt in the case of Malabar Industries Co. -vs.- CIT rep orted in 243 ITR 83 (SC). In the case before us, not only the Assessing Officer took a reasonable view of the matter, the view so taken was also approved by the appellate foru ms. In such a position, it cannot be said that the view taken by the Assessing Officer can be subjected revision p roceedings under section I . T. A . N o . : 4 4 0 / K o l . / 2 0 1 2 A s s e s s m e nt y e a r : 2 0 0 7- 0 8 Page 5 of 5
263. The impugned revision order, therefore, cannot meet any judicial approval. We, therefore, quash the impugned order.
5. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 27 t h day of July, 2012.
Sd/- Sd/-
Mahavir Singh Pramod Kumar
(Judicial Member) (Accountant Member)
Kolkata, the 27 t h day of July, 2012
Copies to : (1) Th e app ell ant
(2) Th e respon dent
(3) CIT
(4) CIT(A)
(5) Th e D ep artment al Rep resentativ e
(6) Guard File
By order etc
Assis tant Registrar
Income Tax Appe llate Tribunal
Kolkata benches, Kolkata
Laha/Sr. P.S.