Income Tax Appellate Tribunal - Mumbai
Galaxy Swass P. Ltd , vs Department Of Income Tax on 8 June, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH, "G",
MUMBAI
BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND
SHRI VIJAY PAL RAO, JUDICIAL MEMBER
MA No: 529/Mum/2011
Arising out of :ITA No.3747/Mum/2009
Assessment Year : 2005-06
Income tax Officer-6(3)-1 M/s. Galaxy Saws Pvt. Ltd.
Room No. 514, 132/134,Pradhan Building
Aayakar Bhavan SVP Road, Dongri
Vs.
M.K. Road Mumbai-400 009.
Mumbai. PAN No.: AAACG 2447 G
(Applicant) (Respondent)
Applicant by : Shri Pawan Ved
Respondent by : Shri Jitendra Jain
Date of hearing : 8.6.2012
Date of Pronouncement : 27.6.2012
ORDER
Per RAJENDRA SINGH (AM).
This miscellaneous application has been filed by the revenue requesting for amendment of the order dated 11.3.2011 of the Tribunal in ITA No.3747/M/2009 on the ground of some apparent mistake in relation to revaluation reserve account created on account of office premises.
2. The facts in brief are that the assessee during the year on 19.5.2004 had sold the office premises for Rs.96.00 lacs, the book value of which was Rs.3,29,143/-. Before selling the office premises, 2 MA No.529/M/11 Arising out of ITA No. 3747/M/09 A.Y:05-06 the assessee had got the premises revalued at Rs.97,44,000/- by registered valuer. The excess of revauled amount over the book value is Rs.94,14,857, had been credited to revaluation reserve account and directly taken to the balance sheet and loss of Rs.1,44,000/- being difference between sale price and revalued amount was debited to P&L account. The assessee had paid the tax under MAT scheme under section 115JB. The issue raised before the Tribunal was whether revaluation reserve of Rs.94,14,857/- can be added to the book profit. The AO in the assessment year held that revaluation of the asset in the year of sale was a colourable device adopted by the assessee to avoid payment of tax. It was also held by him that P&L account had not been prepared by the assessee in accordance with Part-II and III of schedule VI of the Comapanies Act as the entire profit of Rs.92,70,858/- with respect to book value of the asset had not been credited to the P&L account. The AO had, therefore, added the sum of Rs.94,14,857/- to the book profit, which had been deleted by CIT(A). 2.1 The Tribunal had dealt with both the aspects and held that there was no colourable device as accounts under Companies Act were required to be prepared as per Accounting Standard and as per AS-10, revaluation of assets was permitted. The Tribunal also held that revaluation had been made as per valuation reports which had not been disputed by the AO and therefore, there was no case of any 3 MA No.529/M/11 Arising out of ITA No. 3747/M/09 A.Y:05-06 device used by the assessee. The Tribunal also held that there was no provision of making adjustment on account of reserve and since while computing book profit only specified adjustments could be made, there was no case for any addition. The Tribunal accordingly confirmed the order of CIT(A) deleting the addition made by AO.
3. In the Miscellaneous application, the revenue has submitted that in Schedule- E of fixed assets there was no addition shown by the assessee and therefore there was no revaluation of the property. The said Schedule had been certified by the auditor and, therefore, revaluation was not proved and accordingly the claim of creation of reserve was not correct. The ld. DR appearing for the revenue submitted that this aspect had been brought to the notice of the Tribunal which had escaped attention at the time of passing of the order. The ld. DR also submitted that there being apparent mistake in the order , the same should be modified and mistake corrected. 3.1 The ld. AR for the assessee, on the other hand, submitted that there was no apparent mistake in the order of the Tribunal. The ld. AR submitted that, in the Schedule of fixed assets, there was only column for 'addition' and there was no column for 'revaluation reserve'. The assessee had taken revaluation reserve directly to the balance sheet as the asset had been sold during the year and did not appear in the 4 MA No.529/M/11 Arising out of ITA No. 3747/M/09 A.Y:05-06 balance sheet at the end of the year. It was pointed out that revaluation reserve had been duly shown in the balance sheet. The ld. AR also pointed out that the AO in the assessment order had not disputed the revaluation of the asset and creation of the reserve. In para-6, he clearly mentioned that a sum of Rs.94,14,857/- had been credited to the revaluation reserve in the balance sheet. Further in para-6.2, he duly noted the submission of the assessee that market value of the asset had been taken as per the valuer's report at Rs.97,44,000/-. Therefore, it was not correct on the part of the ld. Departmental Representative to state that the assessee had not created reserve. Moreover the point which had been disputed by the AO can not be disputed by the revenue in appeal. The ld. AR also filed copy of the ledger account to demonstrate that, on 1.4.2004 , the assessee had debited the 'account of office premises' by revaluation reserve of Rs.94,14,857/- and 'asset revaluation reserve account' had been created by the same amount. Further on the date of sale i.e. 19.5.2004 the assessee had debited the 'profit on sale on assets account' by sun of Rs.1,44,000/- which had been taken to the P&L account. Thus the relevant entries had been passed showing amount of reserve on 1.4.2004 which also appeared in the balance sheet which had been duly noted by the AO and, therefore, it could not be argued that assessee had not revalued the asset only on the ground that in 5 MA No.529/M/11 Arising out of ITA No. 3747/M/09 A.Y:05-06 the schedule of fixed assets, the amount was not shown. It was accordingly urged that the miscellaneous application should be rejected.
4. We have perused the records and considered the rival contentions carefully. The only mistake pointed out by revenue is that the assessee had not got the asset revalued and, therefore, there was apparent mistake in the computation of book profit in claiming benefit of revaluation reserve. On careful consideration of facts of the case as well as submissions made by both the parties, we see no apparent mistake in the order of the Tribunal. The fact that the assessee had got office premises revalued at Rs.97,40,000/- as per valuation report had been duly noted by the AO. The AO had not disputed with the valuation report. The AO had also noted that the assessee had taken the revaluation reserve of Rs.94,14,857/- to the balance sheet. Thus revaluation of the asset and creation of revaluation reserve had not been disputed by the AO. AO had made addition only on the ground that the revaluation of the asset was a colorable device. The position accepted by the AO in the assessment can not be disputed by the revenue in the appellate proceedings. The assessee has also produced copy of ledger account before us which clearly shows that, that on 1.4.2004 the assessee had debited the office premises account by Rs.94,14,857/- being revaluation reserve and the same had been 6 MA No.529/M/11 Arising out of ITA No. 3747/M/09 A.Y:05-06 taken to the balance sheet. The asset had been revalued as per valuation report which had not been questioned by the AO. Therefore only on the ground that the revaluation reserve was not shown in schedule of fixed assets it can not be said that the assessee has not valued the asset particularly when there is no specific column for showing revaluation reserve in the schedule of fixed assets and assets had been sold during the year and did not appear in the balance sheet. In any case, as pointed out earlier, this fact had not been disputed by the AO and therefore, there can not be any apparent mistake in the order of the Tribunal on this account. We see no merit in the miscellaneous application filed by the revenue and the same is therefore rejected.
5. In the result, the miscellaneous application filed by the revenue is rejected.
Order pronounced in the open court on 27.6.12.
Sd/- Sd/-
(VIJAY PAL RAO) ( RAJENDRA SINGH )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated: 27.6.2012.
Jv.
7 MA No.529/M/11
Arising out of ITA No. 3747/M/09
A.Y:05-06
Copy to: The Applicant
The Respondent
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR " " Bench
True Copy
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.