Income Tax Appellate Tribunal - Mumbai
S. Kant Healthcare Ltd, Mumbai vs Assessee on 27 May, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "E", MUMBAI
BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
ITA Nos.6406/M/2012 & 6152/M/2013
Assessment Years: 2009-10 & 2010 - 11
M/s. S. Kant Healthcare Ltd., Income Tax Officer 5(3)(2),
3/A, Shiv Sagar Estate, Mumbai
Vs.
Dr. Annie Besant Road,
Worli, Mumbai - 400 018
PAN: AAECS 5406P
(Appellant) (Respondent)
Present for:
Assessee by : Shri H.S. Raheja, A.R.
Revenue by : Shri Neil Philip, D.R.
Date of Hearing : 24.03.2015
Date of Pronouncement : 27.05.2015
ORDER
Per Sanjay Garg, Judicial Member:
The above titled appeals have been preferred by the assessee against the orders dated 06.09.2012 and 17.09.2013 of the Commissioner of Income Tax (Appeals) [(hereinafter referred to as CIT(A)] relevant to assessment years 2009-10 & 2010-11 respectively. Since the facts and issue involved in both the appeals are identical in nature, hence the same are taken together for disposal with this common order. For the sake of convenience the facts have been taken from the ITA No.6406/M/2012 for A.Y.2009-10.
ITA No.6406/M/20122. The assessee has taken the following grounds of appeal:
"1. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming 2 ITA Nos.6406/M/2012 & 6152/M/2013 M/s. S. Kant Healthcare Ltd.
the action of the learned Assessing Officer [AO] by holding that appellant is not entitled to set-off of unabsorbed depreciation to the extent of Rs.53,94,749/- against income of the appellate for assessment year 2009-10.
2. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in concluding that unabsorbed depreciation for assessment year 2000-01 has expired in assessment year 2008-09 and hence it cannot be set off in assessment year 2009-10.
3. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming the action of the learned AO in disallowing Rs.38,79,158 out of foreign exchange loss incurred by the appellate on account of fluctuation in rate of foreign exchange.
4. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in holding that loss on account of fluctuation in rate of foreign exchange is because of notional revaluation of the foreign exchange and further erred in holding that it is only a contingent and notional liability which does not crystallise or accrue in the relevant financial year ignoring the decision of the Supreme Court in the case of ONGC (322 ITR 180).
5. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming the action of the learned AO in holding that Rs.23,91 I should be added to the total income of the appellant on the ground that there is a mismatch between ITS data and details submitted by the appellant by throwing the onus on the appellant to prove that ITS data was false.
6. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in not allowing ground of the appellant in regard to granting credit under section 115JAA for MAT paid by the appellant in earlier years on the ground that the appellant had not made such claim in the Return of Income disregarding the fact that the income as per the Return of Income of the appellant for assessment year 2009-10 was Nil, and hence the appellant was not entitled to claim credit under section 115JAA for MAT paid by the appellant in earlier years.
7. The appellant craves leave to add, alter, amplify, modify and vary the above grounds of appeal."
Ground Nos.1 &2
3. The assessee, vide ground No.1, has agitated the action of the Ld. CIT(A) in confirming the action of the AO that assessee is not entitled to set off of unabsorbed depreciation to the extent of Rs.53,94,749/- against income 3 ITA Nos.6406/M/2012 & 6152/M/2013 M/s. S. Kant Healthcare Ltd.
of the assessee for the assessment year 2009-10.
4. The brief facts are that the unabsorbed depreciation pertaining to assessment years 2000-01 claimed by the assessee in the relevant assessment year 2009-10 had been disallowed by the Assessing Officer (hereinafter referred to as the AO) holding that the claim of unabsorbed depreciation could be carried forward up to eight assessment years from the year in which it had arisen.
5. In appeal, the Ld. CIT(A) observed confirmed the disallowance so made by the AO.
6. We find that the time limit of eight years is prescribed for carry forward of unabsorbed losses under section 72(3) of the Income Tax Act. However, there is no maximum time limit prescribed either under section 72 or under section 32(2) of the Income Tax Act for carry forward of unabsorbed depreciation. The issue is squarely covered by the decision of the Hon'ble Gujarat High Court in the case of "General Motors India (P) Ltd. vs. DCIT"
2013 (82) DTR (Guj.) 304. The Ld. D.R. could not point out any contrary decision on this issue. In view of the above, this issue is accordingly decided in favour of the assessee.Ground Nos.3 & 4
7. Ground Nos.3 & 4 relate to disallowance of loss on account of foreign exchange fluctuation. The AO noted that the assessee had claimed loss on account of foreign fluctuation of Rs.40,47,436/- out of which loss of Rs.38,79,158/- was on the foreign currency loan taken by the assessee. On being asked to explain in this respect, the assessee submitted that it had taken foreign currency loan for the purpose of purchases to be made. Due to 4 ITA Nos.6406/M/2012 & 6152/M/2013 M/s. S. Kant Healthcare Ltd.
fluctuation rate the assessee company had incurred loss on foreign exchange loans. The AO, however, disallowed the said loss on the ground that the assessee had not produced the details regarding the utilization of the borrowings observing that for capital asset loan the accounting treatment for the same had to be given as per the section 43A of the Act and if it was on account of revenue expenditure then it was to be treated as unascertained liability which was not allowable under the provisions of the Act.
8. In appeal, the Ld. CIT(A) held that the loss on account of foreign exchange fluctuation was only a notional loss and contingent liability and hence the same was not allowable.
9. Before us, the Ld. A.R. of the assessee has submitted that the assessee had taken bank loan in foreign currency at discounted rates for the purpose of purchases to be made. The loans had been used on day to day basis for purchases and other expenses. The loss was actually incurred and was paid to the respective banks. He has further relied upon the decision of the Hon'ble Supreme Court in the case of "Oil and Natural Gas Corpiration Ltd. vs. CIT"
(2010) 322 ITR 180 (SC) wherein the Hon'ble Supreme Court has held that the loss claimed by the assessee on account of fluctuation in the rate of foreign exchange loans as on the date of balance sheet was allowable as expenditure under section 37(1). The assessee, in this case, has claimed that the loan was used by the assessee for its business purposes and that the said exchange loss is on revenue account, however, the assessee had not submitted the necessary details before the AO. We accordingly restore this issue to the file of the AO for necessary verifications and to decide the issue in the light of the decision of the Hon'ble Supreme Court in the case of "Oil and Natural Gas Corpiration Ltd. vs. CIT" (supra).5 ITA Nos.6406/M/2012 & 6152/M/2013
M/s. S. Kant Healthcare Ltd.
Ground No.5
10. Ground No.5 is relating to the addition on account of mismatch between ITS data and the details submitted by the assessee. The AO observed that as per ITS data under TDS, assessee had received an amount of Rs.23,911/- from M/s. Macnels Container Lines P. Ltd. However, the assessee had not shown the said receipt in its accounts. He therefore added the said amount of Rs.23,911/- into the total income of the assessee.
11. In appeal before the Ld. CIT(A), the assessee submitted that the ITS information was incorrect as the assessee had not received any such amount from the said party. That the assessee had also written a letter to the said party M/s. Macnels Container Lines P. Ltd. requesting it to give the details regarding the amount of Rs.23,911/- and TDS thereon. However, no reply was received. Further that the assessee had also requested the AO to get the details from the said party, however, the said request was not acceded to by the AO. However, the Ld. CIT(A) held that since the assessee had failed to prove that the ITS data was false hence, the AO was justified in making the above addition.
12. Before us, the Ld. A.R. of the assessee has relied upon the decision of the Tribunal in the case of "M/s. A.F. Ferguson & Co. vs. JCIT" ITA Nos.5037/M/2012 & 437/M/2013 decided on 17.10.2014 wherein the Tribunal while dealing the issue of un-reconciled amount as per the AIR information has held that the addition cannot be made solely on the basis of AIR information, especially, when the assessee denies any such receipt as the burden to prove such receipts is on the AO as the assessee cannot be asked to prove the negative. The relevant findings of the Tribunal for the sake of reference are reproduced as under:
"6. We have considered the rival contentions of the ld. representatives of the parties. It is an undisputed fact on the file that the professional fees shown by the 6 ITA Nos.6406/M/2012 & 6152/M/2013 M/s. S. Kant Healthcare Ltd.
assessee in its P&L account far exceeds than the amount shown in the AIR information. Even the assessee has reconciled the major portion of the receipts. It has not been denied by the Revenue Authorities that full and complete details of the parties are not mentioned in the AIR information. The addition in this case has been made by the lower authorities solely on the basis of AIR information. In our view, the addition, made solely on the basis of AIR information, especially in the absence of full details of parties and when the professional receipts declared by the assessee far exceeds than the amount mentioned in the AIR information, is not sustainable in the eyes of law. Our above view is fortified with the decision of the Bangalore Bench of the Tribunal in the case of "DCIT vs. Shree G. Selva Kumar" in ITA No.868/Bang/2009 decided on 22.10.10 and another in the case of "Mrs. Arati Raman vs. DCIT" in ITA No.245/Bang/12 decided on 05.10.12 wherein it has been held that the assessment order based only on the AIR information would not stand in the eyes of law. If the assessee denies that he is in receipt of income from a particular source, it is for the AO to prove that the assessee has received income as the assessee cannot prove the negative. Reliance can also be placed on the decision of Mumbai Bench of Tribunal in the case of Shri S. Ganesh vs. ACIT" in ITA No.527/M/2010 decided on 08.12.10 wherein the Tribunal has held that in the absence of any material brought by the revenue authorities that the assessee has received amount more than the professional fees which has been declared by him in the P&L account and when the professional income declared by the assessee far exceeds the professional fees shown in the AIR information, then additions solely based on the AIR information are not sustainable.
7. In view of our above observations and in the facts and circumstances of the case, the additions made by the Revenue solely based on the AIR information are not sustainable and the same are hereby ordered to be deleted."
13. Respectfully following the above decision of the Tribunal, we hereby delete the addition on this issue.
Ground No.6
14. Ground No.6 is taken as an alternative ground by the assessee in relation to claim of credit of tax paid under MAT provisions under section 115JAA. Since as per the computation of the total income for the assessment year in question, after claiming set off of unabsorbed deprecation of earlier years the taxable income was at nil and no tax was payable, hence the assessee had not claimed credit under section 115JAA of the Act for the MAT paid by the assessee in the earlier assessment year. Since the AO had disallowed the set 7 ITA Nos.6406/M/2012 & 6152/M/2013 M/s. S. Kant Healthcare Ltd.
off of unabsorbed depreciation of earlier years and has computed the taxable income for the year under consideration as per the regular procedure, the assessee, therefore, had requested that he be given the credit of the MAT paid for the earlier years under section 115JAA. However, the AO declined to admit the claim of the assessee on the ground that the assessee had not claimed such credit in its return of income.
15. The Ld. CIT(A) also rejected the said claim of the assessee and upheld the order of the AO on this issue.
16. We may observe that since the AO had disallowed the claim of the assessee for set off of unabsorbed depreciation then under the circumstances the AO was duty bound to consider the alternate claim of the assessee. The assessee was not supposed to make the claim under section 115JAA since the taxable income computed by the assessee under normal provisions was nil. We may further observe that the Hon'ble Bombay High Court in the case of 'Pruthvi Brokers & Shareholders Pvt. Ltd.' ITA No.3908 of 2010 decided on 21.06.12, while relying upon the various decisions of the Hon'ble Supreme Court and other Hon'ble High Courts has held that even if a claim is not made before the AO it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred. The Hon'ble High Court has further observed that the decision of the Hon'ble Supreme Court in the case of 'Goetze (India) Limited v. CIT' (2006) 157 Taxman 1, relating to the restriction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim by way of additional ground. Even otherwise, the Ld. CIT(A) ought to have considered the claim of the assessee in exercise of his appellate jurisdiction under section 250 of the Act. However, in view of the 8 ITA Nos.6406/M/2012 & 6152/M/2013 M/s. S. Kant Healthcare Ltd.
fact that the claim of the assessee, as per our observations made above, for set off of unabsorbed depreciation has been allowed, hence the assessee will not be entitled to the alternative relief under this ground.
17. In view of our observations made above, the appeal of the assessee is partly allowed.
ITA No.6152/M/2013 for A.Y. 2010-1118. The ground No.1 taken by the assessee in this appeal is relating to set off of unabsorbed depreciation of A.Y. 2004-05. In view of our observations made above while adjudicating ground Nos.1 & 2 of assessee's appeal for A.Y. 2009-10 this issue is accordingly decided in favour of the assessee.
19. Ground No.2 is relating to the non grant of credit of MAT paid in earlier years. In view of our findings given above on ground No.6 for A.Y. 2009-10, this issue is decided accordingly.
20. In the result, both the appeals of the assessee are hereby partly allowed.
Order pronounced in the open court on 27.05.2015.
Sd/- Sd/-
(R.C. Sharma) (Sanjay Garg)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 27.05.2015.
* Kishore, Sr. P.S.
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
9 ITA Nos.6406/M/2012 & 6152/M/2013
M/s. S. Kant Healthcare Ltd.
The CIT (A) Concerned, Mumbai
The DR Concerned Bench
//True Copy// [
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.