Ita/196/2013 Of M/S.appollo Tyres Ltd v. The Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE THURSDAY, THE 17TH DAY OF OCTOBER 2013/25TH ASWINA, 1935 ITA.No. 196 of 2013 () ----------------------- AGAINST THE ORDER/JUDGMENT IN ITA 316/2010 of I.T.A.TRIBUNAL,COCHINBENCH APPELLANT(S)/APPELLANT:----------------------- M/S.APPOLLO TYRES LTD., 6TH FLOOR, CHERUPUSHPAM BUILDINGS, SHANMUGHAM ROAD, KOCHI-31(PAN:AAACA69900). BY ADVS.SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.BINU MATHEW SRI.TOM THOMAS (KAKKUZHIYIL) SRI.ABRAHAM JOSEPH MARKOS RESPONDENT(S)/RESPONDENT: ------------------------- THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), RANGE-1, ERNAKULAM KOCHI-682018. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON17-10-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: MANJULA CHELLUR, C.J & A.M.SHAFFIQUE, J. ---------------------------------------------- I.T.A.No. 196 of 2013 ---------------------------------------------- Dated this the 17[th] October, 2013JUDGMENT Manjula Chellur, C.J. Heard learned Senior Counsel Sri.Joseph Markose appearingfor the appellant assessee. 2. Writ Petition was filed questioning the revisionaljurisdiction exercised by the Commissioner of Income Tax underSection 263 of the Income Tax Act (for short, 'the Act'). It is not indispute that regular assessment was completed under Section143(3) of the Act on 31.12.2007. Several issues came up forconsideration before the Commissioner of Income Tax (Appeals)and even the appellate authority proceeded to pass orders on23.6.2008. Meanwhile, the Commissioner of Income Tax, who isthe authority under the Act, passed order dated 15.3.2010exercising its revisional powers under Section 263 of the Act.According to the revisional authority, several issues raised in theorder passed under Section 263 of the Act were not explainedproperly and further through the material available on record, ITA.196/13 though tried to be explained by the assessee, it was notsatisfactory, therefore, the matter came to be remanded for freshconsideration by the Assessing Officer, as the order passed by theAssessing Officer is erroneous and is prejudicial to the interest ofrevenue. Issues (1) to (ix) in Annexure A3 order read as under: (i) In the computation of depreciation onbuilding used for residential purpose, thesale value of office building was wronglyadjusted resulting in allowance of excessdepreciation.building used for residential purpose, thesale value of office building was wronglyadjusted resulting in allowance of excessdepreciation. (ii) Depreciation at appropriate rate is beingclaimed and allowed in respect of vehiclespurchased under Dealer Vehicle Scheme onthe full value without considering thedeposit amount.claimed and allowed in respect of vehiclespurchased under Dealer Vehicle Scheme onthe full value without considering thedeposit amount. (iii) Depreciation on computer accessories hasbeen allowed @ 60% as against 25%allowable. Excess depreciation has to bewithdrawn.been allowed @ 60% as against 25%allowable. Excess depreciation has to bewithdrawn. (iv) The Assessing Officer has omitted to includethe deposits collected from the dealersunderDealerNetworkExpansionProgramme (ATW Showroom) as income ofthe assessee.the deposits collected from the dealersunderDealerNetworkExpansionProgramme (ATW Showroom) as income ofthe assessee. (v) 1/8[th] portion of the Corporate Office building (iii) Depreciation on computer accessories hasbeen allowed @ 60% as against 25%allowable. Excess depreciation has to bewithdrawn.been allowed @ 60% as against 25%allowable. Excess depreciation has to bewithdrawn. (iv) The Assessing Officer has omitted to includethe deposits collected from the dealersunderDealerNetworkExpansionProgramme (ATW Showroom) as income ofthe assessee.the deposits collected from the dealersunderDealerNetworkExpansionProgramme (ATW Showroom) as income ofthe assessee. (v) 1/8[th] portion of the Corporate Office building has been let out and the AO has disallowed1/8[th] depreciation on that building undersection 38(2). However, the AO has failed toconsider proportionate disallowance onrepairs and maintenance expenditure of thebuilding.1/8[th] depreciation on that building undersection 38(2). However, the AO has failed toconsider proportionate disallowance onrepairs and maintenance expenditure of thebuilding. (vi) The Assessing Officer has omitted to disallowthe Employees as well as Employerscontribution towards PF for the month ofMarch 2005 which were not paid undersection 36(i)(va)/43B of the Act.the Employees as well as Employerscontribution towards PF for the month ofMarch 2005 which were not paid undersection 36(i)(va)/43B of the Act. (vii) The AO has omitted to include the receiptsas per TDS certificates filed. It was also notverified by the AO whether the entiremiscellaneous receipts of ₹31,14,449/-accounted represents receipts as per TDScertificates.as per TDS certificates filed. It was also notverified by the AO whether the entiremiscellaneous receipts of ₹31,14,449/-accounted represents receipts as per TDScertificates. (viii) The AO has omitted to disallowproportionate expenditure on exemptedincome (dividend) under section 14A of theAct. Similarly, income from sale ofinvestment is computed under capital gainsand, therefore, expenses attributable toacquisition of the investments cannot bededucted while computing the income frombusiness.proportionate expenditure on exemptedincome (dividend) under section 14A of theAct. Similarly, income from sale ofinvestment is computed under capital gainsand, therefore, expenses attributable toacquisition of the investments cannot bededucted while computing the income frombusiness. (ix) According to the details of additions to P&M ITA.196/13 during the year furnished as per annexureto the Depreciation statement, an amountof 2,00,75,230/- relates to P&M installed at₹the office premises, the value of which cannot be considered for additionaldepreciation under clause (b) of secondproviso. The excess additional depreciationgranted under section 32(i)(iia) on P&Minstalled at office premises requires to bewithdrawn.” 3. This order of the Commissioner was challenged before Tribunal, who confirmed the order of the Commissioner by orderdated 8.2.2013. Aggrieved by this, the appellant assessee isbefore us. 4. According to learned Senior Counsel, Commissioner failedto appreciate that the Assessing Officer did consider the specificnine points raised under Section 263 of the Act, therefore, therewas nothing which could be termed as erroneous consideration onthe part of the Assessing Officer, as the Assessing Officer is notrequired to make roving enquiry into each and every issueconcerned, item-wise while accepting the returns of the assessee. On perusal of records, we notice that the order of theCommissioner passed under Section 263 of the Act is a detailed ITA.196/13 3. This order of the Commissioner was challenged before Tribunal, who confirmed the order of the Commissioner by orderdated 8.2.2013. Aggrieved by this, the appellant assessee isbefore us. 4. According to learned Senior Counsel, Commissioner failedto appreciate that the Assessing Officer did consider the specificnine points raised under Section 263 of the Act, therefore, therewas nothing which could be termed as erroneous consideration onthe part of the Assessing Officer, as the Assessing Officer is notrequired to make roving enquiry into each and every issueconcerned, item-wise while accepting the returns of the assessee. On perusal of records, we notice that the order of theCommissioner passed under Section 263 of the Act is a detailed ITA.196/13 order discussing each of the nine points raised by the revisionalauthority. Tribunal, after referring to decision of Bombay HighCourt in the case of Grasim Industries Ltd. v. CIT (321 ITR 92),analysed what exactly would mean prejudice to the interest ofrevenue and how an authority exercising powers under Section263 of the Act has to proceed in the matter. Ultimately, followingthe decision of Apex Court in Malabar Industrial Co. Ltd. v.CIT [(2000)243 ITR 83], Tribunal also confirmed the opinion of theCommissioner that there was no application of mind whileconsidering the assessment under Section 143(3) of the Act,therefore, it is not only erroneous, but also prejudicial to theinterest of revenue. Opining that the procedure adopted definitelywould have implication on the tax computation which ultimatelycauses prejudice to the revenue, Tribunal confirmed the orders ofthe Commissioner under Section 263 of the Act. 5. Having regard to reasoning of the Tribunal, we affirm theopinion of Tribunal that the fresh consideration of the matter bythe assessing authority in the light of observations of revisionalauthority has to be made afresh untrammelled by any of theobservations made by the authorities concerned. ITA.196/13 We find no good ground to interfere with the opinion of theauthorities concerned. Hence, the appeal is dismissed. MANJULA CHELLUR, CHIEF JUSTICE A.M.SHAFFIQUE, JUDGE vgs17.10