Shri v. Ananth Kumarprop, Biligiri Granitesb.r.hills Road

IN THB HIGH COURT OF KARNATAKA AT BANGALORE DATEBD THIS THE DAY OF JULY, 2014. PRESENT THR HON’BLE MR.JUSTICK N. KUMAR AN D THR HON’BLE MR.JUSTICEK B.MANOHAR INCOME TAX APPEAL NO.466 OFYAOVS BBRITIWE SHRI V. ANANTH KUMAR|PROP, BILIGIRI GRANITES|B.R.HILLS ROAD. CHAMARAJANAGAR _.. APPELLANT (BY SRI.A SHANKAR AND M.LAVA , ADVOCATES) AND: THER ASST. COMMR. OF INCOME TAXCIRCLE 1 (1), SHILPASHREE BUILDINGSVIDYARANYAPURAM, MYSORE —. RESPONDENT (BY SRI.K.V.ARAVIND, ADVOCATE) KRRERE THIS INCOMB TAX APPBAL IS FILED UNDER.SECTION 260-A OF INCOME TAX ACT, 1961 ARISING OUT|OFORDERDATHBD72.2008PASSEDIN-MP|NO.121/BANG/2007 & MP NO.123/BANG/2006, FOR THE|BLOCK ASSESSMENT PERIOD 1988-389 TO 1997-98,PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS|OF LAW STATHKBD THRERBIN AND TO ALLOW THR APPBAND SET ASIDE THE ORDERS PASSED BY THE IITAT, IN MP NO.121/BANG/2007 & MP NO.123/BANG/2006 DATED12.2008 AND 6.2.2007. THIS APPBAL COMING ON FOR FINAL HBARING THIS)DAY,N.KUMAR J., DELIVERED THE FOLLOWING:- JUDGMENT The assessee is a granite dealer and is assessed totax. His premises was searched pursuant to issue ofwarrant otf authorization under Section 132 of theIncome Tax Act. The assessee filed his return pursuantto search. After processing the said return, anassessment order came to be passed on 14.3.2000. Thesubject matter of the controversy in this appeal is theextent to which the benefit under Section SOQHHCG is tbe given to the assessee. In the said order, the businessincome of the assessee was taken as Rs.68,02,804/-.andQO4 /7(OT thesaid|income.amountingCO Rs.64,48,686/- was exempted from payment of taxunder Section 8OHHC. The Assessing Authority tookdepreciation on trucks and equipment as claimed and debited to the Protit and Loss account a sum ofRs.49,22,182/- and deducted 10% attributing to theearning hire charges i.e. Rs.4,52,218/- and thus,arrived at Rs.40,69,094/- as the balance allowablededuction under his business. Similarly, insofar asmaintenance expenses are concerned, it was taken asRs.9,01,561/-. Thus, the gross total income was takenas Rs.97,80,104/-. For the purpose of 80-HHC, thebusiness income was taken at Rs.68,02,8604/- and94.77% was given deduction which works out toRs.64,48,6086/-. Aggrieved to this order, the assesseepreferred an appeal to the Commissioner of Income Tax(Appeals). The Appellate Authority allowed the appeal inpart. 2 |Consequent to the order passed by the AppellateAuthority,|theASSeSSIn¢gOfficer|determinedthebusiness|incomeas|Rs.80,32,073/-and04 77%deduction was allowed. Therefore, for the purpose of deduction under Section 80HHC, the amount arrived at)was Rs./6,11,995/-. The Revenue aggrieved by the saidorder preferred an appeal to the Tribunal. The Tribunaldismissed the appeal by its order dated 2.3.2006. —Thereafter, the Revenue preferred Miscellaneous PetitionNo.123/2006 contending that an additional groundurged was not taken into consideration by the Tribunalbefore passing the order. The said additional groundurged was that CIT (Appeals) while disposing the appealfor the block assessment, ought to have considered thefact that the deduction under Section 80, 80HHC has tobe computed only after setting off carried forward loss ofearlier years. That was not a ground urged before theCIT (Appeals). In spite of the same, the said ground was_accepted and the Tribunal proceeded to pass an orderholding that in terms of provision of Section 72 of theIncome Tax Act, the assessment has to be computedbecause unabsorbed loss has to be entered in the! assessment of every block year for ascertaining whetherthere could be a set off of profits and gains of thebusiness of the assessee. In terms of the said order, theAssessing Authority passed an order. The gross totalincome was taken as Rs.86,99,197/7/-. The businessincome was treated as Rs.80,32,073/- and broughtforward and losses ot 1994-95 was calculated at!Rs.28,97,/060/- and the same was deducted and thusthe business income was reduced to that extent. —Thereby, to that extent, the benefit granted by theAssessing Authority was. reduced. Therefore, the)assessee preferred Miscellaneous Petition No.121/2007.pointing out that the Tribunal could not have passedthe said order. It should have the effect of reducing thebenefit granted by the Assessing Authority. However,the said petition came to be dismissed on the ground, itamounts to reviewing its order. Therefore, the assesseepreferred this appeal challenging both the orders.| 3.|We have heard learned counsel for the parties. 4From the aforesaid facts set out, neither theAssessing Authority nor the First Appellate Authoritydeducted the brought forward losses of 1994-95, whilecomputing the business income. When that is so, forthe first time, the Tribunal could not have passed anorder which has the effect of reducing the benefiteranted by the Assessing Authority while passing theoriginal assessment order, which was confirmed by theFirst Appellate Authority. Section 254(2) vests with theTribunal, the power to rectify any mistake apparentfrom the record. Thus, it can amend any order passedby it under sub-section (1) and shall make suchamendment if the mistake is brought to its notice by theassessee or the Assessing Officer. Therefore, when theTribunal passes an order on 2.3.2006 confirming theorder passed by the Assessing Authority in the appeal,it would not have considered a ground which was. neither urged before the Appellate Authority nor aesround which has the effect of taking away the benefitsiven to the assessee by the Assessing Officer. In thatview of the matter, the order passed by the Tribunal inpurported exercise of power under Section 254(2),cannot be sustained. Accordingly, we pass the following | ORDER The appeal is allowed. The order passed by theTribunal on 6.2.2007 is herby set aside. Consequently,the order passed by the Tribunal on 7.2.2008 is also setaside. Ordered accordingly. AHB Sd/-JUDGE Sd/-.JUDGE