Mandhana Industries Ltd, Mumbai vs Assessee

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आयकर अपील य अ धकरण, मुंबई यायपीठ "बी" मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI

BEFORE S/SHRI D. KARUNAKAR RAO, (AM) AND AMIT SHUKLA, (JM) सव ी डी. क णाकर राव, लेखा सद य एवं अ मत शु ला, या यक सद यके सम

आयकर अपील सं./I.T.A. No.6099/Mum/2011 ( नधारण वष / Assessment Year :2008-09)

M/s Mandhana Industries बनाम/ Asstt. Commissioner of Income Tax Limited, 6(3), Vs. 205,214, Peninsula Centre. Aayakar Bhavan, Dr.S.S.Rao Road, Parel, M K Road, New Marine Line, Mumbai-400012 Mumbai-400020 (अपीलाथ /Appellant) .. ( यथ / Respondent)

आयकर अपील सं./I.T.A. No.4599/Mum/2012 ( नधारण वष / Assessment Year :2007-08)

M/s Mandhana Industries बनाम/ Asstt. Commissioner of Income Tax Pvt.Limited, 6(3), Vs. 205,214, Peninsula Centre. Aayakar Bhavan, Dr.S.S.Rao Road, Parel, M K Road, New Marine Line, Mumbai-400012 Mumbai-400020 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AABCM6615M

अपीलाथ ओर से / Assessees by Shri Rajan Vora

यथ क ओर से/Revenue by Shri Akhilendra Yadav

सन ु वाई क तार ख / Date of Hearing : 27.11.2014 घोषणा क तार ख /Date of Pronouncement : 14.01.2015

आदे श / O R D E R

PER AMIT SHUKLA, (JM)

The aforesaid appeals have been filed by the assessee

against the two separate impugned orders dated 7.1.2011 and 2 I . T . A . N o . 6 0 9 9 / Mu m / 2 0 1 1 a n d I T A N o . 4 5 9 9 / Mu m / 2 0 1 2

23.6.2011 passed by ld. CIT(A)-12, Mumbai u/s 143(3) of the

Income Tax Act, 1961 (the Act ) for the assessment years 2007-

08 and 2008-09 respectively.

2. At the outset, it is noticed that the appeal of the assessee is

time barred by 368 days. In support of condonation of delay, the

Accountant of the assessee has filed an affidavit, which is reproduced

hereinbelow:-

" I, Kishor Bane, son of Dattaram Bane, aged 42 years residing at B-11, Jaai Kunj Chawl, Bharat Bhoir Nagar, Reti Bunder Road, Dombivali (W), Dist. Thane - 421202, do hereby take oath and declare on affirmation as under:

1. That I am working as an accountant for M/s. Mandhana Industries Limited ('Mandhana') from last several years and I am looking after appeal related matter of the Mandhana Industries Ltd.

2. That for Assessment Year 2007-08 Mandhana have preferred an appeal before the Commissioner of Income Tax (Appeal) on 5 May 2011.

3. That on receipt of CIT(A)'s order Mandhana has forwarded a copy of the same to tax consultant for preparation of appeal.

4. That our tax consultant had prepared the draft appeal papers and the same have been received by me in the month of June 2011 for taking signature and filing it before Tribunal and last date for filing appeal before Tribunal was 4th July 2011.

5. That due my oversight the appeal documents remains with me and actually not got signed from Managing Director and in natural corollary had not filled before Tribunal.

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6. That our tax consultant, while going through the appeal paper of subsequent year i.e. AY 2008-09, which is fixed before ITAT on 25 July 2012, asked for the appeal papers filed before Hon'ble ITAT for AY 2007-08 as one of the ground in AY 2008- 09 was inter related with the ground in AY 2007-08.

7. That when I have gone through the records, it came to my knowledge that appeal was remained to be filed due to oversight.

8. That there is an unintentional delay in filing of appeal and no undue benefit or advantage is taken from the delay in filing of appeal.

9. That delay of 368 days, which is attributable to me, kindly be condoned.

10.That I was reprimanded for not filling the appeal before the Hon'ble ITAT for AY 2007-08 within the due date prescribed.

11. That this affidavit is made to put on record the facts.

I say the whatever is stated hereinabove is true to my knowledge and belief"

3. It is seen that the affidavit has been filed by the Accountant of

the assessee who has made an affirmation on oath that due to his

oversight the appeal documents remained with him and could not get

signed from the Managing Director and therefore, appeal could not

be filed. The contents given in the affidavit does not reflects any

reasonable cause for condonation of delay, firstly, the assessee had

not taken any steps for preparation of filing of the appeal when the

draft of appeal was prepared as stated by accountant. The entire

matter had been left with the Accountant from whom no inquiry was 4 I . T . A . N o . 6 0 9 9 / Mu m / 2 0 1 1 a n d I T A N o . 4 5 9 9 / Mu m / 2 0 1 2

done as to why the appeal papers which were prepared was not put

up for signing and filing it before the Tribunal. This attitude of the

assessee itself shows that the assessee was not vigilant enough in

preparing and filing of the appeal before the Tribunal. Secondly, the

appellate order for subsequent the assessment year i.e. 2008-09

was passed on 23.6.2011, against which appeal was filed within time

limit prescribed and it took more than one year to the assessee to

realize that the appeal for the assessment year 2007-08 has not been

filed. It appears from the contents given in the affidavit that, once the

appeal for the assessment year 2008-09 was fixed for hearing and

the ld. counsel briefed with the matter required to know about the fate

of appeal for the assessment year 2007-08, then only the assessee

realized that filing of the appeal for assessment year 2007-08 was

necessary. This is more so in this case, because after the effect of

ld.CIT(A)'s order with regard to the addition made u/s 145A, there

was no addition as it was neutralized by the adjustment made in the

opening stock. It was in this background, the assessee did not chose

to file any appeal before the Tribunal due to neutralization of tax

effect. The reasons advanced in the affidavit filed by the Accountant

of the assessee are not supported by any cogent or supporting

evidence, but were self serving statement and that to be by an

accountant. No material has been placed before the Tribunal to 5 I . T . A . N o . 6 0 9 9 / Mu m / 2 0 1 1 a n d I T A N o . 4 5 9 9 / Mu m / 2 0 1 2

show that contents are correct. It is a mere assertion by an

accountant who is not responsible person, the affidavit should have

been filed by the Managing Director of the assessee-company.

Thus, we do not find any bonafide reasons on the basis of which the

delay of 368 days can be condoned. Accordingly, the appeal filed

by the assessee is not admitted being barred by limitation.

Resultantly, the appeal filed by the assessee for the assessment year

2007-08 is dismissed in limine.

4. Now coming to the appeal for the assessment year 2008-09,

wherein the assessee has raised following grounds of appeal:

"On the facts and in the circumstances of the case the Learned Commissioner of Income Tax (Appeals) - 12, Mumbai [CIT(A)']:

1. Deduction under section 145A of the Act for Rs.28,49,027/-

a. erred in not allowing the corresponding deduction under section 145 A of the Act as additions in the value of opening stock for the year, as the adjustment was made under section 145A of the Act to value of closing stock for the preceding AY 2007-08 in the course of Assessment Proceedings;

b. should have appreciated that closing stock of AY 2007-08 invariably becomes the opening stock of the AY 2008-09;

2. Deduction of proportionate Land Premium Rs. 8,83,402/- a erred in confirming the action of the AO on allowability of proportionate lease rental paid to MIDC of Rs. 8,83,402/-. b. failed to appreciate that the lease premium paid to MIDC is in the form of advance rent for tenure of lease and proportionate write off is towards rent paid to MIDC.

c. failed to appreciate that the land was not acquired by appellant, the appellant only acquired a facility to carry on business profitably by paying nominal lease rent.

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d. erred in not applying the decision of Gujrat High Court in case of Sun Pharmaceutical Ind. Ltd (2009) 227 CTR 206 which is akin to the case of the appellant, wherein the SLP of department was dismissed by the Supreme Court

3. Non Grant of MAT credit of Rs. 26,47,466/- under section 115AA of the Act a. erred in not granting the MAT credit of Rs. 26,47,466/- being carried forward from AY 2006-07 Rs. 11,76,784/- and from AY 2007-08 Rs. 14,70,682/-;

b. should have appreciate that MAT credit is created when the tax payable as per MAT computation is higher compare to normal computation, credit so created is carried forward, and is to be allowed set off in a year when the tax liability under the normal computation is in higher than that as per MAT working;

4 Interest under section 234B & 234C erred in levying interest under section 234B and 234C of the Act; 5 Initiation of penalty proceedings under section 271(1)(c) erred in initiating penalty proceedings u/s 271(1)(c) of the Income Tax Act.

5. Ground No.1 of the appeal, relates to corresponding deduction

u/s 145A on account of addition in the opening stock for the year. As

admitted by the ld.counsel this ground is purely consequential. On

perusal of the impugned order, we find that in the earlier year the ld.

CIT(A) has given direction to the AO that adjustment should made to

the opening stock also in view of the decision of the Hon'ble Delhi

High Court in the case of Mahavira Aluminum Ltd 214 CTR (Del) 45.

Such a direction is to be carried out by the AO and consequential

relief should be given. Thus ground no.1 is disposed off in the

aforesaid manner.

6. In ground no.2, the assessee has challenged the deduction of

proportionate land premium of Rs.8,83,402/- . Before us, the ld.

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counsel for the assessee submitted that this issue is covered against

the assessee and in favour of the Revenue by the decision of

Tribunal in assessee's own case for the assessment year 2005-06.

Wherein, this issue was decided after observing and holding as

under:

"5. Coming to ground 2, this is against the disallowance of land premium written off. The assessee had taken a land on lease- hold bases in the year 1994-95 for a period of 80 years for a sum of Rs. 8,35,452/-. Each year the assessee is claiming 1/80th part of the lease premium as a deduction. The assessee had relied on the decision of the Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd., (225 ITR

802) and the decision of the Hon'ble Gujarat High Court in the case of DCIT vs. Sun Pharmaceutical Inds. Ltd. (227 CTR 206).

On a query from the Bench, the learned counsel for the assessee, though not leaving his ground, admitted that the issue is covered against the assessee by the decision of the Special Bench of the Tribunal in the case of Mukund v. JCIT (106 ITD 231)(SB). The first appellate authority applied the decision of the Special Bench of the Tribunal and confirmed the disallowance. We respectfully following the decision of the Special Bench of the Tribunal, uphold the order of the first appellate authority and dismiss Ground No.2. "

7. In view of the aforesaid decision of the Tribunal, which is

applicable in this year also, we following the same, confirm the order

of ld. CIT(A) on this score and dismiss the ground raised by the

assessee.

8. In ground No.3, the assessee has challenged non-granting of

MAT credit of Rs. 26,47,466/-. The ld. CIT(A) held that the MAT

credit u/s 115JAA is to be allowed only when the book profit are to 8 I . T . A . N o . 6 0 9 9 / Mu m / 2 0 1 1 a n d I T A N o . 4 5 9 9 / Mu m / 2 0 1 2

be taxed. The ld. counsel for the assessee submitted that such an

observation of the ld. CIT(A) is contrary to the clear cut provisions of

section 115JAA, wherein it has been provided that where tax is paid

u/s 115JA(1) then tax credit is to be allowed on such tax paid on the

amount of tax payable by the assessee on his total income which is

computed in accordance with other provisions of the Act. Thus, the

directions of the ld. CIT(A) is not correct. The ld. DR also admitted to

this proposition of law.

9. After considering the impugned order and the relevant

provisions of law, it is seen that section 115JAA clearly provides that,

where any amount of tax is paid u/s 115JA (1) for any assessment

year, then credit in respect of tax so paid shall be allowed to him in

accordance with the provisions of section 115JAA. Further sub-

section (2) clearly provides that tax credit is to be allowed under sub-

section (1) of section 115JAA on the date of tax paid for any

assessment year on book profit and the amount of tax payable by the

assessee on his total income computed in accordance with other

provisions of Act. This clearly infers that the income for any other

years if taxed in the normal computation is more than tax paid under

the book profit for any of assessment years, credit of the tax paid

under MAT has to be given to the assessee. Here in this case, the tax

on normal computation under the other provisions of the Act is more 9 I . T . A . N o . 6 0 9 9 / Mu m / 2 0 1 1 a n d I T A N o . 4 5 9 9 / Mu m / 2 0 1 2

than the tax computed on the book profit, therefore credit of MAT i.e.

an amount of tax computed on the book profit u/s 115JA(1) is to be

given on the amount of tax payable by the assessee on its income

under the normal provisions. The ld. CIT(A) has wrongly held that tax

credit is to be allowed only on the tax computed under the book profit.

Thus, the finding of the ld. CIT(A) is reversed and the AO is directed

to allow the MAT credit being carried forward from assessment year

2006-07 and from assessment year 2007-08 on the tax payable

under normal provisions of the Act. Accordingly, Ground No.3 raised

by the assessee is treated as allowed.

10. Ground No.4 of the appeal relates to charging of interest u/s

234B and 234C of the Act. The charging of interest under these

sections as admitted by the parties are consequential in nature,

therefore, the AO is directed to calculate the interest as per law.

11. In the result, the appeal for the assessment year 2007-08 is

dismissed whereas the appeal for the assessment year 2008-09 is

partly allowed.

The above order was pronounced in the open court on 14th Jan, 2015.

घोषणा खल ु े यायालय म दनांकः Jan, 2015 को क गई ।

sd sd (डी. क णाकर राव/D. KARUNAKAR RAO) (अ मत शु ला / AMIT SHUKLA) लेखा सद य / ACCOUNTANT MEMBER या यक सद य / JUDICIAL MEMBER मुंबई Mumbai: 14th Jan,2015. 10 I . T . A . N o . 6 0 9 9 / Mu m / 2 0 1 1 a n d I T A N o . 4 5 9 9 / Mu m / 2 0 1 2

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, true copy

सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मंब ु ई /ITAT, Mumbai