The Income Tax Appellate Tribunal (ITAT) Ahmedabad has redefined the scope of filing Cross Objection on February 5th in a case where the revenue department attempted to take up a new issue in a cross filing.
The assessee company, Dishman Infrastructure Ltd. is a closely held public limited company having 100% equity share held by Dishman Pharmaceuticals and Chemicals Ltd. (DPCL). It has filed a return of income electronically declaring NIL income. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Income Tax Act. On perusal of the return, it was revealed to the Assessing Officer (AO) that the company had been approved for development of Special Economic Zone (SEZ) at Bavla, Nr. Ahmedabad, Gujarat. It has shown gross profit of Rs.41.77 crores and after set off of carry forward business loss, it has claimed deduction under section 80IAB at Rs.41,62,61,487.
A cross objection was filed by the revenue department before the Appellate Tribunal where the department intended to rake up altogether a new situation as the AO had initially not take any action for recasting of the balance sheet by observing that expenditure debited in the work-in-progress had not been claimed in the profit & loss account.
Vice President Rajpal Yadav and Accountant Member Amarjit Singh dismissed such a cross objection stating, “ . . By filing CO, the department cannot take up a new issue. The scope of CO is discernible from plain reading of sub-section (4) of section 253 of the Income Tax Act, 1961. It contemplates that the respondent could file a CO against impugned order on any part of the order. In other words, if the Revenue has any grievance with the impugned order of the CIT(A), and on that issue it has not filed appeal, then on receipt of notice in the assessee’s appeal, it can file CO. But here the Revenue wants to rake up altogether a new issue which was not subject matter of appeal before the ld.CIT(A); even it was not a subject matter before the AO in the assessment proceedings. Therefore, such CO is not maintainable, hence dismissed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
