Sri Ram Commercial Co., Kolkata V. ITO, Ward-36(2), Kolkata, Kolkata

CO 104/KOL/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2185 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2014
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE
• Assessee Lawyers: KALYAN ACHARYA BHADU RI
• Keywords: Business income; Rule of consistency; Tax effect

Judgement Text

1 ITA NO.1814/KOL/2014 & C.O.104/KOL/2014 SRI RAM COMMERCIAL CO., ,A.Y.2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.1814/KOL/2014 ASSESSMENT YEAR : 2010-11 I.T.O., WARD-36(2) -VERSUS- SRI RAM COMMERCIAL C O. KOLKATA KOLKATA (PAN:AAMFS4086Q) (APPELLANT) (RESPONDENT) C.O.NO.104/KOL/2014 A/O ITA NO.1814/KOL/2014 ASSESSMENT YEAR : 2010-11 SRI RAM COMMERCIAL CO. I.T.O., WARD-36(2) KOLKATA KOLKATA (PAN:AAMFS4086Q) (APPELLANT) (RESPONDENT) FOR THE DEPARTMENT: SHRI PINAKI MUKHERJEE, JCIT , SR.DR FOR THE ASSESSEE : SHRI KALYAN ACHARYA BHADURI, ADV OCATE DATE OF HEARING : 12.01.2016. DATE OF PRONOUNCEMENT : 03.02.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 18.06.2014 OF CIT(A)-XX, KOLKATA RELATING TO A.Y.2010-11. 2. RECENTLY THE CBDT HAS ISSUED CIRCULAR NO. 2 1/2015, DATED 10TH DECEMBER, 2015, WHEREBY THE MONETARY LIMITS FOR FILING OF AP PEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURTS AND SLP BEFORE SUPREME COURT HAVE BEEN INCREASED AS MEASURE FOR REDUCING LITIGATION. THE REVISED MONETARY LIMITS LAID DOWN IN PARA-3 OF THIS CIRCULAR AND THE MANNER OF C OMPUTING TAX EFFECT AS LAID DOWN IN PARA-4 OF THIS CIRCULAR ARE AS FOLLOWS: 2 ITA NO.1814/KOL/2014 & C.O.104/KOL/2014 SRI RAM COMMERCIAL CO., ,A.Y.2010-11 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED I N CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: - SL. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 10,00,000/- 2. BEFORE HIGH COURT 20,00,000/- 3. BEFORE SUPREME COURT 25,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILIN G OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CH ARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'D ISPUTED ISSUES'). HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS T HE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RE TURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX O N DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 3. IN PARA-10 OF THE SAID CIRCULAR IT HAS FURTHER BEEN CLARIFIED THAT THE REVISED MONETARY LIMITS WILL APPLY RETROSPECTIVELY. THE RE LEVANT PARA-10 OF THE CIRCULAR READS THUS: 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSE D. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 4. IN THE PRESENT CASE, THE TAX EFFECT IN THIS AP PEAL BY THE REVENUE IS LESS THAN RS.10,00,000/-. THOUGH THIS APPEAL HAD BEEN FILED BY THE REVENUE ON 23.09.2014 AND WAS WITHIN THE MONETARY LIMIT IN THE FORM OF TAX EF FECT FOR FILING APPEALS BEFORE TRIBUNAL, IN VIEW OF PARA-10 OF THE CIRCULAR OF CBD T, EVEN SUCH APPEALS WILL BE GOVERNED BY THE NEW MONETARY LIMITS LAID DOWN IN TH E CBDT CIRCULAR NO.21/2015 REFERRED TO ABOVE. 3 ITA NO.1814/KOL/2014 & C.O.104/KOL/2014 SRI RAM COMMERCIAL CO., ,A.Y.2010-11 5. IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX CO URT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION L TD. REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISI ONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THA T WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUN D BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY T O THE TERMS OF THE STATUTE. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN FILED CONTRA RY TO THE CIRCULAR ISSUED BY THE CBDT CIRCULAR NO.21 DATED 10.12.2015. 5.1. IN THE EVENT THE REVENUE FINDS AT A LATER DATE THAT THE TAX EFFECT IN THE APPEAL IS MORE THAN RS.10 LAKHS OR DESPITE LOW TAX EFFECT THE APPEAL OF THE REVENUE IS MAINTAINABLE, THE REVENUE IS AT LIBERTY TO MOVE THI S TRIBUNAL FOR RECALL OF THIS ORDER. 6. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL FI LED BY THE DEPARTMENT, AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CONTRARY T O THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE APPEAL FILED BY THE DEPA RTMENT IS DISMISSED IN LIMINE . 7. IN THE RESULT, THE APPEAL BY THE REVENUE IS DI SMISSED. 8. AS FAR AS THE CROSS OBJECTION FILED BY THE ASS ESSEE IS CONCERNED, THE FIRST ASPECT TO BE CONSIDERED IS THE CONDONATION OF 26 DAYS DELA Y IN FILING THE CROSS-OBJECTION WHICH IS EXPLAINED AS OWING TO SICKNESS OF THE EMPL OYEE WHO WAS LOOKING AFTER INCOME TAX MATTER OF THE ASSESSEE. CONSIDERING T HE REASONS GIVEN, WE DEEM IT FIT TO CONDONE THE DELAY IN FILING THE APPEAL. 9. AS FAR AS THE ISSUE RAISED IN THE CROSS OBJECT ION IS CONCERNED, THE QUESTION IS WHETHER INTEREST EARNED ON FIXED DEPOSITS IS TO BE ASSESSED AS INCOME FROM BUSINESS OR INCOME FROM OTHER SOURCES. IT IS NO T IN DISPUTE THAT THE BUSINESS OF THE ASSESSEE WAS INVESTMENT, FINANCING, LENDING, ETC. THE ASSESSEE THEREFORE CLAIMED THAT THE INTEREST INCOME FROM FIXED DEPOSITS SHOULD BE A SSESSED UNDER THE HEAD INCOME 4 ITA NO.1814/KOL/2014 & C.O.104/KOL/2014 SRI RAM COMMERCIAL CO., ,A.Y.2010-11 FROM BUSINESS. THE AO FOUND THAT FIXED DEPOSITS H AD NOTHING TO DO WITH THE BUSINESS OF THE ASSESSEE AND THAT THE SAME CANNOT A LSO BE SAID TO BE OFFERED AS SECURITY TO THE BANK FOR AVAILING CREDIT FACILITIES. IN THI S REGARD, THE AO HAS FOUND THAT THE SECURED LOANS AVAILED BY THE ASSESSEE WAS MINISCULE COMPARED TO THE FIXED DEPOSIT MADE. HENCE, THE AO TREATED THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. 10. BEFORE US, THE ONLY CONTENTION WAS THAT IN THE PAST, INTEREST INCOME FROM FIXED DEPOSITS WAS ACCEPTED AS BUSINESS INCOME BY THE AO AND THEREFORE THE SAME TREATMENT SHOULD BE GIVEN IN THIS AY ALSO. WE DO NOT FIND AN Y FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE LAW IS WELL SETTLED THAT EACH YEAR OF ASSESSMENT IS SEPARATE. THERE IS NO PRINCIPLE OF RES JUDICATA IN INCOME TAX MATTERS. THE RULE OF CONSISTENCY HOWEVER HAS TO BE FOLLOWED. IT DOES NO T EMANATE FROM THE RECORD THAT THIS ISSUE WAS EVER RAISED IN THE PAST IN THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE. IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT THE RULE OF CONSISTENCY CAN BE APPLIED. WE THEREFORE CONFIRM THE ORDER OF THE CIT(A). THE CRO SS OBJECTION IS DISMISSED. 11. IN THE RESULT, THE APPEAL AS WELL AS THE CROSS OBJECTION ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 03.02..2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03.02.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SRI RAM COMMERCIAL CO., 21, STRAND ROAD, KOLKATA- 700001. 2. I.T.O., WARD-36(2), KOLKATA. 3. CIT(A)-XX, KOLKATA 4. CIT-III, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, DEPUTY /ASST. REGISTRAR, ITAT, KOLKATA BENCHES 5 ITA NO.1814/KOL/2014 & C.O.104/KOL/2014 SRI RAM COMMERCIAL CO., ,A.Y.2010-11