Shri Bupendra Jamnadas Doshi (HUF), RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(1), RAJKOT-GUJARAT

CO 52/RJT/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6689 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 28-03-2011
• Assessment Year: misc
• Appeal Filed On: 22-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CJ MANIAR
• Assessee Lawyers: DM RINDANI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.1211/RJT/2010 (ASSESSMENT YEAR 1998-99) THE ACIT, CIR.5 VS M/S IMPULSE STEEL CO RAJKOT 23-A, UDYOGNAGAR RAJKOT PAN : AAAFI5281R (APPELLANT) (RESPONDENT) C.O. 45/RJT/2010 (ARISING OUT OF I.T.A. NO.1211/RJT/2010) (ASSESSMENT YEAR 1998-99) M/S IMPULSE STEEL COMPANY VS THE ACIT, CIR.5 RAJKOT RAJKOT (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING : 21-11-2011 DATE OF PRONOUNCEMENT : 25-11-2011 REVENUE BY : SHRI CJ MANIAR ASSESSEE BY : SHRI DM RINDANI O R D E R PER T.K. SHARMA (JM) THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 02-07-2010 PASSED BY THE CIT(A)-IV, RAJKOT FOR THE ASSESSMENT YEAR 1998-99. 2. THE SOLE GROUND RAISED BY THE REVENUE IN ITS APP EAL READS AS BELOW: ITA NO.1211/RJT/2010 CO 45/RJT/2010 2 THE LD.CIT(A)-IV, RAJKOT HAS ERRED IN LAW AND ON F ACTS IN DELETING THE ADDITION MADE BY THE AO OF RS.3,22,000/- BY DIS ALLOWING EXCESS REMUNERATION TO PARTNERS. 3. THE BRIEF FACTS RELATED TO THE CONTROVERSY INVOL VED IN THE AFORESAID GROUND OF APPEAL ARE THAT IN THE ASSESSMENT YEAR UNDER APP EAL, THE ASSESSING OFFICER DID NOT ALLOW REMUNERATION U/S 40(B) PAID TO THE PARTNE RS BY HOLDING THAT INTEREST INCOME IS NON-BUSINESS INCOME. ON APPEAL, IN THE I MPUGNED ORDER, THE LD.CIT(A) FOUND THAT THIS ISSUE IS COVERED BY THE DECISION OF ITAT FOR THE ASSESSMENT YEARS 1995-06, 1996-97 AND 1997-98 VIDE ORDER DATED 22-09 -2005 IN ITAS NO.57, 58 AND 59/RJT/2004 WHEREIN THE TRIBUNAL HELD AS FOLLOW S: 4. THE FACTS OF THE AFORESAID, CASE ARE VERY MUCH IDENTICAL IN THE PRESENT CASE HAND AND NOTHING WAS BROUGHT ON RE CORD BY THE REVENUE TO PERSUADE US TO DEVIATE FROM THE CONCLUSI ON ALREADY DRAWN BY THE TRIBUNAL, WE WOULD FOLLOW THE DECISION OF THE ITAT IN THE CASE OF M/S SETH BROTHERS (SUPRA) AND DIRECT TH E AO TO ALLOW THE CLAIM OF THE ASSESSEE ON ACCOUNT OF REMUNERATIO N PAID TO PARTNERS WITHOUT EXCLUDING INTEREST INCOME ON DEPOS IT FROM, BANK, WHICH HAS FORMED PART OF THE BOOK PROFIT. GROUND N O.1 IN ALL THE APPEALS ALLOWED. FOLLOWING THE AFORESAID ORDER IN ASSESSEES OWN CAS E FOR THE EARLIER THREE ASSESSMENT YEARS, THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THIS ORDER, THE REVENUE IS IN APPEAL. 4. AT THE TIME OF HEARING, SHRI CJ MANIAR, THE LD.D R, WHO APPEARED FOR THE REVENUE POINTED OUT THAT BANK INTEREST INCOME IS AS SESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THEREFORE, THE VIEW T AKEN BY THE ASSESSING OFFICER DISALLOWING EXCESS REMUNERATION AMOUNTING TO RS. 3, 22,000 BE UPHELD. ITA NO.1211/RJT/2010 CO 45/RJT/2010 3 5. AS AGAINST THE ABOVE, THE LD.COUNSEL FOR THE ASS ESSEE POINTED OUT THAT THE FIXED DEPOSITS WERE USED TO OBTAIN OVERDRAFT FROM B ANK. THEREFORE, INTEREST INCOME IS BUSINESS INCOME. HE POINTED OUT THAT ON IDENTICAL FACTS, THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR S, I.E. ASSESSMENT YEARS 1995-96 , 1996-97 AND 1997-98 HAS HELD THAT INTERES T INCOME ON BANK DEPOSITS FORMS PART OF BOOK PROFIT FOR THE PURPOSE OF SECTIO N 40(B) OF THE I.T. ACT, 1961. THEREFORE, THE VIEW TAKEN BY THE LD.CIT(A) BE UPHEL D. 6. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF AUTH ORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE FACTS AND CIRCUMSTANCES IN RESPECT OF THE ISSUE INVOLVED IN THIS APPEAL, I.E. WHETHER THE INTEREST INCOME EA RNED BY THE ASSESSEE WOULD CONSTITUTE BUSINESS INCOME FOR THE PURPOSE OF PROVI SIONS OF SECTION 40(B) OF THE ACT, ARE IDENTICAL TO THOSE PERTAINING TO PRECEDING THREE PRECEDING ASSESSMENT YEARS. IN THOSE ASSESSMENT YEARS, THE TRIBUNAL, IN ASSESSEES OWN CASE, HAS DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM O F THE ASSESSEE ON ACCOUNT OF REMUNERATION PAID TO THE PARTNERS WITHOUT EXCLUDING THE INTEREST INCOME ON DEPOSITS FROM BANK, WHICH INVARIABLY FORMS PART OF BOOK PROFIT. THE RELEVANT PORTION OF THE JUDGEMENT IS REPRODUCED BY US HEREIN ABOVE. THE DECISION OF THE CO-ORDINATE BENCH IN ASSSSEES OWN CASE FOR THE EAR LIER YEARS, ON IDENTICAL FACTS, IS BINDING ON THE TRIBUNAL TO BE FOLLOWED TO THE SU CCEEDING YEARS. WE ARE, THEREFORE, INCLINED TO UPHOLD THE ORDER OF THE LD.C IT(A). IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO.1211/RJT/2010 CO 45/RJT/2010 4 7. THE CROSS OBJECTION FILED BY THE ASSESSEE ARE ME RELY IN SUPPORT OF THE VIEW TAKEN BY THE LD.CIT(A) DELETING THE ADDITION M ADE BY THE ASSESSING OFFICER OF RS.3,22,000 BY DISALLOWING REMUNERATION TO PARTNERS . IN VIEW OF OUR DECISION IN THE REVENUES APPEAL, THE CROSS OBJECTION FILED BY THE ASSESSEE IS RENDERED INFRUCTUOUS; THEREFORE, THE SAME IS DISMISSED. 8. RESULTANTLY THE APPEAL OF THE REVENUE AND THE CR OSS OBJECTION ARE DISMISSED. THIS ORDER IS PRONOUNCED ON THE DATE MENTIONED HER EINABOVE. SD/- SD/- (A.L. GEHLOT) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 25 TH NOVEMBER, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-IV, RAJKOT 4. THE CIT-III, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT