M/S. DEVIDAS SOONDERDAS & CO., MUMBAI V. THE ITO 14(3)(2), MUMBAI

CO 68/MUM/2008

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6644 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 15-11-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 03-03-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MITESH JOSHI
• Keywords: Tax effect

Judgement Text

DEVIDAS SOONDERDAS & CO 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI PRAMOD KUMAR, AM & SHRI VIJAY PAL RAO, JM ITA NO. 7448/MUM/2007 (ASST YEAR 2004-05) & CROSS OBJECTION NO. 68/MUM/2008 THE INCOME TAX OFFICER WARD 14(3)(2), MUMBAI VS DEVIDAS SOONDERDAS & CO 220 VIJAY GALLI M K MARKET MUMBAI 2 (APPELLANT/RESPONDENT) (RESPONDENT/CROSS OBJECTOR) PAN NO. AAMPG2473M ASSESSEE BY SHRI MITESH JOSHI REVENUE BY SHRI PARTHASATHY NAIK DT OF HEARING 17 TH NOV 2011 DT OF PRONOUNCEMENT 25 TH , NOV 2011 PER VIJAY PAL RAO, JM THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION B Y THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 5 TH OCT 2007 OF THE CIT(A) FOR THE AY 2004-05. 2 THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THIS APPEAL 1 THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE TO T HE EXTENT OF RS.5,82,000/- IN PLACE OF THE AMOUNT OF RS.12,25,55 2/- IN RESPECT OF THE DISALLOWANCE OF INTEREST FOR NON-BUSINESS PURPOSE. 2.THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THA T THE DURING THE YEAR ASSESSEE HAD DIVERTED A SUM OF RS.1,51,54,6531- IN GIVING INTEREST FREE LOANS & ADVANCES TO SISTER CONCERNS I RELATIVES, MAKING INVEST MENTS IN SHARES FROM WHERE THERE WAS NO TAXABLE INCOME, WHEREAS THE ASSESS EE HAS PAID INTEREST ON THE FUNDS BORROWED. THEREFORE, THE CIT(A) OUGHT T O HAVE HELD THAT THE A.O. HAD RIGHTLY DISALLOWED AN AMOUNT OF RS.12,25,552/- ON ACCOUNT OF INTEREST PAID ON BORROWED FUNDS DIVERTED FOR THE PURPOSES OF N ON-BUSINESS ACTIVITY. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A), M UMBAI ON THE ABOVE GROUND(S) BE SET- ASIDE AND THE ORDER OF THE ASSESS ING OFFICER BE RESTORED. DEVIDAS SOONDERDAS & CO 2 3 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF T HE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. 4 THE TAX EFFECT INVOLVED IN THIS APPEAL IS LESS T HAN RS.3 LAKHS AS PER THE LIMIT PRESCRIBED BY THE CBDT VIDE INSTRUCTION NO.3 OF 201 1 FOR FILING OF APPEAL BY THE REVENUE BEFORE THE TRIBUNAL. IN SUCH A SITUATION TH E APPEAL FILED IN CONTRAVENTION OF SUCH LIMIT CANNOT BE SUSTAINED. THIS VIEW IS DULY S UPPORTED BY THE DECISION IN THE CASE OF ACIT VS. SATISH CHANDRA, 10 SOT 383. SIMILA R VIEW HAS BEEN TAKEN BY THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CAMCO COLO UR CO. 254 ITR 565, WHEREIN IT HAS BEEN HELD THAT THE TAX EFFECT INVOLVED IN THE A PPEAL FILED BY THE REVENUE BEING LESS THAN THE MONETARY LIMIT AS PRESCRIBED IN BOARD CIRCULAR, THE SAME IS NOT MAINTAINABLE. 4.1 ACCORDINGLY, IN VIEW THE CIRCULAR OF 2011 AS AP PLICABLE TO THE APPEALS FILED EARLIER, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD IN THE CASE OF CIT VS MADHUKAR K INAMDAR (HUF) REPORTED IN 318 ITR 149 THAT THE AP PEALS FILED BY THE REVENUE PRIOR TO THE CIRCULAR SHALL ALSO BE GOVERNED THE MONETARY LIMIT OF THIS CIRCULAR. SIMILAR VIEW HAS BEEN REITERATED BY THE MUMBAI BENCH OF THE TRIB UNAL VIDE ORDER DATED 29.04.2011 IN ITO VS INDIA SAFETY VAULTS LTD., IN I TA NO. 648-651/M/2010. RESPECTFULLY FOLLOWING THE PRECEDENTS, WE HOLD THAT THE APPEAL F ILED BY THE REVENUE CANNOT BE TAKEN UP FOR DECISION ON MERITS AS THE TAX EFFECT I N THIS CASE IS ADMITTEDLY LESS THAN RS. 3.00 LACS. WE, THEREFORE, DISMISS THE APPEAL FI LED BY THE REVENUE AS NOT MAINTAINABLE. DEVIDAS SOONDERDAS & CO 3 CROSS OBJECTION NO. 68/MUM/2008 5 AT THE TIME OF HEARING, THE LD AR OF THE ASSESSE E SUBMITTED THAT THE ASSESSEE DOES NOT PRESS THE CROSS OBJECTION FILED BY THE ASS ESSEE AND THE SAME MAY BE DISMISSED AS NOT PRESS. THE LD DR HAS NO OBJECTION , IF THE CO FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. ACCORDINGLY, THE CROSS O BJECTION FILED BY THE ASSESSEE IS DISMISSED BEING NOT PRESSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 25 TH , DAY OF NOV 2011. SD/ SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 25 TH , NOV 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI