ACIT, New Delhi V. M/s Goldfields Leasing & Finance & Investment Co. Ltd., New Delhi

ITA 113/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3706 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 27-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS BANITA DEVI NAOREM
• Assessee Lawyers: SUNIL ARORA
• Keywords: Business income; Tax effect
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: I NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER ITA NO: 113/DEL/2011 A.Y. : 2005-2006 ACIT, CIRCLE 12(1) VS. M/S GOLDFILEDS LEASING & FI NANCE NEW DELHI & INVESTMENT CO.LTD., TOP FLOOR PLAZA CINEMA BLDG. CONNAUGHT CIRCUS NEW DELHI (APPELLANT) (RESPONDEN T) APPELLANT BY : MRS. BANITA DEVI NAOREM, SR.D.R. RESPONDENT BY : SRI SUNIL ARORA, C.A. O R D E R PER DIVA SINGH, JUDICIAL MEMBER THIS IS THE APPEAL FILED BY THE DEPARTMENT AGAINS T THE ORDER DATED 22.10.2010 OF LD.CIT(A)-XV, NEW DELHI PERTAINING TO A.Y. 2005-06 WHEREIN THE DEPARTMENT HAS RAISED THE FOLLOWING GRO UNDS. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE CIT(A) IS ERRONEOUS, PERVERSE, ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN TREATING THE AMOUNT OF RS. 11,3 7,694/- ON SALE ITA 113/DEL/2011 PAGE 2 OF 5 A.Y. 2005-2006 M/S GOLDFIELDS LEASING & FINANCE & INVESTMENT CO.LT D . OF INVESTMENT AS CAPITAL GAIN WHEREAS ON THE FACTS OF THE CASE THE AO HAD RIGHTLY TREATED THE SAME AS BUSINESS INCOME. 3. THE APPELLANT CRAVES TO LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HE ARING. 2. A PERUSAL OF THE RECORD SHOWS THAT THE A.O. WAS OF THE VIEW IN REGARD TO THE INCOME OF RS. 11,37,694/- CLAIMED TO BE INCOME UNDER THE HEAD CAPITAL GAINS WAS TO BE CONSIDERED AS BUSINE SS INCOME. ACCORDINGLY THE PROFIT ON SALE OF INVESTMENTS OF TH E SAID AMOUNT WAS TREATED AS BUSINESS INCOME AND TAXABLE INCOME OF TH E ASSESSEE WAS COMPUTED AT RS. 37,706/-. IN VIEW OF THE FACT THAT THE ASSESSEE WAS SUBJECT TO THE MAT PROVISIONS OF S.115 JB AN ADDITI ON OF RS. 31,360/- WAS MADE AS LONG TERM CAPITAL GAIN NOW CONSIDERED AS BUSINESS INCOME. 3. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE LD.CIT(A) CONSIDERING THE FACTS AND THE JUDICIAL PRONOUNCEMEN TS ALLOWED THE APPEAL OF THE ASSESSEE AND THE INCOME RETURNED AS P ROFIT ON SALE OF INVESTMENT WAS ACCEPTED. THE A.O. WAS DIRECTED TO RECOMPUTE THE INCOME U/S 115 JB OF THE ACT IN VIEW OF THE FINDING S IN THE FIRST GROUND OF APPEAL. 4. AGAINST THIS ACTION THE REVENUE IS IN APPEAL BEF ORE THE TRIBUNAL. WE HAVE HEARD THE PARTIES BEFORE THE BENCH ON THE L IMITED ISSUE OF TAX EFFECT WHICH IS MUCH BELOW THE TAXABLE LIMIT OF RS. 2 LAKHS. THE FACT THAT CAPITAL GAIN IS SUBJECTED TO TAX AT THE RATE OF 20% IS LAID DOWN IN S.112 OF THE INCOME TAX ACT, 1961. INCOME FROM BUSINESS AND PROFESSION AS PER SCHEDULE I OF THE RELEVANT FINANCE ACT IS TO BE TAX ED AT 30% PLUS ITA 113/DEL/2011 PAGE 3 OF 5 A.Y. 2005-2006 M/S GOLDFIELDS LEASING & FINANCE & INVESTMENT CO.LT D . SURCHARGE AS SUCH THE DIFFERENCE WOULD WORK OUT IS MUCH LESS THAN RS.2 LAKHS. HOWEVER SINCE THIS IS A CASE WHICH HAS BEEN CONSIDERED IN THE MAT PROVISIONS THE IMPACT IS MUCH LESS. THE LD.D.R. IN REGARD TO THE TAX EFFECT STATED THAT IT IS MUCH BELOW THE TAX LIMIT. BEFORE PROCEEDING WE WOULD LIKE TO MENTION HERE THAT JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. DELHI RACE CLUB LTD. (SUPRA) HAS HELD AS UN DER:- THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS R S.4,65,860/- . AS PER RECENT GUIDELINES OF THE CBDT, APPEAL IN THOSE CASES WHERE THE TAX EFFECT IS LESS THAN 10 LACS, ARE NOT BE ENTERTAINED. THIS COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X-III V. M/S. P.S. JAIN AND CO. BEING NO.179/1991 DECIDED ON 2 ND AUGUST, 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WO ULD ALSO APPLY TO PENDING CASES. 4.1 IN THE FACTS OF THE PRESENT CASE ADMITTEDLY THE TAX PAYABLE IN RESPECT OF GROUNDS OF APPEAL BY THE DEPARTMENT IS L ESS THAN RS.3 LAKHS AND AS PER REVISED INSTRUCTION OF THE CBDT NO.3 DAT ED 9.2.2011 WHEREIN THE CBDT HAS REVISED THE FILING LIMITS FOR APPEAL F ILED BEFORE THE TRIBUNAL, HIGH COURT AND SUPREME COURT AS UNDER:- BEFORE THE INCOME TAX APPELLATE TRIBUNAL : RS.3 LA KHS, APPEALS U/S 260A OF THE IT ACT BEFORE THE HONBLE HIGH COURT : RS.10 LAKHS AND BEFORE THE HONBLE SUPREME COURT : RS.25 LAKHS 4.2 SINCE IN THE PRESENT CASE THE ABOVE REVISED INS TRUCTION IS FULLY APPLICABLE IN VIEW OF THE JUDGMENT OF THE HONBLE D ELHI HIGH COURT (SUPRA), HENCE IN OUR OPINION THE REVENUES APPEAL IS NOT MAINTAINABLE IN VIEW OF THE SAID CIRCULAR OF THE CBDT. REFERENCE M AY ALSO BE MADE TO ITA 113/DEL/2011 PAGE 4 OF 5 A.Y. 2005-2006 M/S GOLDFIELDS LEASING & FINANCE & INVESTMENT CO.LT D . THE DECISION OF HONBLE MADHYA PRADESH HIGH COURT I N THE CASE OF CIT VS. ASHOK KUMAR MANIBHAI PATEL & CO. (2009) 317 ITR 386 (MP). 4.3 WE FURTHER FIND THAT IT IS A SETTLED LAW THAT T HE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS V S. INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272 WHEREIN TH EIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WI TH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THAT WHEN A CI RCULAR 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 TO THE TERMS OF THE STATUTE. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN FILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT INSTRUC TION NO.3 DATED 9.2.2011. 4.4 IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL F ILED BY THE DEPARTMENT AGAINST THE IMPUGNED ORDER OF THE LD. CI T(A), IS CONTRARY TO THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH T HE APPEAL FILED BY THE DEPARTMENT IS DISMISSED IN LIMINE . 5. ACCORDINGLY AFTER HEARING THE PARTIES BEFORE TH E BENCH RELYING UPON THE ORDER DT. 8 TH JUNE, 2011 IN ITA 1640/DEL/2011 IN DCIT VS. MADINA COOPERATIVE SOCIETY AND (1) ORDER OF ITAT, MUMBAI BENCH `A MUMBAI IN THE C ASE OF ITO VS. SHRI ASHOK G. DHANDHARIAI IN ITA NO.2460/MUM./2010, DATE D 28 TH FEBRUARY, 2011, FOR THE ASSESSMENT YEAR 2005-06; & ITA 113/DEL/2011 PAGE 5 OF 5 A.Y. 2005-2006 M/S GOLDFIELDS LEASING & FINANCE & INVESTMENT CO.LT D . (2) ORDER OF ITAT, DELHI BENCH `F NEW DELHI IN THE CASE OF ITO VS. M/S. PRS SECURITIES PVT. LTD. IN ITA NO.4447/2010, DATED 25.03.2011 FOR THE ASSESSMENT YEAR 2001-02. (3) JUDGMENT OF HIGH COURT OF DELHI IN THE CASE OF CIT VS. DELHI RACE CLUB LTD. IN ITA NO.128/2008, DATED 3 RD MARCH, 2011.. THE DEPARTMENTAL APPEAL IS DISMISSED AS NON-MAINTAI NABLE SINCE IT IS FILED CONTRARY TO THE INSTRUCTIONS OF THE CBDT. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON THE DATE OF HEARING ITSELF I.E. ON 28 TH JUNE, 2011. SD/- SD/- (B.K. HALDAR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH JUNE, 2011 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CI T(A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR