ADDL CIT RG 1(2), MUMBAI V. MORGAN STANLEY INDIA SECURITIES P.LTD, MUMBAI

ITA 113/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9014 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RESPECTIVEL Y ASSESSMENT YEARS; THUS
• Keywords: Earning of tax free income; Reasonable cause; Condonation of delay
• Section: 143(3); 142(1); 14A; 6

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.114/MUM/2013 ASSESSMENT YEARS: 2008-09 DCIT-1(2), R. NO.535, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. MAFATLAL HOUSE, 3 RD FLOOR, BACKBAY RECLAMATION, MUMBAI-400020 ( ! / REVENUE) ( '#$ % /ASSESSEE) PAN. NO. AAACM4048B C.O. NO.215/MUM/2015 (ARISING OUT OF ITA NO.114/MUM/2013) ASSESSMENT YEARS: 2008-09 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. MAFATLAL HOUSE, 3 RD FLOOR, BACKBAY RECLAMATION, MUMBAI-400020 / VS. DCIT-1(2), R. NO.535, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( '#$ % /ASSESSEE) ( ! / REVENUE) PAN. NO. AAACM4048B ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 2 ITA NO.113/MUM/2013 ASSESSMENT YEARS: 2009-10 DCIT-1(2), R. NO.535, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. MAFATLAL HOUSE, 3 RD FLOOR, BACKBAY RECLAMATION, MUMBAI-400020 ( ! / REVENUE) ( '#$ % /ASSESSEE) PAN. NO. AAACM4048B C.O. NO.216/MUM/2015 (ARISING OUT OF ITA NO.113/MUM/2013) ASSESSMENT YEARS: 2009-10 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. MAFATLAL HOUSE, 3 RD FLOOR, BACKBAY RECLAMATION, MUMBAI-400020 / VS. DCIT-1(2), R. NO.535, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( '#$ % /ASSESSEE) ( ! / REVENUE) PAN. NO. AAACM4048B & !' ( % ) / DATE OF HEARING : 05/01/2017 ( % ) / DATE OF ORDER: 05/01/2017 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE AS WELL AS THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDERS OF THE LD. FIRST APPELLATE AUTHORIT Y, MUMBAI, DATED 23/10/2012 AND 25/10/2012 RESPECTIVEL Y FOR ASSESSMENT YEARS 2008-09 AND 2009-10. THUS, THE ! ! / REVENUE BY SHRI T.A. KHAN -DR '#$ % ! / ASSESSEE BY SHRI SUNIL M. LALA ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 3 REVENUE IS IN APPEAL AND THE ASSESSEE HAS PREFERRED CROSS OBJECTIONS FOR THE RESPECTIVE ASSESSMENT YEARS. 2. FIRST, WE SHALL TAKE UP THE APPEAL OF THE REVEN UE FOR ASSESSMENT YEAR 2008-09 (ITA NO.114/MUM/2013), WHEREIN, THE ONLY GROUND RAISED PERTAINS TO HOLDING THAT SECTION 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTE R THE ACT) CANNOT BE APPLIED TO THE EXPENDITURE, INCURRED IN RELATION TO TAX FREE DIVIDEND INCOME AS THERE WAS N O TAX FREE DIVIDEND INCOME WAS EARNED/RECEIVED BY THE ASSESSEE , WHICH IS CONTRARY TO THE DECISION OF THE SPECIAL BE NCH OF THE TRIBUNAL IN THE CASE OF CHEMINVEST LTD. (2009) 121 ITD 318 (DEL.)(SB), IN WHICH THE BENCH RELIED UPON THE DECI SION FROM HON'BLE APEX COURT IN THE CASE OF RAJENDRA PRASAD M OODY 115 ITR 522 (SC). 2.1. DURING HEARING OF THIS APPEAL, THE LD. DR, SH RI T.A. KHAN, DEFENDED THE ADDITION MADE BY THE ASSESS ING OFFICER AND THUS SUPPORTED THE CONCLUSION ARRIVED A T IN THE ASSESSMENT ORDER. ON THE OTHER HAND, SHRI SUNIL M. LALA, LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT SECTIO N 14A OF THE ACT WILL NOT APPLY WHERE NO EXEMPT INCOME IS RE CEIVED DURING THE RELEVANT PREVIOUS YEAR AND THUS, DEFENDE D THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY PLAC ING RELIANCE UPON VARIOUS DECISIONS MENTIONED IN THE PA PER BOOK AND MORE SPECIFICALLY THE FOLLOWING DECISIONS: - I. CHEMINVEST LTD. VS CIT (2015) 61 TAXMAN.COM 118(DEL.) ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 4 II. SM ENERGY TEKNIK AND ELECTRONICS LTD. VS DCIT (2015) 61 TAXMAN.COM 448 (MUM. ITAT) III. CIT VS DELITE ENTERPRISES (ITA NO.110 OF 2009) (BOM.) IV. QUALITY ENGINEERING AND SOFTWARE TECHNOLOGIES LTD. VS DCIT(2015) 152 ITD 320 (BANG.) AND V. ANRIYA PROJECT MANAGEMENT SERVICES PVT. LTD. VS DCIT TS-99-ITAT-2015 (BANG.) 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A HOLDING COMPANY OF MORGA N STANLEY INDIA COMPANY PVT. LTD., ENGAGED, INTER-ALI A, IN PROVIDING INVESTMENT RESEARCH ADVISORY SUPPORT, CONSULTANCY SERVICES TO MORGAN STANLEY GROUP COMPAN IES ON A COST PLUS BASIS. FOR ASSESSMENT YEAR 2008-09, THE ASSESSEE FILED RETURN OF INCOME ELECTRONICALLY ON 23/09/2008, DECLARING INCOME OF RS.16,21,74,980/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY, THE REFORE, NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUE D TO THE ASSESSEE. DURING THE YEAR, THE ASSESSEE MADE INVEST MENTS OF RS.1771,91,93,415/- IN VARIOUS GROUP COMPANIES AND DID NOT EARN ANY INCOME WHICH DID NOT FORM PART OF ITS TOTAL INCOME. DURING ASSESSMENT PROCEEDINGS, THE LD. ASSE SSING OFFICER SHOW-CAUSED AS TO WHY DISALLOWANCE MAY NOT BE MADE U/S 14A OF THE ACT R.W.R. 8D OF THE INCOME TAX RULES 1962 (HEREINAFTER THE RULES), SHOULD NOT BE MADE. IN REPLY, ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 5 THE ASSESSEE FILED DETAILED SUBMISSIONS, IN SUPPORT OF ITS CLAIM, BY EXPLAINING THAT NO DISALLOWANCE CAN BE MA DE U/S 14A OF THE ACT R.W.R 8D OF THE RULES. HOWEVER, THE LD. ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT ON 20/12/2011 MADE DISALLOWANCE OF RS.4,55,99,525/-. 2.3. THE ASSESSEE FELT AGGRIEVED AND THUS FILED AP PEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), CHALLENGING THE DISALLOWANCE MADE U/S 14A OF THE AC T R.W.R 8D OF THE RULES, BY CLAIMING THAT ASSESSEE DID NOT EARN ANY EXEMPT INCOME, DURING THE YEAR AND THUS NO DISALLOW ANCE IS WARRANTED U/S 14A R.W.R-8D. AFTER CONSIDERING THE F ACTUAL MATRIX AND THE CASE LAWS, RELIED UPON BY THE ASSESS EE, THE DISALLOWANCE, MADE BY THE ASSESSING OFFICER, WAS DE LETED. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE TH IS TRIBUNAL. 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THE LD. DR DID NOT CONT ROVERT THE CLAIM OF THE ASSESSEE THAT NO EXEMPT INCOME WAS EAR NED BY THE ASSESSEE, WHICH DOES NOT FORM PART OF THE TOTAL INCOME, THUS, WE FIND FORCE IN THE ARGUMENT OF THE LD. COUN SEL FOR THE ASSESSEE AND THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), AS IN THE PRESENT CASE, THE AS SESSEE HAS NOT EARNED ANY TAX FREE INCOME, HENCE THE PROVI SION OF ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 6 SECTION 14A OF THE ACT, WILL NOT BE APPLICABLE. THE RATIO LAID DOWN IN ACIT LAFARGE INDIA HOLDING PVT. LTD. (19 SO T 121) (MUM. TRIB.), WINSOME TEXTILES INDUSTRIES LTD. (319 ITR 204)(P & H) SUPPORTS OUR VIEW. IT IS NOTED THAT THE LD. ASSESSING OFFICER DISALLOWED ONE HALF PERCENT OF TH E INVESTMENT, WHICH WORKS OUT TO RS.4,55,99,525/- U/S 14A OF THE ACT, R.W.R 8D OF THE RULES. THE INVESTMENTS WER E CLAIMED TO BE MADE OUT OF OWNED FUNDS AND THERE WAS NO BORR OWING BY THE ASSESSEE AND FURTHER THE ASSESSEE MADE INVES TMENT IN GROUP COMPANIES AS A STRATEGIC INVESTMENT. AS C LAIMED BY THE ASSESSEE, THE ASSESSEE MADE SUO-MOTO DISALLO WANCE OF RS.35,44,521/- AND THE ASSESSEE EARNED RS.42,27, 384/-, WHEREAS, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.69,70,878/-. IT IS ALSO NOTED THE ADMINISTRATIV E AND SUPPORT SERVICE EXPENSES INCURRED ON BEHALF OF GROU P COMPANIES WERE RECOVERED FROM THEM AT COST AND THE RECOVERY WAS REFLECTED UNDER THE HEAD OTHER INCOME IN SCHEDULE-J OF PROFIT & LOSS ACCOUNT/COMPUTATION OF INCOME. AS MENTIONED EARLIER, SUO-MOTO DISALLOWANCE WAS MAD E BY THE ASSESSEE. THE ASSESSEE HAS ALSO DISALLOWED THE ENTIRE ADMINISTRATIVE EXPENSES WHILE COMPUTING THE TOTAL I NCOME AND THERE IS UNCONTROVERTED FINDING IN THE IMPUGNED ORDER THAT NO EXPENSES WERE CLAIMED AS DEDUCTION IN COMPU TATION OF TOTAL INCOME, THUS, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). IT IS ALSO NOTED THAT THE DISALLOWANCE WAS MADE BY THE LD. ASS ESSING OFFICER, BASED UPON THE DECISION OF THE SPECIAL BEN CH OF THE TRIBUNAL IN THE CASE OF CHEMINVEST LTD. (2009) 121 ITD ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 7 318(DEL.)(SB), WHICH HAS BEEN REVERSED BY HON'BLE H IGH COURT IN (2015) 61 TAXMAN.COM 118 (DEL.) BY FOLLOWI NG CIT VS HOLCIM INDIA P. LTD. (2015) 57 TAXMAN.COM 28 (DE L.)(PARA- 19) AND DISTINGUISHED THE DECISION IN MAXOPP INVEST MENT LTD. VS CIT (2012) 347 ITR 272 (DEL.). THE HON'BLE HIGH COURT HELD THAT SECTION 14A OF THE ACT WILL NOT APP LY WHERE NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING T HE RELEVANT PREVIOUS YEAR. THE ASSESSEE HAS MADE STRAT EGIC INVESTMENT IN THE GROUP COMPANIES AND NO EXEMPT INC OME WAS EARNED BY THE ASSESSEE DURING THE RELEVANT ASSE SSMENT YEAR. THE HON'BLE BOMBAY HIGH COURT IN CIT VS DELI TE ENTERPRISES (ITA NO.110 OF 2009), ORDER DATED 26/02 /2009 DISMISSED THE APPEAL OF THE REVENUE. THE CASE OF TH E ASSESSEE FURTHER FIND SUPPORT FROM THE DECISION OF THE TRIBUNAL IN SM ENERGY TECHNIK AND ELECTRONICS LTD. VS DCIT (2015) 61 TAXMAN.COM 448 (MUM.), QUALITY ENGINEERING AND SOFTWARE TECHNOLOGIES LTD. VS DCIT (2015) 152 ITD 320 (BANG.) AND ANRIYA PROJECT MANAGEMENT SERVICES PVT. LTD. VS DCIT (TS-99-ITAT-2015)(BANG.) . CONSIDERING THE TOTALITY OF FACTS AND THE JUDICIAL PRONOUNCEMENTS, DISCUSSED HEREINABOVE, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). IT IS AFFIRMED, RESULTING INTO DISMISSAL OF APPEAL OF THE REVENUE. 3. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009-10( ITA NO.113/MUM/2013), WHEREIN, THE DIRECTION TO THE ASSESSING OFFICER TO DELETE THE ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 8 DISALLOWANCE OF RS.69,70,878/- MADE U/S 14A R.W.R 8 D OF THE RULES HAS BEEN CHALLENGED. THE LD. DR CONTENDED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) DID NOT CONSIDER THE DECISION IN M/S GODREJ AND BOYCE MFG. LTD. (2010) 328 ITR 80 (BOM.). ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT ED THAT THE LD. ASSESSING OFFICER, WHILE MAKING THE DISALLOWANC E OF RS.69,70,878/- INVOKED THE PROVISION OF SECTION 14A OF THE ACT R.W.R.-8D(2)(III) OF THE RULES. WE FIND THAT T HE ASSESSEE HAS NOT CLAIMED ANY ADMINISTRATIVE EXPENSES, AS DED UCTION, IN ITS COMPUTATION OF INCOME AND THE EXPENSES OF RS.69,70,878/- WERE MET OUT FROM THE GROUP COMPANIE S, WHICH WERE RECOVERED FROM THEM AND SHOWED AS OTHER INCOME. THE ASSESSEE HAS NOT CLAIMED ANY EXPENSES AS DEDUCTION, THUS, THERE IS NO QUESTION OF ANY DISALL OWANCE U/S 14A OF THE ACT. IT IS ALSO NOTED THAT, AS CLAIM ED BY THE ASSESSEE, IN RESPECT OF INVESTMENT IN GROUP COMPANI ES, THE ASSESSEE HAS NOT RECEIVED ANY DIVIDEND INCOME AND T HESE INVESTMENTS WERE MADE IN EARLIER FINANCIAL YEARS OU T OF OWNED FUNDS AND THUS THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE IN RELATION TO THE INVESTMENT IN GROUP COMPANIES. IN THE LIGHT OF THE FOREGOING DISCUSSION , WHILE DISPOSING OF THE APPEAL FOR ASSESSMENT YEAR 2008-09 , THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN HERO ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 9 CYCLES LTD. (ITA NO.331 OF 2009), WALFORT SHARES & STOCK BROKERS LTD. VS INCOME TAX OFFICER (2008) 326 ITR 1 (SC), YATISH TRADING CO. LTD. VS ACIT (2011) 122 ITD 237 (MUM. TRIB.), WE FIND NO INFIRMITY IN THE CONCLUSION OF T HE LD. COMMISSIONER OF INCOME TAX (APPEAL), WE AFFIRMED TH E SAME. THIS APPEAL OF THE REVENUE IS ALSO DISMISSED. 4. NOW, WE SHALL TAKE UP THE CROSS OBJECTION OF T HE ASSESSEE (C.O. NO.215 & 216/MUM/2015). THE LD. COUN SEL FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE ELEC TRONICALLY FILED THE RETURN ON 23/09/2008, DECLARING TOTAL INC OME OF RS.16,21,74,980/-. THE CASE WAS SELECTED FOR SCRUTI NY AND THE LD. ASSESSING OFFICER MADE DISALLOWANCES WITHOU T APPRECIATING THAT THE ASSESSEE HAS NOT EARNED ANY I NCOME WHICH FORM PART OF THE TOTAL INCOME AND FURTHER THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION. IT WAS EXPLAINED THA T THE CROSS OBJECTIONS ARE BASED UPON THE DECISION OF HON 'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. IT WAS EXPLAINED THAT THE CROSS OBJECTIONS CAN BE FILED WI THIN 30 DAYS FROM THE DATE OF THE RECEIPT OF THE NOTICE OF APPEAL, WHEREAS, THE NOTICE WAS RECEIVED ON 03 RD NOVEMBER, 2015. IT WAS POINTED OUT THAT THE ASSESSEE WAS NOT PROVIDED WITH THE GROUNDS OF APPEAL FILED BY THE REVENUE, THUS, THERE IS A REASONABLE CAUSE OF DELAY. THE ASSESSEE HAS MOVED APPLICATION FOR CONDONATION OF DELAY, SUPPORTED BY AN AFFIDAVIT, ON THE REASONING/EXPLANATION CONTAINED T HEREIN. ON THE OTHER HAND, THE LD. DR CONTENDED THE DELAY M AY NOT ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 10 BE CONDONED AS THE ASSESSEE HAS TO EXPLAIN THE REAS ONS OF DELAY OF EACH DAY. 4.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, SO F AR AS, CONDONATION OF DELAY IS CONCERNED, NO DOUBT FILING OF AN APPEAL/CROSS OBJECTION, IS A RIGHT GRANTED UNDER TH E STATUTE TO THE ASSESSEE/DEPARTMENT AND IS NOT AN AUTOMATIC PRIVILEGE, THEREFORE, THE ASSESSEE IS EXPECTED TO B E VIGILANT IN ADHERING TO THE MANNER AND MODE IN WHICH THE APPEALS/CROSS OBJECTIONS ARE TO BE FILED IN TERMS O F THE RELEVANT PROVISIONS OF THE ACT. NEVERTHELESS, A LIB ERAL APPROACH HAS TO BE ADOPTED BY THE APPELLATE AUTHORITIES, WHERE DELAY HAS OCCURRED FOR BONA-FIDE REASONS ON THE PART OF THE ASSESSEE OR THE REVENUE IN FILING THE APPEAL S. IN MATTERS CONCERNING THE FILING OF APPEALS, IN EXERCI SE OF THE STATUTORY RIGHT, A REFUSAL TO CONDONED THE DELAY CA N RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE THRESH OLD, WHICH MAY LEAD TO MISCARRIAGE OF JUSTICE. THE JUDIC IARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE I N JUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF R EMOVING INJUSTICE AND IS EXPECTED TO DO SO. 4.2. THE HONBLE APEX COURT IN A CELEBRATED DECIS ION IN COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS . 167 ITR 471 OPINED THAT WHEN TECHNICAL CONSIDERATION AND SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE COURTS ARE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JU STICE. THIS ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 11 IS FOR THE REASON THAT AN OPPOSING PARTY, IN A DISP UTE, CANNOT HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON- DELIBERATE DELAY. THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTERS RELATING TO THE CONDONATION OF DELAY, JUDIC IOUS AND LIBERAL APPROACH IS TO BE ADOPTED. IF SUFFICIENT C AUSE IS FOUND TO EXIST, WHICH IS BONA-FIDE ONE, AND NOT DUE TO NEGLIGENCE OF THE ASSESSEE, THE DELAY NEEDS TO COND ONED IN SUCH CASES. THE EXPRESSION SUFFICIENT CAUSE IS A DEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY LAW IN A MEAN INGFUL MANNER, WHICH SUB-SERVES THE END OF JUSTICE- THAT B EING THE LIFE PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF THE COURTS. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIO N ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED. THE HONBLE APEX COURT IN VEDABHAI VS SANTARAM 253 ITR 798 OBSERVED THAT INOR DINATE DELAY CALLS OF CAUTIOUS APPROACH. THIS MEANS THAT THERE SHOULD BE NO MALAFIDE OR DILATORY TACTICS. SUFFICI ENT CAUSE SHOULD RECEIVE LIBERAL CONSTRUCTION TO ADVANCE SUBS TANTIAL JUSTICE. THE HONBLE APEX COURT IN 167 ITR 471 OBS ERVED AS UNDER:- 3. THE LEGISLATURE HAS CONFERRED THE POWER TO COND ONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 196 3 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PART IES BY DISPOSING OF MATTERS ON DE MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY EL ASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE THAT BEING THE LIFE-PURPOSE ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 12 OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT I S COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFI ABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT T HE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHERS COURTS IN THE HIERARCHY. 4.3. FURTHERMORE, THE HON'BLE SUPREME COURT IN THE CASE OF VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL V S. SHANTARAM BABURAO PATIL 253 ITR 798 HELD THAT THE C OURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE KEEPING IN MIND THAT IN CONSTRUING THE EXPRESSION SUFFICIENT CAUSE, THE PRINCIPLE OF ADVANCING SUBSTANTIAL JUST ICE IS OF PRIME IMPORTANCE. THE COURT HELD THAT THE EXPRESSIO N SUFFICIENT CAUSE SHOULD RECEIVE LIBERAL CONSTRUCT ION. 4.4. THE DECISION OF THE TRIBUNAL IN PEOPLE INFOCO M PRIVATE LTD. V/S CIT (ITA NO.210/MUM/2013) ORDER DA TED 19/05/2016, M/S NEUTRON SERVICES CENTRE PVT. LTD VS ITO (ITA NO.1180/MUM/2012) ORDER DATED 18/02/2016, SHRI SAIDATTA COOP-. CREDIT SOCIETY LTD. V/S ITO (ITA NO.2379/MUM/2015) ORDER DATED 15/01/2016 AND MR. NIKUNJ BAROT (PROP. ENIGMA) VS ITO (ITA NO.4887/MUM/2015) ORDER DATED 06/01/2016, WHEREIN, SUBSTANTIAL DELAY WAS CONDONED, SUPPORTS T HE CASE OF THE PRESENT ASSESSEE. HAVING MADE THE AFORESAID OBSERVATION AND VARIOUS DECISIONS DISCUSSED HEREINA BOVE, INCLUDING FROM HONBLE APEX COURT, THE CIRCUMSTANCE S NARRATED BY THE ASSESSEE, WHEREIN, HE HAS STATED TH E REASONS WHICH CAUSED THE DELAY, THEREFORE, THE DELAY IS CON DONED. ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 13 5. SO FAR AS, THE MERITS OF THE CROSS OBJECTIONS AR E CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE FAIRLY AGREED THAT IF THE APPEALS OF THE REVENUE ARE DISMISSED, THEN T HE CROSS OBJECTIONS OF THE ASSESSEE WILL BECOME IN-FRUCTUOUS . SINCE, WE HAVE DISMISSED THE APPEALS OF THE REVENUE, AFFIR MING THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL ), THEREFORE, BOTH THE CROSS OBJECTIONS HAS REMAINED F OR ACADEMIC INTEREST ONLY, CONSEQUENTLY, DISMISSED AS IN- FRUCTUOUS. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED A ND CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED AS I N- FRUCTUOUS. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 05/01/2017. SD/- SD/- ( JASON P. BOAZ ) (JOGINDE R SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER & ' MUMBAI; * DATED : 05/01/2017 F{X~{T? P.S / /. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./ ,- / THE RESPONDENT. 3. 0 0 & 1% ( + ) / THE CIT, MUMBAI. 4. 0 0 & 1% / CIT(A)- , MUMBAI, 5. 3!4 .%' , 0 +) +' 5 , & ' / DR, ITA NO.113 & 114/MUM/2013 & CROSS OBJECTION NO.215 & 216/MUM/2015 M/S MORGAN STANLEY INDIA SECURITIES PVT. LTD. 14 ITAT, MUMBAI 6. 6# 7' / GUARD FILE. ! / BY ORDER, /3% .% //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI