ITO 9(2)(1), MUMBAI V. BARUKI SOCKS & HOSIERY P.LTD, MUMBAI

ITA 1131/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6879 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDEDR
• Keywords: Business income; Earning of tax free income
• Section: 14A

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL BBENCH M UMBAI , . . , BEFORE S/SH. RAJENDRA, ACCOUNTAN T MEMBER & C. .N. PRASAD, JUDICIAL MEMBER ./I.T.A./1131/MUM/2016, /ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER 9(2)(1) ROOM NO.601A, 6 TH FLOOR, AAYAKAR BHAVAN, M. K . ROAD, MUMBAI 400 020 VS. M/S. BARUKI SOCKS & HOSIERY PVT. LD. 412, DILKAP CHAMBERS, OFF NEW LINK ROAD, ANDHERI WEST, MUMBAI - 400055 PAN:AADCB0341D ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SAURABH DESHPANDE-DR ASSESSEE BY: NONE / DATE OF HEARING: 12/06/2018 / DATE OF PRONOUNCEMENT: 12/06/2018 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA, AM - CHALLENGING THE ORDER, DATED 30.12.2015, OF CIT(A)- 16, MUMBAI THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL. ASSESSEE-COMPANY ENGAGED IN THE BUSINESS OF SHARES AND SECURITIES FILED ITS RETURN OF INCOME, ON 28.09.2012, DECLARIN G TOTAL INCOME OF RS.13,857/-. THE AO COMPLETED THE ASSESSMENT ON 07.10.2014, U/S.143(3) OF THE ACT,DETERMINING ITS INCOME AT RS.68.25 LACS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE DI SALLOWANCE MADE BY THE AO U/S.14A R.W.RULE 8D OF THE INCOME TAX RULES, 1962 (RULES). DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD MADE INVESTMENTS IN SHA RES OF WOCKHARDT. HE DIRECTED THE ASSESSEE TO FILE EXPLANATION ABOUT THE SAID INVESTMENTS. IT IS SUBMITTED, BEFORE THE AO, THAT THE SHARES WAS HELD AS STOCK IN TRADE ,THAT INCOME DERIVED FROM IT WAS OFFERED UNDER THE HEAD BUSINESS INCOME, THAT IT HAD NOT CLAIMED ANY EXEMPTION OUT OF THE IN VESTMENT MADE IN STOCK IN SHARES. HOWEVER, THE AO DID NOT SATISFIED AND WORKED OUT THE 14A DIS ALLOWANCE AT RS.68.11 LACS. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) AND MADE DETAILED SUBMISSIONS IT ALS O RELIED UPON CERTAIN CASE LAWS. ITA 1131/M/2016 M/S. BARUKI SOCKS & HOSIERY PVT. LTD. 2 AFTER CONCEIVING THE AVAILABLE MATERIAL THE FAA OBS ERVED THAT NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, T HAT IT WAS FOLLOWING THE ACCOUNTING STANDARDS OF THE EARLIER YEARS, THAT THE DEPARTMENT HAD ACCEP TED THE SAME TREATMENT WHILE ASSESSING IT IN THE PREVIOUS YEARS. HE REFERRED TO THE CASES OF CHEMINV EST LTD. (94 CCH 2) OF HONBLE DELHI HIGH COURT AND CORRTECH ENERGY PVT. LTD.(372 ITR 0097)AN D DELETED THE ADDITION MADE BY THE AO. 4. DURING THE COURSE OF HEARING BEFORE US THE DEPARTME NTAL REPRESENTATIVE (DR) RELIED UPON THE ORDER OF THE AO. AS STATED EARLIER, NONE APPEARED O N BEHALF OF THE ASSESSEE. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. W E FIND THAT ASSESSEE COMPANY WAS SHOWING STOCK OF SHARES OF RS.7.16 CRORES IN ITS BOOKS OF ACCOUNTS.SHARES WORTH RS.6.35 CRORES WERE SHOWN AS INVESTMENT AND BALANCE SHARES WERE PART OF ITS INVENTORY.AS PER THE ACCOUNTING STANDARD ISSUED BY THE ICAI SHARES HELD AS STOCK IN TRADE FOR MORE THAN ONE YEAR HAD TO BE SHOWN AS INVESTMENT.IT IS FOUND THAT THE ASSESSEE WAS OFF ERING ENTIRE INCOME, ARISING OF SHARE TRADING, UNDER THE HEAD PROFIT OR GAINS FROM THE BUSINESS O R PROFESSION, AND THAT THE ASSESSEE HAD NOT CLAIMED ANY EXEMPT INCOME DURING THE YEAR UNDER CON SIDERATION. AS THE ASSESSEE DID NOT CLAIM ANY EXPENDITURE AND HAS NOT EARNED ANY EXEMPT INCOM E FOR THE YEAR UNDER CONSIDERATION,SO WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY. WE ALSO HOLD THAT THE FAA HAS RIGHTLY PLACED RELIAN CE ON THE CASES DELIVERED BY HONBLE DELHI HIGH COURT AND HONBLE GUJARAT HIGH COURT, AS MENTI ONED IN THE EARLIER PART OF OUR ORDER. HENCE WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST TH E AO. AS A RESULT APPEAL FILED BY THE A O STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2018. 12 2018 SD/- SD/- ( /C.N.PRASAD) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 12/06/2018. MP/JV,SR.PS ITA 1131/M/2016 M/S. BARUKI SOCKS & HOSIERY PVT. LTD. 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR B BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.