Banwari Lal Tulsyan, Kolkata V. ITO, Ward - 34(1), Kolkata, Kolkata

ITA 115/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54476 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 17-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: R SALARPURIA
• Keywords: Business income; Business expenditure
• Section: 143(1); 54; 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . .. . . .. . , ! '! '! '! '! , ] ]] ] [BEFORE HONBLE SRI S.V.MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM ] !$ !$ !$ !$ /ITA NO.115/KOL/2011 '%& '(/ ASSESSMENT YEAR : 2005-06 BANWARI LAL TULSYAN VS. INCOME-TAX OFFICER, WD- 34(1), KOLKATA (PAN-ABTPT 4527 H) (APPELLANT) (RESPONDENT) FOR APPELLANT: SHRI R. SALARPURIA FOR RESPONDENT SHRI S. K. ROY * / ORDER ( (( ( '! '! '! '!) )) ), , , , ' PER SHRI MAHAVIR SINGH, JM THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST ORDER O F CIT(A)-XX, KOLKATA IN APPEAL NO.95-A/CIT(A)-XX/WD-34(1)/08-09/KOL DATED 1 8.10.2010. RETURN WAS PROCESSED U/S 143(1) OF INCOME TAX ACT, 1961 (HEREI NAFTER REFERRED TO AS THE ACT) ON 19.01.2007 BY ASSESSING OFFICER. THE IMPUGNED RECTI FICATION ORDER WAS PASSED BY I.T.O. WARD-34(1), KOLKATA U/S 154 OF THE ACT FOR R ELEVANT ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DATED 19.09.2008. 2. LEARNED COUNSEL FOR THE ASSESSEE FIRST OF AL L STATED THAT THE ORIGINAL GROUNDS WERE ARGUMENTATIVE HENCE ASSESSEE HAS REVISED GROUNDS AN D HE REFERRED TO FOLLOWING TWO EFFECTIVE GROUNDS:- 1. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF T HE CASE THE CIT(A) HAD GROSSLY ERRED IN NOT HOLDING/APPRECIATING THE FACT THAT EH AO HAD ACTED BEYOND OR IN EXCESS OF JURISDICTION, CONFERRED UPON HIM BY THE STATUTE, BY WRONGLY AND ILLEGALLY INVOKING THE PROVISIONS OF SECTION 154 TO RECTIFY AND RE-COMPUTE THE INCOME OF THE APPELLANT, AS DETERMINED IN AN INTIMA TION, PURPORTEDLY PASSED UNDER SECTION 143(1), ON AN ISSUE WHICH IS DEBATABL E AND ON WHICH THERE COULD BE TWO OPINIONS. 2. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF TH E CASE THE CIT(A) HAD GROSSLY ERRED IN NOT HOLDING/APPRECIATING THE FACT THAT THE AO WAS UNJUSTIFIED IN TREATING THE BUSINESS INCOME OF THE APPELLANT EARNE D FROM SHORT DEPOSITS OF SURPLUS MONEY AS OTHER SOURCE INCOME AND THE AO FUR THER ERRED IN CONSIDERING/TREATING THE INCOME FROM SHARE TRANSACT ION BY REDUCING SUCH 2 INCOME BY TOTAL EXPENSES WITHOUT DISALLOWING STT AN D DONATION AND THUS ERRED IN WRONGLY COMPUTING THE REBATE UNDER SECTION 88E. 3. THE BRIEF FACTS ARE THAT ASSESSEE IS ENGAG ED IN THE BUSINESS OF SHARE TRADING AND ALSO INCOME FROM OTHER SOURCES. THE ASSESSEES BOOK S OF ACCOUNTS ARE AUDITED U/S 44AB AND COMPLETE ACCOUNTS WERE FILED BEFORE ASSESS ING OFFICER. THE ASSESSING OFFICER PROCESSED RETURN U/S 143(1) OF THE ACT VIDE HIS ORDER DATED 19.01.2007. SUBSEQUENTLY, ASSESSING OFFICER ISSUED NOTICE U/S 1 54 OF THE ACT FOR RECTIFYING MISTAKES THAT ASSESSEE HAS CLAIMED 70% OF EXPENSES AGAINST THE SHARE PROFIT AND 30% AGAINST INCOME FROM OTHER SOURCES. THE AO TO DISALL OW EXPENSES WHICH WERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS INCOME , INITIATED RECTIFICATION PROCEEDING U/S 154 OF THE ACT AS HE WANTED TO DISALLOW THE CLA IM OF THE REBATE U/S 88E OF THE ACT AND TO RECALCULATE THE SAME. THE LD. COUNSEL FOR AS SESSEE, AT THE OUTSET, STATED THAT THE ISSUE IS HIGHLY DEBATABLE AND FOR THIS JURISDICTION AL ARGUMENT HE STATED THAT THE AO HAS NO POWER U/S 154 OF THE ACT TO RECOMPUTE REBATE U/S 88E OF THE ACT, WHICH IS HIGHLY DEBATABLE AND EVEN THOUGH, ON MERITS, ASSESSING OFF ICER RIGHTLY ALLOWED IN HIS INTIMATION U/S 143(1) OF THE ACT. THE ASSESSING OFF ICER AS WELL AS CIT(A) HAS NOT ACCEPTED THE PLEA OF ASSESSEE AND CONFIRMED THE ACT ION OF THE ASSESSING OFFICER VIDE PARA 3 OF THE APPELLATE ORDER AS UNDER:- 3. GROUND NO.1,2 & 3 RELATE TO RESTRICTING THE REBATE U/S 88E TO RS.69,863/- AGAINST THE CLAIM OF RS.2,10,069/-. THE APPELLANT IS ENGAGED IN THE BUSINESS OF SHARE TRADING, AND, HAS ALSO SHOWN INCOME FROM OTHER SOURCES. THE BOOKS OF ACCOUNT ARE AUDITED U/S 44AB AND P&L A/C WAS FILED. THE AO FOUND THAT 70% OF THE EXPENSE S ARE CLAIMED AGAINST SHARE PROFIT, AND, 30% AGAINST INCOME FROM OTHER SOURCES. THE AO NOTED THAT EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING THE INCOME IS ALLOWABLE U/S 57; AND, THAT THE AD-HOC CLAIM OF THE APPELLANT WAS NOT ALLOWABLE. THE AO DISALLOWED THE CLAIM AND RE-CALCULATED REBATE U/S 88E ACCORDINGLY. THE LD. AR SUBMITTED THAT THE ISSUE WA S DEBATABLE AND SO, NO RECTIFICATION COULD BE MADE U/S 154. THE LD.AR DID NOT ARGUE ON THE MER IT OF THE ISSUE. I DO NOT FIND MERIT IN THE CONTENTIONS OF THE APPELLANT. THAT CLAIM OF EXPENSE S @30% AGAINST INCOME FROM OTHER SOURCES IS ARBITRARY AND CERTAINLY NOT SUPPORTED BY ANY MATERIAL ON RECORD. I DO NOT AGREE WITH THE LD. AR THAT THE ISSUE IS DEBATABLE. THE CL AIM OF THE APPELLANT IS NOT ALLOWABLE AND IS MISTAKE APPARENT FROM RECORD IN AS MUCH AS IT IS NO T SUPPORTED BY ANY MATERIAL ON RECORD AND IS ALSO CONTRARY TO THE P&L A/C ENCLOSED WITH THE R ETURN. THE ORDER OF THE AO IS CONFIRMED. GROUND NO.1,2 & 3 ARE DISMISSED. 4. WE FIND THAT THE ASSESSING OFFICER HAS INI TIATED RECTIFICATION PROCEEDINGS U/S 154 OF THE ACT TO RE-COMPUTE REBATE U/S 88E OF THE ACT BY DISALLOWING THE CLAIM OF EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR EARNIN G INCOME ALLOWABLE. WE FIND THAT 3 THIS ISSUE IS HIGHLY DEBATABLE AND EVEN IT IS NOT C LEAR HOW THE BUSINESS EXPENSES CAN BE DISALLOWED BY INVOKING RECTIFICATION U/S 154 OF THE ACT. SINCE THIS IS A DEBATABLE ISSUE WE NEED NOT TO GO INTO MERITS OF THE CASE AND WE QU ASH ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE CLAIM OF THE ASSESSEE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE COURT ON 05.08.11 SD/- SD/- [ .., ] [ '!, ' ] [ S.V.MEHROTRA ] [ MAHAVIR SI NGH ] ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( (+ + + +) )) ) DATE: 05.08.11 R.G.(.P.S.) * , -''. /.'0- COPY OF THE ORDER FORWARDED TO: 1 . SHRI BANWARI LAL TULSYAN, C/O SALARPURIA JAJODIA & CO., 7,C.R.AVENUE, KOLKATA-700072. 2 THE I.T.O., WARD-34(1), KOLKATA 3 . THE CIT, 4. THE CIT(A)-XX, KOLKATA 5 . DR, KOLKATA BENCHES, KOLKATA 6. -'/ TRUE COPY, *%7/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES