BHARAT JAYANTILAL PATEL, MUMBAI V. DCIT- 4(1)(1), MUMBAI

ITA 1193/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2632 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 01-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Assessee Lawyers: VASUDEV GINDE
• Keywords: Business income; Rule of consistency; Competent authority; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 1193 / /201 9 ((. .2014-15 ) ITA NO. 1193/MUM/2019 (A.Y.2014-15) SHRI BHARAT JAYANTILAL PATEL, 3/3A, CHURCHGATE HOUSE, 32/34, VEER NARIMAN ROAD, MUMBAI 400 001 PAN: AAAPP6652R / VS. : / APPELLANT DEPUTY COMMISSIONER OF INCOME TAX 4(1)(1), ROOM NO.640, 6 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 : / RESPONDENT ASSESSEE BY : SHRI VASUDEV GINDE REVENUE BY : MS SMITA VERMA / DATE OF HEARING : 02/11/2020 / DATE OF RONOUNCEMENT : 02/11/2020 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-9, MUMBAI (IN SHORT THE CI T(A)) DATED 20/12/2018 FOR THE ASSESSMENT YEAR 2014-15. 2 ITA NO. 1193/MUM/2019 (A.Y.2014-15) 2. THE SOLITARY GROUND RAISED IN THE APPEAL BY AS SESSEE IS AGAINST THE FINDINGS OF CIT(A) IN UPHOLDING INTEREST INCOME AS INCO ME FROM OTHER SOURSES AS AGAINST BUSINESS INCOME DECLARED BY THE ASSESSEE. 3. SHRI VASUDEV GINDE, APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED THAT ASSESSEE IS A SHARE BROKER AND INVESTOR. THE ASSES SEE IS ALSO ENGAGED IN MONEY LENDING BUSINESS. THE LD. AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE SUBMITTED THAT DURING THE PERIOD RELEVANT TO ASSESSMENT YEA R UNDER APPEAL, THE ASSESSEE EARNED INTEREST INCOME OF RS.12,19,55,557/- FROM MO NEY LENDING BUSINESS. THE ASSESSEE OFFERED AFORESAID INTEREST INCOME UNDER TH E HEAD INCOME FROM BUSINESS. THE ASSESSING OFFICER IN SCRUTINY ASSES SMENT PROCEEDINGS RECHARACTERISED THE NATURE OF INTEREST INCOME OF TH E ASSESSEE AS INCOME FROM OTHER SOURCES. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN EARLIER ASSESSMENT YEARS, THE ASSESSEE HAS BEEN OFFERING INTEREST INCOME FROM MONEY LENDING BUSINESS AS BUSINESS INCOME. T HE ASSESSING OFFICER IN ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT ACC EPTED THE SAME IN ASSESSMENT YEAR 2007-08, 2008-09 AND 2010-11. HOWE VER, IN ASSESSMENT YEAR 2011-12 AND 2012-13, THE ASSESSING OFFICER CHANGED THE HEAD OF INCOME AND ASSESSED INTEREST INCOME EARNED BY THE ASSESSEE UND ER THE HEAD INCOME FROM OTHER SOURCES. IN APPEAL THE CIT(A) FOLLOWING THE RULE OF CONSISTENCY ACCEPTED ASSESSEES CONTENTION AND REVERSED THE FINDINGS OF ASSESSING OFFICER. IN ASSESSMENT YEAR 2011-12, THE DEPARTMENT CARRIED THE ISSUED IN APPEAL BEFORE THE TRIBUNAL IN ITA NO.1578/MUM/2016. THE TRIBUNAL VID E ORDER DATED 23/04/2018 UPHELD THE FINDING OF CIT(A) AND DISMISSED THE APPE AL OF REVENUE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED THAT A PERUSAL OF P&L ACCOUNT FOR THE FINANCIAL YEAR ENDING ON 31/ 03/2014 WOULD SHOW THAT INTEREST INCOME OF THE ASSESSEE IS SUBSTANTIAL AS C OMPARED TO THE INCOME FROM 3 ITA NO. 1193/MUM/2019 (A.Y.2014-15) BROKERAGE. THIS CLEARLY SHOWS THAT INTEREST INCOME OF THE ASSESSEE IS NOT INCIDENTAL TO ANY OTHER BUSINESS. 4. PER CONTRA, MS. SMITA VERMA, REPRESENTING THE DE PARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISS ING THE APPEAL OF ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS NOT HAVING LICENCE TO CARRY MONEY LENDING BUSINESS, THEREFO RE, THE CONTENTION OF THE ASSESSEE THAT INTEREST INCOME IS FROM MONEY LENDING ACTIVITIES SHOULD NOT BE ACCEPTED. THE LD. DEPARTMENTAL REPRESENTATIVE FURT HER CONTENDED THAT THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY ON PROCEEDINGS UNDER THE INCOME T AX ACT, THEREFORE, NO RELIANCE SHOULD BE PLACED ON THE EARLIER DECISIONS. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER CONTENTIONED TH AT THE FACTS IN THE IMPUGNED ASSESSMENT YEAR ARE DISTINGUISHABLE AS HAS BEEN POI NTED BY THE CIT(A) IN PARA 3.2.3 OF THE IMPUGNED ORDER. 5. REBUTTING THE CONTENTIONS RAISED ON BEHALF OF TH E REVENUE, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMIT TED THAT OBTAINING OF LICENCE FROM COMPETENT AUTHORITY FOR MONEY LENDING BUSINESS IS NOT A PRE-CONDITION. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN S UPPORT OF HIS CONTENTION PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY HIGH C OURT IN THE CASE OF CIT VS. PADMA S. VORA, REPORTED AS 229 TAXMAN 627. 6. BOTH SIDES HEARD. ORDERS OF AUTHORITIES BELOW AND THE DECISIONS ON WHICH THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS PLACED RELIANCE CONSIDERED. I FIND THAT THE ISSUE OF ASSESSEE DECL ARING INTEREST INCOME FROM MONEY LENDING BUSINESS UNDER THE HEAD BUSINESS IN COME AND ASSESSING OFFICER DISPUTING THE SAME HOLDING THE INTEREST INCOME UNDE R THE HEAD INCOME FROM OTHER SOURCES IS RECURRING IN THE PAST COUPLE OF ASSESSMENT YEARS. IN ASSESSMENT YEAR 2011-12 IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN AN 4 ITA NO. 1193/MUM/2019 (A.Y.2014-15) APPEAL BY THE REVENUE IN ITA NO.1578/MUM/2016 (SUPR A). THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS U NDER:- 6. COMING TO THE REVENUES APPEAL, THE ONLY ISSUE IS WHETHER THE INTEREST INCOME RECEIVED BY THE ASSESSEE SHOULD BE ASSESSED AS BUSI NESS INCOME OR INCOME FROM OTHER SOURCES. 7. THE ASSESSEE IS AN INDIVIDUAL ALSO A MEMBER OF MUMBAI STOCK EXCHANGE AND DOING BUSINESS OF INVESTMENTS AND SHARE BROKING. DURING T HE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE RECEIVED INTEREST ON LOA NS GIVEN AND ALSO PAID INTEREST ON LOANS TAKEN BY HIM. IN THE COURSE OF THE SAID BUSIN ESS THE ASSESSEE OBTAINED LOANS AND ALSO GIVEN LOANS TO VARIOUS PARTIES AND RECEIVE D INTEREST AND ALSO PAID INTEREST. THE ASSESSING OFFICER TREATED INTEREST RECEIVED BY THE ASSESSEE AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. WHEREAS THE ASSESSE E HAS SHOWN THE INTEREST RECEIVED AS INCOME FROM BUSINESS. 8. ON APPEAL THE LD.CIT(A) HELD THAT THE INTEREST RECEIVED BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES. WHILE HOLDING SO HE OBSERVED TH AT IN THE ASSESSMENT YEARS 2007- 08, 2008-09 AND 2010-11 THE INTEREST RECEIVED BY TH E ASSESSEE WAS ASSESSED AS BUSINESS INCOME IN THE ASSESSMENTS COMPLETED U/S. 1 43(3) AND THEREFORE PRINCIPLE OF CONSISTENCE IS REQUIRED TO BE FOLLOWED IN TAX MATTE RS WHEN FACTS ARE IDENTICAL. WITH THESE OBSERVATIONS AND ALSO REFERRING TO THE DECISI ON OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SMT PADMA S. BORA [54 TAXMANN.COM 319] HE CONCLUDED THAT MONEY LENDING LICENCE IS NOT PRECOND ITION FOR HAVING BUSINESS INCOME FROM MONEY LENDING ACTIVITY AND THEREFORE THE INTER EST RECEIVED BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. A PERUSAL OF THE ORDER BY TRIBUNAL IN REVENUES APP EAL FOR ASSESSMENT YEAR 2011- 12 SHOWS THAT IN ASSESSMENT YEAR 2007-08, 2008-09 A ND 2010-11 THE ASSESSING OFFICER HAS ACCEPTED INTEREST INCOME OF THE ASSESSE E AS BUSINESS INCOME. FURTHER, THE TRIBUNAL HAS ALSO ANSWERED THE OBJECT IONS OF REVENUE THAT FOR CONDUCTING MONEY LENDING BUSINESS, LICENCE IS NOT A PRE-CONDITION IN SO FAR AS INCOME TAX PURPOSE. 7. THE LD. DEPARTMENTAL REPRESENTATIVE HAS RAISED O BJECTION THAT THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY UNDER INCOME TAX ACT. THERE IS NO D ISPUTE ON THIS PROPOSITION. HOWEVER, WHEN THE FACTS ARE IDENTICAL , RULE OF CONSISTENCY HAS TO BE FOLLOWED. THE HON'BLE SUPREME COURT OF INDIA IN TH E CASE OF RADHASOAMI SATSANG, 5 ITA NO. 1193/MUM/2019 (A.Y.2014-15) 193 ITR 321 (SC) HAS HELD THAT RULE OF CONSISTENCY HAS TO BE FOLLOWED WHERE THERE IS NO CHANGE IN THE FACTS. 8. A PERUSAL OF THE IMPUGNED ORDERS SHOWS THAT THE CIT(A) HAS TRIED TO DISTINGUISH THE ORDER OF TRIBUNAL FOR ASSESSMENT YE AR 2011-12(SUPRA). HOWEVER, NO SPECIFIC DISTINGUISHING FEATURE ONFACTS HAS BEE N BROUGHT OUT EITHER BY THE FIRST APPELLATE AUTHORITY OR THE LD. DEPARTMENTAL REPRESE NTATIVE. I FIND NO MERIT IN THIS ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVE. 9. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE HAS POINTED THAT IN ASSESSMENT YEAR 2012-13 AS WELL THE ASSESSING OFFIC ER HAD CHANGED THE HEAD OF INCOME IN RESPECT OF INTEREST INCOME EARNED BY THE ASSESSEE FROM MONEY LENDING BUSINESS. THE CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND HELD THAT INTEREST INCOME EARNED BY THE ASSESSEE IS TO BE TAX ED UNDER THE HEAD BUSINESS INCOME. THE REVENUE HAS ACCEPTED THE SAME AND HAS NOT FILED ANY APPEAL BEFORE THE TRIBUNAL. THIS FACT HAS NOT BEEN CONTROV ERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. 10. THUS, IN THE FACTS OF THE CASE AND THE DECISI ON OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12, THE APPEAL OF ASSESSEE IS ACCEPTED. THE IMPUGNED ORDER IS SET ASIDE AND THE SOLITARY GROUN D RAISED BY ASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON MONDAY THE 2 ND DAY OF NOVEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, +(/ DATED: 02 /11/2020 VM , SR. PS(O/S) 6 ITA NO. 1193/MUM/2019 (A.Y.2014-15) COPY OF THE ORDER FORWARDED TO : 1. , / THE APPELLANT , 2. -. / THE RESPONDENT. 3. /. ( )/ THE CIT(A)- 4. /. CIT 5. 01-.( , . . . , / DR, ITAT, MUMBAI 6. 12345 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI