Appeal details
Counselvise Citation
129321114 RSA 2013
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-04-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Next Hearing Date
19-03-2015
Assessment Year
2009-2010
Appeal Filed On
28-08-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER A ND SHRI ABRAHAM P . GEORGE , ACCOUNTANT MEMBER ITA NO.1199/BANG/2014 (ASSESSMENT YEAR: 2009 - 10) M/S.SHRIRAM CHITS (KARNATAKA) PVT. LTD. 259/31, 1 ST FLOOR, 10 TH CROSS, WILSON GARDEN, BANGALORE - 560027. APPELLANT PAN:AACCS2078R VS. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 12(3 ), BANGALORE. RESPONDENT AND ITA NOS.1293/BANG/2013 (ASSESSMENT YEAR: 2009 - 10) DEPUTY COMMISSI ONER OF INCOME - TAX, CIRCLE 12(3 ), BANGALORE. APPELLANT VS. M/S.SHRIRAM CHITS (KARNATAKA) PVT. LTD. BANGALORE - 560027. RESPONDENT A SSESSEE BY: SHRI S.ANANTHAN, CA . RESPONDENT BY: SHRI T.S.N.MURTHY, CIT(DR). DATE OF HEARING : 1 9 - 0 3 - 201 5 . DATE OF PRONOUNCEMENT: 17 - 0 4 - 2015 . O R D E R PER ABRAHAM P GEORGE , A M : THESE ARE APPEALS OF THE ASSESSEE AND REVENUE RESPECTIVELY, DIRECTED AGAINST AN ORDER DATED 14 /06/2013 OF CIT(A) - III, BANGAL ORE, FOR THE IMPUGNED ASSESSMENT YEAR. ITA NO . 1199 & 1293/BANG/203 M/S.SHRIRAM CHITS (KARNATAKA), BANG ALORE. PAGE 2 OF 5 2. ASSESSEE S APPEAL HAS BEEN FILED LATE BY 382 DAYS. ASSESSEE HAS FILED A CONDONATION PETITION, IN WHICH IT IS STATED THAT APPEAL PAPERS WERE, BY MISTAKE, FILED IN THE OFFICE OF THE CIT(ITAT) ON 02/09/2013 . IT IS MENTIONED THAT THIS FACT CAME TO THE NOTICE OF THE ASSESSEE, WHEN ITS APPLICATION FOR CLUBBING WAS FILED ON 09/09/2014 PURSUANT TO THE HEARING NOTICE RECEIVED ON THE DEPARTMENTAL APPEAL. AS PER THE ASSESSEE, IT WAS ONLY AT THAT POINT IT RECOGNIZED THAT THE APPEAL HAS NOT BEEN FILED IN TRIBUNAL OFFICE. THEREUPON, WITHOUT FURTHER DELAY I.E. ON 19/9/2014 THE APPEAL WAS FILED. 3. WE FIND FROM THE AFFIDAVIT THAT ASSESSEE WAS UNDER A BONA - FIDE BELIEF OF HAVING FILED THE APPEAL IN TIME AND THE D ELAY HAD OCCURRED ONLY DUE TO A MISTAKE OF FILING IN THE WRONG OFFICE. IT WAS NOT DUE TO ANY NEGLIGENCE. WE THEREFORE CONDONE THE DELAY AND ADMIT THE APPEAL. 4. LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET ITSELF SUBMITTED THAT THE ISSUES RAISED BY THE DEPARTMENT AND THE ASSESSEE IN THE RESPECTIVE APPEALS WERE COVERED BY THE DECISION DATED 14/08/2013 OF THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 IN ITA NOS.1314, 1315, 1281 & 1282/BANG/2012. LEARNED DEPARTM ENTAL REPRESENTATIVE FAIRLY ADMITTED THAT THE ISSUES WERE COVERED BY THIS TRIBUNAL ORDER MENTIONED SUPRA. ITA NO . 1199 & 1293/BANG/203 M/S.SHRIRAM CHITS (KARNATAKA), BANG ALORE. PAGE 3 OF 5 5. WE HAVE HEARD THE CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS. ISSUE RAISED BY THE REVENUE IN ITS APPEAL IS ON ALLOWANCE GIVEN BY LD.CIT(A) FOR BID LOSSES INCURRED ON CHITS. SIMILAR ISSUE WAS THERE BEFORE THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 MENTIONED SUPRA, WHEREIN IT WAS HELD AS UNDER AT PARAS.3 TO 5: 3. THE ASSESSEE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF CONDUCTING CHITS. WHILE COMPLETING THE ASSESSMENT FOR THE A.Y. 2008 - 09, THE AO HELD THAT THE BID LOSS CLAIMED IN THE MEMO OF INCOME CANNOT BE ALLOWED AS A DEDUCTION. THE ASSESSEE IS IN THE BUSINESS OF CONDUCTING CHITS. THE A SSESSEE ON ITS OWN BIDS AT THE AUCTION. WHEN THE ASSESSEE SUCCEEDS IN HIS BID, THE DIFFERENCE BETWEEN THE VALUE OF THE CHIT AND THE AMOUNT AT WHICH THE ASSESSEE BIDS AT THE AUCTION IS BOOKED AS A LOSS. THE REMAINING TENURE OF THE CHIT IN RESPECT OF WHICH THE ASSESSEE IS A SUCCESSFUL BIDDER MIGHT EXTEND BEYOND THE PREVIOUS YEAR. THE ASSESSEE BOOKS THE LOSS AND SPREADS IT OVER THE REMAINING PERIOD OF THE CHIT GROUP. IN THE BOOKS OF ACCOUNTS THE ASSESSEE BOOKS ONLY THE LOSS THAT IS APPORTIONED FOR THE PER IOD RELEVANT TO THE PREVIOUS YEAR. IN THE RETURN OF INCOME HOWEVER THE LOSS FROM OWN BIDDING FOR THE WHOLE TENURE OF THE CHIT GROUP IS CLAIMED AS A DEDUCTION. IN THE PRESENT A.Y. THE MANNER IN WHICH THE ASSESSEE CLAIMED LOSS ON BIDDING WAS AS FOLLOWS: PROFIT AS PER P & L ACCOUNT RS.3,24,197 LESS:BID LOSS ACCRUED DURING THE YEAR RS.6,47,16,536 LESS:BID LOSS DEBITED TO P & L A/C. RS.5,96,73,493 RS.50,43,043 4. THE AO ALLOWED THE BID LOSS TO THE EXTENT DEBITED IN THE PROFIT AND LOSS ACCOUNT AND REFUSED TO ALLOW THE CLAIM FOR DEDUCTION OF THE SUM OF RS.50,43,043/ - WHICH IS THE BID LOSS REFERABLE TO THE PERIOD BEYOND THE PREVIOUS YEAR. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) AFTER TAKING NOTE OF THE SUBMISSI ONS OF THE ASSESSEE ON THE BID LOSS AND THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE IN A.Y. 2005 - 06, DELETED THE ADDITION MADE BY THE AO OBSERVING AS FOLLOWS: - 4.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE APPELLANT AND TH E REASONS GIVEN BY THE AO IN HIS ORDER FOR REJECTING THE CLAIM OF BID LOSS. THE AO HAS DISALLOWED THE ADDITIONAL BID LOSS CLAIMED IN THE COMPUTATION OF INCOME ON THE GROUNDS THAT ACCOUNTING STANDARDS 1 & 2 ARE VIOLATED BY THE PRACTICE FOLLOWED BY THE APPEL LANT, AND THAT THE MATCHING PRINCIPLE OF ACCOUNTING IS IGNORED. THE DISPUTE ITA NO . 1199 & 1293/BANG/203 M/S.SHRIRAM CHITS (KARNATAKA), BANG ALORE. PAGE 4 OF 5 IS WITH REGARD TO THE PERIOD TO WHICH THIS LOSS RELATES. THE APPELLANT INSISTS THAT THE CLAIM AMOUNT PERTAINS FULLY TO THE FINANCIAL YEAR RELEVANT TO THIS APPEAL ITSELF, AND THA T THE AO IS INCORRECT IN UNDERSTANDING THE SAME TO PERTAIN TO A FUTURE PERIOD INVOLVING THE REMAINING PERIOD OF THE CHIT. 4.4. I FIND THAT THE ISSUE HAS BEEN DECIDED IN THE APPELLANT S FAVOUR FOR THE AY: 2005 - 06 BY MY PREDECESSOR CIT(A) AFTER DUE EXAMINAT ION OF THE ACCOUNTING PROCESS INVOLVED. THIS ORDER HAS BEEN UPHELD BY THE ITAT BANGALORE IN ITA NO.1547/B/2010. I SEE THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDENTICAL TO THE ONE RAISED FOR THAT AY 2005 - 06. I ALSO NOTE THAT NO ADDITION WAS MADE ON THIS POINT BY THE AO FOR AY 2006 - 07. WITH RESPECT TO AY: 07 - 08, THE ADDITION MADE BY THE AO WAS DELETED BY THE CIT(A), AGAINST WHICH ORDER THE DEPARTMENT DID NOT FILE ANY SECOND APPEAL BEFORE THE ITAT. IN VIEW OF THE WRITTEN SUBMISSIONS OF THE APPELLANT ON THIS ISSUE, AND ON A REVIEW OF THE FACTS OF THE CASE, I FIND THAT THE APPELLANT S CLAIM HAS MERIT. THE TREATMENT GIVEN TO THE BID LOSS OVER THE YEARS HAS BEEN CONSISTENT. IN THE CIRCUMSTANCES, I HOLD THAT THE APPELLANT IS ENTITLED TO SUCCEED IN THIS PO INT AND THE AO IS DIRECTED TO ALLOW THE SUM OF RS.50,43,043/ - AS BID LOSS AS A DEDUCTION IN COMPUTING THE TOTAL INCOME. 5. AS CAN BE SEEN FROM THE GROUNDS OF APPEAL, THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE DECISION OF THE TRIBUNAL HAS NOT BEE N ACCEPTED AND AN APPEAL HAS BEEN PREFERRED BY THE REVENUE BEFORE THE HON BLE HIGH COURT. WE ARE OF THE VIEW THAT THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL ON AN IDENTICAL ISSUE HAS TO BE FOLLOWED. IN THE EVENT OF ANY DECISION BY THE HON BLE H IGH COURT SUPPORTING THE VIEW TAKEN BY THE REVENUE, THE REVENUE IS AT LIBERTY TO TAKE APPROPRIATE STEPS. PENDENCY OF AN APPEAL BEFORE THE HIGH COURT CANNOT BE A GROUND NOT TO FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL. ACCORDINGLY, WE DO NOT FIND ANY M ERITS IN THE APPEAL BY THE REVENUE AND THE SAME IS DISMISSED. ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL IS THAT FOREMAN S DIVIDEND WAS CONSIDERED AS TAXABLE INCOME IN ITS HANDS. SIMILAR ISSUE WAS THERE BEFORE THIS TRIBUNAL IN ASSESSEE S OWN CASE MENTIO NED (SUPRA) WHEREIN IT WAS HELD AS UNDER AT PARAS.6 TO 7: 6. AS FAR AS THIS APPEAL IS CONCERNED, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS FOLLOWS: - 1. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. ITA NO . 1199 & 1293/BANG/203 M/S.SHRIRAM CHITS (KARNATAKA), BANG ALORE. PAGE 5 OF 5 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE ADDITION ON ACCOUNT OF FOREMAN S DIVIDEND AMOUNTING TO RS.52,09,740/ - . 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THE FACT THAT THE FOREM AN S DIVIDEND IS NOT TAXABLE ON GROUNDS OF MUTUALITY. FOR ALL THESE AND OTHER GROUNDS WHICH MAY BE URGED AT THE TIME OF THE HEARING OF THIS APPEAL, THE APPELLANT PRAYS THAT ITS APPEAL BE ALLOWED. 7. IT WAS FAIRLY SUBMITTED BY THE PARTIES BEFORE US THA T IN VIEW OF THE DECISION OF THE COORDINATE BENCH IN ASSESSEE S OWN CASE ON AN IDENTICAL ISSUE IN ITA NO.601/BANG/07 FOR AY 03 - 04 ORDER DATED 23.5.2008, WHEREIN SIMILAR WAS DECIDED ISSUE AGAINST THE ASSESSEE, THERE ARE NO GROUNDS TO INTERFERE WITH THE ORDE R OF THE CIT(APPEALS). AS A RESULT, THE APPEAL BY THE ASSESSEE IS ALSO DISMISSED. RESPECTFULLY FOLLOWING THE ABOVE, WE DISMISS BOTH THE APPEAL OF THE REVENUE AS WELL AS THAT OF THE ASSESSEE. PRON OUNCED IN THE OPEN COURT ON 17 TH APRIL , 201 5 . SD/ - SD/ - (RAJPAL YADAV) (ABRAHAM P.JEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE
