DCIT CENT. CIR. - 3, MUMBAI V. Sri. SUSHIL GUPTA (HUF), MUMBAI

ITA 1318/MUM/2006

• Counselvise Citation: 131819914 RSA 2006
• Duration Of Justice: 5 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-11-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 24-02-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHSARTHI NAIK
• Assessee Lawyers: USHA DALAL
• Keywords: Depreciation; Deemed dividend; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, A , MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH (A.M ) ITA NO.1318/MUM/2006 (ASSESSMENT YEAR: 2002-03) DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, 9 TH FLOOR, OLD CGO BLDG. ANNEXE, M.K. ROAD, MUMBAI. V/S SHRI SUSHIL GUPTA HUF, G.G. HOUSE, 42, IRISH PARK, JUHU, MUMBAI 400 049. APPELLANT RESPONDENT DATE OF HEARING : 3.11.2011 DATE OF PRONOUNCEMENT : 3.11.2011 APPELLANT BY : SHRI PARTH SARTHI NAIK RESPONDENT BY : SMT USHA DAL AL O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 27.12.2005 PASSED BY THE LD .CIT(A) FOR THE ASSESSMENT YEAR 2002-03. . 2. THE GROUNDS TAKEN BY THE REVENUE READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN ALLOWING 2/3 RD OF DEPRECIATION CLAIM AND INSURANCE CLAIM IN FULL OF THE ASSESSEE ON MOTOR CAR, WHEN THERE WAS NO BUSINESS ACTIVITY IN THE HUF DURING THE YEAR. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN TREATING THAT MERE REARRANGEMENT BY WAY OF TRANSFER OF CASH FROM THE BANK ACCOUNT IN THE ITA NO.1318/M/2006 SHRI SUSHIL GUPTA HUF 2 FORM OF FIXED DEPOSIT WAS THE BUSINESS ACTIVITY OF THE ASSESSEE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING INTEREST OF RS. 90,000/- TAXED ON THE BASIS OF INTEREST ACCRUED UNDER THE MERCANTILE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE ON LOAN OF RS. 5 LAKHS ADVANCED TO M/S. MASK FILM INTERNATIONAL, WHICH THE ASSESSEE HAD FAILED TO ACCOUNT FOR WITHOUT APPRECIATING THAT ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE TO SHOW THAT THE LOAN HAD BECOME STICKY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING TREATMENT OF INTEREST OF RS. 5,83,517/- ACCRUED ON ADVANCES MADE TO M/S. S.K. FILM ENTERPRISES FROM M/S. G.G. PHOTO LTD., WHEREIN THE ASSESSEE IS HOLDING SUBSTANTIAL INTEREST AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WHILE DELETING DEEMED DIVIDEND OF RS. 5,83,517/- IN THE HANDS OF THE ASSESSEE U/S 2(22)(E) OF THE ACT HAS ERRED IN NOT GIVING ANY DECISION ON THE ALTERNATE FINDING GIVEN BY THE AO THAT THE ABOVE AMOUNT IS ALSO TAXABLE AS PERQUISITE U/S 2(24)(IV) OF THE ACT. 6. THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. AT THE TIME OF HEARING, IT WAS OBSERVED THAT THE TAX EFFECT ON THE ABOVE APPEAL FILED BY THE REVENUE IS LESS THAN THE MONETA RY LIMIT OF RS.3.00 LAKHS FIXED BY THE CBDT. THE LEARNED DEPARTMENTAL R EPRESENTATIVE DID NOT DISPUTE ON THE SAID FACTUAL MATRIX OF THE CASE. 4. THAT BEING SO AND IN VIEW OF THE RECENT CBDT INS TRUCTION NO.3 OF 2011, DATED 9TH FEBRUARY, 2011 REPORTED IN (2011) 3 32 ITR 1 (STATUTES) ITA NO.1318/M/2006 SHRI SUSHIL GUPTA HUF 3 AND THE RATIO OF THE DECISION OF THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. MADHUKAR K. INAMDAR (HUF) (2009 ) 318 ITR 148 (BOM), WHEREIN IT HAS BEEN HELD THAT THE REVISED MO NETARY LIMIT IN THE CIRCULAR DATED MAY 15, 2008 WOULD BE APPLICABLE FOR ALL PENDING APPEALS AND ALSO KEEPING IN VIEW THE CONSISTENT VIEW OF THE COORDINATE BENCHES OF THE TRIBUNAL , WE ARE OF THE VIEW THAT THE DEPAR TMENT SHOULD NOT HAVE FILED THE APPEAL AND ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE REVENUES APPEAL STANDS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3RD NOV., 2011. SD/- SD/- (RAJENDRA SINGH) (D.K .AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 3 RD NOV., 2011 OKK: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER ASSTT. REGISTRAR, IT AT, MUMBAI ITA NO.1318/M/2006 SHRI SUSHIL GUPTA HUF 4 DATE INITIALS 1. DRAFT DICTATED ON 3-11-2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11-2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM 5. APPROVED DRAFT COMES TO THE SR. PS SR.PS ITA NO.1318/M/2006 SHRI SUSHIL GUPTA HUF 5 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER CHEQUE LIST : NAME SECTIONS QUOTATIONS FIGURES TABLE SETTINGS FONDS PARAGRAPHS