VRM SHARE BROKING P. LTD, MUMBAI V. ACIT RG 4(2), MUMBAI

ITA 1388/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2053 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINDO KUMAR
• Keywords: Business expenditure; Rectification of order
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 1388/MUM/2015 (ASSESSMENT YEAR: 2008-09) M/S. VRM SHARE BROKING P. LTD. VS. ACIT, RANGE 4(2) 285, PRINCESS STREET , C.J. HOUSE 2 ND FLOOR, MUMBAI 400002 MUMBAI PAN AABCV1534C APPELLANT RESPONDENT APPELLANT BY: SHRI VIJAY MEHTA RESPONDENT BY: SHRI VINDO KUMAR DATE OF HEARING: 25.10.2016 DATE OF PRONOUNCEMENT: 04.11.2016 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- 9, MUMBAI DATED 08.01.2015 FOR A.Y. 2008-09. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSMENT IN THE CASE ON HAND FOR A.Y. 200 8-09 WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (I N SHORT 'THE ACT') VIDE ORDER DATED 30.11.2010 DETERMINING THE ASSESSEES I NCOME AT ` 5,22,80,530/-, INTER ALIA, ALLOWING REBATE OF ` 1,22,15,102/- UNDER SECTION 88E OF THE ACT. THE ASSESSING OFFICER (AO) INITIATE D RECTIFICATION PROCEEDINGS AND PROCEEDED TO PASS AN ORDER UNDER SE CTION 154 R.W.S. 143(3) OF THE ACT VIDE ORDER DATED 22.03.2013, WHER EIN THE REBATE UNDER SECTION 88E OF THE ACT WAS RESTRICTED TO ` 86,50,500/-. 2.2 AGGRIEVED BY THE ORDER PASSED UNDER SECTION 154 R.W.S. 143(3) OF THE ACT DATED 22.03.2013 FOR A.Y. 2008-09, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A)-9, MUMBAI. THE LEARNED CI T(A) VIDE ORDER DATED 08.01.2015 ALLOWED THE ASSESSEE PARTIAL RELIEF ONLY ON THE ISSUE OF REBATE UNDER SECTION 88E OF THE ACT, BY DIRECTING THE AO T O ALLOW REBATE ITA NO. 1388/MUM/2015 M/S. VRM SHARE BROKING P. LTD. 2 THEREUNDER TO THE EXTENT OF ` 99,94,555/- AS AGAINST ` 86,50,500/- ALLOWED BY THE AO. 3. AGGRIEVED BY THE ORDER OF THE CIT(A) -9, MUMBAI DAT ED 08.01.2015 FOR A.Y. 2008-09, THE ASSESSEE HAS PREFERRED THIS A PPEAL RAISING THE FOLLOWING GROUNDS: - 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT IN PARTIALLY CONFIRMING THE IMPUGNED ORDER U/S 154 R.W.S. 143(3) , WHICH IS CONTRARY TO THE PROVISIONS OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT IN AFFIRMING THE ACTION OF ASSESSING OFFICER AND LEVYING OF TAX TO E XTENT OF RS.37,50,386/- (RS. 40,94,441/- LESS RS.3,44,055/-) AFTER THE COMPLETION OF SCRUTINY ASSESSMENT U/S. 143(3) OF TH E I.T. ACT, 1961. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT IN CONFIRMING THE DISALLOWANCE OF THE STT OF RS.22,20,547/- (RS.25,64 ,602/- LESS RS.3,44,055/-) PAID BY THE ASSESSEE ON THE SHARE TR ANSACTIONS. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALT ER OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 4. GROUND AT SR. NOS 2 & 4 4.1 AT THE OUTSET OF THE HEARING, THE LEARNED A.R. OF THE ASSESSEE SUBMITTED THAT THE GROUNDS AT SR. NOS 2 AND 4 (SUPR A) ARE GENERAL GROUNDS, NOT CALLING FOR ANY ADJUDICATION THEREON. IN THIS V IEW OF THE MATTER, GROUNDS 2 AND 4 ARE RENDERED INFRUCTUOUS AND ACCORDINGLY DI SMISSED. 5. GROUND NO. 1 VALIDITY OF PROCEEDINGS/ORDER UNDER SECTION 154 R.W.S. 143(3) OF THE ACT. 5.1.1 IN THIS GROUND, THE ASSESSEE CHALLENGES THE V ALIDITY OF THE ORDER PASSED BY THE AO UNDER SECTION 154 R.W.S. 143(3) OF THE ACT DATED 22.03.2013 FOR A.Y. 2008-09, WHICH HAS BEEN PARTIAL LY UPHELD BY THE LEARNED CIT(A) BY THE IMPUGNED ORDER. ACCORDING TO THE LEARNED A.R. OF THE ASSESSEE, THIS TECHNICAL ISSUE WAS RAISED BEFORE TH E LEARNED CIT(A), BOTH AT GROUND NO. 1IN THE ORIGINAL GROUNDS (EXTRACTED AT P ARA 1.2 OF THE IMPUGNED ORDER OF THE LEARNED CIT(A)) AND BY WAY OF WRITTEN SUBMISSIONS DATED 22.10.2013, WHEREIN THE ASSESSEE HAD FILED REVISED GROUNDS AND THE SAME ISSUES WERE RAISED CONTENDING THAT THE AO HAD ERRED IN LAW AND ON FACTS IN REVISING THE AMOUNT OF REBATE UNDER SECTION 88E OF THE ACT UNDER SECTION 154 OF THE ACT WITHOUT APPRECIATING THAT THERE WAS NO MISTAKE APPARENT ITA NO. 1388/MUM/2015 M/S. VRM SHARE BROKING P. LTD. 3 FROM THE RECORD AT GROUNDS 1 AND 3 THEREOF. IT WAS SUBMITTED THAT A PERUSAL OF THE IMPUGNED ORDER WOULD EVIDENCE THAT THE LEARN ED CIT(A) HAS NOT ADJUDICATED GROUND NO. 1 OF THE ORIGINAL GROUNDS ST ATING, INTER ALIA, THAT THE SAME WAS NOT PRESSED BY THE LEARNED A.R. AND THEREF ORE DISMISSED; WHICH IS FACTUALLY INCORRECT. FURTHER, PERUSAL OF THE IMPUGN ED ORDER WOULD ALSO SHOW THAT THE REVISED GROUND RAISED AT SR. NO. 3 AS PER THE WRITTEN SUBMISSIONS DATED 22.101.2013 (PLACED IN PAPER BOOK AT PG. 17 T O 42) CHALLENGING THE VALIDITY OF THE ORDER UNDER SECTION 154 R.W.S. 143( 3) OF THE ACT DATED 22.03.2013 BEFORE THE CIT(A) IN THE COURSE OF APPEL LATE PROCEEDINGS, HAS BEEN IGNORED AND NOT ADJUDICATED UPON BY THE LEARNE D CIT(A). 5.1.2 THE SUBMISSIONS DATED 22.10.2013 PUT FORTH BE FORE THE LEARNED CIT(A) AT PARAS 14 TO 21 THEREOF HAVE BEEN STRONGLY REITERATED BY THE LEARNED A.R. ACCORDING TO THE LEARNED A.R. THE INVO CATION OF JURISDICTION UNDER SECTION 154 OF THE ACT WAS VOID AND BAD IN LA W AS THE ORDER OF THE ASSESSMENT FOR A.Y. 2008-09 DATED 30.10.2010 DID NO T CONTAIN ANY MISTAKE APPARENT FROM THE RECORD, WHICH ARE GLARING AND PATENT, REQUIRING NO ELABORATE DISCUSSIONS WITH RESPECT TO EVIDENCE O R ARGUMENTS. IT IS CONTENDED THAT THE REBATE UNDER SECTION 88E OF THE ACT GRANTED TO THE ASSESSEE WAS AFTER THOROUGH SCRUTINY AND VERIFICATI ON OF RELEVANT RECORDS, AFTER WHICH THE AO TAKING NOTE OF THE SECOND PROVIS O TO SECTION 88E(1) READ WITH SUB-SECTION (2) THEREOF HAD RESTRICTED THE REB ATE TO ` 1,22,15,102/- AS AGAINST ` 1,30,02,755/- CLAIMED BY THE ASSESSEE. THEREFORE, T HE PROCEEDINGS UNDER SECTION 154 OF THE ACT INVOKED BY THE AO CLEARLY AMOUNTS TO A RELOOK AT FACTS AND EVIDENCE RESULTING IN A REVIEW OF THE ORDER OF ASSESSMENT WHICH IS TO BE HELD AS INVALID AND BA D IN LAW, SINCE THE ISSUE INVOLVES DEBATABLE POINT OF LAW AND IS CONSEQ UENTLY BEYOND THE PURVIEW OF THE PROVISIONS OF SECTION 154 OF THE ACT . IN SUPPORT OF THE PROPOSITION THAT THE ORDER PASSED BY THE AO UNDER S ECTION 154 R.W.S. 143(3) OF THE ACT DATED 22.03.2013 FOR A.Y. 2008-09 IS TO BE HELD INVALID AND BAD IN LAW, THE ASSESSEE PLACED RELIANCE, INTER ALIA, ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - (I) BANWARI LAL TLUSYAN VS. INCOME TAX OFFICER (ITA NO. 115/KOL/2011 DATED 05.08.2011) ITA NO. 1388/MUM/2015 M/S. VRM SHARE BROKING P. LTD. 4 (II) ACIT VS. KEDAR NATH AGARWAL (ITA NO. 421/KOL/2 011 DATED 14.10.20111) 5.2 PER CONTRA, THE LEARNED D.R. PLACED STRONG REL IANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. THE FACTS OF THE MATTER AS EMANATE FROM THE RECORD ARE THAT IN THE ORDER OF ASSESSMENT FOR A.Y. 2008-09 PASSED UNDER S ECTION 143(3) OF THE ACT VIDE ORDER DATED 30.11.2010, THE AO AFTER SPECI FICALLY EXAMINING THE ASSESSEES CLAIM FOR BEING ALLOWED ` 1,30,02,755/- AS REBATE UNDER SECTION 88E OF THE ACT, ALLOWED THE ASSESSEE REBATE THEREUN DER ONLY TO THE EXTENT OF ` 1,22,15,102/- AFTER SCRUTINY AND VERIFICATION OF TH E RELEVANT RECORDS AND THE EXPRESS PROVISIONS OF LAW AT PARAS 4.1 AND 4.2 OF THE SAID ORDER. 5.3.2 ON APPEAL, WE FIND FROM A PERUSAL OF THE IMPU GNED ORDER THAT THE LEARNED CIT(A) DID NOT ADDRESS THIS ISSUE RAISED IN THE ORIGINAL GROUNDS OF APPEAL (EXTRACTED AT PARA 1.2 OF THE IMPUGNED ORDER ) BRUSHING THEM ASIDE AS BEING NOT PRESSED. IT IS ALSO SEEN THAT THE LEAR NED CIT(A) HAS NOT ACKNOWLEDGED OR ADJUDICATED THIS VERY ISSUE, CHALLE NGING THE VALIDITY OF THE ORDER OF THE AO PASSED UNDER SECTION 154 R.W.S. 143 (3) OF THE ACT ON 22.03.2013, IN GROUND NO. 3 OF THE REVISED GROUND R AISED IN SUBMISSIONS DATED 22.10.2013 (PLACED AT PG. 17 TO 42 OF THE ASS ESSEES PAPER BOOK). 5.3.3 IN THIS REGARD WE FIND THAT ON IDENTICAL FACT S, IN RESPECT OF REBATE UNDER SECTION 88E OF THE ACT, THE ITAT, KOLKATA A BENCH IN THE CASE OF ACIT VS. SHRI KEDAR NATH AGARWAL IN ITA NO. 421/KOL/2011 DAT ED 14.10.2011 AND BANWARI LAL TULSYAN VS. ITO IN ITA NO. 115/KOL/2011 DATED 05.08.2011, HOLDING THAT THE ISSUE OF DISALLOWING THE CLAIM OF EXPENSES WHILE RECOMPUTING THE REBATE UNDER SECTION 88E OF THE ACT BEING HIGHL Y DEBATABLE AND BEYOND THE PURVIEW OF THE PROVISIONS OF SECTION 154 OF THE ACT; THEY THEREFORE QUASHED THE RECTIFICATION ORDER. IN THE CASE OF BANWARI LAL TULSYAN (SUPRA) THE ITAT, KOLKATA A BENCH HELD AS UNDER AT PARA 4 THEREOF: - 4. WE FIND THAT THE ASSESSING OFFICER HAS INITIATE D 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 WHOLL Y AND EXCLUSIVELY ITA NO. 1388/MUM/2015 M/S. VRM SHARE BROKING P. LTD. 5 FOR ERRING INCOME ALLOWABLE. WE FIND THAT THIS ISSU E IS HIGHLY DEBATABLE AND EVEN IT IS NOT CLEAR 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 QUASH ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE CLAIM OF THE AS SESSEE. 5.3.4 FOLLOWING THE AFORESAID ORDERS OF THE ITAT KO LKATA A BENCH IN THE CASE OF BANWARI LAL TULSYAN (SUPRA) AND KADAR NATH AGARWAL (SUPRA), WHICH ARE ON IDENTICAL FACTS AS THE CASE ON HAND, W E ARE OF THE OPINION THAT THE ISSUE OF WORKING OF THE REBATE UNDER SECTION 88 E OF THE ACT IS HIGHLY DEBATABLE ONE AND ARE BEYOND THE PURVIEW OF THE REC TIFICATORY PROVISIONS UNDER SECTION 154 OF THE ACT INVOKED BY THE AO. IN THIS VIEW OF THE MATTER, WE QUASH THE RECTIFICATION ORDERS OF THE AUTHORITIE S BELOW AS INVALID AND BAD IN LAW, AND CONSEQUENTLY ALLOW THE ASSESSEES A PPEAL ON THE GROUND RAISED AT SR. NO. 1. 6. GROUND NO. 3 IS RAISED ON THE MERITS OF THE RE-COMPUTATION OF T HE REBATE UNDER SECTION 88E OF THE ACT. SINCE WE HAVE QUASHED THE ORDER OF THE AO PASSED UNDER SECTION 154 R.W.S. 143(3) OF TH E ACT DATED 22.03.2013 AS INVALID AND BAD IN LAW, WE DO NOT FIND IT NECESS ARY TO ADJUDICATE THIS GROUND ON THE MERITS OF THE ISSUE. 7. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2008- 09 IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER, 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 4 TH NOVEMBER, 2016 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -9, MUMBAI 4. THE CIT - 4, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.