SICOM LTD, MUMBAI V. DCIT CIR 3(3), MUMBAI

ITA 1394/MUM/2012

• Counselvise Citation: 139419914 RSA 2012
• Duration Of Justice: 3 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 15-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 29-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N M WANDRE
• Assessee Lawyers: R R VORA
• Keywords: Sale consideration of property below Jantri Value; Earning of tax free income
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTATN MEMBER ITA NO . 1394 / MUM./ 2012 ( ASSESSMENT YEAR : 200 8 09 ) M/S. SICOM LIMITED SOLITAIRE CORPORATE PARK BUILDING NO.4 ANDHERI GHAT KOPAR LINK ROAD CHAKALA, ANDHERI (E) MUMBAI 400093 PAN AAACS5524J .. APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 3(3), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ITA NO .2057 / MUM./ 2012 ( ASSES SMENT YEAR : 2008 09 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 3(3), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. SICOM LIMITED SOLITAIRE CORPORATE PARK BUILDING NO.4 ANDHERI GHATKOPAR LINK ROAD CHAKALA, ANDHERI (E) MUMBAI 400093 PAN AAACS5524J .... RESPONDENT ASSESSEE BY : SHRI R.R. VORA REVENUE BY : SHRI N.M. WANDRE DATE OF HEARING 21 .0 7 .2015 DATE OF ORDER 05.08.2015 M/S. SICOM LIMITED 2 O R D E R PER A.D. JAIN , JUDICIAL MEMBER TH E PRESENT APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 20 TH DECEMBER 2011 , PASSED BY THE COMMISSIONER ( APPEALS) 7 , MUMBAI, FOR THE ASSESSMENT YEAR 20 0 8 09 . 2. THE FACTS, AS CULLED OUT FROM THE ORDERS OF THE AUTHORITIES BELOW, ARE THAT THE ASSESSEE COMPANY IS A NON BANKING FINANCE COMPANY IN THE BUSINESS OF FINANCE SUCH AS PROJECT FINANCE, LEASING MERCHANT BANKING, INVESTMENTS AND TRADING IN SHARES, FINANCIAL SERVICES AND ADVISORY BUSINESS. IN THE RETURN OF INCOME FILED BY THE ASSESSEE COMPANY, THE ASSESSEE COM PANY CLAIMED AN AMOUNT OF ` 52,40,214, AS DIVIDEND EXEMPT UNDER SECTION 10(34) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). T HE ASSESSEE COMPANY HAD SUO MOTU TREATED ` 52,931 AS EXPENDITURE FOR EARNING EXEMPT INCOME AND THE SAME WAS DISALLOWED IN THE COMPUTATION OF INCOME ATTACHED WITH THE RETURN OF INCOME FILED BY THE ASSESSEE COMPANY. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CONFRONTED THE ASSESSEE COMPANY ABOUT FURTHER DISALLOWANCE TO BE MADE UNDER SECTION 14A OF THE ACT R/W R ULE 8D OF THE I.T. RULES, 1962. THE ASSESSEE COMPANY GAVE ITS REPLY TO THE ASSESSING OFFICER. BEING DISSATISFIED, THE ASSESSING OFFICER M/S. SICOM LIMITED 3 MADE FURTHER DISALLOWANCE UNDER R ULE 8D OF THE RULES , AS PER THE DETAILS GIVEN HEREUNDER: AS PER RULE 8D(2) THE EXPENDITU RE DIRECTLY RELATING TO EXEMPT INCOME N IL PROPORTIONATE DISALLOWANCE OF INTEREST PAID ` 7,87,70,940 PROPORTIONATE EXPENDITURE (BEING % OF AVERAGE VALUE OF INVESTMENT) ` 51,82,635 TOTAL: ` 8,39,53,575 THE ASSESSING OFFICER ALSO ADDED BACK THE AMOUNT DISALLOWED IN THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 3. T HE LEARNED CIT(A), AFTER HEARING THE ASSESSEE, DELETED THE DISALLOWANCE UNDER SECTION 14A ON ACCOUNT OF INTEREST MADE BY THE ASSESSING OFFICER OF ` 7,87,70,940. WITH REGARD TO THE PROPORTIO NATE EXPENDITURE, THE DISALLOWANCE WAS UPHELD BY THE LEARNED CIT(A). AGAINST THIS ORDER OF THE LEARNED CIT(A), THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL. 4. THE REVENUE HAS CONTESTED THE ACTION OF THE LEARNED CIT(A) IN DELETING TH E DISALLOWANCE OF INTEREST MADE BY THE ASSESSING OFFICER UNDER SECTION 14A R/W R ULE 8D(2)(II), WHEREAS, THE ASSESSEE HAS M/S. SICOM LIMITED 4 CONTESTED THE DISALLOWANCE OF EXPENDITURE MADE UNDER SECTION 14A BY THE ASSESSING OFFICER WHICH WAS SUSTAINED BY THE LEARNED CIT(A). THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A): 1. ERRED IN CONFIRMING ADDITION OF RS. 138,87,635/ - TO THE TOTAL INCOME OF THE APPELLANT; DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES 2. ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 51,82,635/ - UNDER SECTION 14A OF THE ACT R.W.R. 8D OF THE RULES; 3. ERRED IN CONCLUDING THAT EXPENSES AMOUNTING TO 0.5% OF THE AVERAGE VALUE OF INVESTMENT I.E. RS. 51,82,635 I S REASONABLE EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME AS PER RULE 8D OF THE RULES; 4. FAILED TO APPRECIATE THAT DURING THE YEAR APPELLANT HAD EARNED EXEMPT DIVIDEND INCOME OF RS.52,93,145 AND SUO MOTO DISALLOWED THE REASONABLE EXPENSES OF RS. 52,93 1/ - ; 5. ERRED IN NOT APPRECIATING THAT THE AO HAD NOT RECORDED HIS DISSATISFACTION AS REQUIRED IN SECTION 14A, WITH REGARDS TO THE CLAIM OF THE APPELLANT BEFORE INVOKING RULE 8D OF THE RULES; 6. WITHOUT PREJUDICE TO THE ABOVE, NO DISALLOWANCE CAN BE MAD E UNDER SECTION 14A OF THE ACT R.W.R 8D OF THE RULES ON INCOME FROM SHARES HELD AS STOCK IN TRADE; 7. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN CONFIRMING THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT, WHILE COMPUTING THE BOOK PROFITS AS PER SECTION 115JB OF THE ACT; PRIOR PERIOD INCOME / EXPENSES A) INCOME ON ACCOUNT OF ADVISORY FEES OF RS. 28.32 LACS WRONGLY BOOKED TWICE M/S. SICOM LIMITED 5 8. ERRED IN NOT ALLOWING REVERSAL OF INCOME ON ACCOUNT OF ADVISORY FEES OF RS. 28.32 LACS, WHICH IS WRONGLY BOOKED TWICE IN T HE ACCOUNTS OF THE APPELLANT; 9. FAILED TO APPRECIATED THAT THOUGH THE EXPENSES OF RS. 28.32 LACS IS SHOWN AS PRIOR PERIOD EXPENSES, IT IS NOTHING BUT REVERSAL OF EXCESS ADVISORY FEES, WHICH IS WRONGLY BOOKED TWICE IN THE ACCOUNTS OF THE APPELLANT; 10. SHOULD HAVE APPRECIATED THAT TAX CAN ONLY BE CHARGED ON LEGITIMATE INCOME AND THE SAME INCOME CANNOT BE CHARGED TO TAX TWICE; 11. WITHOUT PREJUDICE TO THE ABOVE, SHOULD HAVE ADJUSTED ABOVE EXPENSES AGAINST PRIOR PERIOD INCOME AND ONLY NET INCOME SHOULD HA VE BEEN TAXED; 12. WITHOUT PREJUDICE TO THE ABOVE, EXCESS ADVISORY FEES SHOULD BE ALLOWED AS DEDUCTION FROM THE RESPECTIVE ASSESSMENT YEAR FOR WHICH IT PERTAINS TO (I.E. A Y 2007 - 08); 13. WITHOUT PREJUDICE TO THE ABOVE, REVERSAL OF ADVISORY FEES SHOULD BE ALLOWED AS DEDUCTION FROM THE ASSESSMENT YEAR FOR WHICH IT PERTAINS TO (I.E. AY 2007 - 08); B) MUNICIPAL TAXES OF RS. 57.52 LACS 14. ERRED IN NOT ALLOWING PRIOR PERIOD EXPENSES OF RS. 57.52 LACS THOUGH THE SAME WERE CRYSTALLIZED DURING THE YEAR AND INCU RRED FOR THE PURPOSE OF BUSINESS; 15. SHOULD HAVE APPRECIATED THAT THE ADDITIONAL MUNICIPAL TAXES WERE CRYSTALLIZED DURING THE YEAR, AS THERE WAS ONGOING LITIGATION BETWEEN LANDLORD AND MUNICIPAL AUTHORITY ON THE BASIS OF WHICH DEMAND WAS RAISED BY LANDL ORD SUBSEQUENTLY; 16. WITHOUT PREJUDICE TO THE ABOVE, SHOULD HAVE ADJUSTED PRIOR PERIOD EXPENSES AGAINST PRIOR PERIOD INCOME AND ONLY NET INCOME SHOULD HAVE BEEN TAXED; 17. WITHOUT PREJUDICE TO THE ABOVE, MUNICIPAL TAXES SHOULD BE ALLOWED AS DEDUCTION FR OM THE ASSESSMENT YEAR FOR WHICH IT PERTAINS TO (I.E. A Y 2007 - 08); LEVY OF INTEREST U/S 234C 18. ERRED IN LEVYING INTEREST OF RS. 1.21 LACS UNDER SECTION 234C OF THE ACT, WHICH IS ILLEGAL AND UNLAWFUL AND/OR EXCESSIVE AND SHOULD BE LEVIED ONLY ON RETURN ED INCOME. M/S. SICOM LIMITED 6 THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,87,70,940/ - MADE U/S.14A R.W. RULE 8D(2)(II), HOLDING THAT THE ASSESSEE HAD SUFFICIENT FUNDS FOR INVESTMENT AND NO BORROWED FUNDS ARE DIVERTED FOR THE PURPOSE OF INVESTMENT, WITHOUT APPRECIATING THE FACT THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, DESPITE THE OPPORTUNITY PROVIDED TO IT, THE ASSESSEE FAILED TO FURNISH ANY EVIDEN CE TO PROVE THE NEXUS BETWEEN THE INTEREST FREE FUNDS AVAILABLE AND INVESTMENTS MADE. FURTHER, CONSIDERING THE FACT THAT THE ASSESSEE HAD INCURRED EXPENDITURE BY WAY OF INTEREST WHICH, ON THE BASIS OF EVIDENCE FURNISHED, IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT, THE ONLY OPTION AVAILABLE WITH THE A.O. IS TO WORK OUT THE DISALLOWANCE IN AC CORDANCE WITH RULE 8D (2)(II). ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE U/S .14A R.W. RULE 8D(2)(II), FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD [2009) (313 ITR 340) WHEREIN THE HON'BLE COURT HAS HELD THAT IT IS FOR THE ASSESSEE TO SHOW BY PRODUCTION OF MATERIALS THAT SH ARES WERE ACQUIRED FROM FUNDS AVAILABLE IN ITS HAND WITHOUT TAKING BENEFIT OF ANY LOAN, WITHOUT APPRECIATING THAT THE FACTS OF THE CASE RELIED UPON ARE DISTINGUISHABLE FROM THE FACTS OF THE ASSESSEE'S CASE AS, DESPITE THE OPPORTUNITY PROVIDED TO IT THE AS SESSEE HAS FAILED TO FURNISH ANY EVIDENCE TO PROVE THE NEXUS BETWEEN THE INTEREST FREE ANY EVIDENCE TO PROVE THE NEXUS BETWEEN THE INTEREST FREE FUNDS AVAILABLE AND INVESTMENTS MADE. FURTHER, CONSIDERING THE FACT THAT NO SUCH MATERIAL EVIDENCE IS PRODUCED BY THE ASSESSEE, THE DISALLOWANCE MADE BY THE A.O. WAS CORRECT AS HELD BY THE HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF DHANUKA & SONS (33 9 ITR 319 ) (2011) . WE FIRST TAKE UP THE APPEAL FILED BY THE REVENUE. 5. BEFORE US, THE LEARNED DEPARTMENTAL RE PRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND PRAYED THAT THE ORDER OF THE M/S. SICOM LIMITED 7 ASSESSING OFFICER BE CONFIRMED AND THE TOTAL DISALLOWANCE MADE UNDER SECTION 14A, BE RESTORED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED TH AT THE AMOUNT OF INTEREST DISALLOWED BY THE ASSESSING OFFICER WAS LEGALLY AND FACTUALLY INCORRECT AND THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE SAME. HE FURTHER SUBMITTED THAT THE DISALLOWANCE OF PROPORTIONATE EXPENDITURE SUSTAINED BY THE LEARNED CI T(A) IS UNFAIR AND ILLEGAL . 7. WE HAVE HEARD THE RIVAL CONTENTIONS ON THE ISSUE OF DISALLOWANCE OF INTEREST MADE BY THE ASSESSING OFFICER AND DELETED BY THE LEARNED CIT(A) AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ASSESSEE COMPANY HAS USED ITS OWN FUNDS FOR ACQUISITION OF SHARES MEANT FOR INVESTMENT PURPOSE S AND AS PART OF STOCK IN TRADE. IN SUPPORT OF THIS CONTENTION, THE FOLLOWING CASE LAWS WERE RELIED BY THE LEARNED COUNSEL: 1. HINDUSTAN P APER CORPORATION LTD. (ITA NO. 47/KO1/2012) DATED 28 SEPTEMB ER 2012 (KOL) (PAGE NO.355 - 362); 2. P N WRITER (ITA NO. 4388/M/10) DATED 14 OCTOBER 2011 (PAGE NO.363 - 369); 3. SHOPPER'S STOP LTD. (ITA NO. 1448 & 4475/M/2010) DATED 30 AUGUST 201 1 (MUM. TRIB) ( PAGE NO.371 - 378); 4. K. RAHEJA CORPORATION P. LIMITED (ITA NO. 1260 OF 2009) DATED 8 AUGUST 201 1 (BOMBAY HC) (PAGE NO.379 - 381); M/S. SICOM LIMITED 8 5. M/S BALARAMPUR CHINI MILLS LTD. (ITA NO. 504/KO1/2011) AY 2008 - 09 DATED 29 JULY 2011 (K OL. TRIB) (PAGE NO.383 - 396); AND 6. APPELLANT'S ASSESSMENT ORDER FOR A Y 2009 - 10 (PAGE NO.397 - 409) . 8. IN ADDITION TO THE ABOVE CASE LAWS, THE LEARNED COUNSEL ALSO RELIED ON THE ASSESSMENT ORDERS OF THE SUBSEQUENT YEARS , I.E., A.Y S 2009 10, 2010 11 AND 2011 12 IN THE ASSESSEES OWN CASE , WHE REIN , NO DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER. IT IS ALSO SEEN THAT IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3), FOR THE ASSESSMENT YEAR 2009 10, THE ASSESSING OFFICER HAS PASSED A SPEAKING ORDER , ACCEPTING THE CLAIM OF THE ASSESSEE THAT NO BORROWED FUNDS WERE USED FOR THESE SHARES AND, THEREFORE, NO DISALLOWANCE WAS CALLED FOR. THE RELEVANT PORTION OF THE ASSESSMENT ORDER FOR THE YEAR 2009 10 IS REPRODUCED HEREIN BELOW , FOR THE SAKE OF READY REFERENCE: THE INTEREST EXPENSES OF THE ASSESSEE ARE MAJORITY ON ACCOUNT OF SECURED LOAN AND FROM ADJUSTMENT LOANS FROM GOVERNMENT OF MAHARASHTRA AND ON BONDS. THESE DETAILS ARE AVAILABLE IN SCHEDULE 14 OF THE PROFIT & LOSS ACCOUNT. ON AN EXAMINATION OF BANK CASH FLOW, IT IS SEEN THAT NO BORROW ED FUNDS IS DIVERTED FOR INVESTMENT IN SHARES RESULTING IN TAX FREE INCOME. IN THE CIRCUMSTANCES, I AM OF THE OPINION THAT THE INTEREST EXPENSES NEED NOT BE CONSIDERED FOR THE PURPOSE OF COMPUTING DISALLOWANCE U/R 8D. 9. FURTHER, THE LEARNED CIT(A) HAS MENT IONED IN HIS ORDER THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT INVESTED ITS M/S. SICOM LIMITED 9 BORROWED FUNDS IN RESPECT OF THE SHARES WHICH ARE HELD AS INVESTMENT. THE LEARNED CIT(A) HAS RELIED UPON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S RELIANCE UTILITIES AND POWER LTD , 313 ITR 340 (BOM.), WHEREIN IT WAS HELD THAT IF THERE WERE FUNDS AVAILABLE, BOTH INTEREST FREE AND OVER DRAFT AND/OR LOANS TAKEN, THEN A PRESUMPTION WOULD ARISE THAT INVESTMENT WOULD BE OUT OF INTEREST FREE FUNDS GENERATED , OR AVAILABLE WITH THE BANK. RELYING ON THIS JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT, THE LEARNED CIT(A) HAS GIVEN A FACTUAL FINDING THAT THE ASSESSEE HAD SUFFICIENT FUNDS OF ITS OWN TO MEET THE INVESTMENT AND NO BORROWED FUNDS WERE DIV ERTED FOR THE PURPOSE OF MAKING INVESTMENT. THIS FACTUAL FINDING HAS NOT BEEN REBUTTED BEFORE US BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THEREFORE, IN VIEW OF THE AFORESAID DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN RELIANCE UTILITIES PVT. LT D. (SUPRA) AND OTHER CASE LAWS RELIED UPON BY THE LEARNED COUNSEL AND THE FACTS AND EVIDENCES PLACED BEFORE US, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF INTEREST OF ` 7,87,70,9 40, MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THUS, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. M/S. SICOM LIMITED 10 WE NO W TAKE UP THE ASSESSEE S APPEAL. 11. WITH REGARD TO G ROUND NO S .1 TO 6 RAISED BY THE ASS ESSEE , WHEREIN , THE ASSESSEE HAS CONTESTED THE DISALLOWANCE OF PROPORTIONATE EXPENSES OF ` 51,29,704, SUSTAINED BY THE LEARNED CIT(A) , I T WAS ALTERNATIVELY ARGUED BY THE LEARNED COUNSEL THAT IN ANY CASE , THE DISALLOWANCE WAS EXCESSIVE , KEEPING IN VIEW THE FACTS OF THE CASE. IT HAS BEEN ARGUED BY THE LEARNED COUNSEL THAT THE DISALLOWANCE NEEDS TO BE WORKED OUT AGAIN , FOR THE REASON THAT NO DISALLOWANCE UNDER SECTION 14A CAN BE MADE ON THE STRATEGIC INVESTMENTS MADE IN THE SUBSIDIARIES. THE SECOND CONTENTION OF THE LEARNED COUNSEL IS THAT NO DISALLOWANCE UNDER SECTION 14A, CAN BE MADE WITH RESPECT TO THE SHARES HELD AS STOCK IN TRADE. IN SUPPORT OF THIS PROPOSITION, THE LEARNED COUNSEL RELIED ON THE FOLLOWING CASE LAWS: 1. EXCEL INDUSTRIES LTD. VS. DCIT (ITA NO. 1067/MUM/2012 DATED 02 JANUARY 2015) (MUMBAI TRIBUNAL) 2. M/S JM FINANCIAL LIMITED (ITA NO. 4521/MUM/2012 DATED 26 MARCH 2014) (MUMBAI TRIBUNAL) (PAGE NO.231 - 241) 3. EIH ASSOCIATED HOTELS LTD (ITA NO 1503/MDS/2012) DATED 17 JULY 2013 (CHENNAI TRIBU NAL) (PAGE NO.243 - 260) 4. HSBC SECURITIES & CAPITAL MARKETS (ITA NO. 3186/M/2008) DATED 18 MARCH 2011 (PAGE NO. 261 - 264) 5. ZENSAR TECHNOLOGIES (ITA NO. 4538/M/2005) DATED 15 DECEMBER 2010 (PAGE NO. 265 - 275) 6. BALCHANDRA S SULE (ITA NO. 3684/M/2005) DATED 29 OCTOBER 201 0 (PAGE NO.277 - 279) M/S. SICOM LIMITED 11 7. GARWARE WALL ROPES LIMITED (ITA NO.5408/MUM/2012) DATED 15 JANUARY 2014 (PAGE NO. 281 - 288) 2) DISALLOWANCE UNDER SECTION 14A NOT APPLY TO SHARES HELD AS STOCK IN TRADE: DCIT VS. INDIA ADVANTAGE SECURITIES L TD (ITA NO. 6711/MUM/2011 DATED 14 SEPTEMBER 2012) (MUMBAI TRIBUNAL) (BOMBAY HC DISMISSED THE DEPARTMENT APPEAL VIDE ITS ORDER NO. ITA 1131 OF 2013 DATED 17 MARCH 2015) (PAGE NO. 289 - 299) CCI LTD. VS. JCIT (2012) 250CTR 291 (KAR. HC) (PAGE NO.301 - 303) GANJAM TRADING CO. PVT. LTD (ITA NO. 3724/MUM/2005 DATED 20 JULY 2012). (PAGE NO.305 - 320) 12. AT PAGE 169 OF THE PAPER BOOK FILED BY THE ASSESSEE, A RE WORKING HAS BEEN GIVEN BY THE LEARNED COUNSEL , INDICATING THAT IF THE DISALLOWANCE IS WORKED OUT KEEPING IN VIEW THE ABOVE CONTENTIONS, THEN THE DISALLOWANCE CAN BE SUSTAINED ONLY AT ` 13,80,088. IT IS SEEN THAT THOUGH THESE CONTENTIONS WERE NOT RAISED BY THE ASSESS EE BEFORE THE AUTHORITIES BELOW, UNDISPUTEDLY, IN MANY CASES, THESE CONTENTIONS HAVE BEEN ACCEPTE D BY THE VARIOUS BENCHES OF THE TRIBUNAL . T HEREFORE, RESPECTFULLY FOLLOWING THE CASES LAWS CITED ABOVE, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE A .O. FOR VERIFICATION OF THE FACTS AS NARRATED BY THE LEARN ED COUNSEL AND TO THEN ACCORDINGLY ADJUDICATE THIS ISSUE AFRESH. NEEDLESS TO SAY THAT THE ASSESSEE SHOULD ALSO BE GIVEN ADEQUATE OPPORTUNITY OF HEARING TO PUT FORTH ALL THE DETAILS AND EVIDENCES AS MAY BE CONSIDERED M/S. SICOM LIMITED 12 APPROPRIATE BY THE ASSESSEE IN SUPPORT O F ITS CONTENTION S . THUS, GROUNDS NO.1 TO 6 ARE ALLOWED FOR STATISTICAL PURPOSES. 13. GROUND NO.7, DEALS WITH THE GRIEVANCE OF THE ASSESSEE IN MAKING ADDITION TO THE BOOK PROFITS UNDER SECTION 115JB WITH RESPECT TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICE R UNDER SECTION 14A OF THE ACT. 14. THE ASSESSEE HAS TAKE N THIS GROUND AS GROUND NO.9, OF THE APPEAL MEMO BEFORE THE LEARNED CIT(A) ALONG WITH FORM NO.35. IT IS SEEN THAT THIS GROUND HAS NOT BEEN ADJUDICATED BY THE LEARNED CIT(A) IN THE APPEAL ORDER. THEREFOR E, IN ALL FAIRNESS AND TO MEET THE ENDS OF JUSTICE, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND REMIT THIS ISSUE TO THE FILE OF THE LEARNED CIT(A) FOR ADJUDICATION OF THIS ISSUE AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. NEEDLESS TO SAY THAT THE LEARNED CIT(A) SHALL TAKE INTO CONSIDERATION THE CASE LAWS AVAILABLE ON THIS ISSUE AT THE TIME OF DISPOSAL THERE OF. THUS, GROUND NO.7, IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 15. REGARDING GROUNDS NO. 8 TO 17, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT HE DID NOT WISH TO PRESS THESE GROUNDS. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, M/S. SICOM LIMITED 13 DID NOT OBJECT TO THE SUBMISSIONS OF THE LEARNED COUNSEL. CONSEQUENTLY, THESE GROUNDS ARE DISMISSED AS NOT PRESSED . 16. GROUND NO.18, RELATES TO CHARGING OF INTEREST UNDER SECTION 234C OF THE ACT. 17. BOTH THE PARTIES ADMITTED BEFORE US THAT THIS GROUND IS CONSEQUENTIAL IN NATURE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO GIVE CONSEQUENTIAL EFFECT WHILE RE COMPUTING THE INCOME OF THE ASSESSEE , KEEPING IN VIEW OUR FINDINGS GIVEN ABOVE AND IN ACCORDANCE WITH THE PROVISIONS OF LAW. 18. IN THE RESULT, THE REVENUES APPEAL IS TREATED AS PARTLY ALLOWED , FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN T HE OPEN COURT O N 05.08.2015 SD/ - RAJENDRA ACCOUNTANT MEMBER SD/ - A.D. JAIN JUDICIAL MEMBER MUMBAI, DATED : 05.08.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI