DCIT CIR. - 1(1), MUMBAI V. M/s.E VEREST ADVERTISING P. LTD., MUMBAI

ITA 1398/MUM/2006

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3560 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-08-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 27-02-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B SINGH
• Assessee Lawyers: A H DALAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND PRAMOD KUMAR, ACCOUNTANT MEMBER ITA. NO. 1398/MUM/2006 ASSESSMENT YEAR 2000-2001 DCIT, CIRCLE 1 (1) MUMBAI 400 020 VS. M/S. EVEREST ADVERTISING P. LTD. MUMBAI 400 001 PAN AAACE1603Q (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI S.B. SINGH FOR RESPONDENT : SHRI A.H. DALAL ORDER PER D. MANMOHAN, V.P. 1. THIS APPEAL, FILED AT THE INSTANCE OF THE REVEN UE, IS DIRECTED AGAINST THE ORDER DATED 16-12-2005 OF THE CIT(A)-I, MUMBAI AND IT PERTAINS TO THE ASSESSMENT YEAR 2000-2001. 2. IT MAY BE NOTICED THAT THE REVENUE HAS RAISED F OLLOWING ADDITIONAL GROUND OF APPEAL VIDE ITS LETTER DATED 3 -11-2009. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ADMITTING ASSESSEES AP PEAL ON MATTERS ALREADY DECIDED BY THE CIT IN EXERCISE OF H IS POWERS U/S. 263 OF THE ACT, WHICH ATTAINED FINALITY CONSEQUENT TO THE TRIBUNALS ORDER AGAINST ORDER U/ S. 263, IGNORING THE DIRECT DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF HERDILLIA CHEMICALS LTD. VS. CIT REP ORTED IN 221 ITR 194. 3. AT THE TIME OF HEARING, LEARNED COUNSEL, APPEAR ING ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE ASSESSME NT WAS ORIGINALLY COMPLETED BY THE ASSESSING OFFICER WHICH WAS SOUGHT TO BE REVISED BY THE COMMISSIONER OF INCOME TAX IN EXERCISE OF THE P OWERS VESTED IN HIM UNDER SECTION 263 OF THE ACT WHEREIN THE LEARNE D COMMISSIONER OF INCOME TAX HAS GIVEN SOME SPECIFIC DIRECTIONS WH ICH WERE 2 CHALLENGED BY THE ASSESSEE BEFORE THE ITAT AND IN T HE FIRST ROUND OF LITIGATION THE ITAT IN ITS ORDER DATED 19-9-2005 (ITA.8403/MUM/2004) SET ASIDE THE MATTER TO THE FIL E OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AND WHILE GIVING EFF ECT TO THE SAID ORDER, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE O RDER OF THE REVISIONAL AUTHORITY CONTAINS A SPECIFIC DIRECTION AND ACCORDINGLY SOUGHT TO TAX THE IMPUGNED INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. ASSESSEE PREFERRED A MISCELLANEOUS APPLICATION WHICH WAS NUMBERED AS MA.645/MUM/2009 IN ITA.8403/MUM/2004 WH EREIN IT WAS SUBMITTED THAT THE REVISIONAL AUTHORITY HAS NOT GIVEN A SPECIFIC DIRECTION BUT MERELY SET ASIDE THE MATTER FOR FRESH ADJUDICATION. UPON HEARING THE PARTIES THE TRIBUNAL, VIDE ITS ORDER DA TED 18-1-2010, ALLOWED THE MISCELLANEOUS APPLICATION BY MODIFYING PARA 3 OF THE EARLIER ORDER OF THE TRIBUNAL AS UNDER : THE OBSERVATIONS OF COMMISSIONER OF INCOME TAX- 1, MUMBAI IN HIS ORDER PASSED U/S. 263 DATED 27- 2-2004 ON THE ISSUE OF ASSESSABILITY OF INTEREST INCOME AND ASSESSABILITY OF CONSULTANCY INCOME UNDER THE HEAD OTHER SOURCES IS HEREBY VACATED. THE A.O. IS DIRECTED TO ADJUDICATE THIS ISSUE AFRES H, IN ACCORDANCE WITH LAW WITHOUT GETTING INFLUENCED BY OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX-1, MUMBAI IN HIS ORDER PASSED U/S. 263. 5. BOTH THE PARTIES ADMITTED THAT IN THE LIGHT OF ORDER PASSED BY THE ITAT IN M.A.NO. 645/MUM/2009, ADDITIONAL GRO UND FILED BY THE REVENUE HAS BECOME INFRUCTUOUS AND ACCORDINGLY WE R EJECT THE ADDITIONAL GROUND. 6. NOW WE SHALL TAKE-UP GROUNDS OF APPEAL ENCLOSED TO FORM 36. VIDE GROUND NO.1, THE REVENUE CONTENDS THAT THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE INCOME FROM CONSULTANCY FEES OF RS.3,12,250/- RECEIVED DURING T HE YEAR AS INCOME FROM BUSINESS. VIDE GROUND NO.2 IT WAS CONTENDED T HAT THE SHARE 3 BADLA ACTIVITY IS NOT A BUSINESS ACTIVITY OF THE AS SESSEE-COMPANY AND THEREFORE, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN TREATING THIS PROFIT AS INCOME FROM BUSINESS. THE CASE OF THE ASSESSING OFF ICER WAS THAT IT WAS INCOME FROM OTHER SOURCES. 7. THE LEARNED DR RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. 8. ON THE OTHER HAND, LEARNED COUNSEL, APPEARING O N BEHALF OF THE ASSESSEE, ADVERTED OUR ATTENTION TO THE ORDE R PASSED BY THE CIT(A) TO SUBMIT THAT THE ASSESSEE-COMPANY WAS CARR YING ON MARKET RESEARCH ACTIVITY BOTH BEFORE AND AFTER THE TRANSFE R OF ADVERTISING BUSINESS AND EVEN IN THE YEAR UNDER CONSIDERATION T HE APPELLANT- COMPANY CARRIED ON THE MARKET RESEARCH BUSINESS AND THUS, PROFESSIONAL FEES RECEIVED FROM MARKET RESEARCH IS ASSESSABLE TO TAX AS INCOME FROM BUSINESS. IN THIS REGARD, HE REFERRED TO PARA 4 OF THE ORDER OF THE LEARNED CIT(A). SIMILARLY, WITH REGARD TO SHARE BADLA ACTIVITY UNDERTAKEN BY THE ASSESSEE THE LEARNED CIT (A) OBSERVED, IN PARA 6.1 OF HIS ORDER, THAT ENORMOUS TRANSACTIONS H AD TAKEN PLACE ON A DAILY BASIS AND THUS THE ACTIVITY FALLS WITH THE CATEGORY OF FINANCING BUSINESS AND INCOME THEREFROM IS ASSESSABLE TO TAX AS BUSINESS INCOME. 9. LEARNED DR COULD NOT PLACE ANY FACTS ON RECORD TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A). 10. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE , WE ARE OF THE VIEW THAT THE ACTIVITY CARRIED ON AND INCOME TH EREFROM WAS CORRECTLY TREATED BY THE LEARNED CIT(A) AS INCOME F ROM BUSINESS ACTIVITY AND THEREFORE, WE AFFIRM THE ORDER OF THE LEARNED CIT(A) AND REJECT GROUND NOS. 1 AND 2 OF THE REVENUE. 11. AS REGARDS GROUND NOS. 3 AND 4, BOTH THE PARTI ES ADMITTED THAT THE ISSUES REQUIRE TO GO BACK TO THE FILE OF T HE ASSESSING OFFICER 4 SINCE IT IS ONLY CONSEQUENTIAL TO THE DECISION REND ERED WITH REGARD TO GROUND NOS. 1 AND 2. HAVING REGARD TO THE CIRCUMSTA NCES OF THE CASE, WE SET ASIDE THE ISSUES TO THE FILE OF THE ASSESSIN G OFFICER WHO IS DIRECTED TO RECONSIDER THE MATTER IN LINE WITH THE VIEW TAKEN BY US WITH REGARD TO GROUND NOS. 1 AND 2. IT MAY NOT BE O UT OF PLACE TO MENTION THAT THE LEARNED CIT(A) HAS CONSIDERED THIS ISSUE IN DETAIL AND NO MATERIAL WAS FURNISHED TO CONTRADICT THE FIN DINGS OF THE LEARNED CIT(A). 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 2 9 TH DAY OF DECEMBER, 2010. SD/- SD/- (PRAMOD KUMAR) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE 29 TH DECEMBER, 2010 VBP/- COPY TO 1. DCIT, CIRCLE 1 (1), ROOM NO. 579, AAYAKAR BHAVAN , MUMBAI 400 020 2. M/S. EVEREST ADVERTISING P. LTD. KITAB MAHAL, 4 TH FLOOR, 192, DR. D.N. ROAD, MUMBAI 400 001 PAN AAACE1603Q 3. CIT(A)-1, MUMBAI 4. CIT-1, MUMBAI 5. DR A BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.