DCIT CEN CIR 36, MUMBAI V. BRAIN POINT INFOTECH LTD, MUMBAI

ITA 1494/MUM/2012

• Counselvise Citation: 149419914 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: VIJAY MEHTA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND RAJENDRA (AM) . . , , ./I.T.A. NO.1494/MUM/2012 ( / ASSESSMENT YEAR : 2008-09) ASSTT/ DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-36, ROOM NO.11,AAYKAR BHAVAN, M.K.ROAD, MUMBAI-400020. / VS. M/S BRAIN POINT INFOTECH LTD., 6 TH FLOOR, AKRUTI TRADE CENTER, ROAD NO.7, MAROL, MIDC, ANDHERI (E), MUMBAI-400093 ( & / APPELLANT) .. ( ' & / RESPONDENT) ./ ./PAN/GIR NO. : AABCB6527D & / APPELLANT BY : SHRI M.L.PERUMAL ' & * /RESPONDENT BY : SHRI VIJAY MEHTA * - / DATE OF HEARING : 4.2.2014 * - /DATE OF PRONOUNCEMENT : 7.2.2014 / O R D E R PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2008-09 AGAINST ORDER OF LD. COMMISSIONER OF INCOME TAX(A) DATED 16.12.2011 STATING FOLLOWING GROUNDS OF APPEAL: 1(A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT THE INCOME EARNED BY THE ASSESSEE IS COVERED UNDER THE CONCEPT OF MUTUALITY WHEN ON GOIN G THROUGH THE MAIN OBJECT OF THE ASSESSEE AND ANCILLARY OBJECTS AS PER MEMOR ANDUM OF ASSOCIATION, THE ASSESSEE COMPANY IS CARRYING OUT BUSINESS ACTIVITIE S ANT THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE COMPANY IS CARRYING OUT ANY MUTUAL ACTIVITY. 1(B) WHETHER ON THE FACT AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT THE ACTIVI TIES CARRIED OUT BY THE ASSESSEE COMPANY ARE MUTUAL ACTIVITIES, WHEN THERE IS PROVIS ION IN THE ARTICLE OF ASSOCIATION OF THE ASSESSEE (ARTICLE 6) TO DECLAR E DIVIDEND TO SHAREHOLDERS, NOT ON THE BASIS OF CONTRIBUTION, BUT ON THE BASIS OF H OLDING OF SHARES. 1( C ) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT THE INCOME RECEIVED BY THE ASSESSEE I.T.A. NO.1494/MUM/2012 2 COMPANY FROM NON MEMBERS SUCH AS INTEREST ON DEPOSI TS IS EXEMPT FROM TAX ON THE BASIS OF MUTUALITY WHEN INCOME IS NOT RECEIVED FROM MEMBERS. INTEREST WAS RECEIVED FROM MEMBERS WHO ARE MEMBERS OR SHARE HOLD ERS OF THE ASSESSEE COMPANY. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. THE APPELLAN T CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY 2. AT THE TIME OF HEARING, LD. DR RELIED ON THE ORD ER OF AO. HOWEVER, LD. AR SUBMITTED THAT SIMILAR ISSUE ON IDENTICAL FACTS HAS BEEN DECIDED BY TRIBUNAL IN THE ASSESSEES SISTER CONCERN M/S GALLANT INFOTECH PVT LTD IN ITA NO.2963/MUM/2009 RELATING TO ASSESSMENT YEAR 2006-07 VIDE ORDER DAT ED 2.2.2010 AND THE TRIBUNAL RESTORED THE MATTER TO AO FOR FRESH ADJUDICATION I N THE LIGHT OF AMENDMENT TO MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIAT ION AND IN ACCORDANCE WITH LAW. HE FURNISHED A COPY OF SAID ORDER OF THE TRIBUNAL AND ALSO SUBMITTED THAT LD. CIT(A) FOLLOWING THE SAID ORDER OF TRIBUNAL IN HIS ORDER DELETED THE DISALLOWANCE MADE BY AO OF RS.12,69,987/-. HE FURTHER SUBMITTED THAT THE AO WHILE GIVING EFFECT TO THE SAID ORDER OF TRIBUNAL DATED 2.2.2010 (SUPRA) HAS GIVE N RELIEF TO THE ASSESSEE EXEMPTING AMOUNT ON THE PRINCIPLE OF MUTUALITY. HE SUBMITTE D THAT THE FACTS IN THE CASE OF THE ASSESSEE ARE IDENTICAL AND THEREFORE THE ORDER OF T HE LD. CIT(A) MAY BE CONFIRMED. 3. CONSIDERING THE ABOVE SUBMISSIONS OF LD. REPRES ENTATIVES OF THE PARTIES AND THE IMPUGNED ORDER OF LD. CIT(A) AS WELL AS THE ORDER OF THE TRIBUNAL DATED 2.2.2010 IN THE CASE OF M/S GALLANT INFOTECH PVT LTD, SISTER CONCER N OF ASSESSEE (SUPRA), AND IN THE ABSENCE OF ANY FACT BROUGHT ON RECORD CONTRARY THE RETO BY THE DEPARTMENT, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). THEREFORE, WE UPHOLD HIS ORDER BY REJECTING THE GROUNDS OF APPEAL TAKEN BY D EPARTMENT. 4. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7TH FEBRUARY, 2014 . 1 2 7TH FEBRUARY, 2014 * SD SD ( / RAJENDRA) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: ON THIS 7TH DAY OF FEBRUARY, 2014 . . ./ SRL , SR. PS I.T.A. NO.1494/MUM/2012 3 / COPY OF THE ORDER FORWARDED TO : 1. & / THE APPELLANT 2. ' & / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- CONCERNED 4. 6 / CIT CONCERNED 5. 7 '9 , - 9 , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) - 9 , /ITAT, MUMBAI