M/s Travel Inn (India) Pvt. Ltd., Srinagar V. THE Joint Commissioner of Income Tax, Srinagar

ITA 152/ASR/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8810 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 16-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 142(1); 143(1); 201; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NO.152(ASR)/2015 ASSESSMENT YEAR: 2010-11 M/S. TRAVEL INN. (INDIA) PVT. LTD. KALRA COTTAGE, MIR LANE, SHIVPORA, SRINAGAR, J&K. PAN:AAACT6570B VS. JT. CIT, RANGE III, SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SATISH BANSAL (CA) RESPONDENT BY: SH. RAHUL DHAWAN (DR) DATE OF HEARING: 18.10.2016 DATE OF PRONO UNCEMENT: 16.01.2017 ORDER PER N. K. CHOUDHRY (JM): THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-JAMMU, DATED 28.01.2015 FOR ASST. YEAR:2010-11 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. (I) THAT THE LD. CIT(A) HAS WRONGLY DECIDED THE AP PEAL EX-PARTY BY REJECTING THE ASSESSEES APPLICATION FOR ADJOURNMEN T ON THE SAME ISSUES WHICH WERE PENDING BEFORE THIS HONBLE BENCH IN ASS ESSEES OWN CASE IN PREVIOUS YEAR. NOT PRESSED (II) THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE INCOME FROM LONG TERM CAPITAL GAIN (DEBT FUND & EQUITY FUND) IN RESPECT O F INVESTMENT MADE DURING FINANCIAL YEAR 2008-09 & 2009-10, ONLY OUT O F SURPLUS FUND ACCRUED FROM TRAVELING BUSINESS, AS BUSINESS INCOME AGAINST THE LONG TERM CAPITAL GAIN SHOWN BY AN ASSESSEE. (III) THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE, BEING PART OF TOTAL INCOME, AS BUSINESS INCOME AND WRONGLY CONFIRMED BY ADDITION OF BUSINESS INCO ME AGAIN IN THE TOTAL INCOME DECLARED BY THE ASSESSEE. (IV) THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DISALLOWANCE OF RS.1,05,056/- UNDER THE HEAD TRAVELING EXPENSES. (V) THAT THE ORDER IS BAD IN LAW ON FACTS. ITA NO. 152(ASR)/2015 ASST. YEAR: 201 1-12 2 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSESSMENT ORD ER ARE THAT THE ASSESSEE COMPANY FILED ITS INCOME TAX RETURN, DECL ARING THE NET INCOME OF RS.1,18,85,302/- ON 30.09.2010 WHICH WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961. THE CASE WAS SELECT ED FOR SCRUTINY THROUGH CASS AND NOTICE U/S 143(2) OF THE I.T. ACT, 1961 WAS ISSUED ON 15.09.2011, WHICH WAS SERVED ON ASSESSEE THROUGH SPEED POST DATED 15.09.2011 AND THROUGH NOTICE SERVER ON 20 .09.2011. AGAIN VIDE NOTICE U/S 142(1), THE ASSESSEE WAS ASKED TO FUR NISH COPY OF E-RETURN FILED ALONG WITH COPY OF AUDIT REPORT, B ALANCE SHEET AND P&L ACCOUNT WITH RELEVANT ANNEXURE. THE ASSESSEE FURNISHED THE SE DOCUMENTS AND CONSIDERING THESE DOCUMENTS, A QUESTIONNAIRE WAS ISSUED ALONG WITH NOTICE U/S 142(1) OF THE INCOME-TAX ACT , 1961. FURTHER, THE CASE WAS TAKEN UP WITH IT OFFICE AS PER GUI DE LINES ISSUED BY THE CBDT AND FRESH NOTICE UNDER SECTION 143(2) OF TH E INCOME-TAX ACT, 1961 WAS ISSUED ON 31.01.2013 ON ASSUMPTION OF JURISD ICTION BY IT OFFICE AND SUBSEQUENTLY FOLLOWED BY NOTICE UNDER SECTI ON 142(1) OF THE INCOME-TAX ACT, 1961 AND QUESTIONNAIRE FOR FURNISHI NG OF VARIOUS DETAILS AND PRODUCTION OF BOOKS OF ACCOUNTS AND VOUCHERS FO R VERIFICATION. IN RESPONSE TO NOTICES ISSUED SHRI GAGAN DEE P GABA, CHARTERED ACCOUNTANT AND AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED ALONG WITH SHRI RAVINDER SINGH KALRA, MANA GING DIRECTOR OF THE COMPANY APPEARED. REQUISITIONED DETAILS WERE FURN ISHED AND EXAMINED. BOOKS OF ACCOUNTS AND VOUCHERS WERE ALSO FURNISHE D AND CHECKED ON TEST CHECK BASIS. CASE WAS DISCUSSED WITH THE AUTHORI ZED REPRESENTATIVES OF THE COMPANY WHO STATED THAT THE ASSESSE E COMPANY DERIVES INCOME FROM THE BUSINESS OF TOUR OPERATOR S. THE ASSESSEE HAS DECLARED INCOME FROM THE CAPITAL GAIN ON SALE OF SHARES AS WELL AS MUTUAL FUNDS, EQUITY FUNDS AND D EBT FUNDS ETC. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ITA NO. 152(ASR)/2015 ASST. YEAR: 201 1-12 3 ASKED TO FURNISH THE DETAIL & DATE OF PURCHASE AND SALE OF SUCH SHARES, MUTUAL FUNDS ETC. AND THE ASSESSEE WAS ALSO ASKED TO FURNISH THE NATURE OF INVESTMENT. THE ASSESSEE REPLIED VI DE REPLY DATED 27.02.2013 . THE REPLY OF THE ASSESSEE IS REPRODUCED AS UNDER:- 'TRAVEL INN (INDIA) PVT. LTD. IS A TOUR OPERATOR CO MPANY. THE MAIN OBJECTIVE OF THE COMPANY IS TO EARN INCOME FRO M TOUR OPERATION. THE COMPANY HAS INVESTED ITS SURPLUS FUNDS MAXIMUM IN THE FORM OF MUTUAL FUNDS (DEBT & EQUITY FUNDS) AND VERY MINIMAL AMOUNT IN SHARES. DURING THE FINANCIAL YEAR UNDER CONSIDERATI ON, THE ASSESSEE COMPANY HAS EARNED CAPITAL ON REDEMPTION OF MUTUAL FUNDS. THE BREAKUP OF CAPITAL GAIN BOTH LONG TERM AND SHOR T TERM SHOWN IN THE PROFIT & LOSS A/C IS AS PER FOLLOWING DETAILS:- (I) LONG TERM CAPITAL GAIN/(LOSS) ON DEBT FUND INVESTME NT RS.1,28,06,530/- (II) LONG TERM CAPITAL GAIN/(LOSS) ON EQUITY FUND INVEST MENT RS.(12,35,473/-) (III) SHORT TERM CAPITAL GAIN ON DEBT FUND INVESTMENT RS.2,81,084/- (IV) SHORT TERM CAPITAL GAIN ON EQUITY FUND INVESTMENT RS.42,433/- (V) TOTAL RS.1,18,94,574/- [**********] IN VIEW OF THE ABOVE DISCUSSION, PROFIT OF RS.29,01,547 /-IS TREATED AS INCOME OF THE ASSESSEE FROM BUSINESS AND PROFESSIO N AND THE SAME IS ADDED TO THE INCOME DECLARED BY THE ASSESSE E. ADDITION OF RS.29,01,547/- WAS MADE TO THE INCOME OF T HE ASSESSEE. THE ASSESSING OFFICER SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND FOR THI S DEFAULT PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME -TAX ACT,1961 WERE ALSO INITIATED. TRAVELING EXPENSES : THE ASSESSEE HAS DEBITED AN EXPENDITURE OF RS.4,16,835/- TO THE PROFIT & LOSS ACCOUN T UNDER THE HEAD TRAVELING EXPENSES. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THESE EXPENSES AND THESE WERE FURNISHED. THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE VOUCHERS FOR VERIFICATION. DURING ITA NO. 152(ASR)/2015 ASST. YEAR: 201 1-12 4 VERIFICATION, IT IS SEEN THAT THE ASSESSEE HAS DEBITED AN EXPENDITURE OF RS.41,563/- TO AUKLAND/WELLINGTON/MEL BOURNE, RS.42,900/- TO AUCKLAND AND BANGKOK, RS.20,593/- TO AU STRALIA. THESE EXPENSES ARE NOT RELATED TO THE BUSINESS AND PROFESSI ON OF THE ASSESSEES BUSINESS AND PROFESSION OF THE ASSESSEE'S BUSINESS AS THE ASSESSEE HAS NO OFFICE OR OTHER BUSINESS ACTIVITIES AT THESE PLACES. THE TOUR MAY BE FOR MONEY MA KING ETC. IN THESE CIRCUMSTANCES EXPENDITURE TO THE TUNE OF RS.1,05,056/- (RS.41,563/- + RS.42,900/- + RS.20,593/-) CANNOT BE TREATED AS EXPENDITURE RELATED TO THE BUSINE SS ACTIVITIES OF THE ASSESSEE AND CANNOT BE ALLOWED. ADDITION OF RS.1,05,056/- IS MADE TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER FINALLY CONCLUDED AND COMPUTED THE INCOME OF ASSESSEE AS UNDER: INCOME AS DECLARED BY THE ASSESSEE RS.1,18,85,300/- ADDITION AS DISCUSSED: 1) ADDITION AS DISCUSSED VIDE PARA '1' ABOVE RS.29,01,547/- 2) ADDITION AS DISCUSSED VIDE PARA '2' ABOVE RS.1,05,056/- NET TAXABLE INCOME RS.1,48,91,903/- ROUNDED OFF RS.1,48,91,900/- 5. AT THE OUTSET, THE LD. AR SUBMITTED THAT HE DOES NOT WANT TO PRESS GROUND NO.1, HENCE, GROUND NO.1 DOES NOT NEED ADJ UDICATION. WITH REGARD TO GROUND NO.2, THE LD. AR ARGUED THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE INCOME FROM LONG TERM CAPITAL GAIN(DEBT FUND & EQUITY FUND) IN RESPECT OF INVESTMENT MADE DURING FINANCIAL YEAR 2008-09 AND 2009-10 ONLY OUT OF SURPLU S FUND ACCRUED FROM TRAVELING BUSINESS, AS BUSINESS INCOME AGAINST THE LONG TERMS CAPITAL GAIN SHOWN BY THE ASSESSEE. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE IS RUNNING A TRAVEL BUSINESS AND IN 2007-08, THE CO NTENTION ITA NO. 152(ASR)/2015 ASST. YEAR: 201 1-12 5 OF THE ASSESSEE WAS ACCEPTED BY THE DEPARTMENT BUT THE ISSUE S HAVE BEEN CROPPED UP IN 2001 ONLY. EVEN OTHERWISE THERE IS A JUDGMENT IN FAVOUR OF THE ASSESSEE IN ITS OWN CASE AS DECIDED BY AMRITSAR BENCH IN ITA NO.174(ASR)/2013 FOR ASST. YEAR 2009-10. IN WHICH T HE HON'BLE BENCH TREATED THE SIMILAR INCOME UNDER THE HEAD OF CAPI TAL GAINS. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THE ASSESSEE COMPANY HAD NOT BORROWED ANY FUND IN THE PAST NOR IN THE CURRENT YEAR AND THE SECURITIES HAVE BEEN SHOWN AS INVESTMENT A ND NOT AS STOCK-IN-TRADE IN THE AUDIT BALANCE SHEET OF THE COM PANY FOR THIS YEAR ENDING. FURTHER, THE LD. AR PLACED HIS RELIANCE O N CBDT CIRCULAR NO.6/2016, DATED 29 TH FEB.2016, WHICH IS CLARIFICATORY IN NATURE AND ALSO SUBSEQUENT CLARIFICATION DATED 2 ND MAY, 2016 TO THE EFFECT THAT IN RESPECT OF LISTED SHARES AND SECURITIES HELD FOR THE PERIOD OF MORE THAN 12 MONTHS IMMEDIATELY PRECEDING THE DATE ON ITS TRANSFE R, IF THE ASSESSEE DESIRES TO TREAT THE INCOME ARISING OUT FROM THE T RANSFER THEREOF AS CAPITAL GAIN, THE SAME SHALL NOT BE PUT T O DISPUTE BY THE ASSESSING OFFICER. FURTHER BY CLARIFICATORY CBDT CIRCULAR NO.6/2016 DATED 29 TH FEB.2016 WITH A VIEW TO REDUCE LITIGATION AND TO MA INTAIN CONSISTENCY IN APPROACH OF ASSESSMENTS, IT WAS INSTRUCTED THAT INCOME ARISING FROM TRANSFER OF LIST SHARES AND SECURITIES, WHICH ARE HELD FOR MORE THAN 12 MONTHS WOULD BE TAXED UNDER THE HEAD C APITAL GAIN UNLESS THE TAX-PAYER ITSELF TREATS THESE AS ITS STOCK-IN-TR ADE AND TRANSFER THEREOF AS ITS BUSINESS INCOME. 6. ON THE CONTRARY, THE LD. DR SUBMITTED THAT LD. CIT(A ) HAS GIVEN CLEAR FINDING AND EVEN OTHERWISE THE CASE CITED BY THE A R IS ENTIRELY DIFFERENT AND NOT APPLICABLE TO THE INSTANT CASE. 7. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERED THE RELEVANT DOCUMENTS PLACED ON RECORD AND RIVAL SUBMISSIONS OF THE PARTIES. AT THE OUTSET, IT APPEARS FRO M THE ORDER ITA NO. 152(ASR)/2015 ASST. YEAR: 201 1-12 6 PASSED BY THE LD. CIT(A) THAT THE APPELLANT WAS GIVEN ENOUGH OPPORTUNITIES VIDE NOTICES DATED 7 TH , APRIL, 2014, 26 TH MAY,2014, 18 TH JULY, 2014, 18 TH JANUARY, 2015 ETC. TO EXPLAIN HIS CASE, HOWEVER, THE APPELLANT DID NOT RESPOND AND PARTICIPATE IN THE SAID PROCEEDINGS AND IN THE CONSTRAINED CIRCUMSTANCES, THE LD. CIT(A) DECIDED TH E CASE ON MERITS BASED ON THE MATERIAL AVAILABLE BEFORE HIM AND WITH REGARD TO THE GROUND NO.4 ALSO, AS THE APPELLANT HAS NOT MADE A NY SUBMISSIONS BEFORE LD. CIT(A) WHICH COULD CONTROVERT THE FINDINGS O F THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, THEREFORE, THE LD. CIT (A) DID NOT FIND ANY REASON TO INTERFERE WITH THE ADDITION. FROM THE AFORESAID OBSERVATIONS, IT IS CLEAR THAT DUE TO NON-APPEARANCE A ND/OR NON- COOPERATION OF THE ASSESSEE, THE LD. CIT(A) HAS PASSED EX-PARTE ORDER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. BEFORE THIS BENCH, THE LD. A.R OF THE ASSESSEE ALSO FILED THE PAPER BOOKS WITH A CERT IFICATION AS UNDER: THIS IS CERTIFIED THAT ALL THE ABOVE DOCUMENTS MEN TIONED ARE RELEVANT FOR THE YEARS IN WHICH ORDER U/S 250(6) HAS BEEN PASSED BY THE LD. CIT(A) IT IS IMPORTANT TO OBSERVE THAT THE ASSESSEE HAS NOT CERTI FIED THAT THE DOCUMENTS PLACED BEFORE THIS BENCH HAS ALSO BEEN MADE AVAILABLE WITH THE AUTHORITIES BELOW FOR CONSIDERATION . IN THE CUMULATIVE EFFECT, WE ARE OF THE CONSIDERED OPINION THA T IN THE INTEREST OF JUSTICE, THE ASSESSEE SHALL BE GIVEN OPPORTUNITY TO PRO DUCED ALL THE RELEVANT DOCUMENTS AND APPRISE THE LD. CIT(A) OF THE ORDER PASSED BY THE ITAT IN THE CASE OF THE ASSESSEE ITSELF AS WELL AS NOTI FICATIONS OF THE CBDT CIRCULAR. WE HEREBY REMAND THE CASE TO THE FILE O F LD. CIT(A) TO DECIDE AFRESH WHILE GIVING PROPER OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE AND ALSO TO CONSIDER THE PREVIOUS RELEVANT JUDGMEN TS PASSED BY THE ITAT IN THE CASE OF ASSESSEE ITSELF AND ALSO THE NO TIFICATION/ CIRCULAR OF CBDT. ITA NO. 152(ASR)/2015 ASST. YEAR: 201 1-12 7 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16.0 1. 2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOU DHRY) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED:16.01.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER