PRATIMA H. MEHTA, MUMBAI V. ACIT, CC- 2 [(NOW ACIT, CC-4(1)], MUMBAI

ITA 1652/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2108 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 19-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1652/MUM/2015 FOR A Y : 2010-11) PRATIMA H. MEHTA 32, MADHULI, DR. A.B. ROAD, WORLI, MUMBAI-400018 PAN : ABNPM8226G VS. ACIT, CC-23 [NOW ACIT, CC-4(1) ], 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, NEW MARINE LINES, MUMBAI-20 (APPELLANT) (RESPONDENT) APPELLANT BY SHRI DHARMESH SHAH REVENUE BY SHRI P.DANIEL (STANDING COUNSEL) DATE OF HEARING 08.11.2016 DATE OF PRONOUNCEMENT 11.11.2016 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH JUDICIAL MEMBER : 1. THE PRESENT APPEAL U/S 253 OF THE ACT IS DIRECTED B Y THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-52, (FO R SHORT THE CIT(A) MUMBAI, DATED 30.12.2014 FOR ASSESSMENT YEAR (AY) 2 010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: (I) LD. CIT(A) NOT APPRECIATED THE FACT THAT AS PER DEC ISION OF SPECIAL COURT DATED 30.04.2010 IN M.P. NO. 41/1999 BELONGS TO HARSHAD S. MEHTA AND INCOME OUGHT TO HAVE BEEN TAXED IN THE HA NDS OF HARSHAD S. MEHTA AND NOT IN THE HAND OF APPELLANT. (II) LD. CIT(A) ERRED IN NOT GRANTING DEDUCTION OF LIABI LITY AMOUNTING TO RS. 11,1391214/- TOWARD INTEREST EXPENDITURE. (III) LD. CIT(A) ERRED IN CONFIRMING LEVY OF INTEREST U/S 234A, 234B & 234C OF THE ACT. (IV) LD. CIT(A) ERRED IN NOT APPRECIATING THAT INCOME AS SESSED IN THE HAND OF THE ASSESSEE WERE SUBJECT TO THE PROVISION OF TD S AND HENCE, THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S 234B & 234C OF THE ACT. 2. WE HAVE HEARD RIVAL CONTENTION OF LD. AR OF THE PAR TIES. LD. AR OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING GROUND NO.1. GROU ND NO.3 IS AGAINST THE ASSESSEE AND GROUND NO.2 & 4 ARE COVERED IN FAVOUR OF ASSESS EE IN ASSESSEES OWN CASE FOR AY 2009-10 BY THE DECISION OF TRIBUNAL IN ITA NO. 3 50/M/2013. THE LD DR FOR ITA NO. 1652/M UM/2015 PRATIM A H. MEHTA 2 REVENUE DID NOT CONTROVERTED THE CONTENTION OF AR O F ASSESSEE. IN VIEW OF THE SUBMISSION OF LD. AR OF ASSESSEE, THE GROUND NO. 1 & 3 ARE DISMISSED. 3. WE HAVE SEEN THE ORDER OF TRIBUNAL IN ITA NO. 350/M /2013. THE GROUND IDENTICAL TO GROUND NO.2 WAS RAISED BY ASSESSEE VIDE GROUND N O.3. THEREIN THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 350/MUM/2013 MAD E THE FOLLOWING ORDER: 3. GROUND NO. 4 RELATES TO THE DISALLOWANCE OF INT EREST EXPENSE. THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE DECISION RELIED UPON BY THE LD. CIT(A) WHILE DISPOSING THIS GROUND HAS B EEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF THE LD. CIT(A). 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY DISTINGUISHING D ECISION IN FAVOUR OF THE REVENUE. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WHILE DISPOSING THE GROUND RELATING TO THE DISALLOW ANCE OF INTEREST, WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE FINDINGS GIVEN IN THE CASE OF EMINENT HOLDINGS PVT. LTD. WE FIND THAT THE TRIBUNAL IN THE CASE OF EMINENT HOLDINGS IN ITA NOS. 2139, 2140 AND 2141/MUM/2013 H AVE FOLLOWED THE DECISION OF THE TRIBUNAL GIVEN IN COMMON GROUP CASE OF HITESH S. MEHTA AT PARA 2.3 OF THE ORDER AND RESTORED THE MATTER TO TH E FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE FIND INGS OF THE CO ORDINATE BENCH, WE RESTORE THIS ISSUE TO THE FILES OF THE LD . CIT(A) FOR FRESH ADJUDICATION AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. BEFORE CLOSING THIS ISSUE, THE LD. COU NSEL FOR THE ASSESSEE POINTED OUT THAT THE LD. CIT(A) HAS HELD THAT THE I SSUE OF INTEREST EXPENDITURE IS PENDING BEFORE THE HONBLE SPECIAL C OURT. IT IS THE SAY OF THE LD. COUNSEL THAT THE PROCEEDINGS IN WHICH THE SAID ISSUE OF INTEREST WAS ISSUED BY THE CUSTODIAN HAVE BEEN ALREADY CONCLUDED WHICH FACT HAS ALREADY BEEN RECORDED BY THE LD. CIT(A) IN THE IMPUGNED ORD ER. WE, THEREFORE, DIRECT THE LD. CIT(A) TO CONSIDER THIS FACT WHILE D ECIDING THE ISSUE AFRESH. THE LD. CIT(A) MAY ALSO DIRECT FOR THE TAXING OF IN COME IN THE HANDS OF THE RECIPIENT (FAMILY MEMBERS) IN ACCORDANCE WITH THE M ETHOD OF ACCOUNTING FOLLOWED BY THEM AND AS PER THE PROVISIONS OF THE L AW. GROUND NO. 4 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 4. CONSIDERING THE DECISION OF EARLIER YEARS, WE RESTO RE THIS GROUND NO. 2 OF APPEAL TO THE FILE OF LD. CIT(A) TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH THE DIRECTION IN ITA NO. 350/MUM/2013, THUS, THIS GROUND OF APPEAL I S ALLOWED FOR STATISTICAL PURPOSE. 5. GROUND NO.4 RELATES TO THE FACT THAT LD. CIT(A) ERR ED IN NOT APPRECIATING THAT INCOME WAS SUBJECT TO THE PROVISION OF TAX DEDUCTED AT SOURCE (TDS) AND HENCE, NO INTEREST CAN BE COMPUTED U/S 234A & 234C OF THE ACT. WE HAVE SEEN THAT SIMILAR GROUNDS OF APPEAL WAS CONSIDERED IN ASSESSE ES OWN CASE FOR AY 2009-10 ON THE BASIS OF DECISION OF EARLIER YEARS AND THE T RIBUNAL HAS PASSED THE FOLLOWING ORDER: ITA NO. 1652/M UM/2015 PRATIM A H. MEHTA 3 3. THE NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTE REST U/S. 234 OF THE ACT. BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFI ED ENTITY, THAT THE PROVISIONS OF S.234A,234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLIED WITH, THAT THE ASSETS WERE ALREADY IN ATTA CHMENT OF THE CUSTODIAN APPOINTED UNDER THE PROVISIONS OF THE SPECIAL COURT S ACT, THAT THE TRIBUNAL IN THE CASE OF THE APPELLANT AND SEVERAL OTHER ENTI TIES HAD HELD THE VIEW IN FAVOUR OF THE APPELLANT THAT THE HONBLE BOMBAY HIG H COURT IN THE CASE OF DIVINE HOLDINGS PVT. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THE PROVISIONS OF SECTION SECTIONS 234A, 234B AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO THE NOTIFIED ENTIT IES ALSO, THAT THE ASSESSEE WAS IN THE PROCESS OF FILING AN APPEAL AGA INST THEE SAID ORDER BEFORE THE HON'BLE SUPREME COURT, THAT THE INCOME E ARNED IN THE YEAR UNDER CONSIDERATION WAS SUBJECTED TO PROVISIONS OF TDS,TH AT THE CHANGEABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD B E AFTER CONSIDERING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME AS SESSED. THE APPELLANT RELIES IN THIS REGARD ON THE FOLLOWING DECISIONS. H E RELIED UPON THE CASES OF MOTOROLA INC. V. DCIT [95 LID 269 (DEL.(SB)], SEDCO FORES DRILLING CO. LTD. [264 ITR 320],NGC NETWORK ASIA LLC [313 ITR 18 7] ,SUMMIT BHATACHARYA [ 300 ITR (AI) 347 (BOM)(SB)], VIJAL GO PAL JINDAL [ITA NO. 4333/DEL/2009] & EMILLO RUIZ BERDEJO [320 ITR 190 ( BOM)].DR RELIED UPON THE CASES OF DEVINE HOLDINGS PVT. LTD. 3.1.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE F IND THAT IN THE CASE OF DEVINE HOLDINGS PVT. LTD. HON'BLE BOMBAY HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 234A, 234B AND 234C WERE APPL ICABLE TO THE NOTIFIED PERSON ALSO. THEREFORE, UPHOLDING THE ORDER OF THE FAA TO THAT EXTENT, WE HOLD THAT PROVISIONS OF SECTION 234 OF THE ACT ARE APPLICABLE. AS FAR AS CALCULATION PART IS CONCERNED. WE FIND MERITS IN TH E SUBMISSION MADE BY THE ASSESSEE. THEREFORE, WE ARE RESTORING BACK THE ISSU E TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSIDERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED A ND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.5 IS ALLOWED IN PART IN FAVOUR OF THE' ASSESSEE. AS A RESULT, AP PEAL FILED BY THE ASSESSEE FOR THE A.Y 2002-03 STANDS PARTLY ALLOWED. 6. IN VIEW OF THE ABOVE OBSERVATION, WE RESTORE THIS G ROUND OF APPEAL TO THE FILE OF AO FOR FRESH ADJUDICATION CONSIDERING THE TDS ON TH E INCOME ASSESSED AND THE OBSERVATION OF THE TRIBUNAL MADE HERE-IN-ABOVE. THU S, THIS GROUND OF APPEAL IS ALSO ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH NOV, 2016. SD/- SD/- /- (B.R.BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 11/11/2016 S.K.PS ITA NO. 1652/M UM/2015 PRATIM A H. MEHTA 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/