ACIT CEN CUR 40, MUMBAI V. TRIUMPH INTERNATIONAL FINANCE INDIA LTD, MUMBAI

ITA 182/MUM/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2125 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Business income; Bad and doubtful debts

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BE NCH, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER / I .T.A. NO.182/MUM/2012 ( / ASSESSMENT YEAR:2007-08 THE ACIT, CENT. CIR. 40, AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. TRIUMPH INTERNATIONAL FINANCE INDIA LTD., OXFORD CENTRE, 10, SHROFF LANE, COLABA CAUSEWAY, COLABA, MUMBAI-400 005 ./ ./ PAN/GIR NO. :AAACE 0308A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: DR. P. DANIEL / RESPONDENT BY: SHRI RAJIV KHANDELWAL SHRI NEEL KANTH KHANDELWAL / DATE OF HEARING : 29.09.2015 / DATE OF PRONOUNCEMENT :07.10.2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-36, MUMBAI DATED 10.10.2011 PERTAINING T O ASSESSMENT YEAR 2007-08. 2. THE GRIEVANCES OF THE REVENUE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING SHARE TRAD ING LOSS ITA. NO.182/M/2012 2 OF RS. 2,37,672/- DUE TO VALUATION OF SHARES EVEN T HOUGH THERE WAS NO BUSINESS IN EXISTENCE DURING THE YEAR AS THE ASSESSEE BEING INVOLVED IN SECURITIES SCAM WAS DEBA RRED BY SEBI TO CARRY OUT SHARE TRADING ACTIVITIES VIDE ORD ER DATED 4.4.2001. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING BUSINESS E XPENSES OF RS. 9,02,06,224/- EVEN THOUGH THERE WAS NO BUSIN ESS IN EXISTENCE DURING THE YEAR AS THE ASSESSEE WAS DEBAR RED BY SEBI TO CARRY OUT BUSINESS ACTIVITIES VIDE ORDER DA TED 4.4.2001. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING INTEREST OF RS. 1,23,96,113/- FROM DEPOSITS AND INTEREST OF RS. 12, 58,117/- FROM FIXED DEPOSITS AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES WITHOUT CONSIDERING THE FACT TH AT THERE WAS NO BUSINESS IN EXISTENCE DURING THE YEAR AND T HE ASSESSEE HAD ITSELF SHOWN THEM AS OTHER INCOME. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE ISSUE RAISED VIDE GROUND NO. 1 & 2 ABOVE HAVE B EEN CONSIDERED BY THE TRIBUNAL IN THE CASES OF KNP SECURITIES (P) LT D IN ITA NO. 5245/M/2011, VN PAREKH SECURITIES LTD. IN ITA NO. 5243/M/2011 AND CLASSIC SHARES & STOCK BROKING PVT. LTD., IN IT A NO. 5244/M/2011. IT IS THE SAY OF THE LD. COUNSEL THAT ON IDENTICAL SET OF FACTS IN ALL THESE APPEALS, THE TRIBUNAL HAS DECIDE D SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. T HE LD. COUNSEL FURTHER STATED THAT IN SO FAR AS GROUND NO. 3 IS CO NCERNED, IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE CASE OF CLASSIC SHARES & STOCK BROKING PVT. LTD (SUPRA) AND IT HAS BEEN DECI DED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ITA. NO.182/M/2012 3 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BR ING ANY DECISION ON SIMILAR SET OF FACTS IN FAVOUR OF THE R EVENUE. 5. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. THE GRIEVANCE OF THE REVENUE AND THE DECISION OF THE TR IBUNAL REFERRED TO HEREINABOVE IN THE CASE OF KNP SECURITIES (P) LTD. (SUPRA), THE TRIBUNAL HAS HELD AS UNDER: THE REVENUE IS AGGRIEVED ON THE ORDERS OF THE CIT(A ). ON PERUSAL OF THE FACTS OF THE CASE AND AFTER HEARING THE LEARNED COUNSEL, WE ARE OF THE OPINION THAT THERE IS NO NEE D TO DISTURB THE FINDINGS OF THE CIT(A). EVEN THOUGH THE LEARNED COU NSEL FOR REVENUE VEHEMENTLY ARGUED THAT ASSESSEE IS NOT IN T HE BUSINESS SO AS TO ALLOW THE EXPENDITURE, WE ARE OF THE OPINION THAT THERE IS NO CLOSURE OF THE BUSINESS AND IT IS ONLY TEMPORARY SU SPENSION IN THE ASSESSMENT YEAR UNDER CONSIDERATION. WE WERE ALSO I NFORMED THAT THE BUSINESS WAS ULTIMATELY CLOSED AFTER SEBI ORDER S WERE UPHELD BY THE JUDICIAL AUTHORITIES. AS FAR AS IMPUGNED ASS ESSMENT IS CONCERNED, IT IS TO BE CONSIDERED THAT THERE IS ONL Y A SUSPENSION OF THE BUSINESS. THIS ISSUE IS UPHELD BY THE COORDINAT E BENCH IN THE ORDERS REFERRED (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE REVENUE GROUND NO.1 AND UPHELD THE ORDE R OF THE CIT (A). WITH REFERENCE TO THE GROUND NOS.2 & 3 RAISED, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE CIT (A) AS THE AMOUNT WRITTEN BACK OUT OF THE BAD DEBTS AND MISCEL LANEOUS INCOME ARE TO BE CONSIDERED AS BUSINESS INCOME UNDE R SECTION 41(1). JUST BECAUSE THEY ARE SHOWN AS OTHER INCOME IN THE COMPANIES ACCOUNT THESE CANNOT BECOME INCOME FROM OTHER SOURCES, WHICH IS ALTOGETHER A DIFFERENT HEAD UNDE R THE INCOME TAX ACT. SINCE GROUND NO.1 IS DISMISSED, THE GROUND NO.2 HAS NO MERIT. WITH REFERENCE TO THE GRATUITY ALSO, THERE I S NO MERIT IN THE REVENUE GROUND AS THERE IS A CLEAR FINDING BY THE C IT (A) THAT THE GRATUITY AMOUNT WAS NOT ALLOWED AS EXPENDITURE IN T HE EARLIER YEARS, THE QUESTION OF TAXING THE AMOUNT WHEN THE S AME WAS WRITTEN BACK IN THE BOOKS OF ACCOUNT DOES NOT ARISE AS PROV ISIONS OF SECTION 41(1) ARE NOT ITA NO.5245 OF 2011 KNP SECURITIES LT D MUMBAI F- BENCH PAGE 4 OF 4 APPLICABLE TO THE FACTS OF THE CA SE. IN VIEW OF THIS GROUND NOS. 2 & 3 ARE ALSO DISMISSED. ITA. NO.182/M/2012 4 6. THE SAME VIEW WAS FOLLOWED BY THE TRIBUNAL IN TH E CASE OF VN PAREKH SECURITIES LTD (SUPRA). 7. IN SO FAR AS IN GROUND NO. 3 IS CONCERNED, AN ID ENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE CASE OF CLASSIC SHARES & STOCK BROKING PVT. LTD (SUPRA). THE RELEVANT PART OF THE DECISION OF THE TRIBUNAL READS AS UNDER: WE FIND SMALLER SITUATION HAD BEEN CONSIDERED BY T HE TRIBUNAL IN CASE OF KNP SECURITIES PVT. LTD. (SUPRA ) ANOTHER CONCERN OF KETAN PAREKH GROUP IN WHICH SIMILAR CLAI M WAS MADE BY THE ASSESSEE THAT BUSINESS WAS IN EXISTENCE AND NOT CLOSED. THE TRIBUNAL FOLLOWING THE JUDGMENT OF HON BLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS VELLORE ELECT RICAL CORPORATION LTD. (243 ITR 529) HELD THAT THE BUSINE SS HAD NOT CLOSED AND THE CLAIM OF EXPENDITURE HAD TO BE A LLOWED. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRI BUNAL WE HOLD THAT THE BUSINESS OF THE ASSESSEE HAD NOT BEEN CLOSED IN THE RELEVANT YEAR AND THEREFORE FDRS HAD TO BE TREA TED AS PLEDGED IN CONNECTION WITH THE BUSINESS WHICH WAS I N EXISTENCE AND THEREFORE THE INTEREST INCOME HAD TO BE TREATED AS INCIDENTAL BUSINESS INCOME. WE ACCORDINGLY SET A SIDE THE ORDER OF CIT(A) AND ALLOWED THE CLAIM OF THE ASSESS EE. RESPECTFULLY FOLLOWING THE DECISIONS OF THE TRIBUN AL, WE DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER, 2015 SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) $% ' /JUDICIAL MEMBER ' / ACCOUNTANT MEMBER MUMBAI; (' DATED 7 TH OCTOBER, 2015 . % . ./ RJ , SR. PS ITA. NO.182/M/2012 5 !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+, %%-. , -.! , / DR, ITAT, MUMBAI 6. ,/0 / GUARD FILE. / BY ORDER, * % //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI