GUPTA GEMHOUSE P.LTD, MUMBAI V. DCIT RG 1(1), MUMBAI

ITA 1857/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9625 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2003-2004
• Appeal Filed On: 16-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TUFAIL AHMED KHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI D T GARASIA, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1857/MUM/2017 ASSESSMENT YEAR : 2003-04 GUPTA GEMHOUSE P LTD, METRO HOUSE, 2 ND FLOOR, M G ROAD, MUMBAI 400 020 PAN AACG1992L VS. DCIT RANGE 1(1) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI FARROKH V IRANI RESPONDENT BY : SHRI TUFAIL AHMED KHAN DATE OF HEARING : 1 8 .09 .2017 DATE OF PRONOUNCEMENT : 22 .0 9 .2017 O R D E R PER D T GARASIA, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDERS OF CIT(A)-1, MUMBAI, DATED 08.02.2011, RELATING TO ASS ESSMENT YEARS 2003-04. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: I. FIRST GROUND APPEAL 1. THE COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF BUSINESS LOSS AMOUNTING TO RS. 2,20,24,623 2. THE CIT (A) HAS FAILED TO APPRECIATE THAT THE ABOVE MENTIONED BUSINESS LOSS IS GENUINE AND ALLOWABLE 3. THE APPELLANT PRAYS THAT THE BUSINESS LOSS OF RS. 2,20,24,623 BE ALLOWED ITA NO.1857/MUM/2017 GUPTA GEMHOUSE P LTD. 2 II. SECOND GROUND OF APPEAL 1. THE COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF TELEPHONE EXPEN SES AMOUNTING TO RS. 51,145 2. HE FAILED TO APPRECIATE THAT THE RESIDENTIAL T ELEPHONES OF THE DIRECTORS ARE USED BY THE APPELLANT FOR THE PURPOSE OF BUSINESS 3. THE APPELLANT PRAYS THAT THE TELEPHONE EXPENSE S OF RS. 51,145 BE ALLOWED. 2. THE ASSESSEE S IN THE BUSINESS OF PROCESSING AND TRADING OF GEM STONES AND DURING THE YEAR THE ASSESSEE HAS HAD A SALES TU RNOVER OF ` 1,26,30,173/- AND OTHER INCOME OF ` 92,72,242/-, WHICH INCLUDES SERVICES CHARGES OF ` 72,91,875/- RECEIVED FROM GEM HOUSE INCORPORATED, C ANADA. THE ASSESSEE HAS RETURNED BUSINESS LOSS OF ` 2,41,69,336/- DURING THE YEAR AND HAD EARNED DIVIDEND INCOME OF ` 6,69,479/-, WHICH WAS REFLECTED UNDER THE HEAD IN COME FROM OTHER SOURCES. THE ASSESSING OFFICER DISALLO WED BUSINESS LOSS OF ` 2,20,24,623/- AND TELEPHONE EXPENSES OF ` 51,145/-. ON APPEAL, THE CIT(A) DISMISSED THE GROUND PERTAINING TO BUSINESS LOSS OB SERVING AS UNDER: 4.1. IN THE COURSE OF APPELLATE PROCEEDINGS, THE A PPELLANT AR HAS FILED WRITTEN SUBMISSION VIDE LETTER DT. 11.11.2010 . HAVE TAKEN NOTE OF THE APPELLANT ARS SUBMISSION WHICH HAS BEE N SUBMITTED BY THE APPELLANT IN DETAIL. HAVING TAKEN NOTE OF THE AO'S ORDER AS WELL AS APPELLANT ARS SUBMISSION, I FIND THAT THE APPEL LANT HAS RE- ITERATED THE SAME FACT AS BEFORE THE AO AND THE APP ELLANT COULD NOT ADDUCE ANY JUSTIFICATION FOR HAVING INCURRED SO MUC H LOSS. EVEN, I FIND THAT THE APPELLANT COULD NOT REBUT THE FINDING OF THE AO. IN VIEW OF THE ABOVE, I DO NOT FIND FORCE IN THE APPEL LANTS SUBMISSION. HENCE, THE APPELLANTS THIS GROUND OF APPEAL IS DIS MISSED. ITA NO.1857/MUM/2017 GUPTA GEMHOUSE P LTD. 3 3. DURING THE COURSE OF HEARING, THE LEANED AR FAIR LY CONCEDED THAT THE CIT(A) HAS NOT APPLIED HIS MIND WHILE DECIDING THE ISSUE REGARDING LOSS. THOUGH THE ASSESSEE HAS GIVEN JUSTIFICATION FOR CLA IMING THE LOSS THE CIT(A) HAS NOT EXAMINED THE FACTS OF THE CASE AND HAS NOT PASSED A SPEAKING ORDER. THEREFORE, THE MATTER MAY BE RESTORED TO THE CIT(A) TO PASS A SPEAKING ORDER AS PER SECTION 251C OF THE ACT. THE LEARNED DR REL IED ON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE RECORD AS WELL AS THE ORDERS OF THE LOWER AUTHORITIES. WE FI ND THAT AS PER SECTION 251(1)OF THE I.T.ACT, WHILE DISPOSING OF AN APPEAL, THE CIT(A) SHALL HAVE THE POWER TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSE SSMENT. AS PER SECTION 251(1)(C), THE CIT(A) MAY PASS SUCH ORDERS IN THE A PPEAL AS HE THINKS FIT. BUT AS PER SECTION 250(6), THE CIT(A) DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATI ON, THE DECISION THEREON AND THE REASON FOR THE DECISION. WE FIND THAT IN THIS APPEAL THE CIT(A) HAS THE POWER TO DISPOSE OF THE APPEAL BUT HE HAS NOT PASSE D THE ORDER AS PER SECTION 250(6). THEREFORE, IN THE INTEREST OF JUST ICE AND FAIR PLAY, WE RESTORE THIS ISSUE BACK TO THE FILE OF THE CIT(A) WITH A DI RECTION TO PASS A SPEAKING ORDER. 5. AS GROUND NO.1 IS RESTORED TO THE CIT(A), WE RES TORE GROUND 2 ALSO TO HIS FILE TO PASS AN ORDER AS PER RULES. ITA NO.1857/MUM/2017 GUPTA GEMHOUSE P LTD. 4 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF SEPTEMBER, 2017. SD/- SD/- (RAJESH KUMAR ) (D T GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 22 ND SEPTEMBER, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, G BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI