PRATIMA H. MEHTA, MUMBAI V. DCIT CEN CIR 23, MUMBAI

ITA 1911/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8579 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 01-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Opportunity of being heard
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 1911/MUM/2015 (ASSESSMENT YEAR: 2004-05) SMT. PRATIMA H. MEHTA VS. DCIT, CENTRAL CIRCLE - 23 32, MADHULI, 3 RD FLOOR A.B. ROAD, WORLI MUMBAI 400018 (NOW ACIT, CC - 4(1)) 4 TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN ABNPM8226G APPELLANT RESPONDENT APPELLANT BY: SHRI ASHWIN KASHINATH RESPONDENT BY: SHRI DR. P. DANIEL DATE OF HEARING: 02.02.2017 DATE OF PRONOUNCEMENT: 08.02.2017 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- 52, MUMBAI DATED 15.01.2015 FOR A.Y. 2004-05, RAISI NG THE FOLLOWING GROUNDS: - 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE APPRECIATED THAT AS PER THE DECISION OF THE HON'BLE SPECIAL COURT DATED 30,40.2010 IN MP NO, 41 OF 1999, THE ASSETS U NDER CONSIDERATION AND THE CONSEQUENTIAL INCOME BELONGS TO SHRI HARSHAD S. MEHTA AND HENCE THE INCOME ASSESSED BY T HE ASSESSING OFFICER OUGHT TO HAVE BEEN TAXED IN THE H ANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE APPELL ANT. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN C:OMING THE DISALLOWANCE OF INTERES T EXPENSES OF ` 17,67,336/-. 3. THE .LD. COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE ON ACCO UNT OF ADVERTISEMENT/BUSINESS PROMOTION EXPENSES OF ` 17,685/-. 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE LEVY OF INTEREST U/S . 234A, 234B AND 234C OF THE ACT. ITA NO. 1911/MUM/2015 SMT. PRATIMA H. MEHTA 2 5. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACT IN NOT APPRECIATING THAT THE INCOME ASSESSE D IN THE HANDS OF THE APPELLANT WAS SUBJECTED TO THE PROVISIONS OF TDS AND HENCE ON THE SAID AMOUNT TAX, NO INTEREST CAN BE LEVIED U /S. 234B ARID 234C OF THE ACT. 6. THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD TO, ALTER, AMEND AND/OR DELETE ANY OF THE FOREGOING GROUNDS OF APPEA L. 2. GROUNDS 1 & 3 2.1 AT THE OUTSET OF THE HEARING, THE LEARNED A.R. OF THE ASSESSEE SUBMITTED THAT GROUNDS OF APPEAL RAISED AT 1 AND 3 (SUPRA) ARE NOT BEING PRESSED BY THE ASSESSEE IN THIS APPEAL. SINCE THESE S GROUNDS ARE NOT PRESSED, THE SAME ARE RENDERED INFRUCTUOUS AND ACCO RDINGLY DISMISSED. 3. GROUND NO. 2 DISALLOWANCE OF INTEREST EXPENSES ` `` ` 17,67,336/- 3.1 BOTH COUNSELS BROUGHT TO THE NOTICE OF THE BENC H THAT THE ISSUE RAISED ON DISALLOWANCE OF INTEREST EXPENSES WAS COV ERED BY THE DECISION OF A COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR A.Y. 1996-97 IN ITA NO. 6632/MUM/2013 DATED 18.05.2016. WE FIND ON PERUSAL THEREOF, THAT THE COORDINATE BENCH IN THE A FORESAID ORDER FOR A.Y. 1996-97 (SUPRA) HAD FOLLOWED THE DECISION OF ANOTHE R COORDINATE BENCH IN THE ASSESSEES OWN CASE IN ITA NO. 350/MUM/2013 DAT ED 11.05.2015 WHEREIN IT WAS HELD AS UNDER: - 3. GROUND NO. 4 RELATES TO THE DISALLOWANCE OF INT EREST EXPENSE. THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOT ICE THAT THE DECISION RELIED UPON BY THE LD. CIT(A) WHILE DISPOS ING THIS GROUND HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF T HE LD. CIT(A). 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 5 . WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. WHILE DISPOSING THE GROUND RELATING TO THE DISALLOWANCE O F 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 TRIB UNAL IN THE CASE OF EMINENT HOLDINGS IN ITA NOS. 2139, 2140 AND 2141 /MUM/ 2013 HAVE FOLLOWED THE DECISION OF THE TRIBUNAL GIV EN IN COMMON GROUP CASE OF HITESH S. MEHTA AT PARA 2.3 OF THE OR DER AND RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A) F OR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE FINDINGS O F 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. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE LD. CIT(A) HAS HELD T HAT THE ISSUE OF ITA NO. 1911/MUM/2015 SMT. PRATIMA H. MEHTA 3 INTEREST EXPENDITURE IS PENDING BEFORE THE HONBLE SPECIAL COURT. 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 RECOR DED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. WE, THEREFORE, DI RECT THE LD. CIT(A) TO CONSIDER THIS FACT WHILE DECIDING THE ISS UE AFRESH. THE LD. CIT(A) MAY ALSO DIRECT FOR THE TAXING OF INCOME IN THE HANDS OF THE RECIPIENT (FAMILY MEMBERS) IN ACCORDANCE WITH T HE METHOD OF ACCOUNTING FOLLOWED BY THEM AND AS PER THE PROVISIO NS OF THE LAW. GROUND NO. 4 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 3. THE LEARNED D.R. DID NOT CONTROVERT THE CONTENTI ON OF THE LEARNED A.R. FOR THE ASSESSEE. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). A CCORDINGLY WE RESTORE THE ISSUE BACK TO THE FILE OF THE AO FOR FRESH ADJU DICATION AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 3.2 FOLLOWING THE AFORESAID DECISION OF THE COORDIN ATE BENCH OF THE TRIBUNAL IN THE ASSESSEES ON CASE FOR A.Y. 1996-97 IN ITA NO. 6632/MUM/2013 DATED 18.05.2016, WE RESTORE THIS ISS UE BACK TO THE FILE OF THE LEARNED CIT(A) FOR FRESH CONSIDERATION AND A DJUDICATION AFTER AFFORDING BOTH THE ASSESSEE AND ASSESSING OFFICER ( AO) REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER. WE HOLD A ND DIRECT ACCORDINGLY. CONSEQUENTLY GROUND NO. 2 OF ASSESSEES APPEAL IS T REATED AS ALLOWED FOR STATISTICAL PURPOSES. 4. GROUND NO. 4 & 5 CHARGE OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT 4.1 THESE GROUNDS DEAL WITH THE ISSUE OF THE CHARGI NG OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT FOR A.Y. 2004-05. COUNSELS FOR BOTH REVENUE AND THE ASSESSEE AGREED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 1996-97 WHEREIN IT FOL LOWED THE EARLIER DECISION OF THE COORDINATE BENCH FOR A.Y. 2009-10 I N ITA NO. 350/MUM/2013 DATED 11.05.2013, WHEREIN IT WAS HELD AS UNDER AT PARA 4 THEREOF: - 4.GROUND NO.3 AND FOUR DEAL WITH LEVY OF INTEREST U /S. 23B AND 234C OF THE ACT. THE REPRESENTATIVES OF BOTH THE SIDES A GREED THAT THE ISSUE WAS DECIDED IN ASSESSEES OWN CASE, BY THE TRIBUNAL , WHILE ADJUDICATING THE APPEAL FOR THE AY.2009-10(ITA/350/ MUM/2013 DTD. 11. 05.2015).WE WOULD LIKE TO REPRODUCE THE RELEVAN T PORTION OF THE ORDER AND SAME READS AS UNDER: ITA NO. 1911/MUM/2015 SMT. PRATIMA H. MEHTA 4 THE NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTERES T U/S.234 OF THE ACT. BEFORE US, THE AR STATED THAT THE ASSESSEE WAS A NOTIFIED ENTITY, THUS THE PROVISIONS OF S.234A,234B AND 234C OF THE ACT DEEMED TO HAVE COMPLIED WITH, THAT THE ASSE TS WERE ALREADY IN ATTACHMENT OF THE CUSTODIAN APPOINTED UN DER THE PROVISIONS OF SPECIAL COURTS ACT, THAT THE TRIBUNAL IN THE CASE OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD T HE VIEW IN FAVOUR OF THE APPELLANT THAT THE HONBLE BOMBAY HIG H COURT IN THE CASE OF DIVINE HOLDINGS PVT. LTD. AND CASCADE H OLDINGS PVT. LTD. HAD HELD THE PROVISIONS OF SECTION 234A, 234B AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO THE N OTIFIED ENTITIES ALSO, THAT THE ASSESSEE WAS IN THE PROCESS OF FILING AN APPEAL AGAINST THEE SAID ORDER BEFORE THE HONBLE S UPREME COURT, THAT THE INCOME EARNED IN THE YEAR UNDER CON SIDERATION WAS SUBJECTED TO PROVISIONS OF TDS, THAT THE CHANGE ABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD BE AF TER CONSIDERING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED. THE APPELLANT RELIES IN THIS REGARD ON TH E FOLLOWING DECISIONS. HE RELIED UPON THE CASES OF MOTOROLA INC . V. DCIT [95 ITD 269 (DEL. (SB)], SEDCO FORES DRILLING CO. LTD. [264 ITR 320], NGC NETWORK ASIA LLC [313 ITR 187], SUMMIT BHATACHA RYS [300 ITR (AI) 347 (BOM) (SB), VIJAL GOPAL JINDAL [ITA NO . 4333/DEL/2009 & EMILLO RUIZ BERDEJO [320 ITR 190 (B OM). 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 FIND THAT IN THE FALSE OF DE VINE HOLDINGS PVT. LTD. HONBLE BOMBAY HIGH COURT HAS HELD THAT P ROVISIONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO. THEREFORE, UPHOLDING THE ORDER OF THE FAA TO THAT EXTENT, WE HOLD THAT PROVISIONS OF SECTION 234 OF T HE ACT ARE APPLICABLE. AS FAR AS CALCULATION PART IS CONCERNED , WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE. THER EFORE, WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSI DERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASS ESSED AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE FOR THE A .Y. 2002-03 STANDS PARTLY ALLOWED. RESPECTFULLY, FOLLOWING THE ABOVE WE DIRECT THE AO TO HEAR THE ASSESSEE AND DECIDE THE ISSUE AFRESH. 4.2 FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR A.Y. 1996-97 IN ITA NO. 6632/MUM/2013 DATE D 18.05.2016 WE HOLD THAT THE PROVISIONS OF SECTION 234 OF THE ACT ARE APPLICABLE TO THE CASE ON HAND AND RESTORE THIS ISSUE BACK TO THE FILE OF THE AO FOR DECIDING THE ITA NO. 1911/MUM/2015 SMT. PRATIMA H. MEHTA 5 ISSUE AFRESH, IN ACCORDANCE WITH THE FINDINGS RENDE RED BY THE COORDINATE BENCH (EXTRACTED SUPRA AT PARA 4.1) AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 5. GROUND NO. 6 BEING GENERAL IN NATURE, NO ADJUDICATION IS CALL ED FOR THEREON. WE, THEREFORE, DISMISS THIS GROUND AS INFR UCTUOUS. 6. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2004- 05 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH FEBRUARY, 2017. SD/ - SD/ - (RAM LAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 8 TH FEBRUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -52, MUMBAI 4. THE CIT, CENTRAL - II, MUMBAI 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.