Appeal details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 9348 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 1 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-02-2017
Appeal Filed By
Assessee
Bench Allotted
B
Next Hearing Date
18-10-2016
Assessment Year
2009-2010
Appeal Filed On
28-12-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAI NI, AM ./ ITA NO.1922/KOL/2012 ( / ASSESSMENT YEAR:2009-2010) SHRI SHIV KISHAN MOHTA(DECD.) REPRESENTED BY L/H SHRI SUSHIL MOHTA, 9A, ALIPORE PARK PLACE, SOUTH CITY, BELAIR, KOLKATA-700027 VS. COMMISSIONER OF INCOME TAX-1, 110 SHANTIPALLY, AYKAR BHAWAN POORVA, KOLKATA-700107 ./ ./PAN/GIR NO.: AFHPM 1971 N ( /APPELLANT ) .. ( / RESPONDENT ) ./ ITA NO. 330/KOL/2012 ( / ASSESSMENT YEAR:2009-2010) SHRI SHIV KISHAN MOHTA(DECD.) REPRESENTED BY L/H SHRI SUSHIL MOHTA, 9A, ALIPORE PARK PLACE, SOUTH CITY, BELAIR, KOLKATA-700027 VS. DCIT, CENTRAL CIRCLE-XXVIII 18, RABINDRA SARANI, 5 TH FLOOR, PODDAR COURT, KOLKATA-700001 ./ ./PAN/GIR NO.: AFHPM 1971 N ( /APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI B.C.JAIN, FCA REVENUE BY : SHRI NIRAJ KUMAR, CIT(DR) / DATE OF HEARING : 07/12/2016 /DATE OF PRONOUNCEMENT 15/02/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED TWO APPEALS FILED BY THE ASSESSEE, PE RTAINING TO ASSESSMENT YEAR 2009-10. THE APPEAL IN ITA NO.1922/ KOL/2012 IS DIRECTED AGAINST THE ORDER DATED 26.11.2012 PASSED BY LD. COMMISSIONER OF INCOME TAX-1, KOLKATA, U/S.263 OF THE ACT AND AP PEAL IN ITA NO.330/KOL/2012, IS DIRECTED AGAINST THE ORDER PASS ED BY LD. CIT(A), CENTRAL-1, KOLKATA IN APPEAL NO.211/CC-XXVIII/CIT(A ),C-I/10-11, KOLKATA, DATED 09.12.2011, WHICH IN TURN ARISES OUT OF AN OR DER PASSED BY THE ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 2 ASSESSING OFFICER (AO) UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961, (IN SHORT THE ACT), DATED 31.12.2010. 2. ALBEIT , THE IMPUGNED ORDER UNDER CHALLENGE IN BOTH THE AP PEALS ARE DIFFERENT DATED, DIFFERENT ISSUES, HOWEVER RELATES TO SAME ASSESSEE. THE ISSUES RAISED IN THESE APPEALS ARE CULLED OUT OF TH E ORIGINAL ASSESSMENT ORDER FRAMED BY THE AO DATED 31.12.2010. THUS, BOTH THE APPEALS ARE CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY THIS CONSOLIDATED ORDER. ASSESSEE`S APPEAL ITA NO.1922/KOL/2012 3. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN RESPECT OF MERL IN GROUP OF CASES ON 11-9-2008 AND ON SUBSEQUENT DATES. THE ORIGINAL ASS ESSMENT FOR THE ASSESSEE UNDER CONSIDERATION HAS BEEN COMPLETED BY THE AO U/S.143(3) ON DATED 31.12.2010. AFTER THAT THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) PASSED THE ORDER U/S.251/143( 3) ON 24.01.2012. LATER ON, THE CIT U/S.263 OF THE I.T. ACT, PASSED T HE ORDER OBSERVING THE FOLLOWINGS :- ON CAREFUL CONSIDERATION OF FACTS AND CIRCUMSTANCE S OF THE CASE, I AM OF THE OPINION THAT THE CONTENTIONS OF THE ASSES SEE HAS NO MERIT. IT IS EVIDENT FROM THE RECORDS THAT THE ASSESSING O FFICER HAS NOT AT ALL ENQUIRED OR VERIFIED THE LOSSES CLAIMED BY THE ASSESSEE. THE A.O. HAS ACCEPTED THE ASSESSES CLAIM OF F & O LOSS AT RS.4,88,99,127/-, SHORT TERM LOSS AND LONG TERM LOS S WITHOUT RAISING ANY QUERY AND WITHOUT ASKING THE ASSESSEE TO FILE E VIDENCES TO SUPPORT THE CLAIMS. THIS IS EVIDENT FROM THE COPY O F ORDER SHEET FURNISHED BY THE A.R. OF THE ASSESSEE ALONG WITH TH E WRITTEN SUBMISSION. THE HON'BLE SUPREME COURT IN THE CASE O F MALABAR INDUSTRIAL CO. LTD. (2000) 109 TAXMAN 66 HAS HELD T HAT WHERE ASSESSING OFFICER HAD ACCEPTED ENTRY IN STATEMENT O F ACCOUNT FILED BY THE ASSESSEE, IN ABSENCE OF ANY SUPPORTING MATER IAL WITHOUT MAKING ANY ENQUIRY, EXERCISE OF JURISDICTION BY COM MISSIONER UNDER SEC. 263(1) WAS JUSTIFIED. THE AFORESAID CASE LAW S QUARELY FITS IN THIS CASE BECAUSE THE A.O. HAS ACCEPTED THE LOSSES CLAIMED BY THE ASSESSEE WITHOUT ASKING FOR DETAILS AND WITHOUT CON DUCTING ANY ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 3 ENQUIRY OR VERIFICATION. THE CONTENTION OF THE A.R. OF THE ASSESSEE THAT THE ASSESSMENT ORDER HAS MERGED WITH THE ORDER OF CIT(A) AND CIT HAS NO JURISDICTION U/S 263 OF THE I.T. ACT IS ALSO WITHOUT ANY MERIT. IN THE ASSESSMENT ORDER THIS ISSUE WAS NEITH ER DISCUSSED NOR ANY DISALLOWANCE WAS MADE, HENCE THIS WAS NOT AN IS SUE BEFORE THE CIT(A). APPEAL WAS FILED BEFORE THE CIT(A) AGAINST THE ADDITIONS MADE BY THE A.O. IN THE ASSESSMENT ORDER. IN VIEW OF THE DISCUSSION IN THE PRECEDING PARAGRAP H IT IS HELD THAT THE ORDER PASSED U/S 143(3) OF THE I.T. ACT IS ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE THE O RDER IS SET ASIDE U/S 263 WITH A DIRECTION TO THE ASSESSING OFFICER T O COMPLETE IT AS PER LAW, AFTER AFFORDING PROPER OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 4. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUND S OF APPEAL :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ID CIT ERRED IN ASSUMING JURISDICTION U/S 263 2. WITHOUT PREJUDICE THAT IN THE FACTS AND CIRCUMS TANCES OF THE CASE THE ID CIT ERRED IN SETTING ASIDE THE ASSESSME NT WITHOUT LOOKING INTO THE DETAILS OF F & O AND CAPITAL LOSS FILED BEFORE HIM 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY AND/OR SUBMIT FU RTHER OR MORE GROUND(S) OF APPEAL EITHER BEFORE OR AT ANY TIME DU RING THE HEARING OF THE APPEAL. 5. LD. AR FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE LD. CIT ERRED IN ASSUMING JURISDICTION U/S.263 OF THE ACT. HE FURTHER SUBMITTED THAT LD. CIT HAS WRONGLY CONCLUDED THAT THE AO DID NOT LOOK THE DETAILS OF FUTURE AND OPTIONS AND CAPITAL LOSS FILED BY THE AS SESSEE BEFORE HIM. THE ASSESSEE HAS FILED THE DETAILS OF FUTURE AND OPTION BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT U/S.143(3). BASED ON TH E DETAILS AND SUBMISSIONS FILED BY THE ASSESSEE, THE AO HAS REACH ED TO THE CONCLUSION THAT THE ASSESSEE IS ENTITLED TO CARRY FORWARD THE SHORT TERM AND LONG TERM CAPITAL LOSS TO THE EXTENT OF RS.66,87,536/-. THE A SSESSEE HAS SUBMITTED THE DETAILED CALCULATION OF STCL & LTCL INCLUDING F UTURE AND OPTIONS. ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 4 THEREFORE, THE ASSESSEE, FROM HIS SIDE, DID THE COM PLIANCE AND BASED ON THE SUBMISSIONS AND DETAILS OF THE ASSESSEE, THE AS SESSING OFFICER ARRIVED AT THE NET FIGURE AT RS.66,87,536/- WHICH I S TO BE CARRIED FORWARD IN SUBSEQUENT YEARS. THEREFORE, THE AO HAS EXAMINED AN D VERIFIED THE DETAILS OF THE SHORT TERM CAPITAL LOSS AND LONG TER M CAPITAL LOSS AND THIS IS VERY MUCH EVIDENT FROM THE AO THAT THE AO HAS WRITT EN THAT THE ASSESSEE IS ENTITLED TO CARRY FORWARD THE LOSS OF SHORT TERM AND LONG TERM CAPITAL LOSS. THEREFORE, THE AO MUST HAVE EXAMINED THE DETA IL FILED BY THE ASSESSEE, AND, THEREFORE, THE ORDER PASSED BY THE A O IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE AND IT IS NOT ERRONEOUS ALS O. THEREFORE, THE JURISDICTION EXERCISED BY THE CIT U/S.263 IS NOT CO RRECT. 6. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS VE HEMENTLY SUBMITTED THAT THE LOSS OF FUTURE AND OPTIONS DEBIT ED IN PROFIT AND LOSS ACCOUNT RS.4,88,99,127/- WAS NOT VERIFIED BY THE AO . THE SHORT TERM CAPITAL LOSS OF RS.64,01,343/- AND THE LONG TERM CA PITAL LOSS OF RS.2,86,193/- WERE ALSO NOT VERIFIED BY THE AO. THE SUBMISSION OF THE ASSESSEE, STATING THAT ACCEPTANCE OF LONG TERM/SHOR T TERM CAPITAL LOSS DOES NOT AFFECT THE TAX LIABILITY FOR ASSESSMENT Y EAR 2009-2010 IS NOT ACCEPTED BECAUSE THE ASSESSEE WOULD BE ENTITLED TO SET OFF THE FUTURE PROFIT AGAINST THE LOSS DETERMINED TO BE CARRIED FO RWARD IN THE YEAR UNDER CONSIDERATION. THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSMENT YEAR PASSED BY THE AO HAS BEEN MERGED IN THE ORDER OF LD. CIT(A) IS AL SO NOT ACCEPTABLE ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 5 BECAUSE THE ASSESSEE HAS NOT GONE FOR APPEAL BEFORE THE CIT(A) FOR THE ISSUE UNDER CONSIDERATION I.E. THE ISSUE UNDER CON SIDERATION HAS NOT BEEN AGITATED BY THE ASSESSEE BEFORE LD. CIT(A) AND THE LD. CIT(A) HAS NOT ADJUDICATED THIS ISSUE. THEREFORE, THIS ISSUE HAS N OT BEEN TOUCHED BY LD. CIT(A), HENCE, THE CIT U/S.263 HAS RIGHTLY EXERCISE D HIS JURISDICTION. THE AO HAS ACCEPTED THE ASSESSEES CLAIM OF FUTURE AND OPTION LOSS, I.E. STCL & LTCL WITHOUT RAISING ANY ENQUIRY OR WITHOUT ASKING ASSESSEE TO FILE EVIDENCE TO SUPPORT THE CLAIM OF THE ASSESSEE. THE AO DID NOT DEMONSTRATE IN HIS ASSESSMENT ORDER HOW HE HAS ARRI VED AT THE CONCLUSION THAT NET LOSS ON ACCOUNT OF STCL & LTCL IS TO BE CARRIED FORWARD IN THE SUBSEQUENT YEAR. THEREFORE, THE CIT HAS RIGHTLY EXERCISED HIS JURISDICTION U/S.263. THE AO ACCEPTED THE LOSSE S CLAIMED BY THE ASSESSEE WITHOUT ASKING ANY DETAILS AND WITHOUT CON DUCTING ANY ENQUIRY OR VERIFICATION. 7. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT I N THE SUBMISSIONS OF LD. DR FOR THE REVENUE. AS THE PROPOSITION CANVASSED BY LD. DR FOR THE REVENUE ARE SUPPORTED BY THE FACTS NARRATED BY HIM ABOVE. LD. DR FOR THE REVENUE HAS POINTED OUT THAT THE SAID ISSUE WAS NOT BEFORE THE LD. CIT(A) I.E. THE ASSESSEE DID NOT RAISE THIS GROUND BEFORE THE LD. CIT(A), THEREFORE, THE CIT HAS WRONGLY INVOKED HIS JURISDICTION U/S.26 3 OF THE ACT. THE AO HAS ACCEPTED THE LOSS CLAIMED BY THE ASSESSEE WITHO UT ASKING FOR DETAILS AND WITHOUT CONDUCTING ANY ENQUIRY OR VERIFICATION. THE AO ALSO DID NOT DEMONSTRATE IN THE ASSESSMENT ORDER THAT HOW HE HAS ARRIVED AT THE LTCL ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 6 AND STCL. THEREFORE, CONSIDERING THE FACTUAL POSITI ON, WE ARE OF THE VIEW THAT THE ORDER PASSED BY LD. CIT(A) U/S.263 DOES NO T REQUIRE ANY MODIFICATION. THEREFORE, WE CONFIRM THE ORDER PASSE D B LD. CIT. ASSESSEE`S APPEAL IN ITA NO.330/KOL/2012 8. THIS APPEAL IS BARRED BY FOUR DAYS. CONSIDERING THE SUBMISSION MADE BY THE LD. AR, WE FOUND THAT THERE IS A REASON ABLE CAUSE FOR FOUR DAYS DELAY IN FILING THE APPEAL BY THE ASSESSEE, TH EREFORE, THE SAME IS HEREBY CONDONED AND THE APPEAL IS ADMITTED AND HEAR D ON MERITS. 9. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID CIT [A) ERRED IN CONFIRMING/ DISALLOWANCES / ADDITIONS UNDE R SEC 14A TO THE EXTENT OF RS. 197570/ = OUT OF INTEREST RS. 125705 OUT OF GENERAL ADMINISTRATIVE EXPENSES 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS.2352 BEING D EMAT CHARGES AND RS.30332 BEING STT TREATING THE SAME AS 'NOT AN ALLOWABLE' EXPENDITURE AND NOT DELETING THE SAME 3. WITHOUT PREJUDICE, THAT IN THE FACTS AND CIRCUMS TANCES OF THE CASE, THE DISALLOWANCE / ADDITIONS AFORESAID ARE HI GHLY EXCESSIVE 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT CRAVES LEAVE TO SUBMIT FURTHER MORE GROUNDS, ADD, M ODIFY / EDIT / REVISE / ALTER GROUNDS OF APPEAL EITHER BEFORE OR A T THE TIME OF HEARING OF APPEAL. 10. AGAINST THE ADDITION MADE BY THE AO, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A) RAISING THE ISSUE REGARDIN G DISALLOWANCE MADE U/S.14A, HOWEVER, THE CIT(A) CONFIRMED THE ADDITION SO MADE BY THE LD. AO OBSERVING THAT INVESTMENT DECISIONS ALWAYS INVOL VE TOP MANAGEMENT SINCE IT IS VERY STRATEGIC. WHETHER TO INVEST OR NO T TO INVEST AND WHETHER TO RETAIN THE INVESTMENT OR TO LIQUIDATE THE SAME ARE VERY STRATEGIC DECISIONS AND TOP MANAGEMENT IS ALWAYS INVOLVED. THEREFORE, P ROPORTIONATE ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 7 MANAGEMENT AND ADMINISTRATIVE EXPENSES ARE REQUIRED TO BE DEDUCTED WHILE COMPUTING EXEMPT INCOME OR DEALING INVESTMENT MATTER, ACCORDINGLY THE DISALLOWANCE OF RS. 1,97,570/- ON ACCOUNT OF PR OPORTIONATE INTEREST AND RS. 1,25,705/- OUT OF GENERAL AND ADMINISTRATIV E MADE BY AO IS CONFIRMED. 3.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE L.D A.R . THE A.O HAS DISALLOWED DIRECT EXPENDITURE OF DEMAT CHAR GE OF RS. 2,352/, STT OF RS.30,332/- AND STT (F & O) OF RS.2, 89,139/- , INTEREST COMPONENT OF RS.1,97,570/- AND GENERAL AND ADMINISTRATIVE OF RS. 1,25,705/ UNDER RULE 8D READ WITH SECTION 14 A OF THE ACT. AS FAR AS EXPENDITURE ON ACCOUNT OF DEMAT CHARGE OF RS .2352 AND STT OF RS. 30,332/- ARE CONCERNED THE SAME HAVE NOT BEE N INCURRED FOR THE PURPOSE OF THE BUSINESS CARRIED OUT BY THE ASSE SSEE, HENCE EVEN OTHERWISE THE SAME IS NOT AN ALLOWABLE EXPENDI TURE. MOREOVER THE EXPENDITURE, DEMAT CHARGES HAS BEEN DULY CLAIME D BY THE ASSESSEE AGAINST CAPITAL GAIN AND SECURITY TRANSACT ION TAX IS NOT AN ALLOWABLE EXPENDITURE AGAINST THE INCOME CHARGEA BLE UNDER THE HEAD CAPITAL GAIN AS PER PROVISION TO SECTION 48 OF THE ACT. HOWEVER SINCE THE STT OF RS. 2,89,139/- HAS BEEN PA ID IN RESPECT OF F & 0 ACTIVITIES WHICH ARE ASSESSABLE AS BUSINES S INCOME, THE SAME IS AN ALLOWABLE EXPENDITURE. ACCORDINGLY OUT O F TOTAL DISALLOWANCE UNDER THE HEAD DIRECT EXPENSES OF RS. 3,21,823/- MADE BY THE A.O DISALLOWANCE OF RS. 32,684/- IS CON FIRMED. 11. LD. AR FOR THE ASSESSEE, SUBMITTED BEFORE US TH AT TOTAL ADDITION OF RS.6,45,058/- MADE BY THE A.O UNDER SECTION 14A OF THE ACT. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.1,97,570 AND RS .1,25,705/- ON ACCOUNT OF PROPORTIONATE INTEREST AND GENERAL EXPEN SES. DURING THE COURSE OF HEARING IT WAS SUBMITTED BY THE LD. A.R T HAT THE ADDITION HAS BEEN MADE ON ACCOUNT OF DIRECT EXPENDITURE IN THE F ORM OF STT AND INDIRECT INTEREST COMPONENT ETC; IN RELATION TO EAR NING OF THE EXEMPT INCOME OF DIVIDEND OF RS.1,56,232/- . THE STT HAS B EEN PAID IN RESPECT OF F & O ACTIVITIES WHICH ARE ASSESSABLE AS BUSINESS I NCOME AND IN RESPECT OF SHARE TRANSACTION RELATING TO STCG WHICH IS NOT AN EXEMPT INCOME. ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 8 BESIDES, THE A.O. HAS NOR BROUGHT ON RECORD THAT TH ERE IS ANY NEXUS BETWEEN THE EXPENDITURE INCURRED AND TAX FREE INCOM E EARNED THEREOF, THEREFORE, NO DISALLOWANCE UNDER SECTION 14 A SHOUL D BE MADE. THE LD AR FOR THE ASSESSEE ALSO POINTED OUT THAT THE ASSESSEE `S OWN FUNDS (CAPITAL AND RESERVES) ARE MORE THAN THE INVESTMENTS MADE BY THE ASSESSEE, THEREFORE, PROPORTIONATE DISALLOWANCE UNDER RULE 8D (2) (II) SHOULD NOT BE MADE. AS PER THE BALANCE SHEET OF THE ASSESSEE AS O N MARCH 31,2009, THE OWN FUNDS, CONSISTING CAPITAL AND ACCUMULATED P ROFITS ARE AT RS.4,90,52,034/-, WHEREAS TOTAL INVESTMENTS ARE AT RS. 2,49,56,433/-, THEREFORE, THE PROPORTIONATE DISALLOWANCE MADE BY C IT(A) IS NOT JUSTIFIED AND MUST BE DELETED. APART FROM THIS THE LD. AR REL IED ON THE FOLLOWING JUDGMENTS: 1. ASHISH JHUNJHUNWALA, ITA NO.1809/KOL/2012: A.Y. 2009-10:DATED 14.05.2013 (ITAT KOLKATA): 6. WE FIND FROM THE FACTS OF THE ABOVE CASE THAT T HE AO HAS NOT EXAMINED THE ACCOUNTS OF THE ASSESSEE AND THERE IS NO SATISFACTION RECORDED BY THE AO ABOUT THE CORRECTNESS OF THE CLA IM OF THE ASSESSEE AND WITHOUT THE SAME HE INVOKED RULE 8D OF THE RULES. WHILE REJECTING THE CLAIM OF THE ASSESSEE WITH REGA RD TO EXPENDITURE OR NO EXPENDITURE, AS THE CASE MAY BE, IN RELATION TO EXEMPTED INCOME, THE AO HAS TO INDICATE COGENT REASONS FOR THE SAME. FROM THE FACTS OF THE PRESENT CASE IT IS NOTICED THAT TH E AO HAS NOT CONSIDERED THE CLAIM OF THE ASSESSEE AND STRAIGHT A WAY EMBARKED UPON COMPUTING DISALLOWANCE UNDER RULE 8D OF THE RU LES ON PRESUMING THE AVERAGE VALUE OF INVESTMENT AT 0.5% O F THE TOTAL VALUE. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOW ING THE COORDINATE BENCH DECISION IN THE CASE OF J.K.INVESTORS (BOMBAY ) LTD; SUPRA, WE UPHOLD THE ORDER OF CIT(A). THIS APPEAL OF THE REVE NUE IS DISMISSED. 2. MOHAN EXPORTS (P) LTD, 138 ITD 108(DELHI): THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT ANY INVESTMENT IN SHARES OR UNITS HAS BEEN MADE IN THIS YEAR OUT OF B ORROWED FUNDS ON WHICH INTEREST IS PAYABLE BY THE ASSESSEE. THE C OMMISSIONER (APPEALS) HAS GIVEN A VERY SPECIFIC FINDING THAT TH E EXAMINATION OF ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 9 THE BANK ACCOUNT SHOWS THAT SUCH INVESTMENT ARE OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE..THEREFORE, THE PROVISION CONTAINED IN RULE 8D (2) (II) CANNOT BE INVOKED. 12. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREA DY NOTED AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 13. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT I N THE SUBMISSIONS OF THE ASSESSEE, AS THE PROPOSITION CANVASSED BY LD. AR FO R THE ASSESSEE ARE SUPPORTED BY THE JUDGMENTS CITED ABOVE AND FACTS NA RRATED BY HIM ABOVE. AS LD. AR POINTED OUT BEFORE US THAT ASSESSEE HAS P URCHASED THE INVESTMENTS BY USING OWN FUNDS. THE OWN FUNDS AND A CCUMULATED PROFITS OF THE ASSESSEE ARE MORE THAN THE INVESTMENTS, THER EFORE THE DISALLOWANCE OF PROPORTIONATE INTEREST UNDER RULE 8 D(2) (II) IS NOT JUSTIFIED. REGARDING THE DISALLOWANCE OF 0.50% OF AVERAGE INVE STMENTS, NEITHER THE ASSESSING OFFICER NOR THE ASSESSEE BROUGHT ON RECOR D ANY EVIDENCE TO JUSTIFY THAT THESE EXPENDITURES ARE NOT INCURRED BY THE ASSESSEE. WHETHER TO INVEST NOT TO INVEST AND WHETHER TO RETAIN THE I NVESTMENT OR TO LIQUIDATE THE INVESTMENT, THE SAME ARE VERY STRATEGIC DECISIO NS AND TOP MANAGEMENT IS ALWAYS INVOLVED IN THE DECISION MAKIN G PROCESS. THEREFORE, THE POSSIBILITY OF INCURRING SOME EXPEND ITURE ON THAT ACCOUNT CANNOT BE RULED OUT. THE RELIANCE PLACED BY THE LD AR ON THE JUDGMENT OF ASHISH JHUNJHUNWALA, ITA NO.1809/KOL/2012 (SUPRA) IS ON SE PARATE FOOTING BECAUSE IN THIS CASE THE LD CIT(A) ( PARA 4 OF THE SAID ORDER) HELD THAT ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 10 WHATEVER EXPENSES CLAIMED BY THE APPELLANT ARE ALRE ADY DISALLOWED BY THE AO SEPARATELY IN THE ASSESSMENT ORDER, THEREFOR E, IT DOES NOT APPLY TO THE ASSESSEE UNDER CONSIDERATION. ACCORDINGLY, WE DELETE THAT ADDITION OF RS. 1,97,57 0/- (PROPORTIONATE INTEREST) AND CONFIRM THE ADDITION OF RS. 1,25,705/ -. 14. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ON THIS GROUND IS PARTLY ALLOWED. 15. REGARDING GROUND NO. 2 DISALLOWANCE OF RS.2352 BEING DEMAT CHARGES AND RS.30332 BEING STT . THE LD DR FOR THE REVENUE HAS SUBMITTED BEFORE US T HAT THESE EXPENSES DO NOT RELATE TO THE BUSINESS OF THE ASSESSEE. EVEN LD.CIT(A) DID NOT CONSIDER THESE EXPENSES FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE LD. CIT(A) OBSERVED THE FOLLOWINGS: AS FAR AS EXPENDITURE ON ACCOUNT OF DEMAT CHARG E OF RS.2352/- AND STT OF RS.30,332/- ARE CONCERNED THE SAME HAVE NOT BEEN INCURRED FOR THE PURPOSE OF BUSINESS CARRI ED OUT BY THE ASSESSEE, HENCE EVEN OTHERWISE THE SAME IS NOT AN A LLOWABLE EXPENDITURE. MOREOVER THE EXPENDITURE DEMAT CHARGE HAS BEEN DULY CLAIMED BY THE ASSESSEE AGAINST CAPITAL GAIN AND SE CURITY TRANSACTION TAX IS NOT AN ALLOWABLE EXPENDITURE AGA INST THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN AS PER PROVI SIO TO SECTION 48 OF THE ACT. HOWEVER, SINCE THE STT OF RS. 2,89,1 39/- HAS BEEN PAID IN RESPECT OF F &O ACTIVITIES WHICH ARE ASSESS ABLE AS BUSINESS INCOME, THE SAME IS AN ALLOWABLE EXPENDITURE. ACCOR DINGLY, OUT OF TOTAL DISALLOWANCE UNDER THE HEAD DIRECT EXPENSES O F RS. 3,21,823/- MADE BY THE AO DISALLOWANCE OF RS. 32,684/- IS CONF IRMED. THE LD AR FOR THE ASSESSEE DID NOT DEMONSTRATE BEFO RE US WHETHER THE SAID EXPENDITURE RELATES TO HIS ASSESSEE`S BUSINESS OR NOT. THEREFORE, CONSIDERING THE FACTUAL POSITION, WE CON FIRM THE DISALLOWANCE OF RS. 32,684/- ITA NO.1922&330/12 SHRI SHIV KISHAN MOHTA 11 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ON THIS GROUND IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15/02 /2017. SD/ - (S.S.VISWANETHRA RAVI) S D/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; ! DATED 15/02/2017 ' $%& /PRAKASH MISHRA , 0 . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) % & , / ITAT, 1. / THE APPELLANT-SHRI SHIV KISHAN MOHTA 2. / THE RESPONDENT.-DCIT, CC-XXVIII, KOLKATA 3. 1 ( ) / THE CIT(A), KOLKATA. 4. 1 / CIT 5. 23 4 0056 , 56 , / DR, ITAT, KOLKATA 6. 4 78 / GUARD FILE. 2 0 //TRUE COPY//
