M/s Bluestar Vyapaar (P) Ltd, Kolkata V. ITO, Ward-9(1), Kolkata, Kolkata

ITA 1957/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1664 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Section: 37; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (SMC) BENCH, KOLKATA BEFORE SR I J. SUDHAKAR REDDY, HONBLE ACCOUNTANT MEMBER I.T.A. NO. 1957/KOL/2016 ASSESSMENT YEAR: 2010-11 M/S. BLUESTAR VYAPAAR (P) LTD... APPELLANT LOHARUKA NIKET DC-9/28, SHASTRI BAGAN DESHBANDHU NAGAR KOLKATA 700 059 [PAN : AADCB 7732 Q] INCOME TAX OFFICER WARD-9(1), KOLKATA.RESPONDENT AAYAKAR BHAWAN P-7, CHOWRIGHEE SQUARE KOLKATA-700 069 APPEARANCES BY: NONE. APPEARED ON BEHALF OF THE ASSESSEE. SHRI ARINDAM BHATTACHARJEE, ADDL. CIT, DR, APPEARIN G ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 24, 201 7 DATE OF PRONOUNCING THE ORDER : AUGUST 25, 20 17 O R D E R PER J. SUDHAKAR REDDY, AM :- THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 5, KOLKATA, (HEREINAFTER THE LD. CIT(A)), DT. 23/06/2016, PAS SED U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), R ELATING TO ASSESSMENT YEAR 2004-05, ON THE FOLLOWING GROUNDS:- 2 II.T.A. NO. 1957/KOL/2016 ASSESSMENT YEAR: 2010-11 M/S. BLUESTAR VYAPAAR (P) LTD 1. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) IS CONTRARY TO LAW AND THE FACTS OF THE A PPELLANT'S CASE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE TREATMENT OF INTEREST RECEIPTS AS IN COME FROM OTHER SOURCES DONE BY THE AO INSTEAD OF BUSINESS IN COME CLAIMED BY THE APPELLANT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE DISALLOWANCE OF EXPENSES MADE BY A.O . INCURRED ON ACCOUNT OF SALARY, DIRECTORS REMUNERATI ON, PRINTING & STATIONERY, CONVEYANCE, GENERAL EXPENSES , TELEPHONE EXPENSES, AND PROFESSIONAL FEES U/S. 57(I II) WITHOUT APPRECIATION OF THE FACT THAT THE ASSESSEE COMPANY BEING A JURISTIC PERSON, HAD TO ACT THROUGH ITS DIR ECTORS AND EMPLOYEES AND ALL SUCH EXPENSES INCURRED BY IT WERE NECESSARY FOR THE PURPOSE OF RUNNING THE COMPANY WH ICH INVOLVES MAINTAINING THE REGISTERED OFFICE, COMPLYI NG WITH THE STATUTORY OBLIGATIONS, OPERATING BANK ACCOUNT, MAIN TAINING BOOKS AND OTHER BUSINESS ACTIVITIES. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN NOT ALLOWING THE SET OFF OF EXPENSES INCURRED ON BU SINESS BEING BUSINESS LOSS EVEN IF THE INTEREST RECEIPTS ARE TRE ATED AS INCOME FROM OTHER SOURCES. 3 II.T.A. NO. 1957/KOL/2016 ASSESSMENT YEAR: 2010-11 M/S. BLUESTAR VYAPAAR (P) LTD 5. THAT THE APPELLANT CRAVES RIGHT TO ADD, ALTER OR MODIFY ANY' OF THE GROUND OF APPEAL BEFORE OR AT ANY TIME DURIN G THE COURSE OF HEARING OF THE APPEAL. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE, DESPIT E ISSUAL OF NOTICE. WRITTEN SUBMISSIONS WERE FILED. THERE IS NO PETITIO N SEEKING ADJOURNMENT. UNDER THESE CIRCUMSTANCES, I DISPOSE OF THIS CASE EX PARTE, QUA THE ASSESSEE. AFTER HEARING THE LD. DR. 3. HEARD THE LD. DR. 3.1. THE FIRST ISSUE IS WHETHER THE INTEREST EARNED FROM FIXED DEPOSITS MADE OUT OF THE ASSESSEES OWN FUNDS RECEIVED BY WA Y OF SHARE CAPITAL BEING SURPLUS FUNDS, IS TAXABLE UNDER THE HEAD INC OME FROM OTHER SOURCES OR UNDER THE HEAD INCOME FROM PROFESSION . THE ASSESSEE MADE ELABORATE SUBMISSIONS RUNNING IN TO EIGHT PAGES. I HAVE PERUSED THE SAME. AS THE FIXED DEPOSITS WERE M ADE OUT OF SURPLUS FUNDS AND ADMITTEDLY THEY ARE NOT SHORT-TERM DEPOSI TS. THE INTEREST INCOME EARNED ON SUCH FIXED DEPOSITS ARE TAXABLE UN DER THE HEAD INCOME FROM OTHER SOURCES AS HELD BY THE HONOURABLE SUPRE ME COURT IN THE CASE OF M/S TUTICORIN ALKALI CHEMICALS AND FERTILISERS LTD. VS. COMMISSIONER OF INCOME TAX, (1997) 227 ITR 172. HENCE GROUND NO. 2 OF THE ASSESSEE IS DISMISSED. 4. GROUND NO.3 IS AGAINST THE DISALLOWANCE OF EXPEN SES MADE. THE ASSESSEE INCURRED EXPENSES ON ACCOUNT OF SALARY, DI RECTORS REMUNERATION, 4 II.T.A. NO. 1957/KOL/2016 ASSESSMENT YEAR: 2010-11 M/S. BLUESTAR VYAPAAR (P) LTD PRINTING AND STATIONERY, CONVEYANCE, GENERAL EXPENS ES, TELEPHONE EXPENSES AND OTHER PROFESSIONAL FEES. THESE ARE DIS ALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THERE CANNOT B E ALLOWED U/S 57 (III) OF THE ACT. 4.1. IN MY OPINION THE ASSESSEE HAS SET UP HIS BUSI NESS AND THE EXPENDITURE INCURRED, WHICH IS LISTED ABOVE, ARE IN THE REVENUE FIELD. THESE EXPENDITURES ARE LIABLE TO BE ALLOWED AS BUSINESS E XPENDITURE UNDER THE HEAD INCOME FROM BUSINESS AS PER SECTION 28 TO 37 OF THE ACT. JUST BECAUSE THE ASSESSEE HAD NOT COMMENCED THE ACTIVITY OF PURCHASE AND SALE OF GOODS DURING THE YEAR, IT CANNOT BE SAID THAT TH E BUSINESS IS NOT SET UP. HENCE I DIRECT THE ASSESSING OFFICER TO ALLOW THIS EXPENDITURE IN QUESTION UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION . THE ASSESSEE IS ELIGIBLE TO CLAIM INTRA HEAD SET OFF UNDER SECTION 71 OF THE ACT. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. KOLKATA, THE 25 TH DAY OF AUGUST, 2017. SD/- [ J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED :25.08.2017 {SC SPS} 5 II.T.A. NO. 1957/KOL/2016 ASSESSMENT YEAR: 2010-11 M/S. BLUESTAR VYAPAAR (P) LTD COPY OF THE ORDER FORWARDED TO: 1. INCOME TAX OFFICER WARD-3, TINSUKIA AAYAKAR BHAWAN BORDOLOI NAGAR TINSUKIA 786 125 2. M/S. SUSHIL KUMAR JAIN & SONS (HUF) NEAR M.P. JALAN, HIJUGURI A.T. ROAD TINSUKIA - 786125 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES