SAB Electronic Devices Ltd., New Delhi V. DCIT, New Delhi

ITA 2009/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81694 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Assessee Lawyers: P N MEHTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.2009/DEL/2013 ASSESSMENT YEAR : 2008-09 SAB ELECTRONIC DEVICES LTD., B-7/2, OKHLA INDUSTRIAL AREA, PHASE II, NEW DELHI. PAN : AAACS3409E VS. D CIT, CIRCLE-7(1), NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI P. N. MEHTA, CA DEPARTMENT BY : DR. B.R.R. KUMAR, SR. DR ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE CIT (A) ON 04.02.2013 IN RELATION TO THE ASS ESSMENT YEAR 2008-09. 2. THE ONLY ISSUE PRESSED BEFORE US IS AGAINST THE CONFIRMATION OF ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENSES OF ` 4,57,386/-. ITA NO.2009/DEL/2013 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE AO NOTICED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT TH E ASSESSEE WAS EARLIER MANUFACTURING ALMONIUM ELECTROLYTIC CAP ACITORS AND PLASTIC FILM CAPACITORS USED IN TELEPHONE INDUSTRIE S. IT WAS NOTICED THAT THE ASSESSEE CLOSED ITS BUSINESS IN TH E EARLIER YEAR AND DURING THE YEAR IN QUESTION THERE WAS NO BUSINE SS ACTIVITY EXCEPT FOR EARNING OF INTEREST INCOME FROM FDRS, DI VIDEND FROM INVESTMENT AND PROFIT ON SALE OF MUTUAL FUNDS. THE ASSESSEE CLAIMED DEDUCTION FOR A SUM OF ` 5,07,386/- TOWARDS VARIOUS EXPENSES. CONSIDERING THE FACT THAT THE BUSINESS O F THE ASSESSEE STOOD CLOSED IN THE PRECEDING YEAR, THE AO DISALLOW ED THE SAID CLAIM OF DEDUCTION. THE LD. CIT(A) REDUCED THE ADD ITION BY ` 50,000/-. THAT IS HOW, THE ASSESSEE IS AGGRIEVED A GAINST THE SUSTENANCE OF ADDITION AT ` 4,57,386/-. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE COMPUTATION/REVISE D COMPUTATION OF INCOME OF THE ASSESSEE IS AVAILABLE ON PAGES 8-11 OF THE PAPER BOOK. FROM THE COPY OF AUDITED ANNUAL ACCOUNTS, IT CAN BE SEEN THAT THE ASSESSEE EARNED INCOME OF ` 20 ,24,418/- WHICH WAS CREDITED TO THE PROFIT & LOSS ACCOUNT. A DETAIL OF SUCH ITA NO.2009/DEL/2013 3 INCOME IS AVAILABLE IN SCHEDULE-7 TO THE ANNUAL ACC OUNTS. FROM SUCH DETAILS, IT CAN BE SEEN THAT IT COMPRISES OF I NTEREST ON FDRS, INTEREST ON LOAN, DIVIDEND AND PROFIT ON SALE OF IN VESTMENT. SUCH INCOME HAS BEEN ASSESSED UNDER THE HEAD INCOME FRO M OTHER SOURCES. EVEN IF THE BUSINESS OF THE ASSESSEE OF MANUFACTURING ALMONIUM ELECTROLYTIC CAPACITORS AND PLASTIC FILM C APACITORS WAS CLOSED IN THE EARLIER YEAR, THE ASSESSEE STILL EARN ED INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. SECTION 57 O F THE ACT DEALS WITH THE DEDUCTIONS WHICH ARE TO BE ALLOWED WHILE C OMPUTING INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. IT CAN BE SEEN THAT THE AO DID NOT ALLOW ANY DEDUCTION AT ALL DESPITE THE FACT THAT HE ASSESSED SOME INCOME UNDER THE HEAD I NCOME FROM OTHER SOURCES, WHEREAS THE LD. CIT(A) ALLOWED RELI EF FOR A SUM OF ` 50,000/- ON AD HOC BASIS WITHOUT CONSIDERING THE MANDATE OF SECTION 57. IT GOES WITHOUT SAYING THAT IF ANY AMO UNT IS DEDUCTIBLE U/S 57 AGAINST INCOME FROM OTHER SOURCE S, SUCH AMOUNT HAS TO BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME UNDER THIS HEAD NOTWITHSTANDING THAT THERE IS NO IN COME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSI ON. UNDER THE GIVEN CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINI ON THAT IT ITA NO.2009/DEL/2013 4 WOULD BE IN THE INTEREST OF JUSTICE IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO TH E FILE OF THE AO. WE ORDER ACCORDINGLY AND DIRECT HIM TO ALLOW SUCH E XPENSES WHICH CAN BE SO ALLOWED WITHIN THE PRESCRIPTION OF THIS SECTION 57 OF THE ACT AGAINST THE INCOME UNDER THE HEAD INCOM E FROM OTHER SOURCES. NEEDLESS TO SAY, THE ASSESSEE WILL BE AL LOWED A REASONABLE OPPORTUNITY OF HEARING IN SUCH FRESH PRO CEEDINGS. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11.09.201 4. /- SD/- SD/- [ A.T. VARKEY ] [ R.S. SYAL ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 11 TH SEPTEMBER, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.