ACIT 20(2), MUMBAI V. MIRACLE CAFE STORES & BAKERY, MUMBAI

ITA 2019/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3644 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-12-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 01-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI RAJENDRA SINGH,(AM) ITA NO.2019/MUM/2009 ASSESSMENT YEAR : 2004-05 ITA NO.266/MUM/2010 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME TAX -20(2) 612, PIRAMAL CHAMBERS LALBAUG MUMBAI-400 012. ..( APPELLANT ) VS. M/S. MIRACLE CAF STORES & BAKERY GROUND FLOOR, UNIT MANSION GAZDAR ROAD, ANDHERI(W) MUMBAI-400 058. ..( RESPONDENT ) P.A. NO. (AAKFM 8524 D) APPELLANT BY : MR. SHRAVAN KUMAR RESPONDENT BY : MR. PR AKASH PANDIT O R D E R PER D.K. AGARWAL (JM). THESE TWO APPEALS PREFERRED BY THE REVENUE ARE DIRECT ED AGAINST THE SEPARATE ORDERS DATED 15.12.2008 AND 12.1 0.2009 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2004-05 AND 2006-07 RESPECTIVELY. SINCE FACTS ARE IDENTICAL AND ISSUE INVOLVED IS COMMON, BOTH THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE, EXTRACTED FROM ITA NO.2019/M/2009 FOR ASSESSMENT YEAR 2004-05 ARE THAT THE ASSESSEE FIRM IS A TENANT IN RESPECT OF PREMISES AT UNITY MANSION , SITUATED GAZDAR ROAD, ANDHERI (W), MUMBAI PAYING MONTHLY REN T OF RS.2,000/-. ITA NO.2019 & 266.M/09/10 A.Y:04-05 & 06-07 2 THE ASSESSEE FIRM ENTERED INTO AN AGREEMENT WITH M/S. HAR D CASTLE RESTAURANTS PVT. LTD. BY WHICH IT HAS RECEIVED CONDUCTING CHARGES OF RS.36.00 LACS PER YEAR AND INTEREST FREE REFUNDABLE DEP OSIT OF RS.1.00 CRORES. THE ASSESSEE HAS CLAIMED NOMINAL EXPENSES OF RS.10,000 /- ON ACCOUNT OF ACCOUNTS CHARGES, RS.360/- ON ACCOUNT OF BANK CHAR GES AND RS.30,000/- ON ACCOUNT OF RENT, DECLARED TAXABLE INCOME OF RS.35,59,640/-. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE WAS ASKED AS TO WHY INTEREST @ 9% SHOULD NOT BE TAX ED ON TAX FREE DEPOSITS OF RS. 1 CRORES RECEIVED FROM HARD CASTL E. IN REPLY, THE ASSESSEE STATED THAT THE SIMILAR ISSUE AROSE IN THE PRE CEDING ASSESSMENT YEAR AND THE ASSESSING OFFICER IN THAT YEAR HAD CA LCULATED INTEREST @ 8% BASED ON THE FACTS THAT THE PARTNERS HAVE INVESTED THE LOAN RECEIVED FROM THE FIRM IN TAX FREE RBI RELIEF B ONDS AND ACCORDINGLY MADE AN ADDITION OF RS.8.00 LACS TO THE TOTA L INCOME OF THE ASSESSEE AND THE APPEAL IS PENDING BEFORE THE LD. CIT(A) . IT WAS FURTHER SUBMITTED THAT THE RATE OF INTEREST ON FIXED DEPOSIT PREVAILING AT THE TIME OF INVESTMENT WAS 6% . FURTHER THE PARTNERSHIP DEED DOES NOT AUTHORISE TO CHARGE ANY INTEREST ON LOANS TO PARTNE RS. HOWEVER, THE ASSESSING OFFICER AFTER REJECTING THE ASSESSEE'S EXPLANAT ION WAS OF THE VIEW THAT INTEREST FREE REFUNDABLE DEPOSIT HAS BE EN INVESTED BY THE PARTNERS IN TAX FREE RBI RELIEF BONDS ON INTEREST @ 8% , HENCE, HE ADDED RS.8.00 LACS TO THE TOTAL INCOME OF THE ASSESSEE FIRM . BESIDES THIS THE ASSESSING OFFICER ALSO DISALLOWED RENT OF RS.6,000/ - AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.43,65,460/- VIDE ORDER DATED 30.11.2006 PASSED U/S.1 43(3) OF THE INCOME TAX ACT, 1961 (THE ACT). ON APPEAL, THE LD. CI T(A) FOLLOWING THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 03-04 DELET ED THE ADDITION OF RS.8.00 LACS MADE BY THE ASSESSING OFFICER . ITA NO.2019 & 266.M/09/10 A.Y:04-05 & 06-07 3 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US AND CHALLENGED IN THE COMMON GROUNDS F OR THE ASSESSMENT YEARS 2004-05 AND 2006-07 THE DELETION OF ADD ITION OF RS.8.00 LACS EACH MADE BY THE ASSESSING OFFICER. 4. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE OR DER OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE SUB MITS THAT THIS ISSUE IS DIRECTLY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ASSTT. COMMISSIONER OF INCOME TAX VS. M/S. MIRACLE CAF STORES & BAKERY IN ITA NO.4 861/MUM/2007 FOR THE ASSESSMENT YEAR 2003-04 ORDER DATED 25.5.2009. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIB UNAL. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS SQUAR ELY COVERED IN FAVOUR OF THE ASSESSEE WHEREIN THE TRIBUNAL VIDE PARA- 4 OF ITS ORDER SUPRA, HAS HELD AS UNDER :- 4. AFTER HEARING THE LEARNED COUNSELS, WE ARE OF THE OPINION THAT THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). AS RIGHTLY HELD BY THE LD. CIT(A) THE DEPOSIT IS IN THE FIRMS HANDS AND THERE IS NO PROV ISION TO CHARGE INTEREST ONCE THE AMOUNTS ARE DRAWN BY THE PARTNERS. SINCE THERE WAS NO CLAIM FOR INTEREST IN THE PARTNERSHIP DEED THE ASSESSING OFFICER CANNOT ESTIM ATE THE INCOME IN THE HANDS OF THE FIRM WHICH HAS NOT A CCRUED TO IT. NO NOTIONAL INCOME CAN BE BROUGHT TO TAX. ON THE FACTS OF THE CASE WE UPHOLD THE ORDER OF THE LD. CI T(A) AND REJECT THE GROUNDS RAISED BY THE REVENUE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE ORDER OF THE T RIBUNAL SUPRA, ITA NO.2019 & 266.M/09/10 A.Y:04-05 & 06-07 4 DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE ADDITION OF RS.8.00 EACH IN THE ASSESSMENT YEARS 2004- 05 AND 2006-07 MADE BY THE ASSESSING OFFICER . THE COMMON GROUN DS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 7. IN THE RESULT, REVENUES APPEALS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.12.2010. SD/- SD/- (RAJENDRA SINGH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 10.12.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.