MAHAMRU TRADING CO. P. LTD, MUMBAI V. DCIT CIR 5(2), MUMBAI

ITA 2042/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3645 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 28-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Revised return; Unabsorbed depreciation
• Section: 115JB; 154

Judgement Text

ITA NO.2042/MUM/2012 MAHAMRU TRADING CO. PVT. LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, AM AND DR. S.T.M. PAVAL AN, JM ./ I.T.A. NO.2042 /MUM/2012 ( / / / / ASSESSMENT YEAR :2006-07 MAHAM E RU TRADING CO. PVT. LTD. 394C, LAMINGTON CHAMBERS, LAIMINGTON ROAD MUMBAI- 400 004. / VS. D Y . COMMISSIONER OF INCOME TAX CIRCLE-5(2), MUMBAI. ! '# ./ PAN : AAACM7131M ( !$ / / / / APPELLANT ) .. ( %&!$ / RESPONDENT ) !$ ' ( ' / APPELLANT BY : SHRI RAKESH JOSHI %&!$ ' ( ' / RESPONDENT BY : SHRI. MOHIT JAIN ' )# / // / DATE OF HEARING : 09.04.2013 *+ ' )# / DATE OF PRONOUNCEMENT : 19.04.2013 ,'- / O R D E R PER B. RAMAKOTAIAH, A.M . THIS IS AN ASSESSEES APPEAL AGAINST THE ORDERS OF THE CIT(A)-9, MUMBAI DATED 17.02.2012 CONFIRMING THE PENALTY OF RS.20,29,571/- UNDER SECTION 271(1)(C) ON THE REASON FOR FURNISHING INACCURATE PARTICULARS. 2. BRIEFLY STATED, THE ASSESSEE IS A DOMESTIC PRIV ATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES & SECURITIES. THE ASSESSEE DECLARED NIL INCOME AFTER SETTING OFF CARRIED FORWARD LOSSES OF RS.60,29,625/ - AGAINST BUSINESS INCOME. AFTERWARDS ITA NO.2042/MUM/2012 MAHAMRU TRADING CO. PVT. LTD. 2 ASSESSEE FILED REVISED RETURN DECLARING TOTAL INCOM E OF RS.24,41,590/-. IN THE COURSE OF ASSESSMENT HAVING NOTICED THAT ASSESSEE HAS INCOME ON INCORPORATED DEPOSIT ICD OF RS.78,13,449/-, INTEREST ON FD OF RS.6,78,580/- A ND DIVIDEND INCOME OF RS.16,55,850/-, ASSESSING OFFICER TREATED THE SAME AS INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME. WITH REFERENCE TO THE CLAIM OF CARRY FORW ARD LOSSES AO HOLDS THAT HAVING ASSESSED THE ASSESSMENT YEAR 2005-06 AT RS. 4,07,08 9/-, THERE WAS NO SET-OFF OF UNABSORBED LOSSES. HE INITIATED PENALTY PROCEEDING FOR CLAIMING LOSS OF RS. 60, 29,625/-. IN THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE C IT (A) THE ASSESSEE WITHDREW APPEAL FILED CONTESTING TREATMENT OF BUSINESS INCOME AS IN COME FROM OTHER SOURCES. THE ASSESSING OFFICER FINALIZED THE PROCEEDINGS UNDER S ECTION 271 (1) (C) VIDE ORDER DATED 30.03.2011 AND ACCORDINGLY LEVIED PENALTY OF RS.20, 29,571/-. THE LD. CIT (A) CONFIRMED THE SAME BY DISCUSSING VARIOUS LEGAL PROPOSITIONS. 3. BEFORE US, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE FROM THE INCEPTION HAS NO OTHER INCOME EXCEPT INCORPORATE DEPOSITS, DIVIDEND S AND THESE ARE ACCEPTED AS BUSINESS INCOME IN ALL THE YEARS. IT IS FURTHER SUBMITTED TH AT IN ASSESSMENT YEAR 2005-06 THE ASSESSEE OFFERED INCOME OF RS.9,89,73,797/- WHICH WAS CLAIMED AS EXEMPT BEING LONG TERM CAPITAL GAIN AND BUSINESS INCOME OF RS. 4,07,0 89/- WHICH IS NOTHING BUT INCOME UNDER 115JB, WHEREAS ASSESSEE CLAIMED CARRIED FORW ARD LOSSES AT RS. 64,36,715/-,(PAPER BOOK PAGE24). HE FURTHER REFERRED TO THE APPLICATI ON UNDER SECTION 154 DATED 31.01.2012 TO THE AO INTIMATING THAT CARRIED FORWARD BUSINESS LOSS ARE AVAILABLE TO THE ASSESSEE AND CLAIMED SET-OFF. THE LD. DR HOWEVER, SUBMITTED THA T ASSESSEE HAS CLAIMED LOSS WHICH WAS NOT SUBSTANTIATED THEREFORE, THE PENALTY IS LEV IABLE. 3. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RE CORD. THERE IS NO DISPUTE WITH REFERENCE TO ASSESSEE DOING BUSINESS OF INVESTMENT AND FINANCE AND THE SAME WAS ALSO RECORDED IN THE ASSESSMENT ORDER BY THE AO. SUBSTAN TIAL PORTION OF THE INCOME IS BY WAY OF INTERESTS AND ALSO INCOME ON LONG TERM CAPITAL G AINS AS SEEN FROM THE ORDER OF ASSESSMENT YEAR 2005-06 AND ENCLOSED COMPUTATION OF INCOME. ASSESSEE DID CLAIM THE CARRIED FORWARD LOSS AT RS. 64,36,715/- WHILE IT O FFERED INCOME UNDER 115JB AT ITA NO.2042/MUM/2012 MAHAMRU TRADING CO. PVT. LTD. 3 RS.4,07,089/-. THE ASSESSEE CLAIMED REFUND OF RS.41 813/- ON THE BASIS OF COMPUTATION AS PER THE ACKNOWLEDGEMENT PLACED ON RECORD, THEREFOR E IT CANNOT BE SAID THAT ASSESSEE CLAIM FOR LOSSES TO BE SET OFF IS NOT GENUINE. ASSE SSEE CANNOT BE PENALIZED WHEN ASSESSING OFFICER IGNORES THE COMPUTATION ENCLOSED TO THE RETURN AND DECIDES ONLY ON THE BASIS OF ASSESSMENT ORDER OF AY 2005-06 IN WHICH AO DID NOT QUANTIFY THE CARRIED FORWARD LOSS. THESE FACTS WERE ALSO BROUGHT TO THE NOTICE OF THE CIT(A) BUT UNFORTUNATELY HE DID NOT CONSIDER THE SAME. AS SEEN FROM THE STAT EMENT OF CARRIED FORWARD/ BROUGHT FORWARD LOSSES (ON RECORD AT PAGE NO.26), THE SAME ARE AS UNDER:- S.NO. ASSESSMENT YEAR DATE OF FILING OF RETURN UNABSORBED DEPRECIATION UNABSORBED (LOSS) PROFIT TOTAL AMOUNT (ROUND OFF) 1. 1999-2000 31.12.1999 - (2,435,032) (2,435,030) 2. 2000-2001 31.11.2000 - (2,062,469) (2,062,470) 3. 2001-2002 31.10.2001 - (2,646,840) (2,646,840) 4. 2002-2003 31.10.2002 - (445,100) (445,100) 5. 2003-2004 28.11.2003 - 1,166,075 1,166,075 6. 2004-2005 30.11.2004 - (13,345) (13,350) TOTAL (6,436,711) (6,436,715) THIS INDICATES THAT THE ASSESSEES CLAIM FOR SETTIN G OFF LOSS WHEN ASSESSEE FILED THE RETURN OF INCOME IS A BONAFIDE CLAIM AND ASSESSEE HAVING B EEN OFFERING THE SAME OR SIMILAR INCOMES REGULARLY AS BUSINESS INCOMES IN EARLIER Y EARS, HAS CLAIMED THE SETTING OFF AS PER THE RECORD ONLY. IT MAY BE ANOTHER REASON THAT THE INCOME WAS ULTIMATELY ASSESSED UNDER THE HEAD OTHER SOURCES. THEREFORE, WE ARE OF THE OPINION THAT PENALTY WAS LEVIED WRONGLY BY NOT APPRECIATING THE FACTS AVAILABLE ON RECORD BEFORE THE AUTHORITIES. 4. IN VIEW OF THIS, SINCE IT IS ONLY A CLAIM MADE B Y ASSESSEE BUT NOT ACCEPTED BY THE ASSESSING OFFICER, THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS 322 ITR 158(SC) APP LIES TO THE FACTS OF THE CASE. ITA NO.2042/MUM/2012 MAHAMRU TRADING CO. PVT. LTD. 4 ACCORDINGLY, WE HAVE NO HESITATION IN CANCELLING T HE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE CIT(A). THE GROUNDS ARE ALLOWED. 5. IN THE RESULT THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.04.2013 . ,'- ' *+ # ' .,/ 19.04.2013 + ' 0 SD/- SD/- ( DR. S.T.M. PAVALAN) ( B.RAMAKOTAIAH) , / JUDICIAL MEMBER '# , / ACCOUNTANT MEMBER MUMBAI ; ., DATED 19.04.2013 ... / ASHISH PS ,'- ' %)BC D'C) ,'- ' %)BC D'C) ,'- ' %)BC D'C) ,'- ' %)BC D'C)/ COPY OF THE ORDER FORWARDED TO : 1. !$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. E ( ) / THE CIT(A)-9, MUMBAI 4. E / CIT 5, MUMBAI 5. CG0 % ) , , / DR, ITAT, MUMBAI B 6. 0I J / GUARD FILE. ,'- ,'- ,'- ,'- / BY ORDER, &C) %) //TRUE COPY// K KK K/ // /L M L M L M L M ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI