ACIT, CHENNAI V. M/s. Shriram Capital Trust (P) Pvt. Ltd., CHENNAI

ITA 208/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4849 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-06-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 10-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: S BALAMURUGAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 208/MDS/2011 ASSESSMENT YEAR : 2001-02 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE- VI(2), CHENNAI. V. M/S. SHRIRAM CAPITAL TRUST PVT. LTD., MOOKAMBIKA COMPLEX, 4, LADY DESIKA ROAD, MYLAPORE, CHENNAI-600 004. (PAN : AAACS7037E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.B. SEKARAN RESPONDENT BY : SHRI S.BALAMURUGAN O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-IX, CHENNAI IN ITA NO. 124/04- 05 DATED 12-11- 2010 FOR THE ASSESSMENT YEAR 2001-02. 2. SHRI P.B. SEKARAN, LEARNED CIT-DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI S. BALAMURUGAN, ADVOCATE REPRESENT ED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : I.T.A. NO. 208/MDS/2011 2 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE AO TO DELETE THE DISALLOWANCE OF ` 3,60,81,961/- WHICH INCLUDED THE MINIMUM GUARANTEE CHARGES OF ` 3,24,72,982/- RELYING ON CIT(A) ORDERS IN ITA NO.457/06-07 & ITA NO. 186/ 07-08 FOR A.Y 99-2000 & 2000-01 IN ASSESSEES CASE AND HO N'BLE ITATS ORDERS IN THE CASE OF M/S. RAMBAL PROPERTIES P. LTD. IN ITA NO. 1240/MDS/2005. 2.2 IT IS SUBMITTED THAT WITH REGARD TO THE MINIMU M GUARANTEE CHARGES, THE DECISIONS OF THE CIT(A) RELI ED UPON BY THE CIT(A) IN THE HAVE NOT BECOME FINAL AND APPE ALS TO THIS HON'BLE TRIBUNAL HAVE BEEN FILED BY THE DEPART MENT. 2.3 IT IS SUBMITTED THAT WITH REGARD TO THE MINIMU M GUARANTEE CHARGES, THE DECISION OF HON'BLE TRIBUNAL RELIED UPON BY THE CIT(A) IN THE HAS NOT BECOME FINAL AND APPEAL BEFORE THE HON'BLE HIGH COURT HAS BEEN FILED BY THE DEPARTMENT. 2.4 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HAT ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD OF ACCOUNTING AND THE EXPENSES IDENTIFIABLE WITH THE P ROJECT SHOULD BE ALLOWED ONLY IN THE YEAR IN WHICH INCOME IS OFFERED. 2.5 HAVING REGARD TO THE DECISION OF THE ITAT MUMB AI IN THE CASE OF WALL STREET CONSTRUCTION LTD. (101 ITD 156) THE CIT(A) OUGHT TO HAVE AT LEAST IDENTIFIED EXPENSES I DENTIFIABLE WITH THE PROJECT. I.T.A. NO. 208/MDS/2011 3 2.6 IT IS SUBMITTED THAT WITH REGARD TO DISALLOWAN CE OF ADMINISTRATION AND OTHER EXPENSES THE DECISIONS OF THE CIT(A) RELIED UPON BY THE CIT(A) HAVE NOT BECOME FI NAL AND APPEALS TO HON'BLE TRIBUNAL HAVE BEEN FILED BY THE DEPARTMENT. 3.1 THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE A.O TO ASSESS ` 16,42,282/- BEING INTEREST RECEIVED FROM M/S. SHRI HOUSING IP. LTD. BE ASSESSED UNDER BUSINESS. 3.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE ASSESSEE HAS DEPOSITED SURPLUS FUND AVAILABLE IN IT S REAL ESTATE BUSINESS. 3.3 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE MISCELLANEOUS INCOME DOES NOT RELATE TO BUSINESS AC TIVITY. 3.4 IT IS SUBMITTED THAT THE DECISIONS OF THE CIT( A) RELIED UPON BY THE CIT(A) IN THE HAVE NOT BECOME FINAL AND APPEALS TO THIS HON'BLE TRIBUNAL HAVE BEEN FILED BY THE DEPARTMENT. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. 4. AT THE TIME OF HEARING IT WAS FAIRLY AGREED BY B OTH THE SIDES THAT THE ISSUES IN THE APPEAL WERE SQUARELY COVERED BY T HE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE S OWN CASE. 5. IN REGARD TO GROUNDS 2.1 TO 2.6 IT WAS FAIRLY AG REED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THIS TRIBUNA L IN ITA NO. I.T.A. NO. 208/MDS/2011 4 1961/MDS/2010 DATED 04-02-2011 WHEREIN THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS : 4. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE DECISION OF THE CO-ORDINATE BENC H OF THIS TRIBUNAL IN ITA NO.1240/MDS/2005 DATED 28-02-2 007 WAS OF M/S. RAMBAL PROPERTIES PVT. LTD., WHICH IS A SISTER CONCERN OF THE ASSESSEE. IT WAS THE SUBMISSION THA T THE LEARNED CIT(A) HAD IN HIS ORDER IN PARA 3.3 FOLLOWE D THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. RAMBAL PROPERTIES PVT. LTD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT I S NOTICED THAT THE REVENUE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO DISTINGUISH THE FACTS AS MENTIONED IN T HE CASE OF M/S. RAMBAL PROPERTIES PVT. LTD., A SISTER CONCE RN OF THE ASSESSEE, REFERRED TO SUPRA. IN THESE CIRCUMSTANCE S, IT IS NOTICED THAT THE LEARNED CIT(A) HAS ONLY FOLLOWED T HE PRINCIPLES OF JUDICIAL DISCIPLINE IN FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. RAMBAL PROPERTIES PVT. LTD., REFERRED TO SUPRA, AND THE FACTS IN BOTH THE CASES BEING THE SAME, THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE STANDS CONFIRMED. IN THE CIRCUMSTANCES THE APPEAL OF THE REVENUE IS DISMISSE D. IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DE CISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL, THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE STANDS CONFIRMED. I.T.A. NO. 208/MDS/2011 5 6. IN REGARD TO GROUNDS 3.1 TO 3.4 IT WAS FAIRLY AG REED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO-ORDI NATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 1514 /MDS/2010 WHEREIN VIDE PARA 27 OF THE ORDER THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS : 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ORDER OF THE LEARNED CIT(A) CLEARLY SHOWS THAT HE HAS CONSIDERED THE FACT THAT THE MEMORANDUM AND ARTICLES OF ASSOCIATION CATEGORICALLY PERMITTED THE ASSESSEE TO DO MONEY LENDING BUSINESS AND THAT THE ASSESSEE COMPANY IS DOING THE BUSINESS OF MONEY LENDING. ONCE IT IS FOUND THAT THE ASSESSEE IS DOI NG THE BUSINESS OF MONEY LENDING, THEN OBVIOUSLY THE INTER EST INCOME ON THE ADVANCES GIVEN BY THE ASSESSEE COMPANY IN THE COURSE OF THE BUSINESS CAN ONLY BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE FINDI NG OF THE LEARNED CIT(A) IN DIRECTING THE ASSESSING OFFIC ER TO TREAT THE INTEREST ON THE ADVANCES TO M/S. SHRI HOU SING P. LTD. AS ALSO ON THE LOANS GIVEN TO DEPOSITORS ON THEIR DEPOSITS BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS , IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. I.T.A. NO. 208/MDS/2011 6 IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DE CISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES O WN CASE, THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE STANDS CONFIRME D. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 8. THE ORDER WAS PRONOUNCED IN THE COURT ON 23-06-2 011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 23 RD JUNE , 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE