, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH. .. , ! , BEFORE S/SH.I.P.BANSAL, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.2139/MUM/2013, ' ' ' ' # # # # / ASSESSMENT YEAR-2002-03 EMINENT HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI-400018 VS ACIT CENTRAL CIRCLE-31, R.NO.409, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN: AAACE3115H ( $% / APPELLANT) ( &'$% / RESPONDENT) /. ITA NO.2140/MUM/2013, ' ' ' ' # # # # / ASSESSMENT YEAR-2005-06 EMINENT HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, WORLI, MUMBAI-400018 VS DCIT CENTRAL CIRCLE-31, R.NO.409, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN: AAACE3115H ( $% / APPELLANT) ( &'$% / RESPONDENT) /. ITA NO.2141/MUM/2013, ' ' ' ' # # # # / ASSESSMENT YEAR-2006-07 EMINENT HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, WORLI, MUMBAI-400018 VS ACIT CENTRAL CIRCLE - 31, R.NO.409, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN: AAACE3115H ( $% / APPELLANT) ( &'$% / RESPONDENT) '() '() '() '() * * * * / ASSESSEE BY : SHRI DHARMESH SHAH + * / REVENUE BY : DR. P. DANIEL ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 18-06-2014 -.# + ), / DATE OF PRONOUNCEMENT : 18-06-2014 ' ' ' ' , 1961 + ++ + 254 )1( )/) )/) )/) )/) 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDERS DT.23.01.2013 & 21.12.2012 O F THE CS.IT(A)-37 & 36,MUMBAI,ASSESSEES HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NO. 2139/MUM/2013-AY.2002-03 1.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S. 250 OF THE ACT. 2.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING ORDER WITHOUT COMPLYING WITH THE PRINCIPLES OF NATU RAL JUSTICE. 2 ITA NO. 2139 TO 2141/MUM/2013 EMINENT HOLDINGS PVT. L TD. 3.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CA N BE ASSESSED IN THE HANDS OF THE APPELLANT. 4.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWING THE INTEREST EXPENDITURE OF RS.5,14 ,455/-. 5.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CHARGING INTEREST U/S. 234A, 234B AND 234C OF THE ACT. 6.THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD TO, AMEND OR ALTER ALL OR ANY OF THE GROUNDS APPEAL. ITA NO. 2141/MUM/2013-AY.2006-07 1.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S. 143 OF THE ACT, DETERMINING THE INCOME O F THE APPELLANT AT RS. 11,82,710/- IS ILLEGAL AND BAD IN LAW. 2.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER IN GROSS VIOLATION OF PRINCIPLES OF NATURAL J USTICE. 3.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CA N BE ASSESSED IN THE HANDS OF THE APPELLANT. 4.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING RELIEF OF LIABILITY AMOUNTING TO RS.5,14,455/-,TOWA RDS INTEREST EXPENDITURE CLAIMED BY THE APPELLANT. 5.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CALCULATING BOOK PROFIT U/S 115JB AMOUNTING TO RS. 11,80,210/-. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CHARGING INTEREST U/S. 234A, 234B AND 234C OF THE ACT. 7.THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD TO, ALTER, AMEND AND/OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS APPEAL. ITA NO. 2139/MUM/2013-AY.2002-03 : DURING THE COURSE OF HEARING BEFORE US AUTHORISED R EPRESENTATIVE (AR) OF THE ASSESSEE STATED THAT IDENTICAL GROUNDS HAD BEEN FILED FOR THE AY.2005-06 (ITA/2140/MUM/2013)ALSO.HE DID NOT PRESS GROUNDS NO. 1 TO 3. THEREFORE,FIRST THREE GROUNDS R AISED FOR THE YEAR UNDER APPEAL STAND DISMISSED AS NOT PRESSED. 2.1. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF TRADING AND INVESTING IN SECURITIES,FILED ITS RETURN OF INCOME ON 22.04.2013.ASSESSING OFFICER (A O) PASSED AN ORDER U/S.144 R.W.S. 147 OF THE ACT ON 22.03.2006,DETERMINING THE INCOME OF THE ASS ESSEE AT RS.18.83 LAKHS.DURING THE ASSESS - MENT PROCEEDINGS,CERTAIN ADDITIONS WERE MADE BY THE AO AND SAME WERE CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY(FAA).AGAINST THE ORDER OF THE FAA,ASSESSEE HAS RAISED SIX GROUNDS OF APPEAL BEFORE US,AS STATED EARLIER. 2.2. GROUND NO.4 IS ABOUT DISALLOWANCE OF INTEREST EXPEN DITURE OF RS. 5,14,455/-.BEFORE US,AR STATED THAT IDENTICAL ISSUE HAD COME UP FOR ADJUDIC ATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY-2007-08, THAT MATTER WAS RESTORED BACK T O THE FILE OF THE FAA.DEPARTMENTAL REPRESEN - TATIVE(DR) LEFT TO THE ISSUE TO THE DISCRETION OF T HE BENCH. 2.3. AFTER HEARING THE RIVAL CONTENTIONS,WE ARE OF THE O PINION THAT MATTER SHOULD BE REMANDED BACK TO THE FILE OF THE FAA.WE FIND THAT WHILE DECIDING THE APPEAL FOR AY 2007-08 (ITA/8200/2010 DT. 12.02.2014) E BENCH OF TRIBUNAL HAS DECIDED THE ISS UE AS UNDER: 4. GROUND NOS. 4 & 5 ARE INTER-CONNECTED RELATING TO THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 5,14,455/-.IN THIS REGARD, AT THE OUTSET, LD COUNSE L MENTIONED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE ITAT, MUMBAI IN THE CASED O F HITESH S. MEHTA VS. DCIT VIDE ITA NO. 7726 & 7727/M/2010 DATED 26.04.2013, WHEREIN THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILES OF CIT(A) FOR ADJUDICATION OF THE ISSUE AFRESH BY ADJUDICATING TH E RESPECTIVE GROUND RELATING TO THE 3 ITA NO. 2139 TO 2141/MUM/2013 EMINENT HOLDINGS PVT. L TD. REJECTION/RELIABILITY OF THE BOOKS OF ACCOUNT. PARA 5 FROM THE SAID ORDER OF THE TRIBUNAL (SUPRA) IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER : 5. GROUND NO.4 RELATES TO THE ACTION OF THE LD CIT (A) IN CONFIRMING THE LIABILITIES AMOUNTING TO RS. 11,24,99,052/- AND RS. 12,61,36,24 5/- RESPECTIVELY FOR THE AYS 2005-06 AND 2006-07 TOWARDS INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE FINDINGS GIVEN IN PARA 3.3 ABOVE IN RESPEC T OF REJECTION/ RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSED ADJUDICATION OF THE LD CI T(A) IN VIEW OF THE SAID DIRECTION MAY HAVE DIRECT IMPACT ON THE ISSUE OF THE IMPUGNED LIA BILITY, WE SET ASIDE THIS ISSUE TO THE FILES OF THE CIT(A) TO ADJUDICATE AFRESH ALONG WITH THE A DJUDICATION OF THE RESPECTIVE GROUND PERTAINING TO THE REJECTION/ RELIABILITY OF THE BOO KS OF ACCOUNTS. 5 . ON THE OTHER HAND, LD DR DUTIFULLY RELIED ON THE ORDER OF THE AO/CIT(A). 6 .WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORD ERS OF THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF HITESH S. MEHT A (SUPRA). WHETHER THE INTEREST LIABILITIES OF RS. 5,14,455/- CONSTITUTES ASCERTAINED ONE OR NOT IS AL SO LINKED TO THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AS THE BOOKS OF ACCOUNT IS THE BASIS FOR C OMPUTATION OF BOOK PROFITS U/S 115JA OF THE ACT. THIS IS COMMON ISSUE QUA THE ISSUE ADJUDICATED IN T HE CASE OF THE HITESH S. MEHTA (SUPRA) AND MATTER WAS SET ASIDE. RESPECTFULLY FOLLOWING THE SA ID ORDER OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE RAISED IN GROUND NO.4 SHOULD BE SET ASIDE TO THE FILES OF THE CIT(A) FOR FRESH ADJUDICATION OF THE ISSUE AFTER GR ANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE DECISION IF ANY SHOULD BE TAKE N ONLY AFTER CONSIDERING THE DECISION IN THE CASE OF HITESH S MEHTA, (SUPRA). ACCORDINGLY, GROUND NOS . 4 & 5 ARE SET ASIDE. RESPECTFULLY,FOLLOWING THE ABOVE ORDER,WE ARE RESTO RING BACK THE MATTER TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.HE IS DIRECTED TO AFFORD A REASO NABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.4 IS ALLOWED IN FAVOUR OF THE ASSESSEE,IN PART. 3. NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S . 234 OF THE ACT.BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFIED ENTITY,THAT THE PROVISIONS OF S. 234A, 234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLIED WITH,THAT THE ASSETS WERE A LREADY IN ATTACHMENT OF THE CUSTODIAN APPOINTED UNDER THE PROVISIONS OF THE SPECIAL COURT S ACT,THAT THE TRIBUNAL IN THE CASE OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE V IEW IN FAVOUR OF THE APPELLANT,THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIVINE HOLDINGS PV T. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVISIONS OF SECTIONS 234A,234B AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO THE NOTIFIED ENTITIES ALSO,THAT THE A SSESSEE WAS IN THE PROCESS OF FILING AN APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE SUPREME C OURT,THAT THE INCOME EARNED IN THE YEAR UNDER CONSIDERATION WAS SUBJECTED TO PROVISIONS OF TDS,TH AT THE CHANGEABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD BE AFTER CONSIDERIN G THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED. THE APPELLANT RELIES IN THIS R EGARD ON THE FOLLOWING DECISIONS. HE RELIED UPON THE CASES OF MOTOROLA INC. V. DCIT [95 ITD 269 (DEL .(SB)], SEDCO FORES DRILLING CO. LTD. [264 ITR 320],NGC NETWORK ASIA LLC [313 ITR 187] ,SUMMIT BHATACHARYA [ 300 ITR (AT) 347 (BOM)(SB)], VIJAL GOPAL JINDAL [ITA NO. 4333/DEL/20 09] & EMILLO RUIZ BERDEJO [320 ITR 190 (BOM)].DR RELIED UPON THE CASES OF DEVINE HOLDINGS PVT. LTD. 3.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE CASE OF DEVINE HOLDINGS PVT. LTD. HONBLE BOMBAY HI GH COURT HAS HELD THAT PROVISIONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO.THEREFORE, UPHOLDING THE ORDER OF THE FAA TO THAT EXTENT,WE HOLD THAT PROVISIONS O F SECTION 234 OF THE ACT ARE APPLICABLE.AS FAR AS CALCULATION PART IS CONCERNED,WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE.THEREFORE, WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSIDERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO TH E ASSESSEE.GROUND NO.5 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. 4 ITA NO. 2139 TO 2141/MUM/2013 EMINENT HOLDINGS PVT. L TD. AS A RESULT, APPEAL FILED BY THE ASSESSEE FOR THE A Y.2002-03 STANDS PARTLY ALLOWED. ITA NO. 2140/MUM/2013-AY.2005-06 4. AS THE GROUNDS OF APPEAL FOR YEAR UNDER CONSIDERATI ON ARE IDENTICAL TO THE GROUNDS RAISED BY THE ASSESSEE FOR THE AY 2002-03,SO,FOLLOWING OUR ORDER FOR THAT YEAR,WE PARTLY ALLOW THE APPEAL FILED BY THE ASSESSEE. ITA NO. 2141/MUM/2013 5. ASSESSEE HAS RAISED ONE MORE GROUND FOR THE YEAR UN DER APPEAL IN ADDITION TO THE SIX GROUNDS THAT WERE RAISED IN AY 2002-03 AND 2006-07.THE FRES H GROUND TAKEN BY THE(GROUND NO.5) ASSESSEE IS ABOUT CALCULATING BOOK PROFIT U/S.115JB OF THE ACT. BEFORE US,AR DID NOT PRESS FIRST THREE GROUNDS OF A PPEAL,SO,SAME ARE DISMISSED AS NOT PRESSED. GROUND NO.4 IS ABOUT INTEREST EXPENDITURE.WE HAVE A LREADY DECIDED THE ISSUE WHILE ADJUDICATING THE APPEAL FOR THE YEAR 2002-03.FOLLOWING THAT ORDE R MATTER IS RESTORED BACK TO THE FILE OF THE FAA FOR FRESH ADJUDICATION. GROUND NO.6 IS ABOUT THE INTEREST LEVIED U/S.234 OF THE ACT.FOLLOWING OUR ORDER FOR THE YEAR 2002- 03,WE ARE RESTORING THE ISSUE TO THE FILE OF THE AO . 6. NOW WE WOULD LIKE TO DISCUSS GROUND NO.5.BEFORE US, AR STATED THAT THE GROUND RELATING TO CALCULATION OF BOOK PROFIT U/S.115JB,AMOUNTING TO R S. 11.80 LAKHS WAS CONSEQUENTIAL TO GROUND NO.4.DR SUPPORTED THE ORDER OF THE FAA.AFTER CONSID ERING THE RIVAL SUBMISSIONS,WE ARE OF THE OPINION THAT GROUND NO.5 IS CONSEQUENTIAL TO GROUND NO.4.AS WE HAVE RESTORED BACK THE EARLIER GROUND TO THE FILE OF THE FAA,SO,GROUND NO.5 IS ALS O RESTORED BACK HIM FOR FRESH ADJUDICATION.HE WILL AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.GROUND NO.5 IS ALLOWED FOR STATISTICAL PURPOSES. AS A RESULT,APPEALS FILED BY THE ASSESSEE FOR ALL THE THREE AY.S. STAND PARTLY ALLOWED. 1)2 '() + )'3 ' #4 5 + /6 7 0)2 8 + ) 9:. ORDER PRONOUNCED IN THE OPEN COURT ON 18 JUNE,2014 . 0 + -.# 7 ;' 18 TWU , 201 4 . + / < SD/- SD/- ( .. / I.P. BANSAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, ;' /DATE:18.06 . 2014. SK 0 0 0 0 + ++ + &)= &)= &)= &)= > =#) > =#) > =#) > =#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ ? @ , 4. THE CONCERNED CIT / ? @ 5. DR E BENCH, ITAT, MUMBAI / =A/ &)' , . . . 6. GUARD FILE/ / 1 '=) '=) '=) '=) &) &)&) &) //TRUE COPY// 0' / BY ORDER, 5 ITA NO. 2139 TO 2141/MUM/2013 EMINENT HOLDINGS PVT. L TD. B / 9 DY./ASST. REGISTRAR , /ITAT, MUMBAI