GLORIOUS REALITY P. LTD, MUMBAI V. ITO 6(3)(1), Mumbai

ITA 217/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7693 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 29-01-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 12-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SANTOSH PARAB
• Keywords: Business income; Earning of tax free income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI R.K. PAND A ,(AM) ITA NO.217/MUM/2009 ASSESSMENT YEAR : 2005-06 GLORIOUS REALTY PVT. LTD. MAHINDRA TOWERS, DR. G.M. BHOSALE MARG P.K. KURNE CHOWK, WORLI MUMBAI-400 018. ..( APPELLANT ) P.A. NO. (AAACG 2097 E) VS. INCOME TAX OFFICER WARD 6(3)(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI-20. ..( RESPONDENT ) APPELLANT BY : SHRI SANTOSH PARAB RESPONDENT BY : SHR I SUSHIL KUMAR O R D E R PER D.K. AGARWAL (JM). THE APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 1.10.2008 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2005-06 TAKING FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THAT THE BUSINESS OF THE COMPANY HAD NOT COMMENCED AND HENCE FURTHER ERRED IN DISALLOWING THE ENTIRE EXPENDITURE OF RS.24,57,956/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FURTHER ERRED IN CONFIRM ING THE ITA NO.217/M/09 A.Y: 05-06 2 INTEREST AMOUNTING TO RS.1,70,258/- AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME. 2. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED THAT ABOVE ISSUES ARE COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF TH E REVENUE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN GL ORIOUS REALITY PVT. LTD. VS. ACIT ITA NO.2412/M/06 FOR ASSESSMENT YEAR 2003-04 DATED 21.8.08 WHEREIN THE TRIBUNAL WHILE DECIDING T HE SIMILAR ISSUES AGAINST THE ASSESSEE HAS FOLLOWED THE EARLIER ORDER OF T HE TRIBUNAL IN ASSESSEES OWN CASE . THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED ON RECORD THE SAID COPY OF THE ORDERS OF THE TRIB UNAL. 3. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 15.12.1995 WITH THE O BJECTS TO CARRY ON CONSTRUCTION BUSINESS. HOWEVER, DUE TO GENERAL LU LL AND SLOW DOWN IN THE CONSTRUCTION BUSINESS, IT HAS CONCENTRATED ON PL ANNING THE BUSINESS ACTIVITY, STUDYING VARIOUS ALTERNATIVES FOR ACHIEV EMENT OF ITS MAIN OBJECT AND AUGMENTING THE FINANCIAL RESOURCES. TH E ASSESSEE ADMITTED THAT THERE WAS NO CHANGE IN THE BUSINESS ACTIVIT Y VIS-A-VIS EARLIER ASSESSMENT YEAR. IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS DEBITED RS.24.57 LACS AS TOTAL EXPENDITURE IN THE P& L ACCOUNT OUT OF WHICH RS.24.18 LACS PERTAINS TO INTEREST ON LOANS. THE AO AFTER CONSIDERING THE ASSESSEES EXPLANATION AND IN RELYING ON THE DECISION IN ITA NO.217/M/09 A.Y: 05-06 3 TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. VS. CIT (227 ITR 172)(SC) DISALLOWED THE EXPENSES INCLUDING THE INTEREST PAYMENT OF RS.24,57,956/- DEBITED TO P&L ACCOUNT AND FOR THE SIMIL AR REASONS TREATED THE INTEREST INCOME OF RS.1,70,258/- AS INCOME F ROM OTHER SOURCES. ON APPEAL, THE LD. CIT(A) FOLLOWING THE APPE LLATE ORDERS FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 CONFIRMED THE DISALLOWANCE MADE BY THE AO AND UPHELD THE ACTION OF T HE AO IN TREATING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. 4. THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003- 04 (SUPRA), HAS HELD VIDE PARA-7 AND 8 OF ITS ORDER DA TED 21.8.2008 AS UNDER : 7. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION IN ITAT MUMBAI BENCH D IN ASSESSEES OWN CASE IN ITA NO.5686/M/05 FOR THE A.Y. 2002-03 VIDE ORDER DATED 26 TH MAY, 2008 IN WHICH THE ITAT HELD AS UNDER : WE HAVE HEARD BOTH SIDES, MATERIAL ON RECORD AND ORDERS OF AUTHORITIES BELOW. IT IS NOTED THAT THE ASSESSE ES BUSINESS HAS NOT COMMENCED AND IT IS A CASE OF MIXED FUNDS AND THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE THAT EXPENDITURE CLAIMED WAS NOT RELATED TO EARNING T HE EXEMPT INCOME. IN THE BACK GROUND OF THESE FACTS, WE H OLD THAT THE ORDER OF THE LD. CIT(A) IS CORRECT IN LAW. 8. WE FIND THAT THE ISSUE IS COVERED BY THE ABOVE DECISION OF THE ITAT ALSO WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE ASSESSEE WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIB UNAL, DECLINE TO ITA NO.217/M/09 A.Y: 05-06 4 INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON BOTH THE ISSUES AND ACCORDINGLY THE GROUNDS TAKEN BY THE ASSESSEE ARE RE JECTED. 5. IN THE RESULT, ASSESSEES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.2.2010. SD/- SD/- ( R.K. PANDA ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED:12.2.2010. 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. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 29.1.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 2.2.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 12.2.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 15.2.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER