SUMITA SYNTHETICS LTD, MUMBAI V. ITO WD 4(3)(4), MUMBAI

ITA 228/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75463 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 10-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIV JAIN
• Keywords: Business income; Depreciation; Opportunity of being heard
• Section: 43B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO , JM AND SHRI N.K. BIL LAIYA, AM ./ I.T.A. NO.228/MUM/2012 ( ' ' ' ' / ASSESSMENT YEAR :2005-06 M/S. SUMITA SYNTHETICS LTD., 609, KAKAD MARKET, 306, KALBADEVI ROAD, MUMBAI-400 002 / VS. THE ITO 4(3)(4), AAYAKAR BHAVAN, MUMBAI-400 020 ( % ./ ) ./ PAN/GIR NO. : AABCS 4453P ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY: SHRI NISHIT GANDHI +,(* . - / RESPONDENT BY: SHRI SANJIV JAIN . /0% / DATE OF HEARING : 22.01.2014 12' . /0% / DATE OF PRONOUNCEMENT :29. 01.2014 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-9, MUMBAI DT.21.01.2011 PERTAINING TO A.Y. 2005-06. 2. THE ASSESSEE HAS RAISED THREE SUBSTANTIVE GROUND S OF APPEAL. THE GRIEVANCE OF THE ASSESSEE RELATES TO THE CONFIRMATI ON OF THE ADDITION ON ACCOUNT OF (1) DEPRECIATION (2)DISALLOWANCE OF SHOR T TERM CAPITAL LOSS ON SALE OF FIXED ASSETS AND (3) ADDITION MADE ON ACCO UNT OF VARIOUS ITA NO. 228/M/2012 2 EXPENSES. ALL THE THREE GRIEVANCES OF THE ASSESSEE ARE INTER-RELATED AS THE LOWER AUTHORITIES HAVE HELD THAT THE ASSESSEE HAD N OT CARRIED OUT ANY BUSINESS DURING THE YEAR. 3. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT FOR TH E YEAR UNDER CONSIDERATION AS EXHIBITED AT PAGE-14 OF THE PAPER BOOK SHOW THAT THE ASSESSEE HAS SHOWN OTHER INCOME AT RS. 8,62,337/- W HICH COMPRISES OF (I) INTEREST RECEIVED RS. 25,702.82, (II) PROFIT ON SALE OF ASSETS (NET) RS. 5,70,415.71, (III) FACTORY RENT RECEIVED RS. 2,60,0 00/- AND (IV) INTEREST ON I.T. REFUND RS. 6,219/- TOTALING TO RS. 8,62,338/-. THE INCOME COMPUTED BY THE AO IS AS UNDER: NET PROFIT AS PER ACCOUNTS RS. 51,638/- ADD: DEPRECIATION DEBITED TO ACCOUNTS RS. 2,77,966 SALES TAX DISALLOWED EARLIER NOW PAID 43B RS. 4,400 AMOUNT DISALLOWABLE U/S. 40(A)(IA) RS. 20,000 DISALLOWANCE OUT OF EXPENSES AS DISCUSSED IN PARA-8 RS. 2,37,602 RS. 5,91,606 LESS: PROFIT ON SALE OF ASSETS CONSIDERED SEPARATELY RS.-5,70,416 RS. 21,190 ADD: SHORT TERM CAPITAL GAINS AS DISCUSSED ABOVE IN PARA-7 RS. 6,84,745 TOTAL INCOME RS. 7,05,935 ROUNDED OFF TO RS. 7,05,940 4. IT IS THE SAY OF THE LD. COUNSEL THAT THE AO HAS ACCEPTED BUSINESS INCOME TO THE EXTENT OF RS. 21,190 THEREFORE ALL TH E EXPENSES CLAIMED BY THE ASSESSEE INCLUDING DEPRECIATION SHOULD HAVE BEE N ALLOWED BY THE AO. ITA NO. 228/M/2012 3 5. A PERUSAL OF THE INCOME COMPUTED BY THE AO MENT IONED ABOVE SHOWS THAT THE AO HAS NOT COMPUTED THE INCOME UNDER PROPER HEADS OF INCOME. THE HONBLE SUPREME COURT IN THE CASE OF K APURCHAND SHRIMAL VS CIT 131 ITR 451 HAS LAID DOWN THE FOLLOWING RATI O: IT IS WELL KNOWN THAT AN APPELLATE AUTHORITY HAS T HE JURISDICTION AS WELL AS THE DUTY TO CORRECT ALL ERR ORS IN THE PROCEEDINGS UNDER APPEAL AND TO ISSUE, IF NECESSARY , APPROPRIATE DIRECTIONS TO THE AUTHORITY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED TO DISPOSE OF THE WHOLE OR ANY PART OF TH E MATTER AFRESH, UNLESS FORBIDDEN FROM DOING SO BY STATUTE. 6. DRAWING SUPPORT FROM THE AFOREMENTIONED RATIO OF THE HONBLE SUPREME COURT, WE SET ASIDE THE ENTIRE ASSESSMENT B ACK TO THE FILES OF THE AO FOR DENOVO ASSESSMENT. THE AO IS DIRECTED TO RE COMPUTE THE INCOME OF THE ASSESSEE UNDER PROPER HEADS OF INCOME AND TH EN DECIDE THE ISSUE OF ALLOWANCE OF THE EXPENSES/DEPRECIATION AFTER GIVING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSES SEE. THE ASSESSEE IS FREE TO MAKE FRESH CLAIM/SUBMISSIONS BEFORE THE AO. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2014 . 3 . 2' % 4 56 29.1.2014 2 . 7 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 5 DATED 29.01.2014 . . ./ RJ , SR. PS ITA NO. 228/M/2012 4 3 3 3 3 . .. . +/ +/ +/ +/ 8 '/ 8 '/ 8 '/ 8 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// = == = / > > > > (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI