A.C.I.T. CENTRAL CIRCLE - 40, MUMBAI V. CLASSIC SHARES & STOCK BROKING SERVICES LTD., MUMBAI

ITA 2280/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3763 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P DANIAL
• Keywords: Business income; Depreciation; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JM AND SHRI SANJAY ARORA, AM ./ I.T.A. NO. 2 280 /MUM/201 2 ( / ASSESSMENT YEAR : 20 0 8 - 09 ) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIR - 40, ROOM NO.653, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S CLASSIC SHARES AND STOCK BROKING SERVICES LTD., BHUPEN CHAMBERS, GROUND FLOOR, 9, DALAL ST.FORT, MUMBAI - 400023 ./ T AN : AA BCS4255R / REVENUE BY DR.P.DANIAL, STANDING COUNSEL / ASSESSEE BY NONE / DATE OF HEARING : 04/07/2016 / DATE OF PRONOUNC EMENT : 03 /0 8 /2016 / O R D E R PER BENCH: THIS IS DEPARTMENTS APPEAL CHALLENGING THE ORDER DATED 09.1.2012 PASSED BY THE LD.CIT(A) - 37 , WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, LEARNED CIT (A) HAS ERRED IN ALLOWING BUSINESS EXPENSES OF RS.8,85,385/ - EVEN THOUGH THERE WAS NO BUSINESS IN EXISTENCE DURING THE YEAR AS THE ASSESSEE WAS DEBARRED BY SEBI TO CARRYOUT BUSINESS ACTIVITIES VIDE ORDER DATED 11.4.200 1; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT (A) HAS ERRED IN HOLDING INTEREST OF RS.38,27,605/ - FROM FIXED DEPOSITS AND MISCELLANEOUS INCOME OF RS.10,800/ - AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES WITHO UT CONSIDERING THE ITA NO. 2280/ MUM/20 1 2 2 FACT THAT THERE WAS NO BUSINESS IN EXISTENCE DURING T HE YEAR AND THE ASSESSEE HAD HIMSELF SHOWN THEM AS OTHER INCOME . 2 . NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. HOWEVER, FINDING THAT THE MATTER CAN BE PROC EEDED WITH IN THE ABSENCE OF THE ASSESSEE, WE ARE DOING SO. 3 . G RIEVANCES OF THE REVENUE ARE THAT THE LEARNED CIT (A) ALLOWED THE BUSINESS EXPENSES OF RS.8,85,385/ - EVEN THOUGH THERE WAS NO BUSINESS IN EXISTENCE DURING THE YEAR AS THE ASSESSEE WAS DEBARRE D BY SEBI TO CARRYOUT THE BUSINESS ACTIVITIES AND ALSO ERRED IN HOLDING INTEREST OF RS.38,27,605/ - FROM FIXED DEPOSITS AND MISCELLANEOUS INCOME OF RS.10,800/ - AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES WITHOUT CONSIDERING THE FACT THAT THERE WAS NO BUSINESS IN EXISTENCE DURING THE YEAR AND THE ASSESSEE HAD HIMSELF SHOWN THEM AS INCOME FROM OTHER INCOME. 4 . L D. DR SUBMITTED THAT THE ORDER OF SEBI HAS ATTAINED FINALITY WHEN THE HONBLE SUPREME COURT DISMISSED THE CIVIL APPEAL PREFERRED BY T HE ASSESSEE IN CIVIL APPEAL NO.4164 OF 2006 ALONG WITH OTHER APPEALS VIDE ORDER DATED 18.5.2007 AND IT SHALL BE HELD THAT THERE WAS NO CONDUCT OF BUSINESS BY THE ASSESSEE AND THE ASSESSEES GROUP OF COMPANIES PURSUING TO THE SEBIS ORDER. HE HAS FAIRLY BRO UGHT TO OUR KNOWLEDGE THAT THE ORDER DATED 29.5.2009 PASSED IN ITA NO.5008 AND 5009/MUM/2007 (AYS - 2003 - 04 AND 2004 - 05), THE TRIBUNAL HAS SET ASIDE THE ORDER OF LD.CIT(A) AND REMITTED THE MATTER FOR THE FILE OF AO FOR EXAMINATION OF ADMISSIBILITY OF THE AL LOWANCES AND ALLOWABLE ITA NO. 2280/ MUM/20 1 2 3 DEDUCTION. HE PLACED RELIANCE ON A DECISION OF TRIBUNAL IN THE CASE OF ACIT V/S CLASSIC SHARES AND STOCK BROKING P LTD IN ITA NO.5244/MUM/2011 (AY - 2007 - 08) DATED 26.9.2012, WHEREIN IT HAS BEEN HELD ...., THE DECISION IN THE CASE OF KNP SERVICES (P) LTD. (SUPRA) WAS RENDERED BY THE TRIBUNAL RELYING ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. VELLORE ELECTRIC CORPORATION LTD. 243 ITR 529 AND THE SAME HAS BEEN FOLLOWED BY THE TRIBUNAL IN VARIOUS CASES BE LONGING TO THE SAME GROUP TO DECIDE A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. 5. IN THIS MATTER, THE ORDER OF SEBI HAD ATT AINED FINALITY ON 18.5.2007 AND IT IS A QUESTION OF FACT TO BE DECIDE D WHETHER THERE WAS BUSINESS IN EXISTENCE TILL SUCH DATE AND ANY EXPENSES ARE ALLOWABLE AS DEDUCTION TILL SUCH DATE. SINCE THE AO HA D NOT EXAMINED THE SAID ASPECT , IT HAS BECOME IMPERATIVE TO EXAMIN E THE QUESTION OF ALLOWABILITY OF VARIOUS EXPENSES INCURRED BY T HE ASSESSEE TILL 18.5.2007 , IN THE CONTE X T OF COND UCT OF ANY BUSINESS BY THE ASSESSEE TILL SUCH DATE . IT IS A QUESTION OF FACT WHETHER OR NOT THE BUSINESS WAS CARRIED OUT T ILL 18.5.2007 AND IF SO VARIOUS EXPENSES IF INCURRED BY THE ASSESSEE IS ALLOWABLE AS DEDUCTION AND ALSO THE QUESTION OF DEPRECIATION AND INTEREST RELATING TO THE PARTICULAR PERIOD. WE THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMAND THE MATTER TO AO TO EXAMINE THE ABOVE MATTER OF FACT TO REACH A RIGHT CONCLUSION ON THE ISSUE OF LIABILITY OF THE ASSESSEE. 6. IN THE RESULT, THE APPE AL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2280/ MUM/20 1 2 4 ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD AUGUST , 2016 SD/ - SD/ - ( SANJAY ARORA) ( MAHAVIR SIN GH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 03 RD AUGUST ,2016 PS: AG (ON TOUR) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI