MARATHON TRADING & INVESTMENT P. LTD, MUMBAI V. ITO 8(2)(3), MUMBAI

ITA 2357/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8467 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 09-02-2011
• Assessment Year: 1991-1992
• Appeal Filed On: 25-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: VIJAY C KOTHARI
• Keywords: Business income; Retrospective amendment
• Section: 80HHC; 234B; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.2357/M/2010 ASSESSMENT YEAR 1991-92 M/S.MARATHON TRADING & INVESTMENT P.LTD. THE ITO-8 (2)(3), WALALCE BUSINESS CENTRE AAYAKAR BHAVAN, M.K.ROAD COMMERCIAL UNION HOUSE, MUMBAI 400 020. 9, WALLACE STREET, MUMBAI 400 001. PAN : AABCM3973C APPELLANT RESPONDENT ASSESSEE BY : SHRI VIJAY C.KOTHARI REVENUE BY : SHRI S.K.SINGH O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 30.12.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 1991-9 2. THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING THE NAT URE OF INTEREST INCOME AND ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC IN RE SPECT OF SAID INCOME. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT OR IGINAL ASSESSMENT IN THIS CASE HAD BEEN COMPLETED UNDER SECTION 144 ON 26.3.9 7 IN WHICH ADDITIONS WERE MADE ON ACCOUNT OF INTEREST ON INTER CORPORATE LOAN S AND ON ACCOUNT OF DISALLOWANCE OF COMMISSION AND BROKERAGE. THE ASSES SMENT WAS SUBSEQUENTLY SET ASIDE BY THE CIT(A) FOR MAKING FRESH ASSESSMENT DENOVO AFTER NECESSARY 2 VERIFICATION AND AFTER OPPORTUNITY OF HEARING TO TH E ASSESSEE. THE AO IN THE FRESH ASSESSMENT ORDER DATED 27.3.2000 ACCEPTED THE INCOME OF RS.6,78,235/- AS SHOWN IN THE PROFIT AND LOSS ACCOUNT AS BUSINESS INCOME. IN THE SAID ASSESSMENT THE AO HAD NOT ALLOWED ANY DEDUCTION UND ER SECTION 80HHC. THE ASSESSEE THEREFORE DISPUTED THE DECISION OF AO BEFO RE CIT(A) AND TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 29.12.2004 IN ITA NO.2556 /M/2004 RESTORED THE MATTER TO THE FILE OF AO FOR DECIDING THE ASSESSEE S CLAIM OF DEDUCTION UNDER SECTION 80HHC. IN THE IMPUGNED ASSESSMENT ORDER DAT ED 21.12.2006 THE AO DID CONSIDER THE CLAIM OF DEDUCTION UNDER SECTION 8 0HHC BUT DID NOT ALLOW DEDUCTION IN RESPECT OF INTEREST INCOME OF RS.70,72 0/-WHICH WAS TREATED AS INCOME FROM OTHER SOURCES. THE ASSESSEE DISPUTED TH E DECISION OF AO BEFORE CIT(A) WHO UPHELD THE ORDER OF AO TREATING THE INTE REST INCOME AS INCOME FROM OTHER SOURCES AND DENYING THE CLAIM OF DEDUCTION UN DER SECTION 80HHC. AGGRIEVED BY THE DECISION OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US THE LEARNED AR FOR THE ASSESSEE SUBMIT TED THAT THE NATURE OF INTEREST INCOME AS BUSINESS INCOME HAD ALREADY BEEN DECIDED BY THE AO IN THE ASSESSMENT ORDER DATED 27.3.2000 IN WHICH THE RETUR NED BUSINESS INCOME HAD BEEN ACCEPTED. THE ASSESSEE HAD RAISED DISPUTES ONL Y IN RELATION TO DENIAL OF DEDUCTION UNDER SECTION 80HHC AND THE TRIBUNAL HAD RESTORED THE ISSUE TO THE FILE OF AO TO ONLY DECIDE THE CLAIM OF DEDUCTION UN DER SECTION 80HHC. THE AO HOWEVER HAD ADDED THE INTEREST INCOME OF RS.70,720/ - RETURNED BY THE ASSESSEE AS BUSINESS INCOME AS INCOME FROM OTHER SO URCES WHICH WAS BEYOND HIS JURISDICTION. AS REGARDS ALLOWABILITY OF DEDUCT ION UNDER SECTION 80HHC IT WAS SUBMITTED THAT THE ASSESSMENT YEAR INVOLVED BEING 1 991-92 THE PROVISIONS OF EXPLANATION (BAA) WERE NOT APPLICABLE. HE REFERRED TO THE JUDGMENT OF HONBLE 3 SUPREME COURT IN CASE OF K.K.DOSHI & CO. VS CIT (29 7 ITR 38) IN WHICH IT HAS BEEN HELD THAT THE AMENDED PROVISION OF SECTION 80H HC WERE APPLICABLE ON FROM A.Y.1992-93 AND NOT WITH RETROSPECTIVE EFFECT. IT WAS ALSO SUBMITTED THAT THE INTEREST INCOME HAVING BEEN ASSESSED AS BUSINES S INCOME, DEDUCTION UNDER SECTION 80HHC HAD TO BE ALLOWED. RELIANCE WAS PLACE D ON THE JUDGMENT OF HONBLE HIGH COURT OF MUMBAI IN CASE OF CIT VS PUNI T COMMERCIAL LTD. (245 ITR 550) AND THE DECISION OF THE TRIBUNAL IN CASE OF MO TOROLA (112 TTJ 562). THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS O F AUTHORITIES BELOW. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. WE AGREE WITH THE LEARNED AR THAT THE IN TEREST INCOME HAD ALREADY BEEN ASSESSED BY THE AO AS BUSINESS INCOME IN THE A SSESSMENT ORDER DATED 27.3.2000. THE ASSESSEE HAD RAISED DISPUTES ONLY IN RELATION TO DEDUCTION UNDER SECTION 80HHC AND THE TRIBUNAL HAD ALSO RESTO RED THE MATTER TO THE FILE OF AO ONLY FOR CONSIDERING THE CLAIM OF DEDUCTION UNDE R SECTION 80HHC. THEREFORE IN THE FRESH ASSESSMENT AO HAD NO JURISDICTION TO C HANGE THE NATURE OF INCOME OF INTEREST FROM BUSINESS TO OTHER SOURCES. WE THER EFORE SET ASIDE THE ORDER OF CIT(A) ON THIS POINT AND HOLD THAT THE INTEREST HAS TO BE ASSESSED AS BUSINESS INCOME. AS REGARDS ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC IN RESPECT OF INTEREST INCOME, WE NOTE THAT ASSESSMENT YEAR INVOL VED IS 1991-92 AND THEREFORE PROVISIONS OF EXPLANATION (BAA) ARE NOT A PPLICABLE. FURTHER THERE ARE SEVERAL JUDGMENTS OF HONBLE JURISDICTIONAL HIGH CO URT SUCH AS IN CASE OF CIT VS PUNIT COMMERCIAL LTD. (SUPRA) IN WHICH INTEREST INC OME HAS BEEN HELD ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC. THEREFORE IN OUR VIEW THE CLAIM OF DEDUCTION UNDER SECTION 80HHC IN RESPECT OF INTERES T INCOME HAS TO BE ALLOWED. WE HOLD ACCORDINGLY. 4 5. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUN D REGARDING LEVY OF INTEREST UNDER SECTION 234B ETC. THIS BEING A LEGAL GROUND WAS ADMITTED BY THE TRIBUNAL. HOWEVER, THE LEARNED AR FOR THE ASSESSEE CONCEDED THAT THE LEVY OF INTEREST WAS ONLY CONSEQUENTIAL. WE THEREFORE DIREC T THE AO TO RECOMPUTE THE INTEREST AT THE TIME OF GIVING EFFECT TO THIS ORDER . 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. 7. THE DECISION WAS PRONOUNCED IN THE OPEN COURT 11 .02.2011. SD/- SD/- ( D.K. AGARWAL ) (RAJEN DRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 11.02.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR I BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK