DCIT, CC- 7(1), MUMBAI V. CLASSIC SHARES AND STOCK BROKING SERVICES LTD., MUMBAI

ITA 2884/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1037 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2003-2004
• Appeal Filed On: 21-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 2884 / MUM/20 17 ( ASSESSMENT YEAR : 2003 - 04 ) DCIT CC 7(1) ROOM NO.653, 6 TH FLOOR AYAKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 VS. M/S. CLASSIC SHARES AND STOCK BRO KING SERVICES LTD., 121, 1 ST FLOOR, RADHA BHAVAN NAGINDAS MASTER ROAD, FORT, MUMBAI 400 023 PAN/GIR NO. AACCC5745P APPELLANT ) .. RESPONDENT ) REVENUE BY MS. N. HEMALATHA ASSESSEE BY SHRI AKASH KUMAR DATE OF HEARING 05 / 10 /201 7 DATE OF PRONOUNCEME NT 02 / 01 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 47, MUMBAI DATED 31/01/2018 FOR A.Y.2003 - 04 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.2 54 OF THE IT ACT. 2. THE ONLY GRIEVANCE OF REVENUE RELATES TO TREATMENT OF INTEREST INCOME AS INCIDENTAL TO BUSINESS INCOME AS AGAINST INCOME FROM OTHER SOURCES. 3. AT THE OUTSET, LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE , WHEREIN INTEREST EARNED BY THE ASSESSEE WAS TREATED AS INCIDENTAL TO BUSINESS INCOME. I FOUND THAT CIT(A) HAS ALSO ITA NO. 2884/MUM/2017 M/S. CLASSIC SHARES AND STOCK BROKING SERVICES 2 ALLOWED ASSESSEES APPEAL BY FOLLOWING THE ORDER OF THE TRIBUNAL. THE PRECISE OBSERVATION OF CIT(A) WAS AS UNDER: - '4.2 WE HAVE PERUSED TH E RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING NATURE OF INTEREST INCOME RECEIVED BY THE ASSESSEE FROM THE FDRS PLEDGED WITH THE BANKS FOR ISSUE OF BANK GUARANTEE TO THE STOCK EXCHANGE IN CONNECTION WITH THE TRADING BUSINESS OF THE ASSESSEE. THE ASSESSEE HAD BEEN DEBARRED BY SEBI FOR SHARE TRANSACTIONS BUSINESS IN 2001 DUE TO ALLEGATIONS OR IRREGULARITIES AND MANIPULATIONS. THE CASE OF THE ASSESSEE IS THAT THE ORDER OF SEBI HAD BEEN CHALLENGED. THE LICENSE OF THE ASSESSEE HAD BEEN C ANCELLED ONLY IN THE YEAR 2005 AND THE ORDER CANCELLING THE LICENSE HAD ALSO BEEN CHALLENGED BY THE ASSESSEE WHICH WAS DISMISSED BY SAT MUCH LATER AND THE ORDER OF SAT WAS ALSO CONFIRMED BY THE HON'BLE SUPREME COURT. BUT THESE WERE SUBSEQUENT ACTIVITIES AN D IN THE YEAR UNDER CONSIDERATION THE BUSINESS OF THE ASSESSEE HAD NOT CLOSED AND IT WAS ONLY SUSPENDED IN VIEW OF THE ADVERSE ORDER BY SEBI. WE FIND SIMILAR SITUATION HAD BEEN CONSIDERED BY THE TRIBUNAL IN CASE OF KNP SECURITIES PVT.LTD. (SUPRA) ANOTHER C ONCERN OF KETAN PAREKH GROUP IN WHICH SIMILAR CLAIM WAS MADE BY THE ASSESSEE THAT BUSINESS WAS IN EXISTENCE AND NOT CLOSED. THE TRIBUNAL FOLLOWING THE JUDGEMENT OF HON'BLE HIGH COURT OF MADRAS IN CASE OF CIT V. VELLORE ELECTRICAL CORPORATION LTD. (243 ITR 529) HELD THAT THE BUSINESS HAD NOT CLOSED AND THE CLAIM OF EXPENDITURE HAD TO BE ALLOWED. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL WE HOLD THAT THE BUSINESS OF THE ASSESSEE HAD NOT BEEN CLOSED IN THE RELEVANT YEAR AND, THEREFORE, FDRS HAD TO BE TREATED AS PLEDGED IN CONNECTION WITH THE BUSINESS WHICH WAS IN EXISTENCE AND. THEREFORE, THE INTEREST INCOME HAD TO BE TREATED AS INCIDENTAL BUSINESS INCOME. WE ACCORDINGLY SET ASIDE E ORDER OF CIT(A) AND ALLOWED THE CLAIM OF THE ASSESSEE. IN VI EW OF THE ABOVE POSITION, THE AO IS DIRECTED TO ASSESS THE INTEREST INCOME OF RS.39,50,810/ - UNDER THE HEAD 'BUSINESS INCOME' IN ACCORDANCE WITH THE DIRECTIONS OF THE HON'BLE TRIBUNAL AS REPRODUCED ABOVE. GROUND NO,2 OF THE PRESENT APPEAL IS ACCORDINGLY AL LOWED. 4. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, I DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). ITA NO. 2884/MUM/2017 M/S. CLASSIC SHARES AND STOCK BROKING SERVICES 3 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 02 / 01 /201 8 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 02 / 01 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED T O : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//