SUBHAKAM VENTURES (I) P. LTD, MUMBAI V. ACIT CIR 2(3), MUMBAI

ITA 2954/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2454 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 28-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUM BAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C.N. PRA SAD,JUDICIAL MEMBER ./I.T.A./2954/MUM/2013, /ASSESSMENT YEAR: 2009-10 SHUBKAM VENTURES(I) PVT. LTD. THE INTERNATINAL HOUSE 4 TH FLOOR, 16, MK ROAD CHURCHGATE,MUMBAI-400 020. PAN:AAACW 1624 M VS. ACIT, CIRCLE-2(3) AAYAKAR BHAVAN MUMBAI. ./I.T.A./3376/MUM/2013, /ASSESSMENT YEAR: 2009-10 ACIT, CIRCLE-2(3) MUMBAI. VS. SHUBKAM VENTURES(I) PVT. LTD. MUMBAI 400 020. ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI R.K. SAHU ASSESSEE BY: SHRI SANJAY PARIKH / DATE OF HEARING: 28.07.2016 / DATE OF PRONOUNCEMENT: 28.07.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 14/02/2013 OF THE CIT ( A)-6,MUMBAI, THE ASSESSING OFFICER(AO)AND THE ASSESSEE HAVE FILED THE CROSS-AP PEALS FOR THE YEAR UNDER CONSI - DERATION.ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS O F INVESTMENTS AND TRADING IN SHARES AND SECURITIES,FILED ITS RETURN OF INCOME ON 29/09/2009,DECLARING TOTAL LOSS OF RS.16.12 LAKHS.THE AO COMPLETED THE ASSESSMENT, U/S .143 (3)OF THE ACT,ON 27/12/ 2011,DETERMINING THE INCOME OF THE ASSESSEE AT RS.1 ,20,45,370/-. ITA/3376/MUM/2013: 2. THE EFFECTIVE GROUND OF APPEAL,RAISED BY THE AO,IS ABOUT HOLDING THAT SHARES HELD BY THE ASSESSEE AS STOCK IN TRADE DID NOT FORM PART OF AVERAGE VALUE OF INVESTMENT FOR MAKING COMPUTATION UNDER RULE 8D (2) (II) AND R ULE8D (2) (III) OF THE INCOME TAX RULE,1962 (RULES)READ WITH SECTION 14A OF THE A CT.DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD UND ER EXEMPT INCOME OF RS. 83.40 2954 & 3376/M/13 SUBHKAM VENTURESIPL 2 LAKHS,THAT IT HAD DISALLOWED RS.4.15 LAKHS U/S.14A OF THE ACT.HE DIRECTED THE ASSESSEE TO EXPLAIN AS TO HOW THE DISALLOWANCE WAS WORKED OUT.VIDE ITS LETTER,DATED 18/11/2011,THE ASSESSEE SUBMITTED THE REVISED WORKI NG OF DISALLOWANCE AT RS. 24. 18 LAKHS.HOWEVER,THE AO DID NOT ACCEPT THE EXPLANAT ION OF THE ASSESSEE AND RECOMPUTED THE DISALLOWANCE.HE MADE A DISALLOWANCE OF RS.1.04 CRORES, INVOKING THE PROVISIONS OF SECTION 14 A READ WITH RULE 8D OF THE RULES. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,IT WAS AR GUED THAT STOCK IN TRADE SHOULD BE EXCLUDED FROM AVERAGE VALUE OF INVESTMENT .THE FAA REFERRED TO THE CASES OF CCL LTD.(250 CTR 291),YATISH TRADING COMPA NY PRIVATE LTD.(129 ITD 237) AND HELD THAT STOCK IN TRADE SHOULD NOT BE CON SIDERED AS INVESTMENT FOR THE PURPOSE OF AVERAGE VALUE OF THE INVESTMENT FOR COMP UTING DISALLOWANCE UNDER RULE 8D OF THE RULES. 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE(DR) LEFT THE ISSUE TO THE DISCRETION OF THE BENCH.THE A UTHORISED REPRESENTATIVE(AR) RELIED UPON THE CASES OF INDIA ADVANTAGE SECURITIES LTD.(380 ITR 471), HDFC BANK LTD.(383ITR 529) AND YES BANK LTD. (46 ITR-TRI B-317). WE FIND THAT IN IN ALL THE ABOVE REFERRED CASES IT HAS BEEN HELD THAT THE SHARES HELD AS STOCK IN TRADE CANNOT BE CONSIDERED FOR MAKING DISALLOWANCE U/S.14 A OF THE ACT.RESPECTFULLY, FOLLOWING THE ABOVE JUDGEMENTS,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. ITA/2954/MUM/2013: 5. THE EFFECTIVE GROUND OF APPEAL,RAISED BY THE ASSESS EE,ALSO DEALS WITH THE DISALLOW -ANCE MADE BY THE AO U/S. 14 A OF THE ACT. DURING T HE COURSE OF HEARING BEFORE US, THE AR CONTENDED THAT DURING THE APPELLATE PROCEEDI NGS,THE ASSESSEE HAD MADE 2954 & 3376/M/13 SUBHKAM VENTURESIPL 3 ELABORATE SUBMISSIONS, THAT THE FAA HAD NOT DEALT W ITH ANY OF THE ISSUES RAISED BY IT, THAT THE ORDER PASSED BY THE FAA WAS CRYPTIC.TH E DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 6. WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE AS SESSEE TO THE FAA (PAGES 33-39 OF THE PAPER BOOK) AND FIND THAT NONE OF THE ARGUMENTS/ISSUES RAISED BY THE ASSESSEE HAS BEEN DEALT BY HIM.THE ORDER OF THE FAA IS NONSPEAKING. THEREFORE, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTI CE THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE FAA.HE IS DIRECTED TO PASS A REASONED AND SPEAKING ORDER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE.W E WOULD LIKE TO REFER TO THE CASE OF THE HONBLE GAUHATI HIGH COURT DELIVERED IN THE MATTER OF BUILDWELL ASSAM (PVT.)LTD.(133ITR736)AND SAME READS AS UNDER: SECTION 250(6) OF THE I.T. ACT, 1961, PRESCRIBES TH E MANNER OF DISPOSAL OF AN APPEAL. AN ORDER MUST BE IN WRITING CONTAINING THE POINTS FOR DETERMINATION AND DECISION. THE OBJECT IS OBVIOUS. IT ENABLES A PARTY TO KNOW THE PRECISE POINTS DECIDED IN HIS FAVOUR OR AGAINST HIM. ABSENCE OF FORMULATION OF POINTS FOR DECISION OR WANT OF CLARITY IN DECISION PUTS A PARTY IN A QUANDARY. A DECISION AGAINST A PARTY ENA BLES HIM TO GO UP IN APPEAL. A DECISION BY ITS VERY NATURE MUST BE FIRM AND SHOULD NOT BE VAGUE AND UNCLEAR. IF THERE IS A DIRECTION BY THE APPELLATE AUTHORITY TO THE ITO, TH E LATTER IS BOUND TO CARRY OUT THE DIRECTION. REFUSAL TO CARRY OUT A DIRECTION IS A DE NIAL OF JUSTICE AND DESTRUCTIVE OF ONE OF THE BASIC PRINCIPLES IN THE ADMINISTRATION OF JUSTI CE BASED ON THE HIERARCHY OF THE AUTHORITIES. THEREFORE, WHEN A SUBORDINATE AUTHORIT Y IS DIRECTED TO CARRY OUT CERTAIN DIRECTIONS BY A SUPERIOR AUTHORITY, THE TENOR AND C OLOUR OF THE ORDER OF THE SUPERIOR AUTHORITY MUST BE FIRM, CLEAR, CERTAIN, DEFINITE AN D WITHOUT ANY AMBIGUITY. RESPECTFULLY,FOLLOWING THE ABOVE,EFFECTIVE GROUND O F APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE, IN PART. AS A RESULT,APPEAL FILED BY THE AO IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE O PEN COURT ON 28 TH , JULY,2016. 28 , 2016 SD/- SD/- ( . . /C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 28.07.2016. JV.SR.PS. 2954 & 3376/M/13 SUBHKAM VENTURESIPL 4 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.