MAHESH BABULAL MEHTA, MUMBAI V. ITO 16(2)(4), MUMBAI

ITA 297/MUM/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9056 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 19-05-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 12-01-2010
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Tax effect
• Section: 143(3)

Judgement Text

, , B, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.297/MUM/2010 ASSESSMENT YEAR: 2002-03 MAHES H B. MEHTA, PROP OF M/S. PADMA GEMS 46, NAVYUG NAGAR, FORJETT HILL ROAD, TARDEO, MUMBAI-400036 / VS. ITO 16(2)(4), MUMBAI ( APPELLANT ) (RESPONDENT ) P.A. NO. AABPM6865E ITA NO.1776/MUM/2010 ASSESSMENT YEAR: 2002-03 ITO 16(2)(4), MUMBAI / VS. MAHESH B. MEHTA, PROP OF M/S. PADMA GEMS 46, NAVYUG NAGAR, FORJETT HILL ROAD, TARDEO, MUMBAI-400036 ( REVENUE ) (RESPONDENT ) APPELLANT BY SHRI NIRAJ SHETH (AR) REVENUE BY SHRI SUMAN KUMAR ( DR) / DATE OF HEARING: 21/12/2016 / DATE OF ORDER: 13/01/2017 / O R D E R PER ASHWANI TANEJA: THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORD ER OF LD. CIT(A) DATED 17.12.2009 PASSED AGAINST THE ASSESSME NT ORDER DATED 31.03.2005 U/S 143(3) FOR A.Y. 2002-03. MAHESH BABULAL MEHTA 2 FIRST WE SHALL TAKE REVENUES APPEAL IN ITA NO. 1776/MUM/2010 FOR A.Y. 2002-03 3. DURING THE COURSE OF HEARING IT WAS JOINTLY STATED BY THE ASSESSEE AT THE VERY OUTSET BY BOTH THE SIDES THAT TAX EFFECT IN THIS CASE IS LESS THAN RS. 10 LACS. THEREFORE, APPE AL FILED BY THE REVENUE IS NOT MAINTAINABLE IN VIEW OF CIRCULAR OF CBDT NO. 21/2015 DATED 10.12.2015. 3.1. WE HAVE GONE THROUGH THE AFORESAID CIRCULAR AND FI ND THAT REVENUES APPEAL IS NOT MAINTAINABLE IN VIEW OF THE FACT THAT TAX EFFECT IN THIS CASE IS LESS THAN RS. 10 LACS AS WAS ALSO ADMITTED BY BOTH THE PARTIES DURING THE COURSE OF H EARING. THEREFORE, APPEAL FILED BY THE REVENUE IS TREATED A S WITHDRAWN AND DISMISSED AS SUCH. 4. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DI SMISSED. NOW WE SHALL TAKE APPEAL FILED BY THE ASSESSEE IN I TA NO. 297/MUM/2010 FOR A.Y. 2002-03 ON THE FOLLOWING GROUNDS: 1.THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 27 HAS SUSTAINED ADDITION OF RS 2,50,000/- TO VALUA TION OF CLOSING STOCK AND THE SAME SHOULD BE DELETED. 2.THE LEARNED THE COMMISSIONER OF INCOME TAX (APPEA LS) - 27 HAS SUSTAINED DISALLOWANCE OF LOSS OF RS 67,349/ - AND THE SAME SHOULD BE ALLOWED. 3.THE LEARNED THE COMMISSIONER OF INCOME TAX (APPEA LS) - 27 HAS SUSTAINED DISALLOWANCE OF INTEREST OF RS 34, 616/- AND THE SAME SHOULD BE ALLOWED. 4. THE APPELLANT CRAVES TO LEAVE, ADD, AMEND OR ALT ER ANY GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF THIS APPEAL. 5. GROUND NO.1: THIS GROUND WAS NOT PRESSED BY THE LD. COUNSEL DURING THE COURSE OF HEARING THEREFORE IT I S DISMISSED. MAHESH BABULAL MEHTA 3 6. GROUND NO.2: THIS GROUND RELATES TO DISALLOWANCE OF LOSS OF RS.67,349/- 6.1. DURING THE COURSE OF HEARING IT WAS STATED BY THE LD. COUNSEL THAT AO DISALLOWED THE LOSS UNDER THE BELIE F THAT THE SAID LOSS PERTAINS TO ERSTWHILE PARTNERSHIP FIRM NA MELY M/S. PADMA GEMS AND THE THEREFORE, IT COULD NOT HAVE BEE N SET OFF AGAINST THE PROFIT OF PROPRIETORSHIP OF THE UNIT OF THE ASSESSEE. THE DISALLOWANCE WAS CONFIRMED BY THE LD. CIT(A) UN DER THE SAME BELIEF. WHEREAS, AS PER LD. COUNSEL, THE CORRE CT FACT IS THAT THE LOSS PERTAINS TO PROPRIETORSHIP UNIT OF TH E ASSESSEE AND NOT THE PARTNERSHIP FIRM. 6.2. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWE R AUTHORITIES AND IT IS NOTED THAT THERE IS DIRECT CO NTRADICTION IN THE FACT AS NARRATED BY THE LD. COUNSEL BEFORE US A ND AS NARRATED BY THE LOWER AUTHORITIES WHILE PASSING THE ORDER. THUS, IN OUR VIEW THIS ISSUE SHOULD GO BACK TO THE FILE OF THE AO FOR PROPER VERIFICATION OF FACTS. ACCORDINGLY, T HIS ISSUE IS SENT BACK TO THE FILE OF THE AO WHO SHALL DECIDE TH IS ISSUE AFTER PROPER VERIFICATION OF FACTS AND SHALL PASS ASSESSM ENT ORDER AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE TO FURNISH DETAILS AND EVIDENCES TO THE ASSESSEE. THIS GROUND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO.3: THIS GROUND DEALS WITH THE DISALLOWANCE OF INTEREST OF RS.34616/-. 7.1. THE BRIEF BACKGROUND IS THAT THE ASSESSEE HAD MADE CLAIM OF TOTAL INTEREST PAID TO THE BANK OF RS.72973/-. T HE AO DISALLOWED PORTION OF THE INTEREST ON THE GROUND TH AT PART OF THE LOAN UTILIZED BY THE PARTNERSHIP FIRM FOR THE B USINESS OF THE MAHESH BABULAL MEHTA 4 PARTNERSHIP FIRM AND THE SAME WAS NOT UTILIZED BY T HE PROPRIETORSHIP UNIT OF THE ASSESSEE. 7.2. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE THE FOLL OWING OBSERVATIONS: GROUND NO. 6 RELATES TO ADDITION OF INTEREST OF RS . 34616/- WHICH WAS NOT CLAIMED BY THE APPELLANT. IT IS STATE D THAT THE APPELLANT HAD PAID TO THE BANK AT RS.72,973/- DURING THE PERIOD 29.9.2001 TO 31.3.200 2. THE APPELLANT ALSO PAID INTEREST OF RS. 23,629/- ON EXPORT PACKING CREDIT ON 29.9.2001 AND ON 29.11.200 1 RS. 40,000/- WAS PAID AS INTEREST ON CASH CREDIT FA CILITY. ON 8.3.2002, THE INTEREST OF RS. 36,041/- WAS PAID ON DISCOUNTING OF BILLS. THE BANK ALSO CHARGED INTERES T OF RS. 7,196/-. THE APPELLANT HAD CLAIMED TOTAL INTERE ST AT RS. 73,973/- AFTER DEDUCTING PREPAID INTEREST OF PREVIOUS YEAR OF RS. 33,893/-. THE AO HAS DISALLOWE D PORTION OF THE INTEREST AS IT RELATES TO THE PARTNE RSHIP FIRM WHICH HAD FILED A SEPARATE RETURN FOR THE PERIOD FO R WHICH IT WAS IN EXISTENCE. IT WAS CLAIMED THAT THE PARTNERSHIP FIRM HAD NOT CLAIMED THESE INTEREST PAYMENTS AND IT SHOULD BE ALLOWED TO THE INDIVIDUAL WHO TOOK OVER THE PARTNERSHIP. THIS CONTENTION OF T HE APPELLANT IS NOT ACCEPTABLE AS PART OF THE INTEREST PERTAINS TO THE PARTNERSHIP FIRM WHETHER THE FIRM H AS CLAIMED IT OR NOT AND THE DISALLOWANCE MADE BY THE AO WAS CORRECT AND THE SAME IS UPHELD. ACCORDINGLY, TH IS GROUND OF APPEAL IS DISMISSED. 7.3. DURING THE COURSE OF HEARING NOTHING HAS BEEN BROU GHT BEFORE TO SHOW THAT WHOLE OF THE AMOUNT HAS BEEN UT ILISED BY THE ASSESSEE FOR ITS PROPRIETORSHIP BUSINESS. THUS, ACTION OF THE LOWER AUTHORITIES IN DISALLOWING THE PROPORTION ATE INTEREST PERTAINING TO THE LOAN WHICH WAS UTILIZED BY THE PA RTNERSHIP FIRM AND NOT UTILIZED BY THE PROPRIETORSHIP FIRM IS JUSTIFIED. NO INTERFERENCE IS CALLED FOR BY US IN THE ORDER OF LD . CIT(A). THIS GROUND IS DISMISSED. 8 . AS A RESULT, THIS APPEAL IS PARTLY ALLOWED. MAHESH BABULAL MEHTA 5 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED AND APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY, 2017. SD/- (JOGINDER SINGH ) SD/- (ASHWANI TANEJA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13 /01/2017 CTX? P.S/. .. !'#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A)- , MUMBAI 5. #$% &' , &' ) , / DR, ITAT, MUMBAI 6. %*+ , / GUARD FILE. / BY ORDER, # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI