RAM & COMPANY, MUMBAI V. JT CIT 24(2), MUMBAI

ITA 3050/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4412 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 10-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH R PRASAD
• Keywords: Assessment record
• Section: 263

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI- I,BENCH , , BEFORE S/SH. SANJAY GARG, JUDICIAL MEMBER & ASHWANI TANEJA, ACCOUNTANT MEMBER /.ITA NO.3050/MUM/2015, /ASSESSMENT YEAR-2010-11 M/S. RAM & COMPANY C/O., SHANKARLAL JAIN & ASSOCIATES 12, ENGINEER BUILDING, 265, PRINCESS STREET MUMBAI-400 020. PAN NO.AAAFR 1894 D VS. PRINCIPAL COMMISSIONER OF INCOME TAX-30 INCOME TAX OFFICE, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI-400 051. ( / APPELLANT ) ( /RESPONDENT) APPELLANT BY SHRI S.L. JAIN RESPONDENT BY SHRI RAJESH R. P RASAD-CIT-DR DATE OF HEARING : 14.12.2015 DATE OF PRONOUNCEMENT : 08.01.2016 O R D E R PER ASHWANI TANEJA, AM : PRESENT APPEAL IS AGAINST THE ORDER PASSED BY PRINC IPLE CIT U/S. 263 OF THE ACT. PERUSAL OF THE IMPUGNED ORDER SHOWS THAT IT HAS BEEN PASSED ON FOLLOWING TWO ISSUES;- I. THE ASSESSEE HAS CLAIMED DEDUCTION OF TRANSFER EXPENSES U/S. 48 OF THE ACT, AGGREGATING TO RS.17,64,350/-. ACCORDING TO LD.CIT, THE ASSESSI NG OFFICER HAS NOT EXAMINED WHETHER THESE EXPENSES ARE ALLOWABLE U/S. 48 OF THE IT ACT AND, T HEREFORE, ORDER PASSED BY THE ASSESSING OFFICER WAS CONSIDERED AS ERRONEOUS IN SO FAR AS PREJUDICIA L TO THE INTEREST OF THE REVENUE. II. IT WAS NOTED BY THE LD. CIT ON THE PERUSAL OF THE ASSESSMENT RECORD THAT ASSESSEE HAD CLAIMED LOSS UNDER THE HEAD BUSINESS ON ACCOUNT OF VALUATION OF CLOSING STOCK OF SHARES OF TWO COMPANIES. ACCORDING TO LD. CIT THESE SHARES WERE H ELD AS INVESTMENT, AND THEREFORE, THE IMPUGNED LOSS SHOULD NOT HAVE BEEN ALLOWED AS BUSIN ESS LOSS AND SHOULD NOT HAVE BEEN SET OFF 2 ITA NO.3050/M /15-RAM & CO. AGAINST LONG TERM CAPITAL GAIN (LTCG) .THE ASSESSIN G OFFICER WITHOUT LOOKING INTO THESE FACTS AND MAKING NECESSARY ENQUIRIES ALLOWED THE SAID CLA IM. 2. IN VIEW OF THE AFORESAID DISCREPANCIES NOTED BY TH E LD.CIT, A SHOW CAUSE NOTICE U/S. 263 WAS GIVEN/SERVED UPON THE ASSESSEE. THE ASSESSEE FURNIS HED DETAILED REPLIES BEFORE THE LD. CIT EXPLAINING THAT EXHAUSTIVE ENQUIRIES WERE MADE BY T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE ACCEPTING CLAIM OF TH E ASSESSEE MADE IN THE RETURN, BUT LD. CIT WAS NOT SATISFIED WITH THE RESPONSE OF THE ASSESSEE AND ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER AND THEREFORE, HE DIRECTED THE AO TO RE-DO THE ASSESSMENT AND NOT TO ALLOW THE LOSS UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. BEIN G AGGRIEVED, THE ASSESSEE IS BEFORE THE TRIBUNAL. 3. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSE L APPEARING ON BEHALF OF THE ASSESSEE HAS SHOWN THAT EXHAUSTIVE DETAILS WERE FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND WERE EXAMINED BY HIM BEFORE PASSING THE ASSESSMENT ORDER ON BOTH THE ISSUES, AND, THEREFORE, THE LD. CIT WAS LEGALLY AND FACTUAL LY INCORRECT IN POINTING OUT THESE DISCREPANCIES AND IN FRAMING THE IMPUGNED ORDER U/S. 263. 4. WE HAVE GONE THROUGH THE ORDER OF THE LOWER AUTHOR ITIES AND HEARD BOTH THE PARTIES. IT IS NOTED, WITH THE ASSISTANCE OF LD. COUNSEL THAT EXHA USTIVE DETAILS WERE FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEE DINGS ON BOTH THE ISSUES AS HAVE BEEN RAISED IN THE IMPUGNED ORDER. IT IS NOTED THAT VIDE LETTER DATED 7.8.2012, ADDRESSED TO THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED AS UNDER :- 3 ITA NO.3050/M /15-RAM & CO. A) THE ASSESSEE WAS OWNING SEVERAL INDUSTRIAL GALAS AND SHOPS AT MUMBAI. THESE PROPERTIES WERE PROVIDED AS SECURITY TO STATE BANK OF INDIA FO R CREDIT FACILITIES PROVIDED TO GROUP COMPANIES IN 1994 OR THEREABOUT. HOWEVER, DUE TO CE RTAIN DISPUTES WITH THE BANK, ALL THE PROPERTIES WERE UNDER ATTACHMENT AND IN POSSESSION OF COURT RECEIVER. ON SETTLEMENT OF DISPUTES WITH BANK, THESE PROPERTIES WERE RELEASED BY BANK O N CONDITION OF PAYMENT OF SALES CONSIDERATION TOWARDS LOAN OUTSTANDING OF THE PRINC IPAL BORROWERS. 4.1 FURTHER VIDE LETTER DT.27.8.2012 THE ASSESSEE SUBM ITTED DETAILS OF EXPENSES CLAIMED U/S. 48 WITH FOLLOWING EXPLANATION. B) DETAILS OF LEGAL EXPENSES, TRANSFER FEES AND BRO KERAGE PAID CLAIMED AS DEDUCTION OUT OF REALISATION IN COMPUTATION OF CAPITAL GAINS ARE FUR NISHED HEREWITH WITH PARTICULARS OF TDS DEDUCTED, WHEREVER APPLICABLE. 4.2 IT IS NOTED THAT ITEM-WISE DETAIL OF THE EXPENS E CLAIMED WAS GIVEN UNDER THE HEAD OF LEGAL AND PROFESSIONAL CHARGES, TRANSFER CHARGES, BROKERA GE AND RATES AND TAXES FOR THE AMOUNT AGGREGATING TO RS.17,64,350/-. 4.3 IT IS FURTHER NOTED THAT ASSESSEE HAS SUBMITTED BI LLS AND OTHER EVIDENCES OF THESE EXPENSES, SALE DEED OF THE PROPERTIES SOLD AND ORDER OF THE D EBT RECOVERY TRIBUNAL, IN SUPPORT OF THE TRANSACTIONS DONE BY THE ASSESSEE. THE ASSESSEE HAS ALSO SUBMITTED COPIES OF CORRESPONDENCE WITH STATE BANK OF INDIA (SBI) ON THE ISSUE OF SETTLEMEN T OF DUES UNDER COMPROMISE. THUS, FROM ALL THE EVIDENCES IT WAS CLEARLY DISCERNIBLE THAT THE I MPUGNED EXPENSES WERE DONE FOR THE PURPOSES OF ENABLING THE ASSESSEE TO MAKE TRANSFER OF THE PR OPERTY SOLD BY IT DURING THE YEAR UNDER CONSIDERATION. ON THIS ISSUE WE FIND THAT THE POSIT ION OF LAW IS IN FAVOUR OF THE ASSESSEE. IN THE CASE OF CIT VS. SHAKUNTALA KANTILAL (190 ITR 56) , HON'BLE BOMBAY HIGH COURT HAS HELD THAT 4 ITA NO.3050/M /15-RAM & CO. ANY AMOUNT THE PAYMENT OF WHICH IS ABSOLUTELY NECES SARY TO EFFECT THE TRANSFER WILL BE AN EXPENDITURE COVERED U/S. 48. IT HAS BEEN FURTHER HE LD THAT IF AN EXPENDITURE IS NECESSARY TO REMOVE AN ENCUMBRANCE WITHOUT WHICH TRANSFER COULD NOT BE EFFECTED, SUCH EXPENDITURE IS ALLOWABLE U/S. 48. 4.4 THUS, IT IS NOTED THAT AFTER TAKING INTO ACCOUNT A LL THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETAILS SUBMITTED BY THE ASSESSEE, THE AO TOOK A VIEW THAT THESE EXPENSES WERE ALLOWABLE. THE VIEW ADOPTED BY THE AO IS CORRECT AS PER LAW. I N ANY CASE, IT CAN BE SAID TO BE ONE OF THE VIEWS POSSIBLE AS PER LAW. UNDER THESE CIRCUMSTANCE S, THE VIEW ADOPTED BY THE AO CANNOT BE HELD TO BE ERRONEOUS, AS ENVISAGED U/S. 263 OF THE ACT. 4.5 WITH RESPECT TO THE SECOND ISSUE ALSO, IT IS NOTED THAT REQUISITE DETAILS WERE FILED BEFORE THE AO. LD.CIT-DR WAS FAIR ENOUGH TO ADMIT THAT REQ UISITE DETAILS WERE ON RECORD OF THE AO. IT IS NOTED THAT ASSESSEE HAS FILED COMPLETE DETAILS O F SHARES AS STOCK- IN- TRADE. THE ASSESSEE HAS ALSO FILED EVIDENCES FOR MARKET VALUE OF SHARES. IN THE ASSESSMENT ORDER OF THE EARLIER YEARS THE IMPUGNED SHARES HAVE BEEN ACCEPTED AS PART OF STOCK -IN-TRADE. THIS YEAR ALSO, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SHARE TRADING ACTIVITIES , AS HAS ALSO BEEN MENTIONED BY AO IN PARA- 3 OF THE ASSESSMENT ORDER AND THESE FACTS HAVE NOT BE EN DENIED BY THE LD.CIT. THERE WERE NO REASONS WITH THE AO IN THE PRESENT YEAR TO TAKE A D IFFERENT VIEW. IN OUR VIEW, THERE ARE NO VALID BASIS WITH THE LD. CIT TO TREAT THESE SHARES AS PAR T OF INVESTMENTS. LD. CIT HAS SUGGESTED IN HIS ORDER THAT DISCLOSURES MADE BY THE ASSESSEE IN HIS BALANCE SHEET ARE IMMATERIAL AND THE AO SHOULD HAVE IGNORED THE SAME, AND SHOULD HAVE TREAT ED THESE SHARES IN THE NATURE OF INVESTMENTS, THAT TOO, BY DISREGARDING THE TREATMENT GIVEN IN TH E EARLIER YEARS. IN OUR VIEW THE REASONING GIVEN BY THE LD. CIT IN HIS ORDER IS NOT ACCEPTABLE IN LA W, AND IN THE GIVEN FACTS OF THE CASE. WE FIND 5 ITA NO.3050/M /15-RAM & CO. THAT THE AO HAS ACCEPTED THE CLAIM OF THE ASSESSEE, AFTER ANALYZING FACTS OF THE CASE AND EVIDENCES PLACED BY THE ASSESSEE AND IN LINE WITH T HE RECORD OF ASSESSMENT OF EARLIER YEARS. THE VIEW ADOPTED BY THE AO WAS IN ACCORDANCE WITH LAW A ND FACTS. IN OUR VIEW, ON THIS ISSUE ALSO, ORDER OF THE AO CANNOT BE HELD TO BE ERRONEOUS OR P REJUDICIAL TO THE INTEREST OF REVENUE. 4.6 THUS, THE ORDER PASSED BY THE LD. CIT IS NOT IN AC CORDANCE WITH LAW AND FACTS, AND, THEREFORE, SAME IS QUASHED. GROUNDS RAISED BY THE A SSESSEE IN ITS APPEAL ARE ALLOWED. 5. AS A RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COU RT ON 08.01.2016. 8 , 2016 SD/- SD/- ( /SANJAY GARG ) ( /ASHWANI TANEJA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER , MUMBAI, DATED : 08.01.2016 JV, SR. PS 6 ITA NO.3050/M /15-RAM & CO. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI