SILVO LIACAL CHEMICALS LTD, NAVI MUMBAI V. ASST CIT 7(2), MUMBAI

ITA 3199/MUM/2013

• Counselvise Citation: 319919914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 05-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M KESHKAMAT
• Assessee Lawyers: K S CHOKSI
• Keywords: Sale consideration of property below Jantri Value; Business income; Depreciation; Additional evidence; Valuation report
• Section: 32; 50C

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI E BENCH . . , , , BEFORE S/SH. A.D. JAIN,JUDICIAL MEMBER & RAJE NDRA,ACCOUNTANT MEMBER /. ITA NO. 3199 /MUM/201 3 , / ASSESSMENT YEAR - 200 9 - 10 M/S. SILVO LIACAL CHEMICALS LTD. 404 - 405, 4 TH FLOOR, NELCO CHAMBERS, PLOT NO.48, SECTOR - 11, RAJIV GANDHI ROAD,CBD BELAPUR (E) NAVI MUMBAI - 400 614. PA N: AA BCB 1312 H VS. ACIT - RANGE - 7(2) ROOM NO.670, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400 020. ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI K.S. CHOKSI - (AR) / REVENUE BY : SHRI S.M. KESH KAMAT - ( DR) / DATE OF HEARING :05 - 08 - 2015 / DATE OF PRONOUNCEMENT :05 - 08 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 22 .0 2 .201 3 OF CIT(A) - 9 , MUMBAI THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. A) THE LEARNED CIT(A) HAS ERRED IN DISALLOWING RS. 60,900/ - ON ACCOUNT OF INTEREST PAID TO MALIKA MUSA DEVJI RS 46900 AND DOLAT LALANI RS 14000/ - ON THE GROUND OF NON QUOTING OF PAN THE LOAN CONFIRMATIONS SUB MITTED TO HIM WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME MAY BE ALLOWED. (B) WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT (A) HAS ERRED IN DISALLOWING THE ABOVE INTEREST DISALLOWANCES OF INTEREST TO THESE PERSONS IN THE A. Y 2006 - 07 AND HAD NOT FILED AN APPEAL FOR THE SAME. HOWEVER, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT EACH YEAR IS A SEPARATE AND IS TO BE DECIDED ON ITS MERITS AND RELEVANT CIRCUMSTANCES. 2. (A) THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE V ALUATION OF THE VARIOUS PREMISES AT RS71581901 - WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME BE CONSIDERED AS FILED BY THE ASSESSEE AT RS1449916/ - (B) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO BASE D ON THE REMAND REPORT SUBMITTED BY AO WITH REGARD TO THE CREDENTIALS & GENUINENESS OF THE VALUATION REPORTS FILED WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME BE DELETED. (C)THE LEARNED CIT(A) HAS ERRED IN REJECTING THE ADDITI ONAL EVIDENCES FOR THE VALUATIONS FILED UNDER RULE 46A AND NOT CONSIDERING THE ASSESSEE'S REPLY TO THE REMAND REPORT WHEREIN THE VARIOUS JUSTIFICATIONS GIVEN FOR THE CORRECTNESS OF THE VALUATIONS AND GENUINENESS AND THE CREDENTIALS ARE JUSTIFIED BY THE ASSESSEE AND HAS OUGHT TO HAVE ACCEPTED THE ADDITIONAL EVIDENCES IN THE INTEREST OF JUSTICE. (D) WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SALE CONSIDERATION TOTALING TO RS715 8190/ - FOR VARIOUS PREMISES SOLD DURING THE YEAR BASED ON THE VALUATION REPORT FOR ONE SUCH PREMISES WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SALE CONSIDERATION AS PER THE ASSESSEE'S CLAIM BE ALLOWED. (E) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE APPLICATION OF SEC TION 50C OF THE INCOME TAX ACT FOR COMPUTING THE DEPRECIATION ON THE ASSETS WHICH ARE APPEARING UNDER THE BLOCK OF 3199SILVO/13;07 - 08 2 ASSETS UNDER INCOME TAX ACT WITHOUT CONSIDERING THE FACT THAT SECTION50C APPLIES TO CAPITAL GAINS AND THE DEPRECIATION AS PER SECTION 32 A PPLIES TO BUSINESS INCOME. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING 50C VALUE AS THE SALE CONSIDERATION AND HAS REDUCED THE SAME IN COMPUTING THE BALANCE BLOCK OF ASSET WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME BE CONSIDERE D AT SALE CONSIDERATION. (F) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF SHORT TERM CAPITAL GAINS ON THE ASSUMPTION THAT THE BLOCK OF ASSET CEASED TO EXISTS WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME BE CONSIDER ED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE TO THE GROUND OF APPEAL AT THE TIME OF OR BEFORE HEARING. ASSESSEE - COM PANY,ENGAGED IN THE BUSINESS OF MANUFACTURING CHEMICALS, FILED ITS RETURN OF INCOME,ON 15 .09.2009 DECLARING TOTAL INCOME AT RS. NIL.THE ASSESSING OFFICER( AO) COMPLETED THE ASSESSMENT ON 30 .12.20 09, U/S.14 3(3) OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS. ( - ) 4 .99 CRORES. 2. AT THE TIME OF HEARING BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)STATED THE FIRST APPELLATE AUTHOTIRY (FAA)HAD NOT CONSIDERED THE ASSESSEES REPLY TO THE REMAND REPORT FILED BY THE ASSESSEE ,THAT IT HAD SUBMITTED VARIOUS JUSTIFICATION FOR THE CORRECTNESS OF THE VALUATION.THE DR LEFT THE NON CONSIDERATION OF REPLY TO THE REMAND REPORT TO THE DISCRETION OF THE BENCH. WE FIND THAT THE ASSESSEE HAD FILED ADDITIONAL EVIDENCE AS PER RULE 46 A OF THE INCOME TAX RULES, 1962(RULES),THAT THE FAA CALLED FOR A REMAND REPORT FROM THE AO,THAT AFERE RECEIVING THE REMAND REPORT HE REFUSED TO ADMIT THE ADDITIONAL EVIDENCE .IN OUR OPINION THE FAA WAS NOT JUSTIFIED IN REFUSING THE ADMISSION OF ADDITIONAL EVIDENCES AF TER CALLING FOR A REMAND REPORT FROM THE AO.AS PER THE PROCEDURE,THE ASSESSEE SHOULD HAVE BEEN GIVE A CHANCE TO FILE EXPLANATION WITH REGARD TO THE REMAND REPORT OF THE AO.THEREFORE,IN THE INTEREST OF JUSTICE WE ARE REMITTING BACK THE MATTE TO THE FILE OF THE FAA,WHO WILL ADJUDICATE THE ISSUE AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE .GROUND NO.2 IS DECIDED IN FAVOUR OF THE ASSESSEE ,IN P ART. 3. GROUND NO.1 DEALS WITH DISALLOWANCE OF INTEREST AMOUNTING TO RS.46,900 AND RS.14,000/ - . DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD TAKEN LOANS FROM VARIOUS PARTIES AND FILED CONFIRMATIONS,THAT IN CERTAIN CASES IT DID NOT FILE PAN OF THE ASSESSEE ,THAT THE LOANS WERE TAKEN IN EARLIER YEARS AND THE ASSESSEE HAD NOT PROVED THE CREDITWORTHINESS OF THE LENDERS,THAT THE LENDERS WERE NOT BEING ASSESSED TO TAX.HE DISALLOWED RS.70,000/ - UNDER THE HEAD INTEREST PAID WITH REGARD TO FOUR CREDITORS. 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FAA.IT WAS ARGUED BEFORE HIM THAT ALL THE LOANS WERE OLD,THAT SAME WERE CONSIDERED AT THE TIME OF SCRUTINY ASSESSMENT IN THE PAST,THAT THERE WAS NO DISALLOWANCE BY THE THEN AO ON ACCOUNT OF CREDITWORTHINESS OF THE LENDERS,THAT THE LENDERS WE RE HAVING BELOW TAXABLE INCOMES,THAT THE LENDERS HAD FILED CONFIRMATIONS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ,THE FAA HELD THAT TWO CREDITORS OUT OF THE FOUR WERE HAVING INCOME LESS THAN THE THRESHOLD LIMITS,THAT IN CASE OF OTHER TWO CASES THE LOANS WERE NOT TESTED ON TEST OF CREDITWORTHINESS.HE UPHELD THE ADDITION OF RS.60,900/ - . BEFORE US,THE AR STATED THAT CONFIRMATIONS WERE FILED,THAT NON AVAILABILITY OF PAN COU LD NOT BE BASIS FOR DISALLOWING INTEREST,THAT LOANS WERE TAKEN IN EARLIER YEARS.DR SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN 3199SILVO/13;07 - 08 3 EARLIER YEAR SCRUTINY ASSESSMENTS WERE PASSED BY TH E AOS.THE ASSESSEE HAS NOT FILED THE ASSESSMENT ORDERS OF THE EARLIER YEARS IN THE PAPER BOOK THOUGH IT HAD FILED THE NOTICES ISSUED BY THE AO. WE FIND THAT THE ORDER OF THE FAA IS SILENT ABOUT THIS ASPECT.IN OUR OPINION,TRATEMENT GIVEN TO THE LOANS AND T HE INTEREST PAID IN EARLIER YEAR HAS TO BE CONSIDERED FOR ADJUDICATE THE ISSUE.IN SHORT,THE ISSUE NEEDS FURTHER INVESTIGATION.THEREFORE,IN THE INTEREST OF JUSTICE WE ARE REMITTING BACK THE MATTER TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.HE WILL DECIDE THE ISSUE AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE . GROUND NO.1 IS DECIDED IN FAVOUR OF THE ASSESSEE IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STAND PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH ,AUGUST,2015. 5 , 2015 SD/ - SD/ - ( . . /A. D. JAIN) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 05 . 08 . 2015 . . . JV. SR.PS. / 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.