HINDUSTAHN EXPORT AND IMPORT CORPORATION P . LTD, MUMBAI V. ADDL CIT 1(1), MUMBAI

ITA 3241/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2879 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 24-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Assessee Lawyers: S R KIRON; RAGHAVENDRA RAO
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income; Additional evidence; Bad and doubtful debts
• Section: 142(1); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I .T.A. NO.3241&3242/MUM/2014 ( / ASSESSMENT YEAR: 2008-09 & 2009-10) HINDUSTAN EXPORT AND IMPORT CORPORATION (P) LTD. ANAND BHAVAN, 348, DR. D. NAOROJI ROAD, MUMBAI - 400001 / VS. ADDITIONAL COMMISSIONER OF INCOME TAX 1(1) AAYAKAR BHAVAN MAHARSHI KARVE MARG MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAACH1112M ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI S.R.KIRON & RAGHAVENDRA RAO DEPARTMENT BY: SHRI M. RAJAN / DATE OF HEARING: 08.06.2016 /DATE OF PRONOUNCEMENT: 05.10.2016 ! / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED BOTH THE APPEALS AGAINST TH E ORDER DATED 11.02.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RE LEVANT TO THE A.Y.2008-09 AND 2009-10. ITA NO.3241/M/2014(A.Y.2008-09):- 2. THE APPELLANT HAS RAISED THE FOLLOWING GROUNDS:- ITA NO.3241&3242/MUM/2014 ASSESSMENT YEAR: 2008-09 & 2009-10 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) (C IT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF COMMISS ION OF RS.5,00,915/-. HE OUGHT NOT TO HAVE DONE SO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISA LLOWANCE OF RS.12,63,254/- U/S. 14A READ WITH RULE 8D. HE O UGHT NOT TO HAVE DONE SO. 2.1 WITHOUT PREJUDICE TO GROUND OF APPEAL (2) ABOVE AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) HAS ERRED IN NOT RE-DETERMINING THE AMOUNT DISALLOWABLE UNDER RULE 8D OF THE INCOME TAX RULES, 1962. HE OUGHT NOT TO HAVE DONE SO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISA LLOWANCE OF ADVANCES WRITTEN OFF BEING BAD DEBTS OF RS.2,22, 786/-. HE OUGHT NOT TO HAVE DONE SO. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 22.10.2009 DECLARING TOTAL INCOME TO THE TUNE OF RS.11,66,56,050/- AND BOOK PROFIT OF RS.3,14,09,856 /- U/S.115JB OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). THE RET URN WAS PROCESSED U/S.143(1) OF THE ACT ON 09.02.2010. THE NOTICE U/ S.143(2) WAS ALSO ISSUED ON 13.05.2010 WHICH WAS SERVED UPON THE ASSE SSEE ON 15.05.2010. THE CIT, VIDE ORDER DATED 22 ND JUNE, 2010 AUTHORISED THE ADDITIONAL COMMISSIONER OF INCOME TAX-1, MUMBAI, TO EXERCISE ALL POWERS AND DISCHARGE ALL FUNCTIONS OF THE ASSESSING OFFICER FOR A.Y.2008-09 IN RESPECT OF ASSESSEE COMPANYS CASE. IN CONSEQUENCE, A FRESH OPPORTUNITY OF BEING HEARD WAS GRANTED TO ASS ESSEE BY THE ASSESSING OFFICER IN RESPECT OF SCRUTINY ASSESSMENT PROCEEDINGS AND NOTICES U/S.143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED ON 25.08.2010 AND SERVED UPON THE ASSESSEE O N 27.08.2010. THE ITA NO.3241&3242/MUM/2014 ASSESSMENT YEAR: 2008-09 & 2009-10 3 ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEAL ING IN MACHINE TOOLS AND EQUIPMENTS AND PROCESS KNOW-HOW FOR DEFENCE PRO DUCTION. THE ASSESSING OFFICER DISALLOWED THE COMMISSION TO THE TUNE OF RS.5,00,915/- AND THE EXPENDITURE INCURRED TO EARN THE EXEMPT INCOME TO THE TUNE OF RS.12,63,254/- U/S.14A READ WITH RULE 8 D OF THE ACT AND BAD DEBTS TO THE TUNE OF RS.2,22,786/-, THEREFORE THE A SSESSEE FILED THE APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AS SESSING OFFICER, THEREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1:- 4. UNDER THIS ISSUE THE ASSESSEE HAS RAISED THE QUE STION OF DISALLOWANCE OF COMMISSION TO THE TUNE OF RS.5,00,9 15/-. THE ASSESSEE HAS ADMITTED THIS FACT THAT HE FAILED TO PRODUCED T HE CONFIRMATION OF COMMISSION BY THE PARTIES BECAUSE AT THAT TIME HE W AS NOT HAVING SUFFICIENT EVIDENCES WITH HIM AND FAILED TO PRODUCE D THE SAME BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A), THEREFORE, HE SHOULD BE ALLOWED TO ADDUCE THE ADDITIONAL EVIDENCE IN THE INTEREST O F JUSTICE. THE ASSESSEE WANTED TO ADDUCE THE CONFIRMATION ISSUED BY THE M/S . TECHNO LINK CORPORATION AND M/S. A.B.SERVICES PVT. LTD. LIES AT PAGE 108 TO 128 AND 129 TO 134 OF THE PAPER BOOK. THIS PIECE OF EVIDEN CE SEEMS JUSTIFIABLE TO DECIDE THE MATTER OF CONTROVERSY AND IN THE INTE REST OF JUSTICE. THEREFORE, IN THE SAID CIRCUMSTANCES WE SET ASIDE T HE FINDING OF THE CIT(A) ON THIS ISSUE AND ALLOW THE ASSESSEE TO ADDU CE THE ADDITIONAL EVIDENCE AND REMAND THIS ISSUE TO THE FILE OF ASSES SING OFFICER TO DECIDE THE MATTER AFRESH AFTER GIVING AN OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW IN VIEW OF THE EVID ENCE ADDUCED BY THE ITA NO.3241&3242/MUM/2014 ASSESSMENT YEAR: 2008-09 & 2009-10 4 ASSESSEE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FA VOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.2:- 5. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS.12,63,254/- U/S.14A READ WITH RULE 8D OF THE ACT . THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSING OFFICER INCLUDED THE INVESTMENT WHICH HAS BEEN MADE BY THE ASSESSEE AFTER THE SALE OF OLD SHARES. THE ASSESSEE HAS ALSO SHOWN THE FIGURE AT PAGES 155 TO 156 OF TH E PAPER BOOK. THE DETAILED NOTE ON INVESTMENT HAS ALSO BEEN GIVEN WHI CH LIES AT PAGE 157 TO 158 OF THE PAPER BOOK. HOWEVER, IN THIS REGARD NO EVIDENCE WAS ADDUCED BEFORE THE ASSESSING OFFICER, THEREFORE THE ASSESSEE WANTED TO ADDUCE THE ADDITIONAL EVIDENCE IN THIS REGARD. NO DOUBT THIS PIECE OF EVIDENCE WAS NOT PRODUCED BEFORE THE ASSESSING OFFI CER AT THE TIME OF THE FINALISING THE ASSESSMENT. THE ASSESSEE HAS EA RNED TAX FREE LONG TERM CAPITAL GAIN TO THE TUNE OF RS.92,419/- AND DI VIDEND INCOME TO THE TUNE OF RS.7,47,733/-. THE ASSESSEE HAS BEEN SUO M OTO DISALLOWED AN AMOUNT OF RS.4,49,541/-. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSING OFFICER HAS DISALLOWED THE EXPENDITURE TO THE TUNE OF RS.20,91,062/- AND THIS CALCULATION WAS BASED UPON THE INVESTMENT OF THE ASSESSEE WHICH IS PERTAINING TO THE SALE OF OLD SHARES AND PURCHASE OF NEW SHARES. IN THIS REGARD THE ASSESSEE WANTED TO ADDUCE THE FRESH EVIDENCE WHICH HAS NOT BEEN ADDUCED EARLIER. IN TH IS REGARD, WE MAY ADD THAT WHERE THE NEW SHARES ARE, AS CONTENDED, PU RCHASED BY SALE OF OLD SHARES (AT A PROFIT) THE NEW SHARES, TO THE EXT ENT OF THE SAID PROFIT, CAN ONLY BE CONSIDERED AS FINANCED BY THE ASSESSEE S OWN CAPITAL. ITA NO.3241&3242/MUM/2014 ASSESSMENT YEAR: 2008-09 & 2009-10 5 THEREFORE, IN THE SAID CIRCUMSTANCES AND IN THE INT EREST OF JUSTICE WE ARE OF THE VIEW THAT THE CONTENTION OF THE ASSESSEE IS LIABLE TO BE ALLOWED. THEREFORE, IN THE SAID CIRCUMSTANCES WE SET ASIDE T HE FINDING OF THE CIT(A) AND ALLOWED THE ASSESSEE TO ADDUCE THE ADDIT IONAL EVIDENCE AND REMAND THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE THE MATTER AFRESH AFTER GIVING AN OPPORTUNITY OF BEING HEARD T O THE ASSESSEE IN ACCORDANCE WITH LAW. THEREFORE, THIS ISSUE IS DECI DED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.2.1:- 6. THIS ISSUE IS IN CONNECTION WITH THE DISALLOWANC E OF THE BAD DEBTS TO THE TUNE OF RS.2,22,786/-. IN THIS REGARD THE A SSESSEE ALSO WANTED TO ADDUCE THE ADDITIONAL EVIDENCE AND IN THIS REGARD T HE FIGURE OF THE BAD DEBTS HAS BEEN SHOWN AT PAGE 159 OF THE PAPER BOOK. SINCE THIS PIECE OF EVIDENCE WAS NOT ADDUCED BEFORE THE CIT(A) AS WELL AS ASSESSING OFFICER BUT IT IS RELEVANT TO DECIDE THE MATTER OF CONTROVERSY AND IN THE INTEREST OF NATURAL JUSTICE. THEREFORE, IN THE SAI D CIRCUMSTANCES WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND A LLOWED THE ASSESSEE TO ADDUCE THE ADDITIONAL EVIDENCE BEFORE THE ASSESSING OFFICER AND REMAND THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO DECI DE THE MATTER AFRESH AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE A SSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, THIS ISSUE IS DECIDED IN FA VOUR OF THE ASSESSEE AGAINST THE REVENUE. 7. IT IS OBSERVED THAT IN ALL THE ABOVE SAID ISSUES THE ASSESSEE WANTED TO ADDUCE THE ADDITIONAL EVIDENCE WHICH HE HAS NOT PRODUCED BEFORE THE ASSESSING OFFICER AS WELL AS CIT(A). THEREFORE, IN THE INTEREST OF JUSTICE ITA NO.3241&3242/MUM/2014 ASSESSMENT YEAR: 2008-09 & 2009-10 6 WE ARE OF THE VIEW THAT THE ASSESSEE WAS AT FAULT F OR NOT PRODUCING THE EVIDENCE WELL IN TIME, THEREFORE WE IMPOSE THE COST TO THE TUNE OF RS.25,000/- PAYABLE IN THE PRIME MINISTER RELIEF FU ND. FINE PAID. THE ASSESSEE HAS ALSO FILED THE RECEIPT IN CONNECTION W ITH THE PAYMENT TO THE TUNE OF RS.25,000/- WITH THE PRIME MINISTER RELIEF FUND. ITA NO.3242/MUM/14 (A.Y.2009-10):- 8. THE APPELLANT HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) (C IT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF COMMISS ION OF RS.50,74,979/-. HE OUGHT NOT TO HAVE DONE SO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISA LLOWANCE U/S. 14A OF RS.16,41,521/-. HE OUGHT NOT TO HAVE D ONE SO. 2.1 WITHOUT PREJUDICE TO GROUND OF APPEAL (2) ABOVE AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) HAS ERRED IN NOT RE-DETERMINING THE AMOUNT DISALLOWABLE UNDER RULE 8D OF THE INCOME TAX RULES, 1962. HE OUGHT NOT TO HAVE DONE SO. 9. THE FACTS OF THE PRESENT CASE ARE QUITE SIMILAR TO THE ABOVE SAID ITA NO.3241/MUM/2014 HOWEVER THE FIGURES ARE DIFFER ENT. THE MATTER OF CONTROVERSY IS ALSO INVOLVED AS THE SAME WHICH H AS BEEN INVOLVED IN THE ABOVE MENTIONED APPEAL. THE ISSUE NO.1, 2 AND 2 .1 WHICH HAS BEEN RAISED IN ABOVE MENTIONED ITA NO. 3241/MUM/1014 HAS ALSO BEEN RAISED IN THIS APPEAL AND THE ASSESSEE HAS RAISED T HE SIMILAR POINT WHICH HAS BEEN MENTIONED ABOVE. THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON IN THE ISSUE NO.1, 2 AND 2.1 IN THIS APP EAL ALSO AND ALLOW THE ASSESSEE TO ADDUCE THE ADDITIONAL EVIDENCE BEFORE T HE ASSESSING OFFICER ITA NO.3241&3242/MUM/2014 ASSESSMENT YEAR: 2008-09 & 2009-10 7 WHICH IS NECESSARY TO ADJUDICATE THE MATTER OF CONT ROVERSY AND IN THE INTEREST OF JUSTICE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 10. IT IS OBSERVED THAT IN ALL THE ABOVE SAID ISSUE S THE ASSESSEE WANTED TO ADDUCE THE ADDITIONAL EVIDENCE WHICH HE HAS NOT PRODUCED BEFORE THE ASSESSING OFFICER AS WELL AS CIT(A). THEREFORE, IN THE INTEREST OF JUSTICE WE ARE OF THE VIEW THAT THE ASSESSEE WAS AT FAULT F OR NOT PRODUCING THE EVIDENCE WELL IN TIME, THEREFORE WE IMPOSE THE COST TO THE TUNE OF RS.25,000/- PAYABLE IN THE PRIME MINISTER RELIEF FU ND. FINE PAID. THE ASSESSEE HAS ALSO FILED THE RECEIPT IN CONNECTION W ITH THE PAYMENT TO THE TUNE OF RS.25,000/- WITH THE PRIME MINISTER RELIEF FUND. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2016 SD/- SD/- (SANJAY ARORA) (AMARJIT SINGH) / ACCOUNTANT MEMBER #$ /JUDICIAL MEMBER % & MUMBAI; ' DATED : 5 TH OCTOBER, 2016 MP MP MP MP ITA NO.3241&3242/MUM/2014 ASSESSMENT YEAR: 2008-09 & 2009-10 8 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ( ) / THE CIT(A)- 4. ( / CIT 5. )*+ $$,- , ,- , % & / DR, ITAT, MUMBAI 6. +./ 0 / GUARD FILE. / BY ORDER, ) $ //TRUE COPY// / ! ' (DY./ASSTT. REGISTRAR) # $ , % & / ITAT, MUMBAI