PARLE PET PVT LTD, MUMBAI V. DCIT 8(2), MUMBAI

ITA 3350/MUM/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7845 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 09-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H N SINGH; PADMA RAM MIRDHA
• Assessee Lawyers: NIMESH JAIN A R S
• Keywords: Capital asset; Business income; Revision of order; Depreciation; Opportunity of being heard; Rule of consistency
• Section: 143(3); 14A; 263

Judgement Text

P A G E | 1 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) IN THE INCOME TAX APPELLATE TRIBUNAL ' C ' BENCH, MUMBAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 4249/MUM/2010 (ASSESSMENT YEAR: 2006 - 07 ) PARLE PET PVT LTD. (NOW MERGED WITH PARLE AGRO PVT. LTD.) WESTERN EXPRESS HIGHWAY, CHAKALA ANDHERI (E), MUMBAI - 400099 VS. CIT - 8, MUMBAI ROOM NO. 214, AAYKAR BHAVAN, M.K ROAD, MUMBAI - 400 020. PAN AABCP9640D ( APPELLANT ) ( RESPONDENT ) ITA NO. 3350/MUM/2014 (ASSESSMENT YEAR: 2006 - 07 ) PARLE PET PVT LTD. (NOW MERGED WITH PARLE AGRO PVT. LTD.) WESTERN EXPRESS HIGHWAY, CHAKALA ANDHERI (E), MUMBAI - 400099 VS. DY. COMMISSIONER OF INCOME - TAX 8(2) ROOM NO. 209, AAYKAR BHAVAN, M.K ROAD, MUMBAI - 400 020. PAN AABCP9640D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI YOGESH THAR & SHRI NIMESH JAIN, A .R S RESPONDENT BY: SHRI H.N. SINGH & SHRI PADMA RAM MIRDHA, SR. D.R DATE OF HEARING: 12.10 .2018 DATE OF PRONOUNCEMENT: 2 8 . 12 .2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX - 8 , MUMBAI (FOR SHORT CIT) UNDER SEC. 263 OF THE INCOME TAX ACT , 1961 (FOR SHORT I.T. P A G E | 2 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) ACT), DATED 05.04.2010 WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3), DATED 29.09.2008; AND THE ORDER PASSED BY THE CIT(A), DATED 20.02.2014, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC . 143(3) R.W.S 263 OF THE I.T ACT, DATED 19.08.2011. AS THE AFOREMENTIONED APPEALS ARE INEXTRICABLY INTERLINKED AND RATHER INTERWOVEN, THEREFORE, THE SAME ARE BEING TAKEN UP TOGETHER. WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE AGAINST THE ORDER PASS ED BY THE CIT - 8, MUMBAI UNDER SEC. 263 OF THE I .T ACT. THE ASSESSEE ASSAILING THE ORDER OF THE CIT HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN TREATING THE ORDER PASSED BY A.O WERE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND II.ISE POWER UNDER SECTION 263 OF THE INCOME TAX ACT. WITHOUT PREJUDICIAL TO ABOVE: - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSI ONER OF INCOME - TAX ERRED IN DISALLOWING EXPENSES OF RS.47,06,690/ - BY ALLOCATING 50 PERCENT OF EXPENSES ON ESTIMATE BASIS TO BUSINESS CENTRE ACTIVITY WHICH WAS ASSESSED BY AO AS INCOME FROM HOUSE PROPERTY. THE APPELLANT SUBMIT THAT THE ADDITION MADE IS ON ESTIMATE BASIS WITHOUT ANY JUSTIFICATION AND THEREFORE IT IS PRAYED THAT THE ADDITION BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN ASSESSING SHORT TERM CAPITAL GAIN OF RS.1,56,00,610 / - UNDER THE HEAD INCOME FROM BUSINESS. THE APPELLANT SUBMITS THAT THEY HAD NOT CARRIED OUT TRADING ACTIVITY IN SECURITIES AND THEREFORE THERE IS NO JUSTIFICATION FOR ASSESSING SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. IT IS PRAYS THAT THE DIRECTION GIVE N TO AO BE CANCEL. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN NOT ACCEPTING THE LONG TERM CAPITAL GAIN OFFER TO TAX BY EXERCISING THE OPTION OF INDEXATION AND WITHOUT INDEXATION WHICHEVER IS BENEF ICIAL TO THE APPELLANT. THE APPELLANT SUBMIT THAT THE LONG TERM CAPITAL GAIN BE ASSESSED BY APPLYING THE PROVISION OF SECTION 112(1) OF THE INCOME TAX ACT 1961 , AND ACCORDING THE LONG TERM CAPITAL GAIN OFFER TO TAX BY APPELLANT BE ACCEPTED. 5 . THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, AND MODIFY THE GROUNDS AT OR BEFORE THE TIME OF HEARING. P A G E | 3 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF HEALTH CENTRE/V3 FITNESS CENTRE AND IS ALSO IN RECEIPT OF COMPENSATION FROM BUSINESS SERVICE CENTRE HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2006 - 07 ON 23.11.2006, DECLARING TOTAL INCOME AT RS.4,61,45,944/ - . THE B USINESS S ERVICE C ENTRE WAS CARRIED OUT BY THE ASSESSEE ON A PORTION OF ITS HEAD OFFICE WHICH WAS LEASED OUT TO ITS GROUP COMPANIES . THE COMPENSATION RECEIVED FROM THE BUSINESS SERVICE CENTRE WAS BROUGHT TO TAX BY THE A.O UNDER THE HEAD I NCOME FROM HOUSE PROPERTY IN THE ASSESSMENT ORDER PASSED BY HIM UNDER SEC. 143(3) OF THE I.T. ACT AND T HE LOSS OF THE ASSESSEE WAS SCALED DOWN TO AN AMOUNT OF ( - ) RS. 47,66,515/ - . INSOFAR THE CAPITAL GAIN ON THE SALE OF INVESTMENTS AND SECURITIES SHOWN BY THE ASSESSEE IN ITS RETURN OF INCOME AT RS. 5,81,61,500/ - , THE SAME WAS ASSESSED AS SUCH BY THE A.O . ON APPEAL , THE CIT(A) REVISED THE TOTAL INCOME (OTHER THAN CAPITAL GAINS) AT ( - )RS. 49,14,827/ - AND CAPITAL GAINS AT RS. 5,81,61,500/ - . 3. SUBSEQUENTLY, THE COMMISSIONER OF INCOME TAX - 8, MUMBAI PASSED AN ORDER UNDER SEC. 263, DATED 05.04.2010 AND TREATING TH E ORDER PASSED BY THE A.O UNDER SEC.143(3) , DATED 29.09.2008 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE , SET ASIDE THE SAME INTER ALIA ON THE FOLLOWING ISSUE S : (I) THE CIT OBSERVED THAT THE ASSESSEE HAD DEBITED TOTAL EXPENDITURE OF RS. 3 ,14,14,713/ - IN ITS PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. IT WAS NOTICED BY THE CIT THAT A FTER EXCLUDING THE EXPENSES OF RS. 70,13,046/ - INCURRED IN RESPECT OF THE BUSINESS CENTRE ALONGWITH THE DEPRECIATION OF RS.39,34,779/ - , THE BALANCE EXPENSES OF RS. 2,04,66,348/ - WERE CLAIMED BY THE ASSESSEE TO BE PERTAINING TO HEALTH CENTRE/V3 FITNESS CENTRE. IT WAS OBSERVED BY THE CIT THAT AFTER EXCLUDING ITEMS LIKE LOSS ON SALE OF ASSETS: RS. 16,715/ - ; LOSS ON SALE P A G E | 4 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) OF INVESTMENTS: RS. 4,56,893/ - ; AN D INTEREST ON DEBENTURES: RS. 16,715/ - , THE BALANCE EXPENSES CLAIMED AGAINST THE HEALTH CENTRE/V3 FITNESS CENTRE WERE SCALED DOWN TO RS. 1,99,56,542/ - . FURTHER, TAKING NOTE OF THE FACT THAT THE ASSESSEE HAD RELATED SPECIFIC EXPENSES OF RS. 90,01,774/ - AS H AVING BEEN INCURRED IN RESPECT OF HEALTH CENTRE/V3 FITNESS CENTRE, IT WAS OBSERVED BY THE CIT THAT THERE REMAINED BALANCE COMMON EXPENSES OF RS.1,09,54,768/ - WHICH WERE LIABLE TO BE APPORTIONED AMONGST THE BUSINESS SERVICE CENTRE AND HEALTH CENTRE/V3 FITNE SS CENTRE . THE CIT TAKING COGNIZANCE OF THE FACT THAT O UT OF THE AFORESAID EXPENSES INTEREST OF RS.16,900/ - WAS ALREADY EXCLUDED AND AN AMOUNT OF RS.15,41,385/ - WAS DISALLOWED UNDER SEC. 14A , THUS WORKED OUT THE BALANCE COMMON EXPENSES AT RS.94,13,383/ - [ RS .1,09,54,768/ - ) ( - ) (RS.15,41,385/ - ] THE CIT DIRECTED THE A.O TO ALLOCATE THE COMMON EXPENSES IN THE RATIO OF 50:50 TO BUSINESS SERVICE CENTRE AND HEALTH CENTRE/V3 FITNESS CENTRE AND MAKE A FURTHER DISALLOWANCE OF EXPENSES ATTRIBUTABLE TO THE BUSINESS SERV ICE CENTRE OF RS.47,06,690/ - (I.E. 50% OF RS.94,13,383/ - ) IN THE HANDS OF THE ASSESSEE. (II) . THE CIT OBSERVED THAT THE A.O WHILE FRAMING THE ASSESSMENT HAD ACCEPTED THE ASSESSES CLAIM OF S HORT TERM CAPITAL GAIN (STCG) FROM THE SALE OF MUTUAL FUNDS WITHOUT VERIFYING AS TO WHETHER THE ASSESSEE HELD THE MUTUAL FUNDS AS INVESTMENTS OR WAS CARRYING ON THE REGULAR BUSINESS OF PURCHASE AND SALE OF MUTUAL FUNDS. THE CIT BEING OF THE VIEW THAT THE REPEATED TRANSACTIONS O F BUYING AND SELLING OF EQUITY SHARES /MUTUAL FUNDS BY THE ASSESSEE COMPANY REVEALED ITS CLEAR INTENTION OF EARNING PROFITS, THEREFORE , CONCLUDED THAT IT COULD SAFELY BE HELD THAT THE ASSESSEE WAS ENGAGED IN BUSINESS OF PURCHASE AND SALE OF INVESTMENTS. IN THE BACKDROP OF HIS AF ORESAID OBSERVATIONS THE CIT P A G E | 5 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) DIRECTED THE A.O TO ASSESS THE STCG AS BUSINESS INCOME AND CHARGE TAX ACCORDINGLY O N THE SAME . (III) T HE CIT OBSERVED THAT THE ASSESSEE ON THE SALE OF VARIOUS UNITS OF MUTUAL FUNDS ETC. HAD ACCORDING TO I TS CONVENIENCE WORKED OUT THE LONG TERM CAPITAL GAIN (LTCG) BY ADOPTING A MIXED SYSTEM OF COMPUTATION OF CAPITAL GAINS . IT WAS NOTICED BY THE CIT THAT CERTAIN LTCG TRANSACTIONS WERE BROUGHT TO TAX BY THE ASSESSEE BY INDEXING THE COST AND WORK ING OUT THE TA X AT 20% , WHILE FOR IN RESPECT OF THE REMAINING LTCG TRANSACTIONS THE TAX WAS WORKED OUT AT 10% WITHOUT INDEXING THE COST. THE CIT WAS OF THE VIEW THAT THE ASSESSEE COULD EITHER COMPUTE THE LTCG @ 20% ( WITH INDEXING) OR @ 10% (WITHOUT INDEXING) AND IT WAS NOT PERMISSIBLE TO FOLLOW A MIXED SYSTEM . THE CIT OBSERVED THAT THE TOTAL TAX PAYABLE @10% ON THE ENTIRE LTCG (WITHOUT INDEXING) WORKED OUT TO RS.65,91,984/ - , WHILE FOR THE TAX PAYABLE @20% ON THE ENTIRE LTCG (WITH INDEXING) WORKED OUT TO RS.64,02,320/ - . THE CIT WAS OF THE VIEW THAT THE ASSESSEE COULD HAVE CHOSEN THE LOWEST TAX PAYABLE OF RS.64,02,320/ - (SUPRA) ON THE ENTIRE LTCG , AS AGAINST THE TAX WORKED OUT BY DEPLOYING THE MIXED SYSTEM AT RS.58,07,946/ - . IT WAS THUS OBSERV ED BY THE CIT THAT THE ASSESSEE BY CHOOSING A MIXED SYSTEM OF COMPUT ING ITS TAX LIABILITY ON LTCG HAD THUS ERRED IN PAYING LOWER AMOUNT OF TAX OF RS.5,94,374/ - [ RS.64,02,320/ - ( - ) RS.58,07,946/ - ] . IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS THE CIT DIREC TED THE A.O TO COMPUTE THE TAX LIABILITY ON THE LTCG AT RS.64,02,320/ - . 4. AGGRIEVED, THE ASSESSEE HAS CARRIED THE ORDER OF THE CIT(A) PASSED UNDER SEC. 263 OF THE I.T ACT IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) AT THE VERY OUTSET ASSAILED THE ORDER PASSED BY THE CIT UNDER SEC.263 . IT WAS SUBMITTED BY THE LD. A.R THAT THE CIT HAD WRONGLY ASSUMED JURISDICTION BY HOLDING THE P A G E | 6 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) ORDER PASSED BY THE A.O UNDER SEC.143(3) AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE A.O WHILE FRAMING THE ASSESSMENT HAD MADE NECESSARY ENQUIRIES IN RESPECT OF THE ISSUE S UNDER CONSIDERATION, T HEREFORE, THE VERY ASSUMPTION OF JURISDICTION BY THE CIT ON THE PREMISE THAT THE A.O HAD MADE INADEQUATE ENQUIRIES COULD NOT BE SUSTAINED AND WAS LIABLE TO BE VACATED. IT WAS THE CONTENTION OF THE LD. A.R THAT IN ORDER TO INVOKE THE PROVISIONS OF SEC. 263 THE ORDER PASSED BY THE A.O MUST BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE , AND THE SAME CANNOT BE EXERCISE D IN A CASE WHERE THE A.O AFTER HAVING APPLIED HIS MIND HAD ARRIVED AT A POSSIBLE AND A PLAUSIBLE VIEW. INSOFAR THE DISALLOWANCE OF EXPENSES WAS CONCERNED, IT WAS SUBMITTED BY THE LD. A.R THAT AS THE A.O AFTER DUE APPLICATIO N OF MIND HAD RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS.7 0 ,13,046/ - AS WAS ATTRIBUT ED BY THE ASSESSEE TO THE BUSINESS SERVICE CENTRE, THEREFORE, THE CIT HAD EXCEEDED HIS JURISDICTION AND HAD IN A WHIMSICAL MANNER ON AN ESTIMATE BASIS DISALLOWED A FUR THER AMOUNT OF RS.47,06,690/ - . THE LD. A.R SUBMITTED THAT THE OBSERVATIONS OF THE CIT THAT THE STCG OF RS.1,56,00,610/ - SHOWN BY THE ASSESSEE ON SALE OF MUTUAL FUNDS WAS LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS CLEARLY MILITATED AGAINST TH E VIEW TAKEN BY THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A.Y. 2005 - 06 VIZ. PARLE PET PVT. LTD. VS. ACIT - 8(2), MUMBAI [ ITA NO. 4248/MUM/2010 ] (COPY PLACED ON RECORD). IT WAS SUBMITTED BY THE LD. A.R THAT THE TRIBUNAL IN THE AFORESAID CASE AFTER REFERRING T O THE FACT THAT THE INCOME FROM SALE OF MUTUAL FUNDS/SHARES WAS ASSESSED BY THE REVENUE IN THE CASE OF THE ASSESSEE IN THE PRECEDING YEARS VIZ. A.Y. 2002 - 03, A.Y. 2003 - 04 AND A.Y. 2004 - 05 UNDER THE HEAD STCG, HAD THUS VACATED THE OBSERVATIONS RECORDED BY T HE CIT IN HIS ORDER PASSED UNDER SEC.263 THAT THE INCOME FROM THE SALE OF SHARES AND INVESTMENTS WAS LIABLE TO BE ASSESSED AS BUSINESS INCOME , P A G E | 7 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) AND NOT AS STCG AS CLAIMED BY THE ASSESSEE. FURTHER, IT WAS SUBMITTED BY THE LD. A.R THAT THE CIT HAD ALSO ERRED IN CONCLUDING THAT AS PER THE MANDATE OF LAW THE ASSESSEE COULD EITHER COMPUTE THE LTCG @ 10% ( WITHOUT INDEXATION ) OR @ 20% ( WITH INDEXATION ) QUA EACH CAPITAL ASSET , AND WAS PRECLUDED FROM ADOPTING A MIXED SYSTEM FOR COMPUTING HIS TAXABILITY IN RESPECT OF THE DIFFERENT CAPITAL ASSET S . THE LD. A.R IN SUPPORT OF ITS CONTENTION RELIED ON THE ORDER PASSED BY THE TRIBUNAL IN ITS OWN CASE FOR A.Y. 2005 - 06 I.E. PARLE PET PVT. LTD. VS. DCIT - 8(2), MUMBAI (ITA 4248/MUM/2016; DATED 17.02.2016 ) . IT WAS SUBMITTED BY THE LD. A.R. THAT IN THE AFOREMENTIONED CASE THE TRIBUNAL IN CONTEXT OF THE ISSUE UNDER CONSIDERATION AFTER RELYING ON A HOST OF JUDICIAL PRONOUNCEMENT S VIZ. (I) MOHAN LAL M. SHAH VS. ACIT (2008) 26 SOT 380; (II) DEVINDAR PRAKASH KALRA VS. ACIT (2006) 151 TAX MAN 17 (DEL); (III) CIT VS. ANUJ A. SHAH (2010) 190 TAXMAN 330 (BOM); AND (IV) DCIT VS. SAVAL MOTORS AGENCIES PVT. LTD. (2012) 19 TAXMAN 359 (MUM) , HAD THEREIN CONCLUDED THAT THE ASSESSEE WAS VESTED WITH THE RIGHT TO COMPUTE ITS LTCG TAX LIABILITY TRANSACT ION WISE E ITHER AT 10% (WITHOUT INDEXATION) OR 20% (WITH INDEXATION) IN RESPECT OF DIFFERENT TRANSACTIONS DURING THE YEAR, IN A MANNER AS THE ASSESSEE WOULD FIND BENEFICIAL . IT WAS THUS SUBMITTED BY THE LD. A.R THAT AS THE A.O HAD TAKEN A POSSIBLE AND A P LAUSIBLE VIEW WHICH WAS WELL IN CONFORMITY WITH THE VIEW EARLIER TAKEN BY THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A.Y. 2005 - 06, THEREFORE, THERE WAS NO OCCASION FOR THE CIT TO HAVE REVISED THE ASSESSMENT. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE ( FOR SHORT D.R) RELIED ON THE ORDER PASSED BY THE CIT . IT WAS SUBMITTED BY THE LD. D.R THAT AS THE A.O HAD FAILED TO APPL Y HIS MIND TO THE ISSUE S UNDER CONSIDERATION , THEREFORE, THE CIT HAD RIGHTLY EXERCISED HIS JURISDICTION AND REVISED THE ASSESSMENT ORD ER UNDER SEC.263 OF THE I.T ACT. P A G E | 8 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) 5. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE SHALL FIRST ADVERT TO THE ISSUE S IN RESPECT OF WHICH THE CIT HAS REV ISED THE ORDER PASSED BY THE A.O UNDER SEC.143(3) , AND WHILE DELIBERATING ON THE SAID RESPECTIVE ISSUES SHALL EXAMINE THE VALIDITY OF THE EXERCISE OF JURISDICTION BY THE CIT UNDER SEC.263 OF THE I.T. ACT. ADMITTEDLY, THE DISALLOWANCE OF EXPENSES OF RS.47,0 6,690/ - BY THE CIT BY ALLOCATING 50% OF SUCH EXPENSES TO THE BUSINESS CENTRE HAD BEEN MADE ON AN ESTIMATE BASIS. WE FIND THAT THE A.O WHILE FRAMING THE ASSESSMENT UNDER SEC. 143(3), DATED 29.09.2008 HAD BROUGHT THE COMPENSATION CHARGES RECEIVED BY THE ASSESSEE ON ACCOUNT OF LETTING OUT OF OFFICE PREMISES TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY , AS AGAINST THAT SHOWN BY THE ASSESSEE AS ITS BUSINESS INCOME. RESULTANTLY, THE EXPENSES ATTRIBUTABLE TO T HE BUSINESS SERVICE CENTRE, AS WERE DEBITED BY THE ASSESSEE IN ITS PROFIT & LOSS A/C WERE LIABLE TO BE DISALLOWED. WE FIND THAT THE ASSESSEE ON BEING CALLED UPON BY THE A.O TO FURNISH THE DETAILS OF THE EXPENSES WHICH RELATED TO THE BUSINESS SERVICE CENTRE AND WERE DEBITED IN THE PROFIT AND LOSS ACCOUNT , HAD FURNISHED THE DETAILS OF SUCH EXPENDITURE AGGREGATING TO RS. 70,13,046/ - .FURTHER, THE ASSESSEE HAD ALSO FURNISHED WITH THE A.O THE LIST OF ASSETS OF THE BUSINESS SERVICE CENTRE ON WHICH DEPRECIATION OF RS. 39,34,779/ - WAS CLAIMED BY THE ASSESSEE. HOWEVER, THE A.O WITHOUT MAKING NECESSARY VERIFICATIONS AS TO WHETHER ANY OTHER EXPENDITURE PERTAINING TO THE BUSINESS SERVICE CENTRE WAS DEBITED BY THE ASSESSEE IN THE PROFIT AND LOSS A/C , HAD SUMMARILY ACCEPTE D THE AFORESAID CLAIM OF THE ASSESSEE AND DISALLOWED THE EXPENSES AS PER THE DETAILS WHICH WERE FURNISHED BY THE ASSESSEE. IN OUR CONSIDERED VIEW THE CIT HAS RIGHTLY OBSERVED THAT THE FAILURE ON THE PART OF THE A.O TO MAKE ANY VERIFICATIONS AND ACTUALLY FI ND OUT THE EXPENSES WHICH RELATED TO THE BUSINESS SERVICE P A G E | 9 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) CENTRE FOR MAKING A PROPER DISALLOWANCE , HAD THEREIN RENDERED THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. APART THEREFROM, WE ARE FURTHER IN AGREEMENT WITH THE OBSERVATION OF THE CIT THAT THE RELATING OF THE BALANCE EXPENSES OF RS.1.90 CRORES WITH THE RECEIPTS OF RS.42 . 56 LACS FROM THE HEALTH CENTRE SUPPORTED THE OBSERVATIONS OF THE CIT THAT THE A.O BY FAILING TO HAVE CARRIED OUT NECESSARY VERIFICATIONS HAD ARRIV ED AT A PALPABLY ERRONEOUS VIEW. IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS WE ARE PERSUADED TO SUBSCRIBE TO THE VIEW OF THE CIT THAT THE ORDER OF THE A.O IN CONTEXT OF DISALLOWANCE OF EXPENSES PERTAINING TO THE BUSINESS SERVICE CENTRE , HAVING BEEN PASS ED WITHOUT MAKING NECESSARY VERIFICATIONS IS CLEARLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. WE THUS UPHOLD THE ORDER PASSED BY THE CIT UNDER SEC.263 IN CONTEXT OF THE AFORESAID ISSUE. THE G ROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE IS DISMISSED. 6. WE SHALL NOW ADVERT TO THE OBSERVATION S OF THE CIT THAT THE ACCEPTANCE BY THE A.O OF THE INCOME FROM THE SALE OF MUTUAL FUNDS AS SHOWN BY THE ASSESSEE UNDER THE HEAD STCG , WITHOUT MAKING ANY VERIFICATIONS AS TO WHE THER THE ASSESSEE WAS CARRYING OUT SUCH TRANSACTIONS IN A SYSTEMATIC AND AN ORGANISED MANNER IN THE PAST, THEREIN MAKING THE SAME LIABLE TO BE TAX ED AS ITS BUSINESS INCOME, HAD RENDERED THE ORDER PASSED BY HIM UNDER SEC.143(3) AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF T HE REVENUE. WE HAVE DELIBERATED ON THE ISSUE AT LENGTH AND FIND THAT ON A SIMILAR GROUND THE CIT HAD REVISED THE ORDER PASSED BY A.O UNDER SEC.143(3), DATED 28.12.2007 FOR A.Y 2005 - 06. THE CIT WHILE REVISING THE ASSESSMENT ORDER FOR A.Y 2005 - 06 HAD OBSERVED THAT THE A.O HAD ERRED IN NOT ASSESSING THE INCOME FROM THE SALE OF SHARES AS THE BUSINESS INCOME OF THE ASSESSEE , AND HAD WRONGLY ACCEPTED THE CLAIM OF THE ASSESSEE AND BROUGHT THE P A G E | 10 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) SAME TO TAX UNDER THE HEAD STCG . HOWEVER, THE AFORES AID ORDER OF THE CIT WAS THEREAFTER REVERSED BY THE TRIBUNAL , VIDE ITS ORDER PASSED IN PARLE PET PVT. LTD. VS. DCIT - 8(2), MUMBAI (ITA NO. 4248/MUM/2010; DATED 17.02.2016). THE TRIBUNAL IN ITS AFORESAID ORDER HAD OBSERVED THAT THE INCOME OF THE ASSESSEE FROM SALE OF SHARES AND SECURITIES IN THE EARLIER YEARS VIZ. A.Y. 2002 - 03, A.Y. 2003 - 04 AND A.Y. 2004 - 05 WAS ALSO ASSESSED BY THE REVENUE UNDER THE HEAD STCG IN THE HANDS OF THE ASSESSEE. IT WAS THUS OBSERVED BY THE TRIBUNAL THAT ON THE BASIS OF THE PRINCIPLE OF CONSISTENCY THE INCOME FROM THE SALE OF SHARES AND SECURITIES WAS RIGHTLY CLAIMED BY THE ASSESSEE AND BROUGHT TO TAX BY THE A.O UNDER THE HEAD STCG. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE C ONSISTENT VIEW OF THE REVENUE THAT THE INCOME FROM THE SALE OF SHARES AND SECURITIES WAS LIABLE TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE UNDER THE HEAD STCG, THEREFORE, IT CAN SAFELY BE CONCLUDED THAT AS THERE WAS NO SHIFT IN THE FACTS OF THE CASE FOR THE UNDER CONSIDERATION, AS AGAINST THOSE OF THE AFOREMENTIONED PRECEDING YEARS, THE A.O HAD FAIRLY ARRIVED AT A POSSIBLE AND A PLAUSIBLE VIEW AND CONCLUDED THAT THE INCOME FROM SALE OF SHARES AND SECURITIES WAS TO BE SUBJECTED TO TAX AS STCG. WE THUS ARE OF A STRONG CONVICTION THAT THE AFORESAID PLAUSIBLE VIEW OF THE A.O IN CONTEXT OF THE ISSUE UNDER CONSIDERATION COULD NOT HAVE BEEN DISLODGED BY THE CIT IN EXERCISE OF HIS REVISIONAL JURISDICTION UNDER SEC.263 OF THE I.T. ACT , WITHOUT RECORDING A FIND ING AS TO HOW THE FACTS OF THE CASE WERE MATERIALLY DIFFERENT FROM THOSE OF THE AFOREMENTIONED PRECEDING YEARS . WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS VACATE THE ORDER PASSED BY THE CIT UNDER SEC. 263 TO THE EXTENT HE HAD DIRECTED THE A.O TO ASSESS THE STCG OF RS.1,56,00,610/ - UNDER THE HEAD BUSINESS INCOME IN THE HANDS OF THE ASSESSEE. THE GROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE IS ALLOWED. P A G E | 11 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) 7. WE SHALL NOW ADVERT TO THE OBSERVATION OF THE CIT THAT AS PER THE MANDATE OF LAW THE ASSESSEE COU LD NOT HAVE ADOPTED A MIXED SYSTEM AND SUBJECTED THE LTCG IN RESPECT OF DIFFERENT TRANSACTIONS DURING THE YEAR TO TAX EITHER @ 10% (WITHOUT INDEXATION) OR @ 20% (WITH INDEXATION) AS PER SEC. 112(1) OF THE I.T ACT. WE FIND THAT THE CIT HAD OBSERVED THAT THE ASSESSEE BY FOLLOWING A MIXED SYSTEM HAD WORKED OUT THE TAX LIABILITY O N LTCG IN RESPECT OF CERTAIN TRANSACTIONS @ 20% (WITH INDEXING) AND IN THE REMAINING CASES AT 10% (WITHOUT INDEXING). THE CIT WAS OF THE VIEW THAT THE ASSESSEE REMAINED UNDER AN OBLIG ATION TO HAVE ADOPTED A UNIFORM METHOD FOR COMPUTING THE TAX LIABILITY IN RESPECT OF THE LTCG ON THE VARIOUS TRANSACTIONS FOR THE YEAR UNDER CONSIDERATION I.E BY SELECTING EITHER OF THE AFORESAID METHOD VIZ. (I) . TAX ON LTCG @ 20% (WITH INDEXING); OR (II) . TAX ON LTCG @ 10% (WITHOUT INDEXING). ON THE BASIS OF HIS AFORESAID OBSERVATION S IT WAS NOTICED BY THE CIT THAT THE TAX ON LTCG @ 20% (AFTER INDEXING) WORKED OUT TO RS.64,02,320/ - , WHILE FOR THE TAX PAYABLE ON THE LTCG @10% ( WITHOUT INDEXING ) STOOD COMPUT ED AT RS.65,91,984/ - . IT WAS FURTHER NOTICED BY THE CIT THAT THE ASSESSEE BY ADOPTING A MIXED SYSTEM OF COMPUTING THE TAX LIABILITY ON THE LTCG TRANSACTIONS HAD WORKED OUT THE TOTAL TAX LIABILITY AT RS.58,07,946/ - . THE CIT WAS OF THE VIEW THAT THE ASSESSEE COULD HAVE CHOSEN LOWEST TAX PAYABLE I.E RS.64,02,320/ - (SUPRA) BY UNIFORMLY WORKING OUT THE TAX LIABILITY ON ALL THE LTCG TRANSACTIONS @20% (WITH INDEXING), A S AGAINST THE ACTUAL TAX WORKED OUT AT RS. 58,07,946/ - . THE CIT WAS OF THE VIEW THAT THE A.O BY A CCEPTING THE MIXED SYSTEM OF COMPUTATION OF CAPITAL GAINS HAD WRONGLY APPROVED THE PAYMENT OF LOWER TAX BY THE ASSE SSEE AMOUNTING TO RS.5,94,374/ - [ I.E RS. 64,02,320/ - ( - ) RS.58,07,946/ - ] . ON THE BASIS OF HIS AFORESAID OBSERVATIONS, IT WAS CONCLUDED BY THE CIT THAT THE ORDER PASSED BY THE A.O AS REGARDS COMPUTING THE TAX LIABILITY OF THE P A G E | 12 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) ASSESSEE ON LTCG TRANSACTIONS, HAD RENDERED H IS ORDER PASSED UNDER SEC.143(3) AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 8. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE AFORESAID OBSERVATIONS OF THE CIT. IN OUR CONSIDERED VIEW ON A SIMILAR ISSUE THE ORDER PASSED BY THE A.O UNDER SEC.143(3), DATED 28.12.2007 FOR A.Y 2005 - 06 WAS REVISED BY T HE CIT UNDER SEC.263 OF THE I.T ACT. HOWEVER, A COORDINATE BENCH OF THE TRIBUNAL ON APPEAL I.E. ITAT C BENCH, MUMBAI IN THE CASE OF PARLE PET PVT. LTD. VS. DCIT - 8(2), MUMBAI (ITA NO. 4248/MUM/2010; DATED 17.02.2016) BY RELYING ON CERTAIN JUDICIAL PRONOUNCEMENT S VIZ. (I) MOHAN LAL M. SHAH VS. ACIT (2008) 26 SOT 380; (II) DEVINDAR PRAKASH KALRA VS. ACIT (2006) 151 TAXMAN 17 (DEL); (III) CIT VS. ANUJ A. SHAH (2010) 190 TAXMAN 330 (BOM); AND (IV) DCIT VS. SAVAL MOTORS AGENCIES PVT. LTD. (2012) 19 TAXMA N 359 (MUM), HAD CONCLUDED THAT THE ASSESSEE WAS VESTED WITH THE RIGHT TO COMPUTE THE TAX LIABILITY ON THE LTCG AT 10% (WITHOUT INDEXING) OR 20% (WITH INDEXING) TRANSACTION WISE, I.E IN A MANNER AS IT FINDS BENEFICIAL . O N THE AFORESAID PREMISE THE TRIBUNAL HAD SET ASIDE THE ORDER PASSED BY THE CIT UNDER SEC. 263 IN CONTEXT OF THE ISSUE UNDER CONSIDERATION . WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID ORDER OF THE TRIBUNAL IN THE ASSESSES OWN CASE, AS WELL AS THE ORDERS OF THE COORDINA TE BENCHES OF THE TRIBUNAL A S WERE AVAILABLE AT THE TIME WHEN THE A.O HAD PASSED THE ORDER UNDER SEC.143(3), IT CAN SAFELY BE CONCLUDED THAT A POSSIBLE AND A PLAUSIBLE VIEW IN CONTEXT OF THE ISSUE UNDER CONSIDERATION WAS ARRIVED AT BY THE A.O , WHICH THUS O USTED THE JURISDICTION OF THE CIT TO REVISE THE ORDER FOR SUBSTITUTING HIS VIEW AS AGAINST THAT TAKEN BY THE A.O. WE THUS ARE OF THE CONSIDERED VIEW THAT THE ORDER PASSED BY THE CIT UNDER SEC. 263 IN CONTEXT OF THE MANNER OF COMPUTING OF THE TAX LIABILITY O N LTCG ARISING P A G E | 13 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) FROM THE SALE OF THE SHARES AND SECURITIES CANNOT BE SUSTAINED AND IS THEREFORE VACATED. THE G ROUND OF APPEAL NO. 4 RAISED BY THE ASSESSEE IS ALLOWED. 9. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO.3350/MUM/2014 A.Y.2006 - 07 10. WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) - 17, MUMBAI, DATED 20.02.2014, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.143(3) R.W.S . 263 OF THE INCOME TAX, 1961 (FOR SHORT I.T. ACT), DATED 19.08.2011. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUND S OF APPEAL: GROUND NO. I : DISALLOWANCE OF EXPENSES: 1. ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENSES OF RS. 4706,690/ - ON THE ALLEGED GROUND THAT THE EXPENSES DO NOT RELATE TO HEALTH CENTRE BUSINESS. 2. THE LEARNED CIT( A) ERRED IN HOLDING THAT THE APPELLANT HAS AGREED WITH THE OBSERVATIONS MADE BY THE LEARNED CIT - 8 DURING THE COURSE OF THE PROCEEDINGS U/S 263 AND THAT THE ORDER OF THE LEARNED CIT - 8 WAS DULY ACCEPTED BY THE APPELLANT AS NO APPEAL WAS PREFERRED AGAINST IT INASMUCH AS THE APPELLANT HAS PREFERRED AN APPEAL AGAINST THE ORDE R PASSED U/S 263 BEFORE THE HONBLE ITAT AND THIS FACT WAS BROUGHT OUT IN THE WRITTEN SUBMISSIONS FILED BEFORE THE LEARNED CIT(A). 3. THE APPELLANT PRAYS THAT THE DISALLOWANCE OF DEDUCTION AMO UNTING TO RS. 47,06,690/ - BE DELETED. GROUND NO. II: SHORT TERM CAPITAL GAINS TREATED AS BUSINESS INCOME: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONF IRMING THAT THE SHORT TERM CAPITA L GAIN AMOUNTING TO RS.1,56,00, 610/ - SHALL BE ASSESSED UNDER THE HEAD BUSINESS INCOME'. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT HAS AGREED WITH THE P A G E | 14 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) OBSERVATIONS MADE BY THE LEARNED CIT - 8 INASMUCH AS THE APPELLANT HAS PREFERRED AN APPEAL AGAINST TH E ORDER PASSED U/S 263 BEFORE THE HON BLE ITAT AND THIS FACT WAS BROUGHT OUT IN THE WRITTEN SUBMISSIONS FILED BEFORE THE LEARNED CIT(A). 3. THE APPELLANT PRAYS THAT SUCH SHORT TERM CAPITAL GAINS BE HELD AS ASSESSABLE UNDER THE HEAD CAPITAL GAINS' AND NOT UNDER BUSIN ESS INCOME'. WITHOUT PREJUDICE TO GROUND II: SHORT TERM CAPITAL GAINS TREATED AS BUSINESS INCOME: ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE ALTERNATIVE PLEA MADE BY WAY OF SUPPLEMENTARY WRITTEN SUBMISSIONS THAT EVEN IF THE SHORT TERM CAPITAL GAIN AMOUNTING TO RS. RS. 86,36,939/ - (NON STT) AND RS. 69,63,671/ - (STT PAID) TOTALING TO RS. 1,56,00,610/ - IS TREATED AS BUSINESS IN COME, THEN THE SHORT TERM CAPITAL LOSS AMOUNTING TO RS. 2,96,688/ - OUGHT TO BE TREATED AS BUSINESS LOSS, AND H ENCE ONLY THE NET AMOUNT OF RS. 1,53,03,922/ - (1,56,00,610 - 2,96,688) OUGHT TO BE CHARGED TO TAX. GROUND NO. III: LONG TERM CAPITAL GAINS: 1. . ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THE LONG TERM CAPITAL GAIN OFFERED TO TAX BY EXERCISING THE OPTION OF INDEXATION AND WITHOUT INDEXATION WHICHEVER IS BENEFICIAL TO THE APPELLANT. 2. THE LEARNED CIT(A) ER RED IN HOLDING THAT THE ORDER OF THE LEARNED CIT - 8 WAS DULY ACCEPTED BY THE APPELLANT AS NO APPEAL WAS PREFERRED AGAINST IT INASMUCH AS THE APPELLANT HAS PREFERRED AN APPEAL AGAINST THE ORDER PASSED U/S . 263 BEFORE THE HON BLE ITAT. 3. THE APPELLANT PRAYS TH AT THE LONG TERM CAPITAL GAIN BE ASSESSED BY APPLYING THE PROVISION OF SECTION 112(1) OF THE ACT AND ACCORDINGLY, THE ADDITIONAL LONG TERM CA PITAL GAIN TAX LIABILITY OF RS. 5,94,374/ - BE DELETED. GROUND NO.IV: GENERAL THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND AND /OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 11. BRIEFLY STATED, THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y. 2006 - 07 ON 01.12.2006, DECLARING TOTAL INCOME AT RS.4,61,45,944/ - . THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS ORIGINALLY FRAMED U NDER SEC.143(3) ON 29.09.2008 , DETERMINING ITS TOTAL INCOME (OTHER THAN CAPITAL GAINS) AT ( - ) RS.47,66,515/ - AND CAPITAL GAINS AT RS.5,81,61,500/ - . ON APPEAL , PART RELIEF WAS ALLOWED P A G E | 15 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) BY THE CIT (A) AND CONSEQUENTIAL INCOME OF THE ASSESSEE WAS REVISED AT TOTAL INCOME (OTHER THAN CAPITAL GAINS) AT ( - ) RS.49,14,827/ - AND CAPITAL GAINS AT RS.5,81,61,500/ - . SUBSEQUENTLY, THE CIT - 8, MUMBAI, VIDE HIS ORDER PASSED UNDER SEC. 263, DATED 05.04.2010 SET ASIDE THE ORDER PASSED BY THE A.O UNDER SEC. 143(3), DATED 29.09.2008 ON VARIOUS ISSUES BY TREATING THE SAME AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE A.O WHILE GIVING EFFECT TO THE ORDER PASSED BY THE CIT INTER ALIA MADE THE FOLLOWING ADD ITIONS /DISALLOWANCE S : SR. NO. PARTICULARS AMOUNT 1. DISALLOWANCE OF EXPENSES RS. 47,06,690/ - 2. RE - CHARACTERISATION OF THE STCG ON SALE OF SHARES AND SECURITIES RS.1,56,00,610/ - 3. RE - WORKING O F THE TAX LIABILITY ON LTCG .................. 12. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS OF THE ASSESSEE WAS HOWEVER NOT PERSUADED TO SUBSCRIBE TO THOSE ADVANCED IN CONTEXT OF THE AFORESAID ADDITIONS/DISALLOWANCE AND UPHELD THE ORDER OF THE A.O . 13. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE MAY HEREIN OBSERVE THAT AS THE OBSERVATIONS OF THE CIT IN HIS ORDER PASSED UNDER SEC.263 OF THE I.T. ACT HAD ON TWO ISSUES THAT HAD BEEN ASSAILED BY THE ASSESSEE IN THE PRESENT APPEAL BEFORE US VIZ. (I) RE - CHARACTERISATION OF THE STCG ON SALE OF SHARES AND SECURITIES AS THE BUSINESS INCOME OF THE ASSESSEE; AND (II) RE - WORKING OF THE TAX LIABILITY OF LTCG UNDER SEC.112(1) OF TH E ACT, HAD BEEN VACATED BY US WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE I.E PARLE PET PVT. LTD. VS. DCIT - 8(2), MUMBAI (ITA NO. 4249/MUMBAI/2010) THAT WAS FILED AGAINST THE ORDER PA SSED P A G E | 16 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) BY THE CIT UNDER SEC.263, THEREFORE, THE RESPECTIVE GROUNDS OF APP EAL I.E. GROUND OF APPEAL NO. (II) & GROUND OF APPEAL NO. (III) AS HAD BEEN RAISED BY THE ASSESSEE BEFORE US ASSAILING THE AFORESAID ADDITIONS/DISALLOWANCES DO NOT SURVIVE AND A RE THEREIN RENDERED AS INFRUCTUOUS. THE GROUND OF APPEAL NO. (II) & GROUND OF A PPEAL NO. (III) ARE DISMISSED AS HAVING BEEN RENDERED AS INFRUCTUOUS. 14. WE SHALL NOW ADVERT TO THE DISALLOWANCE OF EXPENSES OF RS.47,06,690/ - AS HAD BEEN ASSAILED BY THE ASSESSEE BEFORE US , ON THE GROUND THAT THE LOWER AUTHORITIES HAD ERRED IN OBSERVING THAT THE SAID EXPENSES DID N OT RELATE TO THE BUSINESS OF HEALTH CENTRE/V3 FITNESS CENTRE OF THE ASSESSEE. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) THAT THE TOTAL EXPENDITURE INCURRED ON THE BUSINESS OF HEALTH CENTRE/V3 FITNESS CENTRE INCLUD ING BOOK DEPRECIATION PERTAINING TO THE BUSINESS OF HEALTH CENTRE/V3 FITNESS CENTRE AMOUNTED TO RS.1,66,01,812/ - . AMONG THE OTHER EXPEN SES , THE AFORESAID AMOUNT OF RS.1,66,01,812/ - INCLUDED TELEPHONE CHARGES AND ELECTRICITY CHARGES, DETAILS OF WHICH AS CLA IMED BY THE ASSESSEE WAS SUBMITTED BEFORE THE CIT IN THE COURSE OF THE REVISION PROCEEDINGS UNDER SEC.263, VIDE LETTER DATED 28.01.2010. ON THE BASIS OF THE AFORESAID CONTENTION , IT WAS THE CLAIM OF THE ASSESSEE THAT THE ONLY EXPENDITURE WHICH WAS COMMON A S REGARDS THE BUSINESS CENTRE AND THE HEALTH CENTRE AMOUNTED TO RS.42,48,167/ - , DETAILS O F WHICH WERE ALSO CLAIMED TO HAVE BEEN SUBMITTED WITH THE CIT IN THE COURSE OF THE REVISION PROCEEDINGS UNDER SEC. 263, VIDE LETTER DATED 21.01.2010. FURTHER, IT WAS TH E CLAIM OF THE ASSESSEE THAT THE AFORE SAID EXPENSES INCLUDED CERTAIN EXPENSES WHICH WERE ATTRIBUTABLE TO THE HEALTH CENTRE, VIZ. (I) LEGAL AND PROFESSIONAL CHARGES FOR INCOME TAX AND OTHER ISSUES: RS.6,19,628/ - ; AND (II) AUDITORS REMUNERATION: RS.,1,44,649 / - , WHICH WERE ALLOWABLE AS AN EXPENDITURE. ACCORDINGLY, IT WAS THE CLAIM OF THE ASSESSEE BEFORE THE P A G E | 17 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) CIT(A) THAT THE DISALLOWANCE MAY , AT WORST, COULD ONLY BE WORKED OUT IN CONTEXT OF THE COMMON EXPENDITURE OF RS.19,42,505/ - IN THE RATIO OF 50:50 I.E AFTER EX CLUDING FROM THE COMMON EXPENDITURE OF RS.42,48,169/ - THE AFOREMENTIONED EXPENSES I.E. (I) AUDITORS REMUNERATION : RS. 1,44,679/ - ; (II) LEGAL AND PROFESSIONAL FEES: RS.6,19,628/ - ; AND (III) EXPENDITURE DISALLOWED UNDER SEC.14A: RS.15,41,385/ - . 15. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID CONTENTIONS AS WERE ADVANCED BY THE ASSESSEE BEFORE THE CIT(A) IN CONTEXT OF THE ISSUE UNDER CONSIDERATION. HOWEVER, WE FIND THAT THE CIT IN HIS ORDER UNDER SEC.263 HAD OBSERVED THAT DURING THE COURSE OF THE REVISION PROCEEDINGS THE ASSESSEE HAD FURNISHED A LIST OF CERTAIN COMMON EXPENSES AMOUNTING TO RS.42,48,167/ - WHICH HAD BEEN DEBITED TO BUSINESS SERVICE CENTRE AND WERE NOT ALLOCATED TO THE FITNESS CENTRE. IT WAS OBSERVED BY THE CIT THAT COMPARISON OF THE EXPENSES OF RS.42,48,167/ - WITH THOSE WHICH WERE OFFERED BY THE ASSESSEE FOR DISALLOWANCE AND ACCEPTED BY THE A.O , REVEALED THAT EXPENSES TO THE EXTENT OF RS.30,88,957/ - INCLUDED IN THE CHART OF EXPENSES AMOUNTING TO RS.42,48,167/ - , NOWHERE FIGURE D IN THE EXPENSES OF RS.70,13,046/ - RELATED TO BUSINESS SERVICE CENTRE AS WAS FURNISHED BY THE ASSESSEE AND ACCEPTED BY THE A.O IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT WAS THUS OBSERVED BY THE CIT THAT THE EXPENSES TO THE EXTENT OF RS.30,88,957/ - C LEARLY PERTAINED TO THE BUSINESS SERVICE CENTRE AND HAD BEEN ADMITTED BY THE ASSESSEE IN THE COURSE OF THE REVISION PROCEEDINGS UNDER SEC.263 OF THE I.T. ACT. WE FIND THAT THE CLAIM OF THE ASSESSEE THAT IT HAD IN THE COURSE OF THE REVISION PROCEEDINGS, VI DE ITS LETTER S DATED 21.01.2010 AND 28.01.2010 , HAD SUBMITTED BEFORE THE CIT THAT CERTAIN OTHER EXPENSES VIZ. (I) TELEPHONE CHARGES ; AND (II) ELECTRICITY CHARGES WERE INCURRED ONLY FOR THE PURPOSE P A G E | 18 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) OF HEALTH CENTRE, HOWEVER DOES NOT FIND ANY MENTION IN THE ORDER OF THE CIT. FURTHER, THE CLAIM OF THE ASSESSEE THAT IT HAD SPECIFICALLY SUBMITTED BEFORE THE CIT IN THE COURSE OF THE REVISION PROCEEDINGS UNDER SEC.263 THAT THE ONLY EXPENDITURE WHICH WAS COMMON IN NATURE AMOUNTED TO RS.42,48,167/ - , IS ALSO NOT DISC ERNIBLE FROM THE ORDER OF THE CIT. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID FACTS , WHEREIN THERE IS NO MENTION OF THE AFORESAID CLAIM S WHICH ARE STATED BY THE ASSESSEE TO HAVE BEEN RAISED BEFORE THE CIT IN CONTEXT OF THE COMMON E XPENSES, THE MATTER REQUIRES TO BE REVISITED BY THE A.O IN ORDER TO VERIFY THE GENUINENESS AND VERACITY OF THE AFORE SAID CLAIM OF THE ASSESSEE. WE THUS IN ALL FAIRNESS AND IN THE INTEREST OF JUSTICE RESTORE THE ISSUE AS REGARDS THE DISALLOWANCE OF EXPENSES OF RS.47,06,690/ - BY THE A.O ON THE GROUND THAT THE SAME TO THE SAID EXTENT WERE RELATED TO THE BUSINESS SERVICE CENTRE OF THE ASSESSEE , TO HIS FILE FOR FRESH ADJUDICATION. THE A.O SHALL IN THE COURSE OF THE SET ASIDE PROCEEDINGS VERIFY AS TO WHETHER THE ASSESSEE HAD RAISED THE AFORESAID CLAIMS, VIDE ITS LETTER S DATED 21.01.2010 AND 28.01 . 2010 BEFORE THE CIT , OR NOT. IN CASE THE CLAIM OF THE ASSESSEE OF HAVING RAISED THE AFORESAID ISSUE IS FOUND TO BE IN ORDER, THE A.O SHALL THEREIN CONSIDER THE SAME AND RE - ADJUDICATE THE QUANTIFICATION OF THE AMOUNT OF EXPENSES WHICH ARE LIABLE TO BE DISALLOWED AS BEING ATTRI BUTABLE TO THE BUSINESS SERVICE CENTRE . NEEDLESS TO SAY , THE A.O WHILE RE - ADJUDICATING THE ISSUE SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHO SHALL REMAIN AT A LIBERTY TO SUBSTANTIATE ITS AFORESAID CLAIM. 16. THE G ROUND OF APPE AL NO. (I) IS ALLOWED FOR STATISTICAL PURPOSE. 17. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. P A G E | 19 ITA NO.4249/MUM/2010 & ITA NO. 3350/MUM/2014 A.Y.2006 - 07 PARLE PET PVT. LTD.VS. DCIT - 8(2) 18. THE APPEALS OF THE ASSESSEE I.E (I). ITA NO. 4249/MUM/2010 AGAINST THE ORDER PASSED BY THE CIT - 8, MUMBAI UNDER SEC . 263 OF THE I.T ACT , DATED 05.04.2010 ; AND (II). ITA NO . 3350/MUM/2014 AGAINST THE ORDER PASSED BY THE CIT(A) - 17, MUMBAI, DATED. 20.02.2014, ARE BOTH PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PR ONOUNCED IN THE OPEN COURT ON 2 8 . 12.2018 S D / - S D / - ( G. MANJUNATHA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 28.12.2018 PS. ROHIT / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI