WARRIOR ( INVESTMENT ) LTD, MUMBAI V. DCIT 1(3), MUMBAI

ITA 347/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3847 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 06-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINHA
• Assessee Lawyers: MILIN THAKORE
• Keywords: Business expenditure

Judgement Text

ITA NO. 347 /MUM/2011 WARRIOR (INVESTMENT) LIMITED 1 | PA GE IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.347 /MUM/2011 (ASSESSMENT YEAR; -2005-06) WARRIOR ( INVESTMENT ) LIMITED GROUND FLOOR, FORBES BUILDING CHARANJIT RAI MARG, FORT, MUMBAI 400 001. VS. DCIT CIRCLE 1(3), AAYKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. APPELLANT RESPONDENT ASSESSEE BY: SHRI MILIN THAKORE DEPARTMENT BY: SHRI D.K. SINHA DATE OF HEARING: 16/5/2013 DATE OF PRONOUNCEMENT: 16/ 5 /2013 O R D E R PER RAJENDRA SINGH A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.10.2010 OF CIT (A) FOR THE ASSESSMENT YEAR 2005- 06. THE DISPUTES RAISED IN THIS APPEAL RELATE TO DISALLOWANCE OF EXP ENSES U/S 14 A OF THE IT ACT, NATURE OF INTEREST INCOME AND DISALLOWANCE OF ADMINISTRATIVE AND OTHER EXPENSES. 2. THE FACTS IN BREIF ARE THAT THE AO DURING THE AS SESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD SHOWN BUSIN ESS INCOME OF RS. 2843435/- AND DIVIDEND INCOME OF RS. 9,30,760/- WHI CH WAS EXEMPT FROM TAX. THE AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THERE WAS NO BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE DURING THE YEAR. HE, THEREFORE, HELD THAT WHATEVER THE INCOME HAD BEEN E ARNED BY THE ASSESSEE WAS INCOME FROM OTHER SOURCES AND DISALLOW ED THE EXPENSES CLAIMED BY THE ASSESSEE AS NOT INCURRED RELATING TO THE BUSINESS OF THE ASSESSEE. HE ALSO DISALLOWED AND ADDED TO THE TOTAL ICOME THE EXPENSES RELATING TO THE EXEMPT DIVIDEND INCOME WHICH WAS CO MPUTED BY HIM ON ITA NO. 347 /MUM/2011 WARRIOR (INVESTMENT) LIMITED 2 | PA GE ESTIMATE BASIS IN THE RATIO OF DIVEND INCOME TO THE TOTAL INCOME, AT RS. 2,46,793/-. 3. IN APPEAL CIT (A) OBSERVED THAT BEFORE HIM ALSO NO SPECIFIC CLAIM HAD BEEN MADE THAT THE ASSESSEE HAD BEEN CARRYING O N ANY BUSINESS ACITIVITY. HE, THREFORE CONFIRMED THE ORDER OF AO T REATING THE INCOME AS INCOME FROM OTHER SOURCES AS WELL AS DISALLOWANCE OF EXPENSES EXCEPT THE PROFESSIONAL TAX OF RS. 2,500/- AND AUDIT FEE O F RS. 12.931/-. IN RELATION TO DISALLOWANCE U/S 14A, CIT (A) HELD THA T DISALLOWANCE HAD TO BE MADE ON THE BASIS OF PRINCIPLE CONTAINED IN THE RULE 8D. AGGRIEVED BY THE DECISION OF CIT (A) THE ASSESSEE IS IN APPEAL B EFORE TRIBUNAL ON ISSUES RELATING TO NATURE OF INCOME AND DISALLOWANC E OF BUSINESS EXPENSES AND DISALLOWANCE U/S 14A. 4. BEFORE US, LEARNED AR FOR THE ASSESSEE AT THE VE RY OUTSET POINTED OUT THAT THE ISSUES RAISED IN THIS APPEAL HAVE ALRE ADY BEEN CONSIDERED AND DECIDED BY TRIBUNAL IN THE ORDER DATED 22.10.20 10 IN ITA NOS. 4991/MUM/2004 AND 1881/MUM/2006 IN ASSESSMENT YEARS 2001- 2002 AND 2004-2005 AND ALL THE ISSUES HAVE BEEN RES TORED BY THE TRIBUNAL TO THE FILE OF AO FOR FRESH ADJUDICATION. LEARNED DR FAIRLY CONCEDED THAT THE ISSUES WERE COVERED BY THE DECISI ON OF TRIBUNAL (SUPRA). 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATT ER CAREFULLY. THE DISPUTE IS REGARDING THE NATURE OF INCOME EARNE D BY THE ASSESSEE, THE DISALLOWANCE OF BUSINESS EXPENSES AND DISALLOWA NCE U/S 14 A. WE FIND THAT THE SAME ISSUE HAD ARISEN IN EARLIER YEAR S ALSO AND HAVE BEEN DECIDED BY THE TRIBUNAL VIDE ORDER DATED 22.10.2010 IN ITA NOS. 4991/MUM/2004 AND 1881/MUM/2006 IN ASSESSMENT YEARS 2001- 2002 AND 2004-2005. THE TRIBUNAL NOTED THAT THERE W AS NO DISPUTE THAT BUSINESS OF THE ASSESSEE WAS FINANCE AND INVES TMENTS AS PER OBJECTS STATED IN THE MEMORANDUM OF ASSOCIATION. TR IBUNAL ALSO NOTED THAT THE AO WHILE TREATING THE INCOME AS INCOME FRO M OTHER SOURCES HAD ITA NO. 347 /MUM/2011 WARRIOR (INVESTMENT) LIMITED 3 | PA GE NOT GIVEN ANY REASON FOR ARRIVING AT SUCH FINDING A ND CIT(A) ALSO WITHOUT EXAMINING THE BALANCESHEET AND INVESTMENTS MADE, HA D HELD THAT THERE WERE NO OTHER STOCK IN TRADE SHOWN BY THE ASSESSEE WHEREAS THE ASSESSEE CLAIMED THAT AS PER THE BALANCE SHEET AS O N 31.3.2009, THE ASSESSEE HAD MADE FRESH INVESTMENTS AND HAD ALSO EA RNED PROFIT ON SALE AND INVESTMENT. TRIBUNAL, THEREFORE, HELD THAT THE ISSUE REQUIRED FRESH EXAMINATION AND ACCORDINLGLY RESTORED THE MATTER TO THE FILE OF AO FOR PASSING FRESH ORDER REGARDING NATURE OF INCOME EARN ED BY THE ASSESSEE AS WELL AS DISALLOWANCE OF EXPENSES. AS REGARDS TH E DISALLWOANCE MADE U/S 14A, THE TRIBUNAL HELD THAT THE ISSUE REQUIRED FRESH EXAMINATION IN THE LIGHT OF JUDGMENT OF HONBLE HIGH COURT OF BO MBAY IN CASE OF GODREJ BOYCE MANUFACTURING CO. LTD. VS. DCIT ( ) AND ACCORIDNLGY RESTORED THIS ISSUE ALSO TO THE FILE OF THE AO. THE FACTS AS WELL AS THE ISSUES RAISED IN THIS ORDER ARE IDENTIC AL. THEREFORE, RESPECTFULLY FOLLOWING THE DICISION OF TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2001-02 AND 2004-05 (SUPRA) WE SET ASIDE THE ORDER OF CIT (A) AND RESTORE ALL THE ISSUES TO THE FILE O F AO FOR PASSING FRESH ORDER AFTER NECESSARY EXAMINATION AND AFTER ALLOWIN G PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUCNED IN THE OPEN COURT TODAY I.E 16.5.2 013. SD/- SD/- (AMIT SHUKLA ) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 16TH MAY, 2013. SK ITA NO. 347 /MUM/2011 WARRIOR (INVESTMENT) LIMITED 4 | PA GE COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI