M/S. DBS FINANCIAL SERVICES P. LTD, MUMBAI V. THE DY CIT CIR 3(1),

ITA 3542/MUM/2004

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1520 (ITAT-MUMBAI)
• Duration Of Justice: 12 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 1998-1999
• Appeal Filed On: 07-05-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G NANTHAKUMAR
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.3542/MUM/2004 (ASSESSMENT YEAR 1998-99) ITA NO.3964/MUM/2004 (ASSESSMENT YEAR 1999-2000) DBS FINANCIAL SERVICES PVT. LTD., 213,RAHEJA CHAMBERS, NARIMAN POINT, MUMBAI 400 021 PAN:AAACD0540P ...... APP ELLANT VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1), AAYKAR BHAVAN,M.K.ROAD, MUMBAI 400 020 .... RESPO NDENT APPELLANT BY : SHRI NIRAJ SETH RESPONDENT BY : SHRI G.NANTHA KUMA R DATE OF HEARING : 30/11/2016 DATE OF PRONOUNCEMENT : 07/12/2016 ORDER PER B.R.BASKARAN,A.M: BOTH THE APPEALS FILED BY THE ASSESSEE FOR AY 199 8-99 AND 1999-2000 ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A)-28, MUMBAI. BOTH THE APPEALS WERE HEARD TOGETHER, SINCE MOST OF THE ISSUES URGED THEREIN ARE IDENTICAL IN NATURE. HENCE BOTH THE APPEALS ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2 ITA NO.3542 & 3964/MUM/2004 (ASSESSMENT YEAR 1998-99& 1999-2000) 2. THE ASSESSEE IS RUNNING BUSINESS CENTRES AT MUMBAI, DELHI, BANGALORE AND COLLECTS RENTS FROM THE LICENSEES. THE ASSESSEE OF FERED THE RENTAL INCOME UNDER THE HEAD BUSINESS, BUT THE AO ASSESSED THE SA ME AS INCOME FROM HOUSE PROPERTY. CONSEQUENTLY VARIOUS EXPENSES CLAIMED BY THE ASSESSEE WERE ALSO DISALLOWED. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THESE TWO APPEALS BEFORE US. 3. THE LD A.R SUBMITTED THAT THE TRIBUNAL HAD ALS O INITIALLY CONFIRMED THE ORDERS PASSED BY LD CIT(A). HOWEVER, AFTER THE DEC ISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & I NVESTMENTS LTD (CIVIL APPEAL NO.4494 OF 2004 DATED 9.4.2015), THE TRIBUNA L, VIDE ITS ORDER DATED 22- 03-2016 PASSED IN ITA NO.2269/MUM/2004 & OTHERS REL ATING TO AY 1993-94 AND OTHERS, HAS RESTORED THE MATTER BACK TO THE FIL E OF THE AO WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH IN THE LIGHT OF THE DECISION RENDERED BY THE HONBLE APEX COURT IN THE ABOVE CITED CASE. 4. THE LD D.R DID NOT DISPUTE THE FACTUAL ASPECT S PRESENTED BY THE LD A.R. 5. WITH THESE BACK GROUNDS, WE SHALL DEAL WITH V ARIOUS GROUNDS URGED BY THE ASSESSEE IN AY 1998-99. GROUND NO.1 & 2 DEALS WITH THE ISSUE OF THE HEAD UNDER WHICH THE INCOME RECEIVED BY THE ASSESSEE IS ASSESSABLE. THE GROUND NO. 3, 5, 6 & 8 DEALS WITH THE EXPENSES DISALLOWED BY THE AO, SINCE HE HAD ASSESSED THE INCOME UNDER THE HEAD INCOME FROM HOUS E PROPERTY. ALL THESE GROUNDS REQUIRE CONSIDERATION TOGETHER. ACCORDINGL Y, CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH IN THE ASSESSEES OW N CASE (REFERRED ABOVE), WE SET ASIDE THE ORDERS PASSED BY LD CIT(A) ON THES E ISSUES AND RESTORE THEM TO THE FILE OF THE AO WITH IDENTICAL DIRECTIONS GIV EN BY THE CO-ORDINATE BENCH. 3 ITA NO.3542 & 3964/MUM/2004 (ASSESSMENT YEAR 1998-99& 1999-2000) 6. THE LD A.R DID NOT PRESS GROUND NO.4 AND HENCE THE SAME IS DISMISSED AS NOT PRESSED. 7. GROUND NO.7 RELATES TO DISALLOWANCE OF INTERE ST EXPENDITURE ON THE GROUND THE FUNDS WERE UTILISED FOR MAKING INVESTMENT IN SH ARES OF BAUSCH & LAMB LTD. THE LD A.R SUBMITTED THAT THE ASSESSEE IS A REGISTE RED NBFC AND HENCE IT HAS MADE THE IMPUGNED INVESTMENT AS PART OF ITS BUSINES S ACTIVITIES. HE SUBMITTED THAT THE TAX AUTHORITIES HAVE NOT APPRECIATED THIS FACT AND HENCE THEY HAVE DISALLOWED THE INTEREST EXPENDITURE. 8. WE HEARD LD D.R ON THIS ISSUE. WE NOTICE TH AT THE TAX AUTHORITIES HAVE NOT CONSIDERED THE CLAIM OF THE ASSESSEE THAT IT IS A R EGISTERED NBFC AND INVESTMENT HAS BEEN MADE AS PART OF ITS BUSINESS AC TIVITIES. HENCE WE ARE OF THE VIEW THAT THIS ISSUE ALSO REQUIRES FRESH EXAMIN ATION. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE A ND RESTORE THE SAME TO THE FILE OF THE AO FOR FRESH EXAMINATION. 9. GROUND NO.8 IS RELATED TO CHARGING OF INTERES T U/S 234B OF THE ACT. SINCE CHARGING OF INTEREST IS CONSEQUENTIAL IN NATURE, TH IS GROUND DOES NOT REQUIRE ANY ADJUDICATION. 10. IN GROUND NO.9, THE ASSESSEE HAS SUMMARISED T HE RELIEF PRAYED FOR. HENCE THIS GROUND ALSO DOES NOT REQUIRE ANY ADJUDICATION. THE REMAINING GROUND NOS. 10 & 11 ARE GENERAL IN NATURE. 11. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR AY 1999-2000. CONSISTENT WITH THE VIEW TAKEN IN AY 1998-99, THE G ROUND NOS.1, 2, 3, 5, 6 ARE SET ASIDE TO THE FILE OF THE AO. 4 ITA NO.3542 & 3964/MUM/2004 (ASSESSMENT YEAR 1998-99& 1999-2000) 12. THE GROUND NO.4 IS NOT PRESSED AND HENCE THE S AME IS DISMISSED AS NOT PRESSED. 13. GROUND NO.7 RELATES TO DISALLOWANCE OF INTERE ST ON THE GROUND THAT THE ASSESSEE HAS MADE INVESTMENTS IN BAUSCH & LAMB. ID ENTICAL ISSUE WAS SET ASIDE BY US IN AY 1998-99 TO THE FILE OF THE AO. C ONSISTENT WITH THE VIEW TAKEN THEREIN, WE RESTORE THIS ISSUE ALSO TO THE FILE OF THE AO. 14. GROUND NO.8 RELATES TO THE DISALLOWANCE OF P ROPORTIONATE INTEREST ON THE GROUND THAT THE ASSESSEE HAS GIVEN INTEREST FREE AD VANCE TO M/S DAVER FINLEASE & PORTFOLIO P LTD. THE LD A.R SUBMITTED THAT THE A BOVE SAID PARTY IS A NON- RELATED PARTY AND IT WAS GIVEN OUT OF COMMERCIAL CO NSIDERATIONS. HE SUBMITTED THAT THE ASSESSEE HAS GOT OWN FUNDS MORE THAN THE A MOUNT OF LOAN AND HENCE THE DECISION RENDERED BY THE JURISDICTIONAL HIGH CO URT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD (313 ITR 340) WOULD APPLY T O THE FACTS OF THE PRESENT CASE. ACCORDINGLY HE SUBMITTED THAT THE DISALLOWAN CE MADE BY THE AO UNDER THIS HEAD NEEDS TO BE DELETED. 15. WE HEARD LD D.R ON THIS ISSUE. HOWEVER, WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE, SINCE IT IS TAKING SUPPORT FROM TH E DECISION RENDERED BY THE JURISDICTIONAL BOMBAY HIGH COURT (REFERRED SUPRA). SINCE THE FACTUAL ASPECTS RELATING TO THE ISSUE REQUIRE VERIFICATION, WE REST ORE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH BY APPLYING THE PRINCIPLES LAID DOWN BY THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD(SUPRA). 16. GROUND NO.9 ONLY SUMMARIES THE RELIEF PRAYED F OR AND HENCE IT DOES NOT REQUIRE ANY ADJUDICATION SEPARATELY. OTHER GROUNDS ARE GENERAL IN NATURE. 5 ITA NO.3542 & 3964/MUM/2004 (ASSESSMENT YEAR 1998-99& 1999-2000) 17. IN THE RESULT, BOTH THE APPEALS OF THE ASSE SSEE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07/12/2016 SD/- SD/- ( RAVISH SOOD) (B.R.BASKARAN) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 07/12/2016 VM , SR. PS 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