ADDL CITY 4(3), MUMBAI V. MONEY CARE FINANCE & LEASING LTD, MUMBAI

ITA 3569/MUM/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0807 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.3569/M/2010 ASSESSMENT YEAR: 2006-07 ACIT 4(3), 6 TH FLOOR, R. NO.649, AAYAKAR BHAVAN, MUMBAI - 400020 VS. M/S. MONEY CARE FINANCE & LEASING LTD., B-402, VICTORY PARK, 4 TH FLOOR, OM SHANTHI CHOWK, CHANDAVARKAR ROAD, BORIVALI WEST, MUMBAI 400 092 PAN: AAACM 3714C (APPELLANT) (RESPONDENT) CO NO.29/M/2010 ASSESSMENT YEAR: 2006-07 M/S. MONEY CARE FINANCE & LEASING LTD., 1/17, GROUND FLOOR, SUMER NAGAR, NEAR KORA KENDRA FLYOVER, S.V. ROAD, BORIVALI (W), MUMBAI 400 092 PAN: AAACM 3714C VS. DY. COMM. OF INCOME TAX-4(3), (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI M. SUBRAMANIAN, A.R. REVENUE BY : SHRI PAVAN KUMAR BEERLA, D.R. DATE OF HEARING : 21.05.2015 DATE OF PRONOUNCEMENT : 31.07.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED APPEAL BY THE REVENUE AND THE COR RESPONDING OBJECTIONS BY THE ASSESSEE HAVE BEEN DIRECTED AGAIN ST THE ORDER DATED ITA NO.3569/M/2010 & ITA NO.29/M/2010 M/S. MONEY CARE FINANCE & LEASING LTD. 2 22.02.2010 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2006- 07. 2. THE REVENUE IN ITS APPEAL HAS AGITATED THE ACTIO N OF THE LD. CIT(A) IN TREATING THE INCOME FROM SALE AND PURCHASE OF SHARE S AS LONG TERM CAPITAL GAINS INSTEAD OF BUSINESS INCOME AS HAS BEEN ASSESSED BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO). THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAS BEEN ENGAGED IN THE BUSINESS OF FINANCIAL SERVICES AND S HARE INVESTMENT. THE ASSESSEE HAD CEASED/CLOSED ITS SHARE BUSINESS FROM A.Y. 2004-05 AND IT TRANSFERRED ALL THE SHARES HELD AS STOCK IN TRADE T O THE INVESTMENT ACCOUNT. NO TRANSACTION OF SALE AND PURCHASE OF SHARES HAD BEEN DONE DURING THE YEAR UNDER CONSIDERATION I.E. A.Y. 2006-07. THE TRANSACTIONS DURING THE YEAR WERE ONLY REGARDING THE SALE OF SHARES WHICH WERE PURCHASED D URING THE EARLIER YEARS. THE PERIOD OF HOLDING OF SHARES WAS MORE THAN A YEA R IN RESPECT OF ALL THE TRANSACTIONS AND EVEN MORE THAN 8 TO 10 YEARS IN MA NY CASES. THE SHARES HAD BEEN DISCLOSED AS INVESTMENTS IN THE BALANCE SHEET. THERE WERE ONLY 14 SCRIPTS OUT OF WHICH 8 HAD BEEN HELD SINCE 1996 AND ONE SIN CE 2004 AND ONE HAD BEEN HELD SINCE 2005. THE ASSESSEE HAS ALSO FILED A COP Y OF RESOLUTION DATED 10.04.2004 ON THE FILE VIDE WHICH IT HAD BEEN RESOL VED THAT THE ASSESSEE COMPANY HAD CEASED IN ENGAGING ITSELF IN BUSINESS O F SALE AND PURCHASE OF SHARES AND THAT THE SHARES SHOWN AS STOCK IN TRADE HAD BEEN TRANSFERRED TO INVESTMENT ACCOUNT. CONSIDERING THE ABOVE FACTS, T HE LD. CIT(A) HAS DIRECTED THE AO TO TREAT THE INCOME FROM THE SALE OF ABOVE S HARES AS LONG TERM CAPITAL GAINS. 3. WE DO NOT FIND ANY INFIRMITY IN THE WELL REASONE D ORDER OF THE LD. CIT(A) IN THIS RESPECT. THE APPEAL OF THE REVENUE IS THEREFORE DISMISSED. 4. NOW COMING TO THE CROSS OBJECTIONS FILED BY THE ASSESSEE. ITA NO.3569/M/2010 & ITA NO.29/M/2010 M/S. MONEY CARE FINANCE & LEASING LTD. 3 CO NO.29/M/2010 5. THE ASSESSEE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN DIRECTING THE AO TO VERIFY WHETHER ANY DEDUCTION OR LOSS HAD BEEN CLAIMED BY THE ASSESSEE DURING THE PREVIOUS YEARS IN RESPECT OF CREDIT BALA NCE OF RS.25 LAKH PAYABLE TO M/S. M.J. INTERNATIONAL. THE AO DURING THE ASSESSM ENT PROCEEDINGS ADDED THE AMOUNT OF RS.25 LAKH UNDER SECTION 41(1) OF THE ACT INTO THE INCOME OF THE ASSESSEE OBSERVING THAT THE ASSESSEE HAD NOT FURNIS HED NECESSARY EVIDENCES REGARDING THE PAYMENT OF THE AMOUNT TO THE CONCERNE D PARTY OR THE STATEMENT AND CONFIRMATION OF THE AUDITOR IN THIS RESPECT. 6. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE SU BMITTED THAT IT HAD NOT CLAIMED ANY DEDUCTION OR LOSS IN THE PREVIOUS YEAR RELATING TO THE ABOVE SAID CREDIT OF RS. 25 LAKH. THE LD. CIT(A) THEREFORE DI RECTED THE AO TO VERIFY WHETHER ANY DEDUCTION OR LOSS HAD BEEN CLAIMED IN A NY PREVIOUS YEAR AND IF IT IS FOUND THAT DEDUCTION WAS CLAIMED THEN THE AMOUNT BE ADDED INTO THE INCOME OF THE ASSESSEE AND IN CASE NO DEDUCTION WAS CLAIME D THEN PROVISIONS OF SECTION 41(1) WOULD NOT APPLY. 7. BEFORE US, THE LD. A.R. OF THE ASSESSEE WHILE RE LYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . KESARIA TEA CO. LTD. 254 ITR 434 AND FURTHER RELYING UPON ANOTHER DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUGUALI SUGAR WORKS (P) LTD. 236 ITR 518 HAS CONTENDED THAT MERE UNILATERAL TRANSFER OF ENTRY IN ACCOUNTS WOULD NOT ENABLE THE DEPARTMENT TO APPLY SECTION 41(1) OF THE I.T. ACT. ON THE OTHER HAND, THE LD. D.R. HAS RELIED UPON TH E FINDINGS OF THE LD. CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IT IS AN ADMITTED FACT ON THE FILE THAT THE ASSESSEE HAS FURNISHED CO NFIRMATION FROM THE PARTY. ITA NO.3569/M/2010 & ITA NO.29/M/2010 M/S. MONEY CARE FINANCE & LEASING LTD. 4 HOWEVER, THE SAID CONFIRMATION HAS NOT BEEN EXAMINE D BY THE AO. BEFORE THE LD. CIT(A), THE ASSESSEE HAS CONTENDED THAT IT HAS NOT CLAIMED ANY DEDUCTION OR LOSS IN RESPECT OF THE ABOVE STATED CREDITS FROM M/S. M.J. INTERNATIONAL. THE LD. CIT(A) DIRECTED THE AO TO VERIFY THE CONTENTION OF THE ASSESSEE IN THIS RESPECT. HOWEVER, WE FIND THAT THE ASSESSEE HAS FI LED A CONFIRMATION FROM THE PARTY TO SHOW THAT THE AMOUNT WAS STILL SHOWN AS A LIABILITY BY THE ASSESSEE AND RECOVERABLE BY THE OTHER PARTY. WE THEREFORE MODIFY THE ORDER OF THE LD. CIT(A) WI TH THE ADDITIONAL DIRECTION THAT THE AO WILL VERIFY AS TO WHETHER THE LIABILITY HAS BEEN STILL EXISTENT OR HAS CEASED TO EXIST IN THE LIGHT OF THE CASE LAWS CITED BY THE ASSESSEE AND THE OTHER RELEVANT CASE LAWS AS MAY BE AVAILABL E IN RELATION TO THE ISSUE UNDER CONSIDERATION AND ALSO CONSIDERING THE EVIDEN CES FILED BY THE ASSESSEE IN THIS RESPECT AND TO DECIDE THE ISSUE AFRESH IN ACCO RDANCE WITH LAW. THE AO WILL ALSO VERIFY THE CONTENTION OF THE ASSESSEE THA T IT HAD NOT CLAIMED ANY DEDUCTION OR LOSS IN ANY OF THE PREVIOUS YEAR IN RE SPECT OF THE AMOUNT IN QUESTION AND TO DECIDE THE ISSUE AS PER DIRECTIONS OF THE LD. CIT(A) AS STATED ABOVE. ACCORDINGLY, CROSS OBJECTION OF THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D AND CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.07.2015. * KISHORE, SR. P.S. ITA NO.3569/M/2010 & ITA NO.29/M/2010 M/S. MONEY CARE FINANCE & LEASING LTD. 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.