DOUBLEDOT FINANCE LTD, MUMBAI V. DCIT RG 4(1), MUMBAI

ITA 3571/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3546 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Keywords: Bonafide belief
• Section: 234B; 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.3571/MUM/2015 (ASSESSMENT YEAR : 2010-11) DOUBLEDOT FINANCE LIMITED., 1 ST FLOOR, KANTA TERRACE, 533, KALBADEVI ROAD, MUMBAI- 400002. PAN: AABCD5429J VS. DCIT RANGE 4(1), ROOM NO. 640, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 (APPELLANT) .. ( RESPONDENT) ASSESSEE BY SHRI DHARMESH SHAH (AR) REVENUE BY SHRI O.P. MEENA (DR) DATE OF HEARING : 11.08.2015 DATE OF PRONOUNCEMENT : 17.08.2016 O R D E R D.KARUNAKARA RAO, AM: 1. THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A)- 9, MUMBAI DATED 05.03.2015. ASSESEE RAISED THE FOLL OWING GROUNDS AND THE SAME READS AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 9 HAS ERRED IN CONFIRMING THE DISALLOWANCE AT THE RATE OF 0.50% OF THE AVERAGE VALUE OF STOCK IN TRADE U/S 14A OF THE ACT READ WIT H RULE 8D. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 9 HAS ERRED IN DISALLOWING 0.50% OF THE AVERAGE VALUE OF BOTH INVE STMENTS & STOCK IN TRADE U/S 14A OF THE ACT READ WITH RULE 8D WHILE COMPUTING INCOME U/S 115JB OF THE ACT. 2 ITA NO.3571/M/ 2015 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OR ALL OF THE ABOVE MENTIONED GROUNDS OF APPEAL. 2. FURTHER, ASSESSEE FILED A LETTER DATED 10.08.2016 R AISING AN ADDITIONAL GROUND WHICH IS AS UNDER: THE LD. CIT(A) ERRED IN LAW AND IN FACTS IN NOT APP RECIATING THAT THE INTEREST U/S. 234B AND 234C OF THE ACT CANNOT BE LE VIED IN CASE WHERE THE INCOME IS DETERMINED ON THE BASIS OF THE PROVISIONS OF S. 115JB OF THE ACT. 3. REGARDING THE ADDITIONAL GROUND, I FIND THAT THE IS SUE RAISED CONSTITUTES A LEGAL ISSUE AND THEREFORE, AFTER HEAR ING BOTH THE PARTIES, I HEREBY ADMIT THE SAME AND ADJUDICATE IN THE FOLLOWIN G PARAGRAPHS OF THIS ORDER. 4. TO START WITH, I SHALL DEAL WITH THE REGULAR GROUND RAISED BEFORE US AND I FIND IT RELATES TO THE EXCLUSION OF STOCK-IN -TRADE FOR THE PURPOSE OF COMPUTATION OF AVERAGE INVESTMENT FOR DETERMINING THE DISALLOWANCE UNDER RULE 8D(2)(III) OF THE I.T. RULES R.W.S 14A O F THE ACT. 5. BEFORE ME, ON THE ABOVE ISSUE, IT IS THE CONTENTION OF THE ASSESSEE, THE STOCK-IN-TRADE NEEDS TO BE EXCLUDED FOR THE PUR POSE OF AVERAGE INVESTMENT, WHICH IS THE BASE FIGURE FOR COMPUTING THE DISALLOWANCE APPLYING RATE OF 0.5%. IT IS THE CONTENTION OF THE ASSESSEE, THE STOCK-IN- TRADE, BEING NOT AN INVESTMENT SHOULD BE EXCLUDED F ROM THE AVERAGE INVESTMENT AND ONLY THE RESULTANT ADJUSTED AVERAGE INVESTMENT IS REQUIRED TO THE CONSIDERED FOR CALCULATING DISALLOW ANCE APPLYING THE RATE 3 ITA NO.3571/M/ 2015 OF 0.5%. IN SUPPORT OF THE SAID INTERPRETATION, LD. COUNSEL FOR THE ASSESSEE BROUGHT MY ATTENTION TO ONE OF MY ORDERS I N THE CASE OF M/S. INDIA ADVANTAGE SECURITIES LTD. (ITA NO. 3759/MUM/2 014AY-2009-10 DATED 10.02.2016). 6. BRINGING MY ATTENTION TO PARA-9 TO 13, THE COUNSEL SUBMITTED THAT THE SIMILAR DIRECTIONS, THE MATTER CAN GO BACK TO T HE AO FOR APPLYING RATIO LAID DOWN IN THE SAID DECISION AND CALCULATING THE DISALLOWANCE AS PER THE SAID ORDER. AFTER HEARING BOTH THE PARTIES, I HAVE GONE THROUGH THE PARAS 9 TO 12 AND FIND THE AO SHOULD BE DIRECTED TO FOLLO W THE SAID ORDER SCRUPULOUSLY. THE AO SHOULD UNDERSTAND THAT THE EXP RESSION INVESTMENT IS NOT TO BE CONFUSED THE EXPRESSION STOCK-IN-TRAD E WHICH IS A CURRENT ASSET. AO IS DIRECTED ACCORDINGLY. 7. IN THE RESULT, REGULAR GROUND FILED BY THE ASSESSEE IS ALLOWED AS ABOVE. 8. REGARDING THE SECOND ISSUE RELATING TO LEVY OF STA TUTORY INTEREST IN RESPECT OF TAXES RELATABLE TO THE BOOK PROFITS DETE RMINED U/S 115JB OF THE ACT. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DEC ISION OF THE TRIBUNAL IN THE CASE OF ROCKLINE DEVELOPERS P. LTD. (ITA NO. 65 95/MUM/2014-AY- 2011-12 DATED 01.01.2016 WHEREIN VIDE PARA-5 OF THE ORDER, AO IS DIRECTED TO RECALCULATE THE INTEREST AND ALLOWED TH E GROUND OF THE ASSESSEE IN HIS FAVOUR PARTLY. 4 ITA NO.3571/M/ 2015 9. I PERUSED THE SAME AND FIND THE SAME IS RELEVANT, T HEREFORE, PARA-5 IS EXTRACTED AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE LEVY OF INTEREST U/S. 234B AND 234C IN CASE OF COMPANIES GOVERNED BY MAT PROVISIONS WAS FINALLY SE TTLED BY THE HONBLE APEX COURT ON 7.1.2011, THAT BEFORE THAT THE ASSESS EES WERE UNDER BONAFIDE BELIEF THAT THEY HAD NOT TO PAY ADV TAX AS PER THE PROVISION OF SEC.207/208 OF THE ACT, THAT AFTER 07.1.2011 POSITI ON BECAME VERY CLEAR THAT THE ASSESSEES TO BE TAXED U/S. 115JB WOULD ALS O HAVE TO PAY ADVANCE TAX. CONSIDERING THE PECULIAR FACTS AND CIR CUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT INTEREST SHOULD BE LEVIED FOR THE DEFAULT OF MARCH INSTALLMENT ONLY AND NOT FOR THE EARLIER T HREE INSTALLMENTS. THE AO IS DIRECTED TO RECALCULATE THE INTEREST ACCORDIN GLY. GROUND B IS DECIDED IN FAVOUR OF THE ASSESSEE IN PART. 10. CONSIDERING THE ABOVE, I AM OF THE VIEW THAT THE IN TEREST SHOULD NOT BE LEVIED WITHOUT EXAMINING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. AO IS DIRECTED TO EXAMINE THE SAME AND AP PLYING THE CITED SUPREME COURTS JUDGMENTS IN THE CASE OF KWALITY BIS CUITS (284 ITR 434) & ROLTA INDIA (330 ITR 470) ETC. AO SHALL GRANT OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE PROPERLY. ACCORDINGLY, THE AD DITIONAL GROUND RAISED BY THE ASSESSEE IS DECIDED AS ABOVE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF AUGUST, 2016. SD/- (D.KARUNAKARA RAO) ACCOUNTANT MEMBER 5 ITA NO.3571/M/ 2015 MUMBAI, DATED: 17.08.2016 SHARWAN P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR SMC BENCH BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.