ACIT 2(3), MUMBAI V. TEMPLE TREES IMPEX & INVESTMENT P. LTD, MUMBAI

ITA 3673/MUM/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9346 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 16-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 05-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Scheme of amalgamation
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI B.R. JAIN, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 3710/MUM/2009 (ASSESSMENT YEAR: 2005-06) TEMPLE TREES IMPEX & INVESTMENTS PVT. LTD., C/O B.S. MEHTA & CO., 11/13 BOTAWALA BUILDING, 2 ND FLOOR, HORNIMAN CIRCLE, FORT, MUMBAI -400 001 PAN: AAACT 1765 G VS ASST. COMMISSIONER OF INCOME-TAX(OSD)-I, CITY-2, MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 3673/MUM/2009 (ASSESSMENT YEAR: 2002-03) ASST. COMMISSIONER OF INCOME-TAX(OSD)-I, CITY-2, MUMBAI VS TEMPLE TREES IMPEX & INVESTMENTS PVT. LTD., MUMBAI -400 005 (APPELLANT) (RESPONDENT) APPELLANT-ASSESSEE BY : SHRI HARESH G. BUCH SHRI HARSH KAPADIA SHRI JSHEEN JAIN RESPONDENT-REVENUE BY : SHRI RAKESH RANJAN DATE OF HEARING: 16.10.2012 DATE OF PRONOUNCEMENT: 23.11.2012 O R D E R PER VIVEK VARMA, JM: THE CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE DEPARTMENT AGAINST THE ORDER OF CIT(A) XXX, MUMBAI, DATED 30.03.2009. SINCE BOTH THE APPEALS HAVE BEEN FILED AGAINST O NE ORDER, WE FOR THE SAKE OF CONVENIENCE AND BREVITY, ARE DISPOSING OFF THE APPEALS THROUGH ONE COMMON AND CONSOLIDATED ORDER. TEMPLE TREES IMPEX & INVESTMENTS PVT. LTD. ITA 3710/MUM/2009 ITA 3673/MUM/2009 2 ITA NO. 3710/MUM/2009 : APPEAL BY THE ASSESSEE 2. THE FACTS INVOLVED IN THE APPEAL OF THE ASSESSEE ARE THAT TWO COMPANIES, M/S MBS HYGIENE PRODUCTS (P) LTD. AND M/S MODE RN HYGIENE PRODUCTS (P) LTD. AMALGAMATED INTO THE ASSESSEE COMPANY V IDE HIGH COURT ORDER DATED 29.04.2005, WHEREIN THE APPOINTED DATE WAS FIXED AT 01.10.2004. 3. THE AO, WHILE EXAMINING THE CONTENTS OF THE SCHEME OF AMALGAMATION OBSERVED THAT ASSESSEE COMPANY DID NOT FILE THE RELEVA NT DETAILS OF THE AMALGAMATING COMPANIES FOR THE PERIOD BETWEE N 01.04.2004 TO 30.09.2004, IN WHICH CASE, WILL HAVE TO BE ASSES SED IN THE HANDS OF THE ASSESSEE COMPANY. THE CIT(A) ALSO SUST AINED THE OBSERVATIONS OF THE AO. 4. AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 5. IT WAS CONTENDED BEFORE US THAT, EVEN IF THE DETAILS O F THE AMALGAMATING COMPANIES WERE NOT FILED, THAT ITSELF DOES NOT, IN ANY CASE MEAN THAT THE ASSESSEE COMPANY HAD TO BEAR THE BURDEN OF THE ASSESSMENT OF AMALGAMATING COMPANIES IN ITS PROCEEDINGS. I T WAS ALSO POINTED OUT THAT THE AMALGAMATING COMPANIES HAVE AMALGAM ATED INTO ASSESSEE COMPANY AS ON THE APPOINTED DATE AND HENCE, THE ASSESSEE WAS NOT CONCERNED WITH WHATEVER HAPPENED AT THE EARLIE R TIMES. IT WAS ALSO SUBMITTED THAT SO FAR AS THE ASSESSMENT DETAILS OF THE AMALGAMATING COMPANIES WERE CONCERNED, EVERYTHING WAS AV AILABLE WITH THE DEPARTMENT AS PART OF THE DEPARTMENTAL RECORD S, WHICH COULD HAVE EASILY BEEN CALLED FOR BY THE AO. BUT THE AO PREFER RED TO TAKE A SHORT CUT AND ADDED THE DETAILS IN THE HANDS OF THE ASS ESSEE. THE AR, THEREFORE, PLEADED THAT SINCE THE ENTIRE ISSUE HAS A LEGAL FOUNDATION, THE RECORDS HAVE TO BE EXAMINED AND NO DOUBT THAT TH E ASSESSEE WAS TEMPLE TREES IMPEX & INVESTMENTS PVT. LTD. ITA 3710/MUM/2009 ITA 3673/MUM/2009 3 UNABLE TO PRODUCE THE SAME, IT MAY, NOW BE GIVEN THE OPP ORTUNITY TO EXPLAIN THE CASE TO THE AO. 6. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD THE ARGUMENTS AND WE FIND THAT RELEVA NT DETAILS WERE NOT FILED, WHICH THE AO HAD ASKED FOR SPECICALLY, BUT THAT DOES NOT MEAN THAT ADDITION COULD BE MADE STRAIGHT AWAY, BEC AUSE THE AMALGAMATION WAS TAKING AS PROCESS OF LAW, UNDER THE ORD ERS OF THE HONBLE BOMBAY HIGH COURT. ADMITTEDLY, THERE WERE NOT DE TAILS FILED BY THE ASSESSEE, BUT THE AO, ON ITS OWN, ALSO COULD HAVE MA DE SOME ATTEMPTS TO GATHER INFORMATION FROM THE DEPARTMENTAL REC ORDS. THIS WAS NOT DONE FROM THE AOS SIDE AS WELL. WE, THEREFORE, FIND THAT THERE WAS SHORTFALL FROM BOTH THE SIDES AND TAKING THE ENTIRE CIR CUMSTANCES INTO ACCOUNT, WE, SET ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE AO TO ENQUIRE ABOUT THE COMPLIANCE ASPECT OF BOTH THE AMALGAMA TING COMPANIES BETWEEN 01.04.2004 TO 30.09.2004 AND GIVE A REA SONABLE FINDING ON TAX STATUS OF BOTH THE COMPANIES, I.E. MHP & MBS. IF, AS RESULT OF ENQUIRIES, IT IS FOUND THAT THE AMALGAMATING COMPA NIES HAD FILED THEIR RETURNS AND PROPER REFERENCES AND COMPLIANCES HAVE BEEN DONE, THEN THE AO IS DIRECTED TO DELETE THE ADDITION MADE. 8. GROUNDS NO. II, III & IV LINKED TO GROUND NO. I. 9. SINCE WE HAVE RESTORED THE ISSUE OF AMALGAMATION OF TH E TWO COMPANIES, INTO THE ASSESSEE COMPANY, THE GROUNDS NO. I, II, III & IV ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE, AS THE AO SHALL APPROACH THE ISSUE DE NOVO . 10. GROUND NO. V THE ISSUE INVOLVED IS WITH REGARD TO DISALLOWANCE U/S 14A. TEMPLE TREES IMPEX & INVESTMENTS PVT. LTD. ITA 3710/MUM/2009 ITA 3673/MUM/2009 4 11. THE AO HAS COMPUTED THE DISALLOWANCE AS PER THE PRE SCRIPTION OF RULE 8D, FOLLOWING SB AT MUMBAI IN THE CASE OF DAGA CAPITAL MFG. PVT. LTD. 12. THE ISSUE IS NOW SETTLED THAT RULE 8D SHALL BE MADE AP PLICABLE FORM ASSESSMENT YEAR 2008-09 ONWARDS, SINCE THE IMPUGNE D ASSESSMENT YEAR IS 2005-06, THE RULE WILL NOT APPLICABLE, HOW EVER, SOME REASONABLE DISALLOWANCE HAS TO BE MADE. WE, THEREFOR E, RESTORE THIS ISSUE ALSO TO THE FILE OF THE AO. 13. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RE STORE THE ISSUE TO THE AO WHO SHALL DISALLOW THE ATTRIBUTABLE EXPENSE S U/S 14A ON SOME REASONABLE BASIS. 14. GROUNDS NO. VI & VII ARE CONSEQUENTIAL. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ITA NO. 3673 OF 20009, REVENUES APPEAL : 15. EFFECTIVELY THERE IS JUST ONE GROUND, WHICH HAS BEEN AGITATED BY THE DEPARTMENT, I.E. WITH REGARD TO DELETION OF RS. 18,55,250 BEING THE INTEREST INCOME. 16. THE CIT (A), HAS GIVEN A VERY REASONED ORDER ON THIS ISSUE, WHICH READS AS UNDER, THE APPELLANT CANNOT BE MADE TO SUFFER BECAUSE OF MISTAKE OF THE BANK AND HENCE THE ASSESSING OFFICER IS DIRECTE D TO EXCLUDE THIS AMOUNT OF RS. 18,55,250 FORM TOTAL INCOME OF T HIS ASSESSMENT YEAR AS THE APPELLANT HAS ALREADY OFFERE D THE SAME IN ASSESSMENT YEAR 2006-07 AS PER REVISED STATEMENT RECEIVED FROM THE BANK. SAME AMOUNT CANNOT BE ASSESSED TWIC E, IN A.Y. 2004-06 & 2006-07. THE ADDITIONAL GROUND OF APPEAL IS THUS ALLOWED. TEMPLE TREES IMPEX & INVESTMENTS PVT. LTD. ITA 3710/MUM/2009 ITA 3673/MUM/2009 5 17. IT IS AGAINST THIS ORDER, THE DEPARTMENT HAS FILED THE INSTANT APPEAL. 18. THE DR HAS PLACED HIS RELIANCE ON THE ORDER OF TH E AO, WHEREAS, THE AR RELIED ON THE DECISION OF THE CIT(A). 18. WE HAVE GONE THROUGH THE ORDER OF THE CIT(A) AND WE FIND THAT THE CIT(A) HA VERY LOGICALLY DELETED THE ADDITION, WHICH, IN OU R CONSIDERED OPINION, IS ALSO FAIR. HAVING SO OBSERVED, WE DO NO T INTEND TO DISTURB THE FINDINGS OF THE CIT(A), WHICH WE SUSTAIN. 19. THE DEPARTMENTS APPEAL IS THUS DISMISSED. 20. IN THE RESULT: THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 23/11/2012. SD/- (B.R. JAIN) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 23/11/2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- XXX , MUMBAI. 4) THE CIT -2, MUMBAI, 5) THE D.R. J BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN