M/S JANHAVI INVESTMENTS P LTD, Pune V. ACIT, Cir.-2, Kolhapur

ITA 373/PUN/2006

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60003 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-02-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 12-04-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMENDRA KAUSHAL
• Keywords: Business income; Opportunity of being heard; Rule of consistency
• Section: 143(3); 56; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 373/PN/06 (ASSTT YEAR: 1996-97) M/S JANHAVI INVESTMENTS P. LTD., .. APPELLANT C/O SOUMITRA WARDEKAR, GHAGRE RESIDENCY, LANE NO 14 PRABHAT ROAD, PUNE 411 004 VS. ASSTT. COMMISSIONER OF INCOME-TAX, .. RESPONDENT CIR.2, KOLHAPUR APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI RAMENDRA KAUSHAL DATE OF HEARING : 08.02.20 12 DATE OF PRONOUNCEMENT : 28.02. 2012 ORDER PER G.S. PANNU, A.M .: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), KOLHAPUR DATED 3 0.12.2005 WHICH, IN TURN, HAS ARISEN FROM ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 1996-97. 2. ALTHOUGH THE ASSESSEE HAS RAISED AS MANY AS RIGH T GROUNDS OF APPEAL IN THE MEMO OF APPEAL, BUT THE ONLY TWO GROU NDS OF APPEAL PRESSED AT THE TIME OF HEARING ARE AS FOLLOWS: 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN MECHANICALLY HOLDING THAT THE O THER INCOME OF RS 12,97,28,320/- AS PER SCHEDULE J OF THE FINAL AC COUNTS OF THE APPELLANT FOR THE RELEVANT YEAR IS REQUIRED TO BE T AXED UNDER THE HEAD INCOME FROM OTHER SOURCES U/S 56 OF THE I.T., ACT 1961. IT MAY PLEASE BE HELD THAT ALL THE ITEMS OF INCOME COM PRISED IN SCHEDULE J OF THE FINAL ACCOUNTS OF THE APPELLANT F OR THE RELEVANT YEAR CONSTITUTE THE BUSINESS INCOME OF THE APPELLAN T AND ARE TO BE TAXED UNDER THE HEAD INCOME FROM BUSINESS. 4. THE LD CIT(A) HAS ERRED IN HOLDING THAT IN VIEW OF THE DECISION AT PARAGRAPH 19(II) OF THE ORDER PASSED BY HON. ITAT I N ITA NO 825/PN/01, THE EARLIER DECISIONS GIVEN BY HIS LD PR EDECESSOR PASSED FOR AY 1995-96 AND AY 1997-98 (THOUGH THE SA ME ARE ACCEPTED BY THE DEPARTMENT) IN THE CASE OF THE APPE LLANT IN RESPECT OF DEBENTURE INTEREST, MISCELLANEOUS RECEIP TS, BALANCE WRITTEN OFF, INTEREST FROM BANK, COMMISSION INCOME ETC., ARE AUTOMATICALLY OVERRULED. THE AFORESAID FINDING/CONC LUSION DRAWN BY THE LD CIT(A) MAY PLEASE BE VACATED. THE OTHER GROUNDS WERE NOT PRESSED AND, THEREFORE, THEY STAND DISMISSED AS NOT PRESSED. 3. THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956 AND IS ENGAGED IN DEALING OF SHARES AND SECURITIES. FOR THE ASSESSMENT YEAR 1996-97, RETURN OF INCOME WAS FILED ON 30.11.1996 DECLARING A LOSS OF RS 38,57,32 ,632/-. AN ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED ON 26.3.1999 AT A TOTAL LOSS OF RS 37,59,05,375/- AS S PECULATION LOSS AND NET LOSS UNDER THE HEAD INCOME FROM OTHER SOUR CES WAS COMPUTED AT RS 31,07,174/-.SUBSEQUENTLY, VIDE ORDER DATED 30.03.2001, THE COMMISSIONER OF INCOME-TAX, KOLHAPU R INVOKING HIS JURISDICTION UNDER SECTION 263 OF THE ACT FOUND THE ASSESSMENT ORDER DATED 26.3.1999 AS ERRONEOUS IN SO FAR AS IT WAS PR EJUDICIAL TO THE INTERESTS OF REVENUE. THE COMMISSIONER OF INCOME-TA X FOR THE DETAILED REASONS CONTAINED IN HIS ORDER DATED 30.3. 2001 SET ASIDE THE ASSESSMENT ORDER DATED 26.3.1999 IN ENTIRETY AN D DIRECTED THE ASSESSING OFFICER TO MAKE RE-ASSESSMENT AFTER GIVIN G PROPER OPPORTUNITY TO THE ASSESSEE ON ALL THE ASPECTS CONT AINED IN HIS ORDER. THE ORDER OF THE COMMISSIONER OF INCOME-TAX WAS CHA LLENGED BY THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL, VIDE ITA NO 825/PN/01 DATED 25.4.2005. MEANWHILE, THE ASSESSING OFFICER P ASSED AN ORDER AFRESH AS PER THE DIRECTIONS OF THE COMMISSIONER OF INCOME-TAX AND IN THE ASSESSMENT SO FRAMED UNDER SECTION 143(3) RE AD WITH SECTION 263 OF THE ACT DATED 28.3.2002, TOTAL INCOME WAS AS SESSED AT RS 7,675,79,329/-. THE SAID TOTAL INCOME WAS COMPUTED UNDER HEAD INCOME FROM OTHER SOURCES. THE SAID ASSESSMENT WA S CARRIED IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEA LS) WHO, VIDE HIS ORDER DATED 20.1.2003 DISMISSED THE APPEAL OF T HE ASSESSEE ON THE GROUND THAT THE ASSESSMENT ORDER DATED 28.3.200 2 PASSED BY THE ASSESSING OFFICER WAS NOTHING BUT AN ORDER GIVING E FFECT TO THE DIRECTIONS OF THE COMMISSIONER OF INCOME-TAX CONTAI NED IN HIS ORDER UNDER SECTION 263 OF THE ACT AND, THEREFORE, THE AP PEAL THEREFROM COULD NOT LIE BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). FOR THE AFORESAID REASON, BUT WITHOUT COMMENTING ON THE MERITS OF THE ASSESSEES GRIEVANCE AGAINST THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER ON 28.3.2002, THE COMMISSIONER OF INCOME-TAX (APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE AS N ON- MAINTAINABLE. EVEN THE SAID ORDER OF THE COMMISSION ER OF INCOME- TAX (APPEALS) DATED 20.1.2003 WAS CARRIED IN APPEAL BEFORE THE TRIBUNAL VIDE ITA NO 222/PN/03 DATED 25.4.2005. NOT ABLY, THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THE COM MISSIONER OF INCOME-TAX DATED 30.3.2001 AS ALSO THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 20.1.2003 VIDE ITA NO 825/PN/01 AND 222/PN/03 (SUPRA) WERE HEARD AND DISPOSED OF BY THE TRIBUNAL TOGETHER ON 25.4.2005. THE TRIBUNAL VIDE ITA NO 825 /PN/01 READ ALONGWITH ORDER IN M. A NO 55/PN/09 DATED 7.1.2011, IN PRINCIPLE UPHELD THE STAND OF THE COMMISSIONER OF INCOME-TAX FOR INVOKING HIS REVISIONARY JURISDICTION UNDER SECTION 263 OF THE A CT, WHILE ON THE OTHER ISSUES PERTAINING TO THE MERITS OF THE ADDITI ONS/DISALLOWANCES, SOME MODIFICATIONS WERE MADE TO THE ORDER OF THE CO MMISSIONER. FURTHER IN THE APPEAL, VIDE ITA N0 222/PN/03 (SUPRA ) ARISING FROM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) DATED 20.1.2003, THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DID NOT ACCEPT HIS PLEA TH AT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 28.3.2002 WAS MERELY GIVING EFFECT TO THE ORDER OF THE COMMISSION ER OF INCOME-TAX PASSED UNDER SECTION 263 OF THE ACT. THE TRIBUNAL R ESTORED THE MATTER BACK TO THE FILE OF THE COMMISSIONER OF INCO ME-TAX (APPEALS) WITH DIRECTIONS THAT ALL THE MATTERS AGITATED BEFOR E HIM IN THE APPEAL OF THE ASSESSEE SHOULD BE DECIDED ON MERITS. THE PR ESENT CAPTIONED APPEAL BEFORE US IS AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME-TAX (APPEALS) DATED 30.12.2005, WHICH HAS BE EN PASSED AS A CONSEQUENCE TO THE DIRECTIONS OF THE TRIBUNAL CON TAINED IN ITS ORDER DATED 25.4.2005 (SUPRA). IN THIS BACKGROUND OF THE MATTER, WE MAY NOW EXAMINE THE SPECIFIC GROUNDS RAISED BY THE ASSE SSEE SO AS TO APPRECIATE THE CONTROVERSY. 4. IN SUM AND SUBSTANCE, THE DISPUTE REVOLVES AROUN D THE NATURE AND ASSESSMENT OF AN AMOUNT OF RS 12,97,28,320/- DE TAILED AS UNDER, WHICH HAS BEEN CLASSIFIED AS OTHER INCOME IN SCHEDULE J ANNEXED TO THE PROFIT & LOSS ACCOUNT OF THE ASSESSE E, WHEREOF DETAILS ARE AS UNDER: SCHEDULE J OTHER INCOME: CURRENT YEAR RS. PS. DIVIDEND 6,991,438.85 (TDS RS 1727656) DEBENTURE INTEREST 5,844,157.15 (TDS RS 64834.31) BROKERAGE 5,946,112.00 INTEREST RECEIVED ON STOCK INVEST 0.0 0 MISCELLANEOUS RECEIPTS 648.00 COMMISSION RECEIVED 0.00 INTEREST OTHERS 2,842,499.00 BANK INTEREST 9,087,440.00 MISC. BALANCES W/OFF 69,804.33 RATE DIFFERENCE 88,365.00 INTEREST ON ICD 98,009,102.00 INCOME RELATING TO PREVIOUS YEAR 848,753. 67 129,728,320.00 ============ 5. IN THE ASSESSMENT INITIALLY FINALIZED UNDER SECT ION 143(3) ON 26.3.1999, CERTAIN INCOMES OUT OF THE AFORESAID WER E ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND ACCO RDINGLY, BUSINESS LOSS WAS COMPUTED AT RS 37,59,05,375/-. HO WEVER, THE COMMISSIONER OF INCOME-TAX IN HIS ORDER UNDER SECTI ON 263 OF THE ACT HAD FOUND THAT SOME OF THE INCOMES STATED ABOVE WHICH WERE CONSIDERED AS BUSINESS INCOME WERE OTHERWISE LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE MAIN POINT OF CONTENTION IS THE ASSESSABILITY OF INTEREST INCOME. THIS ASPECT OF THE MATTER HAS BEEN SPECIFICALLY OPINED BY THE TRIBUNAL IN ITA NO 825/PN/01 (SUPRA) IN PARA 14 AS UNDER: 14. THE SECOND ISSUE WAS WHETHER INTEREST RECEIVED UNDER VARIOUS HEADS CONSTITUTED BUSINESS INCOME OR INCOME FROM OT HER SOURCES. THE LD DR RELIED ON THE DECISION OF GODAVARI SUGAR MILLS LTD, DECIDED BY THE HONBLE BO MBAY HIGH COURT. THE FACTS OF THE CASE WERE THAT INTEREST INCOME WAS RECEIVED BUT NO MATERIAL WAS PLACED BEFORE THE TRIBUNAL THAT MONEYS WERE LENT IN THE COURSE OF BUSINESS. THE COURT HELD THAT ONUS TO ADD UCE EVIDENCE WAS ON THE ASSESSEE AND IN ABSENCE OF DISCHARGE OF THAT ON US, THE INCOME HAS TO BE TAXED AS INCOME FROM OTHER SOURCES. WE HAVE AL SO SEEN THAT THE FACTS IN THE CASE OF TUTICORIN (SUPRA) ARE DISTINGU ISHABLE FROM THE FACTS OF THE INSTANT CASE PRIMARILY BECAUSE IN THAT CASE BUS INESS AT HAD NOT COMMENCED WHILE IN THE INSTANT CASE, THIS IS THE 8 TH YEAR OF BUSINESS. THE BORROWINGS AND LENDINGS ARE IN THE COURSE OF BUSINE SS. THEREFORE, WE ARE OF THE VIEW THAT THE DECISION IN THE CASE OF PARAMO UNT PREMISES P LTD IS APPLICABLE AND INTEREST INCOME IS TAXABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. IN TERMS THEREOF, AS PER THE TRIBUNAL, INTEREST INC OME WAS TAXABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES AS MADE OUT BY THE COMMISSIONER OF INCOME-TAX IN HIS ORDER UNDER SECTI ON 263 OF THE ACT AND THEREAFTER BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER DATED 28.3.2002. THE AFORESAID PLE A OF THE ASSESSEE WAS BEFORE THE COMMISSIONER OF INCOME-TAX (A PPEALS) IN THE IMPUGNED PROCEEDINGS DATED 30.12.2005. HOWEVER, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS CHOSEN TO HOLD THAT THE SAME WAS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS ACCORDING TO HIM , THERE WAS SOME CONFUSION IN THE ORDER OF THE TRIBUNAL DATED 25.04.20 05 (SUPRA) ON A READING OF PARAGRAPHS 12, 13, 14 AND 19((II). THIS ASPECT OF THE ISSUE BROUGHT OUT BY THE COMMISSIONER OF INCOME-TAX (APPEALS), IN OUR VIEW, IS RE NDERED REDUNDANT SUBSEQUENT TO THE DECISION OF OUR CO-ORDINATE BENCH IN M A NO 55/PN/09 (SUPRA) WHEREIN CERTAIN AMENDMENTS TO THE ORDER OF THE TRIBUNAL IN ITA NO 825/PN/01 HAVE BEEN MADE. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO APPLY THE DIRECTIONS OF THE TRIBUNAL ON THIS ASPECT AS CO NTAINED IN PARA 14 OF THE ORDER IN ITA NO 825/PN/01 (SUPRA), WHICH HAS BEEN EXTRACTED BY US IN THE EARLIER PART OF THIS ORDER, AND RE-COMPUTE THE INCOME OF THE ASSESSEE THEREOF ACCORDINGLY. 6. EVEN WITH REGARD TO OTHER ELEMENTS OF INCOME CON TAINED IN SCHEDULE J TITLED AS OTHER INCOME, THE PLEA SET -UP BY THE APPELLANT BEFORE US IS THAT FOR THE PRECEDING ASSESSMENT YEAR 1995-96 AND ALSO FOR LATER ASSESSMENT YEAR 1997-98, THE COMMISSIO NER OF INCOME- TAX (APPEALS) HAD HELD CERTAIN INCOMES TO BE ASSESSABLE UN DER THE HEAD BUSINESS AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCE S. IT HAS BEEN POINTED OUT THAT NO APPEAL AGAINST SUCH ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS BEEN PREFERRED BY THE REVENUE AND, THEREFORE, ON THE PRINCIPLE OF CONSISTENCY IN THIS YEAR TOO, THE ASSESSING OFFICER SHOULD ASSESS INCOME OF THE ASSESSEE IN THE SAME LIGHT. WE FIND AMP LE MERIT IN THE AFORESAID ASSERTIONS MADE OUT BY THE ASSESSEE AND, THEREFO RE, DIRECT THE ASSESSING OFFICER TO CONSIDER THE AMOUNTS CONTAINED UNDER T HE HEAD OTHER INCOME OF RS 12,97,28,320/- IN ACCORDANCE WITH THE FIN DINGS OF THE TRIBUNAL IN ITA NO 825/PN/01 (SUPRA) AS ALSO ON THE PRINCIPLE OF CON SISTENCY FOLLOWING THE AFORESTATED TWO ORDERS OF THE COMMISSIONER OF INCOME-TA X (APPEALS) FOR THE ASSESSMENT YEARS 1995-96 AND 1997-98, AND SEGREGATE THE A MOUNTS ASSESSABLE UNDER TH6E HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER SHALL THEREAFTER ALLOCATE THE EXPENSES TO COMPUTE THE RESULTA NT TOTAL INCOME KEEPING IN MIND THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1997-98 VIDE ITA NO 1454/PN/03 DATED 25 .4.2005 AND AS PER LAW. NEEDLESS TO MENTION, IN CARRYING OUT THE AFOR ESAID EXERCISE TO RECOMPUTE TOTAL INCOME OF THE ASSESSEE, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN SUPPO RT OF ITS STAND. IN THIS VIEW OF THE MATTER, FOR STATISTICAL PURPOSES, GROUN D NOS 3 & 4 AS STATED ABOVE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . DECISION PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF FEBRUARY, 2012. SD/- SD/- (I C SUDHIR) ( G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMB ER PUNE, DATED 28 TH FEBRUARY, 2012 B COPY TO:- 1) JANHAVI INVESTMENT P LTD KOLHAPUR 2) ACIT CIR.2, KOLHAPUR 3) THE CIT (A) KOLHAPUR 4 THE CIT KOLHAPUR 5) DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE TRUE COPY BY ORDER SR. PS, ITAT PUNE