GLANCE FINANCE LTD, MUMBAI V. ITO WD 1(1)-4, MUMBAI

ITA 4146/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3531 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 19-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 19-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K SINHA
• Assessee Lawyers: S S KAMAVAT
• Keywords: Opportunity of being heard; Rule of consistency; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI H L KARWA, PRESIDENT & SHRI N K BILLAIYA, ACCOUNTANT MEMBER ITA NO.4146/MUM/2011 : ASST.YEAR 2005-2006 M/S. GLANCE FINANCE LTD., 5 KITAB MAHAL, 1 ST FLOOR, 192 DR. D.N.ROAD, MUMBAI- 400 001. PAN : AAACG4442P VS. ITO WARD 1 ( 1 )( 4 ), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI SHASHIKANT GUPTA, SUNIL H IRAWAT, SAMEER DOSHI & S.S.KAMAVAT RESPONDENT BY : SHRI D.K.SINHA DATE OF HEARING : 19.06.2013 DATE OF PRONOUNCE MENT : 19.06.2013 O R D E R PER N.K.BILLAIYA (AM) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-1 MUMBAI, DATED 06.01.2011 PERTAINING TO A.Y. 2005-06. THE A SSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. 2. GROUND NO.1 RELATES TO THE ADDITION OF RS.98,433 /- BEING THE DIFFERENCE BETWEEN THE RECEIPTS SHOWN IN TDS CERTIFICATES AND THE BOOKS OF ACCOUNT. THE ASSESSEE IS IN THE BUSINESS OF FINANCING, CONSULTANCY, TRADING AND INV ESTMENT IN SHARES, ARRANGING LOANS AND ADVANCES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 28.10.2005 DECLARING TOTAL INCOME AT RS.8,90,074/-. THE RETUR N WAS SELECTED FOR SCRUTINY ASSESSMENT 2 ITA NO.4146/MUM/2011 AY: 2005-2006 AND, ACCORDINGLY, STATUTORY NOTICES WERE ISSUED AND SERVED ON THE ASSESSEE. WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OF FICER NOTICED THAT AS PER TDS CERTIFICATES, THE ASSESSEE HAS RECEIVED A SUM TOTAL OF RS.68,02,667/- ON VARIOUS HEADS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S CREDITED THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT UNDER THESE HEADS AT RS.67,04,234/ -. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE DIFFERENCE OF RS.98,433/- WAS NOT OFFERED F OR TAXATION. THE ASSESSEE FILED A DETAILED REPLY ON 23.05.2007 SUBMITTING A DETAILED BREAK-UP OF THE INCOME UNDER VARIOUS HEADS. THE ASSESSING OFFICER DID NOT ACCEPT THE CO NTENTION OF THE ASSESSEE AND ADDED THE SUM OF RS.98,433/- TO THE TOTAL INCOME OF THE ASSES SEE. THE ASSESSEE AGITATED THIS MATTER BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. 3. BEFORE US THE COUNSEL FOR THE ASSESSEE ARGUED TH AT THE DIFFERENCE IS IN RESPECT OF THE SERVICE TAX ON WHICH NO TDS WAS MADE BY THE PAR TIES. THEREFORE, THERE IS A DIFFERENCE IN THE TDS AMOUNT AND THE AMOUNT CREDITED IN THE PR OFIT AND LOSS ACCOUNT. THE ASSESSEE FILED A RECONCILIATION STATEMENT EXHIBITED AT PAGES 8 & 9 OF THE PAPER-BOOK. IN OUR CONSIDERED VIEW, THIS ISSUE NEEDS TO BE LOOKED AFRE SH AT THE ASSESSMENT STAGE. WE, THEREFORE, RESTORE THIS ISSUE BACK TO THE FILE OF T HE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE RECONCILIATION STATEMENT AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.1 IS ALLOWE D FOR STATISTICAL PURPOSE. 4. GROUND NO.2 RELATES TO THE DISALLOWANCE OF RS.13 ,46,049/- U/S. 14A OF THE ACT. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN RS.20,37,423/- AS EXEMPT INC OME, WHICH COMPRISES OF SHARE PROFIT FROM PARTNERSHIP FIRM OF RS.20,27,673/- AND RS.9,750/- AS DIVIDEND. THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF THE EXPENDITURE INCURRED FOR EARNING THE EXEMPT INCOME. THE ASSESSEE REPLIED THAT CONSIDERING THE NATURE OF EXEMPT INCOME NO EXPENSES WERE INCURRED. THE REPLY OF THE ASSESSEE DID NOT F IND ANY FAVOUR FROM THE ASSESSING OFFICER, WHO COMPUTED THE DISALLOWANCE OF EXPENSES ATTRIBUTABLE TO THE EXEMPT INCOME AT RS.13,46,049/- THE ASSESSEE AGITATED THIS MATTER B EFORE THE CIT(A) AND REITERATED WHAT 3 ITA NO.4146/MUM/2011 AY: 2005-2006 HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITY, BUT FAILED TO CONVINCE THE CIT(A) THAT NO EXPENDITURE WAS INCURRED FOR EARNING THIS EXEMPT IN COME. 5. BEFORE US THE COUNSEL FOR THE ASSESSEE SUBMITTED THE COPY OF THE ORDER OF THE CIT(A) PERTAINING TO A.Y. 2004-05 AND CONTENDED THA T SIMILAR ADDITIONS MADE IN THE EARLIER YEAR HAS BEEN DELETED BY THE CIT(A) AGAINST WHICH T HE REVENUE HAS NOT PREFERRED ANY APPEAL. 6. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE CIT( A) FOR A.Y. 2004-05. WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT ON IDE NTICAL FACTS THE ADDITIONS WERE DELETED. THE CIT(A) HAS DECIDED THIS ISSUE AT PARA 4.5 OF IT S ORDER AS UNDER: 4.5 AFTER CAREFUL CONSIDERATION I FIND THAT MOST O F THE EXEMPTED INCOME HAS COME FROM SHARE INCOME FROM PARTNERSHIP FIRM. NO EXPENDITURE CAN BE ATTRIBUTABLE FOR EARNING THIS SHARE INCOME. THE PA RTNERSHIP FIRM RUNS ITS OWN BUSINESS AND ACCOUNTS FOR ITS INCOME AND EXPENDITUR E. THE NET INCOME WORKED OUT IN THE COMPUTATION IS DISTRIBUTED AMONGS T THE PARTNERS. THE PARTNERS ARE NOT NEEDED TO INCUR ANY EXPENDITURE TO EARN THIS SHARE INCOME. SO THERE IS NO QUESTION OF ATTRIBUTING ANY EXPENDIT URE AGAINST THIS INCOME. THE OTHER SUM OF RS.4150 IS VERY SMALL AND IT WILL NOT BE WORTHWHILE TO WORK OUT A SMALL DISALLOWANCE OF IT. HENCE ADDITION MAD E IS DELETED. THE LEARNED DR COULD NOT BRING ANY DISTINGUISHING F ACT ON RECORD. AS THE REVENUE HAS ACCEPTED THE FINDINGS OF THE CIT(A) ON IDENTICAL FA CTS IN THE PREVIOUS YEAR, FOLLOWING THE RULE OF CONSISTENCY, THE DISALLOWANCE MADE BY THE A SSESSING OFFICER AT RS. 13,46,049/- IS DELETED. GROUND NO.2 IS ALLOWED. 7. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE 2013. SD/- SD/- (H L KARWA) (N.K.BILLAIYA) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DT : 19 TH JUNE, 2013 4 ITA NO.4146/MUM/2011 AY: 2005-2006 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T -1, MUMBAI 4. THE CIT (A)-1 MUMBAI 5. THE DR, G- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI