ASST CIT 16(3), MUMBAI V. BHAVANI GEMS, MUMBAI

ITA 4183/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0955 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 09-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: REEPAL G TRAISHAWALA
• Keywords: Business income
• Section: 80HHC; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4183/MUM/2014 (ASSESSMENT YEAR- 2004-05) A.C.I.T.-16(3), MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 VS. M/S BHAVANI GEMS 101, PRASAD CHAMEBRS, OPERA HOUSE, MUMBAI-400004 PAN: AAAFB2302G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI KAILASH KANOJIYA (DR) ASSESSEE BY : SHRI REEPAL G. TRAISHAWALA (DR) DATE OF HEARING : 03.05.2017 DATE OF PRONOUNCEMENT : 03.05.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL U/S 253 OF THE INCOME-TAX ACT (THE ACT) IS FILED BY REVENUE AGAINST THE ORDER OF LD. CIT(A)-27, MUMBAI DATED 10.03.2014. TH E REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN L AW, THE LD. CIT(A) ERRED IN ALLOWING THE INTEREST INCOME AS BUSINESS INCOME OF THE ASSESSEE THAT FOR CONSEQUENT DEDUCTION U/S. 80HHC OF THE ACT? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LA W, THE LD. CIT(A) ERRED IN ALLOWING THE INTEREST INCOME AS BUSINESS INCOME OF ASSESSEE EVEN THOUGH THE ASSESSEE'S MAIN BUSINESS ACTIVITY DOES NOT MENTION OF INTEREST INCOME ACTIVITY?' 2. AT THE OUTSET OF THE PROCEEDING, THE LD. AR OF THE ASSESSEE ARGUED THAT THE ISSUE RAISED BY REVENUE IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF ASSESSEE IN ASSESSEES OWN CASE IN EARLIER THREE AYS WHEREIN TH E TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. IT WAS ARGUED THAT THE LD. CIT (A) WHILE DECIDING THE RELEVANT GROUND OF APPEAL FOLLOWED THE ORDER OF TRI BUNAL AND GRANTED THE RELIEF TO THE ASSESSEE. THE LD. DR FOR THE REVENUE SUBMITTED THAT THE REVENUE HAS FILED APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AND THE SAME IS PENDING. ITA NO. 4183/M/2014- M/S BHAVANI GEMS. 2 3. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW. WE FIND THAT THE CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2001-02 AND 2002-03 PASS ED THE FOLLOWING ORDER: 5 WE HAVE CONSIDERED THE RIVAL CONTENTION AS WELL A S THE RELEVANT MATERIAL ON RECORD. IT IS SETTLED PROPOSITION OF LAW THAT IF THE ASSESSING OF FICER HAS TAKEN ONE OF THE POSSIBLE VIEWS, THEN CIT CANNOT TAKE A DIFFERENT VIEW. THE I SSUE BHAVANI GEMS REGARDING THE DEDUCTION U/S 80HHC ON INTEREST RECEIVED ON THE DEP OSITS WAS ALREADY CONSIDERED AND DECIDED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE AY 2000-01, 2001-02 AND 2002- 03. THE ASSESSING OFFICER REDUCED 90% OF THE INTERE ST INCOME BY APPLYING CLAUSE (BAA) OF EXPLANATION TO SEC.80HHC AND THEREFORE, THE VIEW TAKEN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW ON THE ISSUE. BY INVOKING SEC. 263 WH AT IS REQUIRED TO BE SEEN IS WHETHER THE VIEW TAKEN BY THE ASSESSING OFFICER IS AFTER AP PLICATION OF MIND AND A POSSIBLE VIEW AND NOT SOMETHING WHICH CANNOT BE DISPUTED. THUS, W HEN THE VIEW OF THE ASSESSING OFFICER IS NOT IMPOSSIBLE VIEW AS THE ISSUE, IN THE YEAR UNDER CONSIDERATION, WAS PENDING IN THE APPEAL FILED BY THE ASSESSEE BEFORE THE CIT( A) AS WELL AS BEFORE THE TRIBUNAL AND VIDE ORDER DATED 10.3.2008, THE TRIBUNAL HAS DECIDE D THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: 3. 'THE CIT(A) HAS CONSIDERED ASSESSEE'S SUBMISSION AND FOUND BEYOND ANY DOUBT ASSESSEE HAS NO SURPLUS FUNDS WITH IT TO EARN INTER EST INCOME BUT DUE TO BUSINESS COMPULSION AND AS A REQUIREMENT OF BANK IN GRANTING CREDIT FACILITIES IT HAS TO DEPOSIT THE MONEY WITH THE BANK. THE SOURCE OF THE SAME WAS FROM BANK FINANCE, I.E. FROM BORROWED FUNDS (INTEREST BEARING). THE ACTIVITY OF THE ASSESSEE THEREFORE, INEXTRICABLY LINKED WITH THE OVERALL BUSINESS ACTIVITY OF THE FI RM. THE CIT(A) FURTHER NOTED THAT IN ASSESSEE'S OWN CASE FOR EARLIER YEAR IN ASSESSMENT YEARS 2000-01, 2001-02 AND 2002- 03, THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE.' 5.1 THUS, IN VIEW OF THE FACT THAT WHEN THIS ISSUE WAS CONSIDERED AND DECIDED BY THE TRIBUNAL AND ULTIMATELY ALLOWED IN FAVOUR OF THE AS SESSEE, THEN THE VIEW TAKEN BY THE ASSESSING OFFICER BY APPLYING CLAUSE (BAA) OF EXPLA NATION TO SEC. 80HHC IS, THOUGH WAS NOT UPHELD, ONE OF THE POSSIBLE VIEWS. THEREFOR E, THE CIT'S JURISDICTION U/S 263 IS OTHERWISE BARRED ON THE ISSUE, WHICH IS A SUBJECT M ATTER OF APPEAL BEFORE THE APPELLATE AUTHORITIES. 6 IN VIEW OF THE ABOVE DISCUSSION WE FIND THAT THE JURISDICTION EXERCISED BY THE CIT U/S 263 ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S 8 0HHC IS NOT PROPER AND JUSTIFIED. ACCORDINGLY, WE ALLOW THE GROUND OF THE ASSESSEE ON THIS ISSUE. 4. CONSIDERING THE DECISION OF CO-ORDINATE BENCH WHICH WAS FOLLOWED BY THE LD. CIT(A) WHILE PASSING THE IMPUGNED ORDER, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD. CIT(A). 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DAY OF MAY 2017. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 03/05/2017 S.K.PS ITA NO. 4183/M/2014- M/S BHAVANI GEMS. 3 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/