NESS NUSLI WADIA, MUMBAI V. ACIT CIR 2(1), MUMBAI

ITA 4240/MUM/2011

• Counselvise Citation: 424019914 RSA 2011
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Keywords: Capital asset; Proportionate interest; Cost of acquisition
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B,MUMBAI BEFORE SHRI D. MANMOHAN (VICE PRESIDENT) & SHRI RAJENDRA (AM) I.T.A. NO.4240/MUM/2011 (A.Y. 2006-07) MR. NESS NUSLI WADIA, NEVILLE HOUSE, J.N. HEREDIA MARG, BALLARD ESTATE, MUMBAI-400 001. PAN: AAAPW0814G.` VS. ASST. COMMR. OF INCOME-TAX, CIR. 2(1), AAYKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. APPELLANT RESPONDENT APPELLANT BY NONE. RESPONDENT BY SHRI P .C. MAURYA. DATE OF HEARING 26-03-2012 DATE OF PRONOUNCEMENT 30 -03-2012 O R D E R PER RAJENDRA, AM : APPELLANT HAS RAISED THE FOLLOWING GROUNDS OF APPE AL : 1. THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECT OF CAPITAL LOSS OF RS.36,013/- O N SALE OF SHARES BY STATING THAT THE LOSS IS NOT ALLOWABLE BEING CAPITAL IN NATURE AND THAT THE CASE LAWS CITED BY T HE APPELLANT ARE DISTINGUISHABLE ON FACTS. 2. THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT CONSIDERING THE APPELLANTS CLAIM THAT THE PROPORTIONATE INTEREST OF RS.36,013/-, ON AMOUNT BORROWED FOR PURCHASE OF GO AIRLINES (INDIA) PVT. L TD. SHARES, WHICH WERE SOLD, WAS TO BE ADDED TO THE COS T OF ACQUISITION OF THE SAID SHARES. ITA NO.4240/MUM/2011 2 3. THE LEARNED COMMISSIONER (APPEALS) ERRED IN STATING THAT THE INTEREST U/S.234B AND 234C WAS MANDATORY WITHOUT CONSIDERING THE MERITS OF THE CONTENTIONS MADE BY THE APPELLANT. 4. THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT CONSIDERING THE APPELLANTS CONTENTION THAT THE APPELLANT WAS ENTITLED TO DEDUCTION U/S.54 IN TERMS OF THAT SECTION; AND HENCE HE WAS NOT IN A POSITION TO ESTIMATE HIS INCOME IN TERMS OF CAPITAL GAINS NOT INVESTED AS ON 31.03.2006 FOR THE PURPOSE OF ADVANC E TAX, AND HENCE INTEREST CANNOT BE COMPUTED AND LEVI ED U/S.234B AND 234C NOBODY APPEARED ON BEHALF OF THE APPELLANT ON 26-03 -2012. FACTS EMERGING FROM THE FILE ARE AS UNDER 2. APPELLANT HAS CLAIMED CAPITAL LOSS OF RS.36,103/ - ON SALE OF SHARES. HE WAS ASKED TO SHOW CAUSE WHY THE SAID AMOUNT SHOULD NOT BE DISALLOWED AS THE SAME WAS NOT THE LOSS BUT WAS INTEREST PAID BY THE APPEL LANT TO HDFC. APPELLANT DID NOT FILE ANY EXPLANATION. SO THE AO ADDED BACK IT TO HI S TOTAL INCOME. 3. APPELLANT FILED AN APPEAL BEFORE THE CIT(A) AN D DETAILS OF CAPITAL LOSS WERE FILED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. HE FURTHER ARGUED THAT THE BORROWING WAS DIRECTLY RELATED TO PURCHASE OF SHARE S, THE PROPORTIONATE INTEREST WAS CORRECTLY ADDED TO THE COST OF ACQUISITION AND HENC E THE DISALLOWANCE OF CAPITAL LOSS AMOUNTING TO RS.36,013/- SHOULD BE DELETED. 4. CIT(A) CONFIRMED THE ACTION OF THE AO. HE OBSERV ED : IT IS EVIDENT FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAS PURCHASED THE SHARES WITH BORROWED FUNDS AND INCURR ED LOSS ON SALE OF PART OF THE SHARES. ACCORDINGLY, THE ASS ESSEE HAS CLAIMED PROPORTIONATE CAPITAL LOSS OFRS.36,013/- WH ICH IS NOT ALLOWABLE BEING CAPITAL IN NATURE. HENCE, THE DISAL LOWANCE MADE BY THE A.O. IS CONFIRMED AND APPEAL ON THIS GR OUND IS DISMISSED. THE CASE LAWS CITED BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS. ITA NO.4240/MUM/2011 3 5. DR SUPPORTED THE ORDERS OF THE AO AND THE CIT(A) . HE ARGUED THAT WHILE COMPUTING CAPITAL GAINS INTEREST PAID CANNOT BE ALL OWED. 6. AFTER CONSIDERING THE MATERIAL AVAILABLE ON THE FILE AND THE ARGUMENTS OF THE AR, WE ARE OF THE OPINION THAT MATTER SHOULD BE REM ITTED BACK TO THE AO FOR VERIFYING THE FACT WHETHER DEDUCTION U/S.57 WAS CLA IMED OR NOT FOR THE SAME AMOUNT. IT IS TRUE THAT THE INTEREST PAID ON THE BO RROWINGS FOR THE ACQUISITION OF A CAPITAL ASSET MUST BE CONSIDERED FOR DEDUCTION U/S. 48. BUT, IF THE SUM IS ALREADY THE SUBJECT MATTER OF DEDUCTION UNDER OTHER HEADS L IKE THOSE UNDER SECTION 57, IT CANNOT BE DEDUCTED AGAIN FOR THE PURPOSE OF COMPUTA TION U/S.48. AS THE FACTS ABOUT THE CLAIM MADE BY THE APPELLANT ARE NOT CLEAR AND A PPELLANT WAS ALSO ABSENT WHEN THE CASE WAS CALLED FOR HEARING, WE DIRECT THE CIT( A) TO DECIDE THE ISSUE IN LIGHT OF ABOVE DISCUSSION. 7. GROUND NOS. 3 AND 4 ARE ABOUT CHARGING OF INTERE ST U/S. 234B AND 234C. IN THE GROUNDS OF APPEAL BEFORE THE CIT(A), THE APPELL ANT HAD ELABORATELY ARGUED AS TO WHY INTEREST U/S.234B AND 234C SHOULD BE RECOMPUTE D CONSIDERING THE PECULIAR FACTS OF HIS CASE. 8. THE CIT(A) IN A SINGLE LINE ORDER HAS DISPOSED O F THE CASE AS UNDER : THE CHARGING OF INTEREST IS MANDATORY AND CONSEQ UENTIAL. 9. WE ARE OF THE OPINION THAT CIT(A) SHOULD HAVE PA SSED REASONED AND SPEAKING ORDER DEALING WITH ISSUES RAISED BY THE APPELLANT A BOUT ENTITLEMENT TO DEDUCTION U/S.54 OF THE ACT AND THE PRINCIPLE OF TAX DUE ON T HE RETURNED INCOME. AS HE HAS DECIDED THE APPEAL WITHOUT DISCUSSING THE ISSUES RA ISED BY THE APPELLANT, WE REMIT THE MATTER TO HIS FILE FOR PASSING A SPEAKING ORDER . 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.4240/MUM/2011 4 ORDER PRONOUNCED ON THE 30TH DAY OF MARCH , 2012. SD/- SD/- (D. MANMOHAN) (RAJENDRA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI: 30TH MARCH , 2012. NG: COPY TO : 1. ASSESSEE. 2. DEPARTMENT. 3 CIT(A)-4,MUMBAI. 4 CIT-2,MUMBAI. 5.DR,B BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNAT ION 1. DRAFT DICTATED ON 27-03-2012 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 28-03-2012 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON 30.3.12 SR.PS/ 7. FILE SENT TO THE BENCH CLERK 30.3.12 SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER