CAMPBELL KNITWEAR LTD ( NOW MERGED WITH FORBES AND CO. LTD), MUMBAI V. ITO 2(1)(2), MUMBAI

ITA 435/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9208 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-12-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 18-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M D T HAHARE
• Keywords: Business income; Commercial expediency
• Section: 43B

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 435 / MUM/ 20 1 0 ( ASSESSMENT YEAR : 200 3 - 20 0 4 ) M/S CAMPBELL KNITWEAR LTD. (NOW MERGED WITH FORBES AND COMPANY LTD.0 , FORBES BUILDING, CHARANJIT RAI MARG, FORT, MUMBAI - 400 001 . VS. ITO, 2( 1 )( 2 ), MUMBAI PAN/GIR NO. : A AA CC 0433 A ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : M R. M.D. T HAHARE /REVENUE BY : MR. RAKESH RANJAN DATE OF HEARING : 1 2 TH DEC . , 2012 DATE OF PRONOUNCEMENT : 19 TH D EC. , 2012 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 17 - 12 - 2009 OF LEANED CIT(A) - 4 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 3 - 0 4 . 2 . THE ASSESSEE RAISES THE FIRST GROUND IN REGARD TO DISALLOWANCE OF RS. 88,842/ - MADE U NDER SECTION 43B R.W.S.2(24)(X ) AND UNDER SECTION 36(1)(VA ) OF THE ACT . ITA NO.435/2010 2 3 . SINCE THE PAYMENTS ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND WERE NOT MADE IN TIME, THEREFORE, THE AO AND LEARNED C IT (A) MADE AND CONFIRMED THE DISALLOWANCE RESPECT IVELY. 4 . AFTER CONSIDERING THE SUBMISSIONS, I FOUND THAT ALL THE PAYMENTS HAVE BEEN MADE BEFORE FILING THE RETURN, THEREFORE, THEY ARE ALLOWABLE IN VIEW OF THE DECISION OF THE HON BLE HIGH COURT REPORTED IN 213 CTR 268 IN VIEW OF THE DECISION OF THE DELH I HIGH COURT REPORTED IN 321 ITR 528. ACCORDINGLY, I ALLOW THIS GROUND OF THE ASSESSEE BY DELETING THE ADDITION. 5 . THE SECOND GROUND IS AGAINST CONFIRMING THE PRIOR PERIOD EXPENSES OF RS. 4,80,144/ - . 6 . THE AO NOTICED THAT SOME OF THE EXPENSES ARE CLAI MED WHICH RELATE TO EARLIER PERIOD, THEREFORE, HE HELD THAT THEY ARE NOT ALLOWABLE DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, HE DISALLOWED A SUM OF RS. 4,80,144/ - . LEARNED CIT(A) ALSO CONFIRMED THE ACTION OF THE AO . 7 . AFTER CONSIDERING THE SUBMISS IONS, I FOUND THAT THE ASSESSEE DESERVES TO SUCCEED ON THIS ISSUE ALSO. I NOTED THAT THE EXPENSES WERE CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION BY SETTLING THE CLAIM FOR THE YEAR UNDER CONSIDERATION. NO CLAIM HAS BEEN MADE IN EARLIER YEAR IN RESPEC T TO THESE EXPENSES. I FURTHER NOTI C ED THAT THERE ARE ABOUT RS. 22 CRORES OR ODD EXPENSES CLAIMED BY THE ASSESSEE AND THESE EXPENSES ARE IN VERY SMALL PROPOR TION OF THE TOTAL EXPENSES CLAIMED. ITA NO.435/2010 3 THEREFORE, I FEEL THAT DISALLOWANCE MADE BY THE AO, WHICH IS CON FIRMED BY THE LEARNED CIT(A) , WAS NOT JUSTIFIED. ACCORDINGLY, I DELETE THIS ADDITION ALSO. 8 . THE THIRD GROUND RELATES TO TAXING INTEREST FROM BANKS/INCOME TAX REFUND AS INCOME FROM OTHER SOURCES OF RS. 3,98,221/ - . 9 . THE ASSESSEE SHOWN INTEREST INCOME EA RNED ON BANK DEPOSIT AND ON INCOME - TAX REFUND AND THE SAME WAS SHOWN AS BUSINESS INCOME. THE AO TREATED THE SAME AS INCOME FROM OTHER SOURCES. LEARNED CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 10 . AFTER CONSIDERING THE SUBMISSION, I FOUND THAT INTEREST RECEIVED ON INCOME - TAX REFUND IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THEREFORE, THE ACTION OF THE AO TO THIS EXTENT IS CONFIRMED. 10.1 REGARDING THE INTEREST FROM BANK, IT IS NOT CLEAR AS TO WHETHER THIS AMOUNT WAS EARNED ON FIXED DEPOSIT OUT OF FUNDS OF BUSINESS OR WAS EARNED FOR BUSINESS EXPEDIENCY LIKE TAKING LOAN FACILITY ETC., THEREFORE, I RESTORE THIS ISSUE TO THIS EXTENT TO THE FILE OF THE AO TO EXAMINE THIS ASPECT AFRESH. IF IT IS FOUND THAT THE INTEREST IS EARNED F OR COMMERCIAL EXPEDIENCY THEN THE SAME IS ASSESSABLE AS BUSINESS INCOME AS HELD BY HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PARAMOUNT PREMISES (P) LTD, 190 ITR 259 . ITA NO.435/2010 4 10. 2 FOR THE SAKE OF CLARIFICATION, THE INTEREST RELATED TO INCOME TAX REFUND AMO UNTING TO RS. 13,020/ - WHICH IS ASSESSABLE AS INCOME FROM OTHER SOURCES. THE INTEREST EARNED ON DEPOSIT FROM BANK AS OF RS. 3,22,924/ - , WHICH HAS BEEN RESTORED TO THE FILE OF THE AO TO CONSIDER THE SAME AFRESH AND THERE IS ANOTHER AMOUNT OF RS. 1,63,267/ - , WH ICH IS MISCELLANEOUS INCOME I.E. INTEREST ON CUSTOMERS ETC., THE SAME IS ASSESSABLE AS INCOME FROM BUSINESS AS THE SAME HAS BEEN RECEIVED BY THE ASSESSEE ON BELATED PAYMENT ETC. THIS GROUND OF THE ASSESSEE IS ALLOWED IN PART AS STATED ABOVE. 11 . THE NEXT ISSUE RELATES TO NOT ALLOWING THE BROUGHT FORWARD LOSS AS INCOME ASSESSED FROM OTHER SOURCES. 12 . THE AO AND LEARNED CIT(A) DISALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT BROUGHT FORWARD LOSS ES CAN ONLY BE ALLOWED AGAINST BUSINESS INCOME AND NOT I NCOME FROM OTHER SOURCES. THE ISSUE IN RESPECT OF INTEREST EARNED ON BANK DEPOSIT HAS BEEN RESTORED TO THE FILE OF THE AO TO CONSIDER AFRESH, THEREFORE, THIS ISSUE IS ALSO RESTORED TO FILE OF THE AO TO CONSIDER THE SAME AFRESH. THE AO IS ALSO DIRECTED TO C ONSIDER THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF SH AM PROGETTI S.P.A. VS. ACIT, 132 ITR 70 , WHEREIN IT IS HELD THAT INCOME FROM INTEREST ON SUCH BANK DEPOSIT S COULD BE TREATED AS BUSINESS INCOME FOR THE PURPOSE OF SET OFF OF ITS CARRIED FORWARD BUSINESS LOSS ES OF EARLIER YEARS. I ORDER ACCORDINGLY. ITA NO.435/2010 5 13 . THE NEXT ISSUE IS AGAINST CHARGING OF INTEREST, WHICH IS CONSEQUENTIAL IN NATURE. THE AO IS DIRECTED TO ALLOW THE CONSEQUENTIAL RELIEF TO THE ASSESSEE. 14 . IN THE RESULT, APPEAL OF THE A SSESSEE IS ALLOWED IN PART FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF DEC. 2012. 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 19 / 1 2 / 2012 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY OR DER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI