DCIT 2(3), MUMBAI V. TATA INVESTMENT CORPORATION LTD, MUMBAI

ITA 4448/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49451 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 28-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BURZIS S TARAPORWALA
• Keywords: Business income; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI T.R.SOOD (A. M) ITA NO.4448/MUM/10(A.Y. 2006-07) THE DCIT 2(3), ROOM NO.555, AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (APPELLANT) VS. M/S. TATA INVESTMENT CORPORATION LTD., BOMBAY HOUSE, 24, HOMI MODY STREET, FORT, MUMBAI 400 001 PAN: AAACT 4120F (RESPONDENT) APPELLANT BY : SHRI PAVAN VED RESPONDENT BY : SHRI BURZIS S. TARAPORWALA ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE REVENUE AGAINST THE O RDER DATED 8.3.2010 OF CIT(A)-6, MUMBAI, RELATING TO AY 06-07.THE GROUNDS OF APPEAL OF THE REVENUE READ AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 14,33,000 /- BEING EXCESS DIVIDEND RECOVERED BY THE ASSESSEE DURING THE YEAR WHICH WAS NOT REFUNDED TO THE RIGHTFUL OWNERS. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASID E AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE ASSESSEE IS A NON-BANKING FINANCE COMPANY AS DEFINED BY THE RESERVE BANK OF INDIA, UNDER THE CATEGORY INVESTME NT COMPANY. IN THE COURSE OF ITS BUSINESS, THE ASSESSEE SOLD SHARES WH ICH IT HELD AS ITA NO.4448/MUM/10(A.Y. 2006-07) 2 INVESTMENTS. THE TRANSFER OF SHARES HAD TAKEN PLAC E IN THE EARLIER ASSESSMENT YEARS. THE TRANSFER OF NAMES OF THE TRA NSFEREE WAS NOT RECORDED IN THE REGISTER OF MEMBERS OF THE COMPANY WHOSE SHA RES WERE TRANSFERRED BY THE ASSESSEE. THEREFORE DIVIDEND DECLARED BY THE C OMPANIES ON THOSE SHARES WAS PAID TO THE ASSESSEE. THE ASSESSEE RECEIVED A SUM OF RS.14.33 LAKHS DURING THE PREVIOUS YEAR IN THIS REGARD. THE SAME WAS SHOWN AS PART OF SUNDRY CREDITORS UNDER THE HEADING EXCESS DIVIDEND RECEIVED REFUNDABLE IN THE BALANCE SHEET AS ON 31.3.2006. ACCORDING TO THE AO, SINCE THE EXCESS DIVIDEND RECOVERED HAS NOT BEEN REFUNDABLE DURING T HE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, TH E AMOUNT WAS TO BE TREATED AS INCOME OF THE ASSESSEE FOR THE YEAR. TH E AO IN COMING TO THE ABOVE CONCLUSION RELIED ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF M/S.CHOWRANGHEE SALES BUREAU LTD. VS. CIT 8 7 ITR 542 (SC). 3. BEFORE CIT(A), THE ASSESSEE SUBMITTED THAT THE D IVIDENDS WERE RECEIVED ON SHARES WHICH WERE ALREADY SOLD BY THE ASSESSEE A ND WERE NO LONGER SHOW AS INVESTMENT IN THE ACCOUNTS OF THE ASSESSEE. THE ASSESSEE THEREFORE SUBMITTED THAT THE SAID DIVIDEND RECEIVED BY IT DOE S NOT CONSTITUTE ITS INCOME AS THE ASSESSEE IS NEITHER THE ACTUAL NOR THE BENEF ICIAL OWNER OF THE SHARES ON WHICH THE DIVIDEND WAS RECEIVED. THE ASSESSEE P OINTED OUT THAT DIVIDEND SO RECEIVED IS SUBSEQUENTLY REFUNDED TO THE CORRECT OWNER OF THE SHARES ON BEING GIVEN PROOF OF OWNERSHIP. ALSO, IN THE EVENT THAT THE EXCESS DIVIDEND IS NOT CLAIMED BY THE CORRECT OWNER UPTO A PERIOD OF F IVE FROM THE END OF THE FINANCIAL YEAR IN WHICH THE DIVIDEND IS RECEIVED, T HE ASSESSEE CREDITS THE SAID UNCLAIMED DIVIDEND TO MISCELLANEOUS INCOME AND OFFE RS THE SAME TO TAX. THE ASSESSEE POINTED OUT THAT THE EXCESS DIVIDEND AS ON 31 MARCH 2006 WAS RS. 14.33 LAKHS, WHICH PERTAINED TO THE ASSESSMENT YEAR 2006-07 AND FOR PREVIOUS ASSESSMENT YEARS. THE ASSESSEE POINTED O UT THAT THE ACCOUNTING POLICY OF THE ASSESSEE HAS BEEN ACCEPTED BY THE RE VENUE IN ALL EARLIER YEARS ITA NO.4448/MUM/10(A.Y. 2006-07) 3 AND THIS ADDITION OF RS.14.33 LAKHS HAS BEEN MADE B Y THE REVENUE ONLY FOR THE FIRST TIME IN THE PRESENT ASSESSMENT YEAR. T HE ASSESSEE ALSO DISTINGUISHED THE DECISION OF THE HONBLE SUPREME C OURT IN THE CASE OF M/S. CHOWRINGHEE SALES BUREAU P. LTD. VS. COMMISSIONER O F INCOME TAX (87 ITR 542). THE ASSESSEE POINTED OUT THAT IN THE AFORESA ID CASE THE FACTS WERE THAT THE ASSESSEE, A PRIVATE COMPANY, WAS A DEALER IN F URNITURE, WHO ALSO ACTED AS AN AUCTIONEER. IN RESPECT OF THE SALES EFFECTED BY IT AS AN AUCTIONEER, THE APPELLANT REALIZED COMMISSION AND SALES TAX. THE AM OUNT OF SALES TAX REALIZED WAS CREDITED SEPARATELY IN ITS ACCOUNT BO OKS UNDER THE HEAD SALES TAX COLLECTION ACCOUNT. THE ASSESSEE DID NOT PAY T HE AMOUNT OF SALES TAX TO THE ACTUAL OWNER OF THE GOODS, NOR DID IT DEPOSIT T HE AMOUNT REALIZED BY IT AS SALES TAX IN THE STATE EXCHEQUER, BECAUSE IT TOOK T HE POSITION THAT THE STATUTORY PROVISION CREATING THAT LIABILITY UPON IT WAS NOT VALID. THE ASSESSEE ALSO DID NOT EVEN REFUND THE SALES TAX TO THE PERSO NS FROM WHOM IT HAD BEEN COLLECTED. IN THE CASH MEMOS ISSUED BY THE ASSESSE E TO THE PURCHASERS IN THE AUCTION SALES, THE ASSESSEE WAS SHOWN AS THE SE LLER. ON THE ABOVE FACTS, THE HONBLE SUPREME COURT HELD THAT: A) AN AUCTION SALE WOULD HAVE TO BE CONSIDERED TO BE A SALE FOR THE PURPOSE OF THE SALE OF GOODS ACT. B) AN AUCTIONEER, WHO CARRIES ON THE BUSINESS OF SELLI NG GOODS AND WHO HAS IN THE CUSTOMARY COURSE OF BUSINESS AUTHORI TY TO SELL GOODS BELONGING TO THE PRINCIPAL, SHOULD BE INCLUDE D WITHIN THE DEFINITION OF THE WORD DEALER. C) AS THE AMOUNT OF SALES TAX WAS RECEIVED BY THE APPE LLANT IN ITS CHARACTER AS AN AUCTIONEER, THE AMOUNT, IN THE VIEW OF THE SUPREME COURT, SHOULD BE HELD TO FORM PART OF ITS T RADING OR BUSINESS RECEIPT. D) IT IS THE TRUE NATURE AND QUALITY OF THE RECEIPT AN D NOT THE HEAD UNDER WHICH IT IS ENTERED IN THE ACCOUNT BOOKS AS W OULD PROVE DECISIVE. THE ASSESSEE POINTED OUT THAT IN ITS CASE, IT HAS RECEIVED DIVIDEND ON SHARES WHICH ARE NO LONGER PART OF ITS INVESTMENT PORTFOL IO. THE DIVIDENDS RECEIVED BY THE ASSESSEE DO NOT THEREFORE CONSTITUTE PART OF ITS INCOME AND, THEREFORE, ITA NO.4448/MUM/10(A.Y. 2006-07) 4 THE SAID DIVIDENDS CONSTITUTE A LIABILITY IN THE HA NDS OF THE ASSESSEE, AS THE SAME ARE HELD BY THE ASSESSEE FOR AND ON BEHALF OF THE RIGHTFUL CLAIMANTS OF THE DIVIDEND. IN ANY EVENT, IF THE DIVIDEND IS NOT CLAIMED WITHIN A PERIOD OF FIVE YEARS FROM THE END OF THE YEAR IN WHICH IT IS RECEIVED, THE APPELLANT ITSELF HAS OFFERED THE SAME AS INCOME AND PAID TAX ON THE SAID DIVIDENDS. THE POSITION HAS BEEN CONSISTENTLY FOLLOWED BY THE APPE LLANT AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE IN ALL PAST ASSESSMENT S. THE ASSESSEE FURTHER RELIED ON THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V LEADER VALVES LTD., (2 95 ITR 273) WHERE THE COURT HELD THAT KEEPING IN VIEW THE PRINCIPLES OF C ONSISTENCY, THE REVENUE COULD NOT BE PERMITTED TO RAISE AN ISSUE IN ISOLATI ON ONLY FOR ONE YEAR IN THE CASE OF ONE ASSESSEE WHILE ACCEPTING THE FINDINGS O N THE SAME ISSUE IN THE CASE OF OTHER ASSESSEES AND FOR OTHER YEARS IN THE CASE OF THE ASSESSEE. 4. THE CIT(A) ACCEPTED THE STAND OF THE ASSESSEE AN D DELETED THE ADDITION MADE BY THE AO, OBSERVING AS FOLLOWS: 7.3 I HAVE CONSIDERED THE FACTS OF THE ISSUE AS W ELL AS SUBMISSIONS FILED BY THE AR AND FIND MERIT IN THEM. IT IS AN ADMITTED FACT THAT THE DIVIDEND HAS BEEN RECEIVED IN RESPECT OF SHARES WHICH ARE NO LONGER PART OF APPELLANTS INVESTMENT PORTFOLIO. T HUS, APPELLANT IS ACTUALLY HOLDING THE SAID DIVIDEND AMOUNT IN TRUST OF THE RIGHTFUL OWNERS AND THE SAME ACTUALLY REPRESENTS A LIABILITY OF THE APPELLANT. THERE IS ALSO MERIT IN THE SUBMISSIONS OF THE AR TH AT IN ANY CASE, AFTER AN EXPIRY OF A PERIOD OF FIVE YEARS, THE SAID AMOUNT IS VOLUNTARILY OFFERED FOR TAXATION, IF NOT CLAIMED BY THE RIGHTFU L OWNER. IT IS ALSO NOTED THAT THIS POLICY HAS BEEN CONSISTENTLY BEEN F OLLOWED BY THE APPELLANT AND ACCEPTED BY THE DEPARTMENT IN THE PAS T AND THAT EVEN ON THE PRINCIPLE OF CONSISTENCY, THIS ADDITION IS N OT WARRANTED. THIS GROUND IS THEREFORE ALLOWED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. WE HAVE HEARD THE RIVAL SUBMISSIONS. ITA NO.4448/MUM/10(A.Y. 2006-07) 5 THE LEARNED D.R. SUBMITTED THAT THE ASSESSEE DID NO T PRODUCE ANY EVIDENCE BEFORE THE AO TO SHOW THAT THE SUM OF RS.14.33 LAKH S WAS IN FACT DIVIDEND ON SHARES WHICH THE ASSESSEE HAD ALREADY TRANSFERRE D. HE ALSO SUBMITTED THAT THE CLAIM OF THE ASSESSEE THAT THE SHARES ON W HICH THE DIVIDEND IN QUESTION WERE RECEIVED BY THE ASSESSEE, WERE HELD A S INVESTMENT HAS NOT BEEN EXAMINED. ACCORDING TO HIM, THE CLAIM OF THE ASSESSEE WITHOUT PROOF OF THE ABOVE BASIC FACTS SHOULD NOT HAVE BEEN ACCEPTED BY THE CIT(A). IN THIS REGARD, IT WAS ALSO SUBMITTED BY THE LEARNED D.R. T HAT EVEN IF AO HAD NOT RAISED DISPUTE ON THE ABOVE ASPECTS, IT WAS THE DUT Y OF THE CIT(A) TO HAVE EXAMINED THE SAME. IT WAS FURTHER SUBMITTED BY HIM THAT THE PRINCIPLE OF CONSISTENCY WHICH WAS ONE OF THE BASIS ON WHICH THE CIT(A) DELETED THE ADDITION MADE BY THE AO, WOULD NOT BE APPLICABLE B ECAUSE THE PRINCIPLE OF RESJUDICATA IS NOT APPLICABLE IN INCOME TAX PROCEED INGS. IT WAS FURTHER SUBMITTED THAT DIVIDEND RECEIVED BY THE ASSESSEE WA S PART OF TRADING RECEIPTS THOUGH ASSESSED UNDER THE HEAD INCOME FROM OTHER S OURCES U/S.56 OF THE INCOME TAX ACT, 1961 (THE ACT). HE PLACED STRONG R ELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CHOWRANGHE E SALES BUREAU LTD. (SUPRA). 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE STAND OF THE ASSESSEE AS WAS PUT FORTH BEFORE CIT(A) AND FURTHER CLARIFIED THAT THE SHARES IN RESPECT OF WHICH DIVIDEND WERE RECEIVED BY THE A SSESSEE FORMED PART OF THE INVESTMENT PORTFOLIO OF THE ASSESSEE AND NOT STOCK- IN-TRADE OF THE ASSESSEE. FURTHER RELIANCE WAS PLACED ON THE DECISION OF THE ITAT MUMBAI IN THE CASE OF SSKI INVESTOR SERVICES (P) LTD. VS. DCIT (2009) VOL. 34 SOT 412(MUM) WHEREIN ON IDENTICAL FACTS, THE TRIBUNAL HELD THAT U/S.115-O OF THE ACT, TAX IS LEVIED ON DISTRIBUTED PROFITS OF DOMESTIC COMPANIES AND THEREFORE ALREADY SUFFERS TAX IN THE HANDS OF THE COMPANY PAYING DIVI DEND. THE RECEIPT OF DIVIDEND BY AN ASSESSEE WHO HAS ALREADY SOLD THE SH ARES CANNOT BE TERMED ITA NO.4448/MUM/10(A.Y. 2006-07) 6 AS DIVIDEND IN HIS HANDS BECAUSE HE IS NO LONGER TH E OWNER OF SHARES. THE CHARACTER OF THE INCOME WOULD CHANGE IN THE HANDS O F SUCH ASSESSEE BUT THE FACT WOULD REMAIN THAT THE DIVIDEND HAS ALREADY SUF FERED TAX AND THEREFORE CANNOT BE AGAIN TAXED IN THE HANDS OF THE ASSESSEE WHO SOLD THE SHARES BUT STILL RECEIVES DIVIDEND ON SHARES TRANSFERRED BY HI M. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUTSET WE HAVE TO REJECT THE ARGUMENT OF THE LEARNED D.R. THAT THE CH ARACTER OF THE SUM IN DISPUTE HAS NOT BEEN ESTABLISHED BY THE ASSESSEE TO BE A DIVIDEND PAID ON SHARES WHICH IT HAD TRANSFERRED AND THAT THE DIVIDE NDS HAVE TO BE REFUNDED TO THE RIGHTFUL OWNERS. IN THIS REGARD, NEITHER TH E AO NOR THE CIT(A) DISPUTED FACTS REGARDING THE CLAIM OF THE ASSESSEE IN THIS R EGARD. IT IS NOT OPEN TO THE REVENUE FOR THE FIRST TIME IN AN APPEAL BEFORE THE TRIBUNAL TO RAISE SUCH AN ISSUE. IT WAS SUBMITTED BY THE LEARNED D.R. THAT T HE FACT THAT THE A.O MADE THE IMPUGNED ADDITION BY ITSELF SHOWS THAT HE HAD D ISPUTED THE CLAIM OF THE ASSESSEE. IN THIS REGARD WE NOTICE THAT THE A.O NE VER CALLED UPON THE ASSESSEE TO FURNISH DETAILS IN THIS REGARD. EVEN B EFORE CIT(A) THE A.O HAS NOT RAISED ANY ISSUES ON THIS ASPECT. THE CASE OF THE A.O BEFORE TRIBUNAL PROCEEDS ON THE FOOTING THAT IT IS ONLY WHEN REFUND OF DIVIDEND IS MADE TO THE RIGHTFUL OWNER OF THE DIVIDEND, CAN THE ASSESSEE SA Y THAT THE RECEIPT IS NOT ITS INCOME. WE THEREFORE DO NOT FIND ANY MERIT IN THE ARGUMENT RAISED BY THE LEARNED D.R. IN THIS REGARD BEFORE US AND WE PROCEE D THE EXAMINE THE ISSUE ON THE PREMISE THAT THE CLAIM OF THE ASSESSEE THAT THE RECEIPTS IN QUESTION WERE DIVIDEND WHICH ARE LAWFULLY PAYABLE TO THE TRA NSFEREES OF SHARES BY THE ASSESSEE IS CORRECT. 8. THE LAW IS WELL SETTLED THAT ALL RECEIPTS ARE NO T INCOME. ONLY THOSE RECEIPTS WHICH ARE IN THE CHARACTER OF INCOME CAN B E ASSESSED TO TAX. THE DEFINITION OF INCOME AS GIVEN IN THE ACT, U/S.2( 24) IS AN INCLUSIVE DEFINITION. ANYTHING WHICH CAN PROPERLY BE DESCRIBED AS INCOME, IS TAXABLE UNDER THE ITA NO.4448/MUM/10(A.Y. 2006-07) 7 ACT UNLESS EXPRESSLY EXEMPTED. THE EXPRESSION INC OME HAS TO BE UNDERSTOOD IN ITS NATURAL MEANING. ITS NATURAL ME ANING EMBRACES ANY PROFIT OR GAIN, WHICH IS ACTUALLY RECEIVED. THE IDE A BEHIND PROVIDING AN INCLUSIVE DEFINITION IN SECTION 2(24) IS NOT TO LIM IT ITS MEANING BUT TO WIDEN ITS NET. THE CHARGING SECTION VIZ., SECTION-4 OF TH E ACT, REFERS TO THE CHARGE OF INCOME TAX BEING ON THE TOTAL INCOME OF THE PREVIOU S YEAR OF EVERY PERSON. SECTION 5 DEFINES SCOPE OF TOTAL INCOME AND IT TALK S OF INCOME FROM WHATEVER SOURCE DERIVED WHICH IS RECEIVED OR DEEMED TO BE RE CEIVED IN INDIA OR WHICH ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE I N INDIA. THE INCOME BEARS ITS QUALITY AS INCOME ONLY IF IT IS RECEIVED BY THE ASSESSEE, OR IT HAS ACCRUED OR HAS ARISEN TO THE ASSESSEE, OR AT LEAST IS FICTI ONALLY DEEMED TO BE RECEIVED BY OR IS DEEMED TO HAVE ACCRUED OR ARISEN TO HIM. IF NOT IN FACT RECEIVED, THE ASSESSEE SHOULD AT LEAST BE ENTITLED TO RECEIVE IT. TO CALL SOMETHING INCOME, WITHOUT THERE BEING AN ACTUAL RECEIPT, THERE MUST A TLEAST BE A DEBT OWNED BY A THIRD PARTY TO THE ASSESSEE. IT WOULD BE EQUALLY TRUE TO SAY THAT EVEN WHEN A PERSON RECEIVES SOMETHING, THE SAME WILL ASSUME T HE CHARACTER OF INCOME IN THE HANDS OF THE RECIPIENT ONLY WHEN HE HAS A LE GAL RIGHT TO THE SUM RECEIVED. OTHERWISE, THE RECIPIENT WOULD ONLY BE H OLDING THE MONEY SO RECEIVED IN TRUST FOR THE LAWFUL OWNER OF THE MONEY . THE ASSESSEE HAS RECEIVED DIVIDEND ON SHARES WHICH IT HAD ALREADY TR ANSFERRED AND THE RIGHT TO RECEIVE DIVIDEND VESTS WITH THE TRANSFEREE. NEVERT HELESS, THE ASSESSEE RECEIVED THE SUMS IN QUESTION BECAUSE IT WAS SHOWN AS THE REGISTERED OWNER OF THE SHARES IN THE REGISTER OF MEMBERS OF THE COM PANY. SEC.72 OF THE INDIAN CONTRACT ACT, 1872 LAYS DOWN A PERSON TO WH OM MONEY HAS BEEN PAID, OR ANYTHING DELIVERED, BY MISTAKE OR UNDER CO ERCION, MUST REPAY OR RETURN IT. IT IS THUS CLEAR THAT IT IS ONLY WHEN T HERE IS A RIGHT TO RECEIVE INCOME, INCOME CAN BE SAID TO HAVE ACCRUED. WITHOU T LEGALLY ENFORCEABLE RIGHT THERE CAN BE NO ACCRUAL OF INCOME. WE ARE OF THE VIEW THAT THE ASSESSEE HAS NO LAWFUL RIGHT TO THE RECEIPT IN QUESTION NOR HAS IT CLAIMED SUCH A RIGHT. ITA NO.4448/MUM/10(A.Y. 2006-07) 8 IN SUCH CIRCUMSTANCES, THE RECEIPT WILL NOT ASSUME THE CHARACTER OF INCOME IN THE HANDS OF THE ASSESSEE. ON THIS GROUND ITSEL F, THE APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. 9. WE ALSO FIND THAT THE ASSESSEE HAS BEEN FOLLOWIN G CONSISTENTLY THE METHOD OF ACCOUNTING WHEREBY THE DIVIDENDS RECEIVED BY THE ASSESSEE WHICH ARE TO BE REFUNDED TO THE RIGHTFUL OWNER, IF THE SA ME IS NOT CLAIMED FOR A PERIOD OF 5 YEARS FROM THE DATE OF RECEIPT OF THE D IVIDEND BY THE ASSESSEE, IS TREATED AS INCOME AND OFFERED TO TAX BY THE ASSESSE E. THIS METHOD OF ACCOUNTING HAS BEEN ACCEPTED BY THE REVENUE. IN SU CH CIRCUMSTANCES WE FAILED TO SEE AS TO HOW THE REVENUE WILL BE PREJUDI CED. IN OUR VIEW THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE IS VER Y REASONABLE. IN OUR VIEW THE CIT(A) WAS, THEREFORE, JUSTIFIED IN DELETI NG THE ADDITION MADE BY THE AO. 10. WITH REGARD TO THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CHOWRANGHEE SALES BUREAU LTD. (SUPRA) WE ARE OF THE VIEW THAT THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE. IN THE SAID CASE THE ASSESSEE COLLECTED SALES TAX FROM THE CUSTOMERS AND TOOK A STAND THAT THE SAME IS NOT PAYABLE TO THE STATE EXCHEQUER. IN THE PRESENT CASE THE ASSESSEE HAS ALWAYS MAINTAINED THAT THE DIVIDEND RE CEIVED BY IT WHICH WERE LAWFULLY PAYABLE TO THE TRANSFEREE OF SHARES WERE N OT ITS MONEY. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THE DECISION IN THE CASE OF CHOWRANGHEE SALES BUREAU LTD. (SUPRA) WILL NOT BE A PPLICABLE. FURTHER THE DIVIDENDS WERE RECEIVED ON SHARES WHICH WERE HELD A S INVESTMENTS. AT THE TIME OF RECEIPT OF THE DIVIDENDS, THE SHARES DID NO T FORM PART OF THE INVESTMENT PORTFOLIO OF THE ASSESSEE AND, THEREFORE , IT CANNOT BE SAID THAT IT WAS RECEIVED BY THE ASSESSEE IN ITS CHARACTER AS AN INVESTOR. WE, THEREFORE, ITA NO.4448/MUM/10(A.Y. 2006-07) 9 FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). CONS EQUENTLY, THE APPEAL OF THE REVENUE IS DISMISSED. 11. IN THE RESULT, THE APPEAL BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 15 TH DAY OF JULY, 2011. SD/- SD/- (T.R.SOOD ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 15TH JULY.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RH BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.4448/MUM/10(A.Y. 2006-07) 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 28/6/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 29/6/11 SR.PS/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/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER