DCIT 1(2), MUMBAI V. MASUMI OVERSEAS P. LTD, MUMBAI

ITA 4484/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0340 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN LD
• Assessee Lawyers: VYOMA RAO LD
• Keywords: Unexplained investment
• Section: 143(3)

Judgement Text

ITA NO.4484/M/2013 MASUMI OVERSEAS PRIVATE LIMITED ASSESSMENT YEAR-2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.4484/MUM/2013 ( / ASSESSMENT YEAR: 2008-09) DEPUTY COMMISSIONER OF INCOME TAX 1(2) ROOM NO.530, 5 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020 / VS. MASUMI OVERSEAS PRIVATE LIMITED OFFICE NO.8 3 RD FLOOR BANU MANSION NADIRSHAH SUKHIA STREET FORT MUMBAI ! ./ ./PAN/GIR NO. AAECM-4835-C ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : VYOMA RAO, LD. AR RE VENUE BY : T.A.KHAN , LD. DR / DATE OF HEARING : 01/08/2017 / DATE OF PRONOUNCEMENT : 04/08/2017 ITA NO.4484/M/2013 MASUMI OVERSEAS PRIVATE LIMITED ASSESSMENT YEAR-2008-09 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2008- 09 CONTESTS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2 [CIT(A)], MUMBAI DATED 20/03/2013 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE. 2. THE FACTS LEADING TO THE DISPUTE ARE THAT THE AS SESSEE, BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF BULLION TRADING & EXPORT OF JEWEL / ORNAMENTS, WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 29/12/2010 AT RS.6,26,47,170/- AS AGAINST RETURNED INCOME OF RS.3,95,85,140/- FILED BY THE ASSESSEE ON 30/09/200 8. 2.1 THE ASSESSEE, INTER-ALIA, SUFFERED ADDITION OF RS.57.68 LACS ON ACCOUNT OF LOAN PROCESSING CHARGES & ANOTHER ADDITION OF RS.53.50 LACS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN MUTUAL FUNDS. FURTHER, THE NET LOSS OF RS.19.75 LACS FROM SHARES / DERIVATIVES WAS TREATED UNDER THE HEAD CAPITAL GAINS WHICH WAS NOT ALLOWED TO BE CARRIED FORWARD TO BE SET OFF IN SUBSEQUENT YEARS . ALL THE THREE ISSUES ARE SUBJECT MATTER OF THIS APPEAL. 2.2 THE ASSESSEE OBTAINED BILL DISCOUNTING FACILITY FROM AXIS BANK AND PAID PROCESSING FEES OF RS.56.18 LACS TOWARDS THE S AME, WHICH IN THE OPINION OF LD. AO, WERE NOT INCURRED FOR BUSINESS P URPOSES AND HENCE NOT ALLOWABLE U/S 37. 2.3 FURTHER, AS PER AIR INFORMATION / CIB DATA RECEIVED BY LD. AO, IT WAS FOUND THAT THE ASSESSEE INVESTED A SUM OF RS.53 .50 LACS IN CERTAIN ITA NO.4484/M/2013 MASUMI OVERSEAS PRIVATE LIMITED ASSESSMENT YEAR-2008-09 3 MUTUAL FUNDS WHICH WERE NOT REFLECTED BY THE ASSESS EE IN HIS BOOKS OF ACCOUNTS. THE ASSESSEE CONTENDED THAT NO SUCH INVES TMENT WERE EVER MADE BY THE ASSESSEE AND CONSEQUENTLY LD. AO, TO CO NFIRM THE SAME, WROTE A LETTER TO RESPECTIVE MUTUAL FUNDS FOR CONFI RMATION OF THE TRANSACTIONS. SINCE, NO REPLY WAS RECEIVED FROM THE MUTUAL FUNDS AT THE TIME OF COMPLETION OF ASSESSMENT, THE SAME WAS TREA TED AS UNEXPLAINED INVESTMENT AND ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED ALL THE ISSUES SUCCESSFULLY BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 20/03/2 013 WHERE THE LD. CIT(A) OBSERVED THAT THE ASSESSEE PAID LOAN PROCESSING CHARGES OF RS.56.18 LACS TO AXIS BANK AGAINST CREDIT FACILITY OF 100 CRORES. SINCE, THE SAID CREDIT FACILITY WAS UTILIZED TOWARDS TRADI NG IN BULLION ETC, WHICH WAS ASSESSEES BUSINESS AND THEREFORE ALLOWABLE TO THE ASSESSEE U/S 37. SIMILARLY, ADDITION OF RS.53.50 LACS WAS DELETE D BY LD. CIT(A) AFTER OBSERVING THAT THE ASSESSEE HAD FILED AFFIDAVIT FOR THE CONTENTION THAT NO SUCH INVESTMENTS WERE EVER MADE BY THE ASSESSEE. RE GARDING CARRY FORWARD OF SHORT TERM CAPITAL LOSS, THE LD. CIT(A) CONCLUDED THAT SINCE LOSS FROM SHARES / DERIVATIVES WAS TREATED AS SHORT TERM CAPITAL LOSS , AS A LOGICAL CONSEQUENCE, THE SAME COULD BE CARRY F ORWARD FOR SET OFF IN SUBSEQUENT YEARS AS PER LAW. AGGRIEVED BY THE STAND OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE FINDING OF LD. AO WHEREAS THE LD. COUNSEL FOR ASSES SEE [AR] PLACED RELIANCE ON THE ORDER OF LD. CIT(A). ITA NO.4484/M/2013 MASUMI OVERSEAS PRIVATE LIMITED ASSESSMENT YEAR-2008-09 4 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS THE ALLOWABILITY OF LOAN PROCESSING FEES IS CONCERNED, LD. CIT(A) HAS CATEGORICALLY CONCLUDED T HAT THE CREDIT FACILITY FROM AXIS BANK HAS BEEN USED FOR THE BUSINESS OF TH E ASSESSEE AND HENCE, THE SAME IS CLEARLY ALLOWABLE TO THE ASSESSE E. SIMILARLY, SINCE LOSS FROM SHARES / DERIVATIVES HAS BEEN ASSESSED AS SHORT TERM CAPITAL LOSS, AS A LOGICAL CONSEQUENCE, THE ASSESSEE IS ENTITLED TO CARRY FORWARD THE SAME FOR SET OFF IN SUBSEQUENT YEARS AS PER LAW . THEREFORE, THESE TWO ISSUES REQUIRE NO INTERFERENCE ON OUR PART. 6. SO FAR AS ADDITION OF RS.53.50 LACS ON ACCOUNT O F UNEXPLAINED INVESTMENT IS CONCERNED, WE FIND THAT THE ASSESSEE HAS ALREAD Y FILED AN AFFIDAVIT IN SUPPORT OF THE CONTENTION THAT NO SUCH INVESTMENT WERE EVER MADE BY HIM. FURTHER, THE AUDITED ACCOUNTS OF THE A SSESSEE FOR IMPUGNED AY AS PLACED ON RECORD REFLECT NO SUCH INV ESTMENT. THE LD. AO HAD ALREADY WRITTEN TO THE RESPECTIVE MUTUAL FUN DS TO CONFIRM THE TRANSACTIONS BUT NO REPLY WAS RECEIVED AGAINST THE SAME EVEN UP-TO THE TIME OF APPELLATE PROCEEDINGS. THEREFORE, WHILE IN PRINCIPAL AGREEING WITH THE STAND OF LD. CIT(A), WE REMIT THIS ISSUE BACK TO THE FILE OF LD. AO FOR LIMITED PURPOSE OF APPRECIATING THE ASSESSEES CONT ENTION IN THE LIGHT OF THE REPLY RECEIVED FROM THE MUTUAL FUNDS. ACCORDING LY, THIS GROUND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.4484/M/2013 MASUMI OVERSEAS PRIVATE LIMITED ASSESSMENT YEAR-2008-09 5 7. RESULTANTLY, THE REVENUES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH AUGUST, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.08.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI