METALLICA INDUSTRIES LTD, NEW DELHI V. ITO 9(2)(3), MUMBAI

ITA 4486/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55052 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-08-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 01-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MOURYA
• Keywords: Business income; Business expenditure; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY (AM) AND SHRI VIJAY PAL RAO (JM) ITA NO. 4486 & 4487/M/2010 ASSESSMENT YEARS: 2000-01 & 2001-02 M/S METTALLICA INDUSTRIES LTD. THE INCOME TAX OFF ICER 9(2)(3), 72, JANPATH, AAYAKAR BHAVAN, M.K. ROAD, NEW DELHI 110001. MUMBAI 400 020. PAN: AAACM 9033 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJIT SHAH REVENUE BY : SHRI P.C. MOURYA DATE OF HEARING : 24-08-2011 DATE OF PRONOUNCEMENT : 30-08-2011 O R D E R PER VIJAY PAL RAO (JM): THESE APPEALS ARE BY THE ASSESSEE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT (A) BOTH DATED 03-03-2010 FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02. 2. THE ASSESSEE HAS RAISED COMMON GROUND IN THESE A PPEALS. FOR THE SAKE OF CONVENIENCE, THE EFFECTIVE GROUNDS RAISED FOR TH E ASSESSMENT YEAR 2000-01 ARE REPRODUCED AS UNDER: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN HOLDING ITA 4486 & 4487 / M/ 2010 M/S METALLICA INDUSTRIES LTD 2 (I) THAT LEGAL EXPENSES AMOUNTING TO RS. 4,27,011/- ARE NOT ALLOWABLE AS DEDUCTION ON THE GROUND THAT THERE ARE NO MATERIAL IN SUPPORT OF SUCH CLAIM. (II) ALTERNATIVELY NOT DIRECTING THE ASSESSING OFFICER T O ALLOW THE SAME AFTER VERIFYING THE APPELLANTS CLAIM AS REGARDS THE SAME HAVING BEEN INCURRED ON LITIGATION IN RESPECT OF THE ASSETS HELD. 3. THE ASSESSEE OWNED VARIOUS PROPERTIES WHICH WERE EARLIER USED FOR THE PURPOSE OF BUSINESS BUT THE SAME WERE LET OUT SINCE THERE WAS CLOSURE OF THE BUSINESS W.E.F., 28.02.1998. THE ASSESSEE RETURNED THE RENTAL INCOME AS BUSINESS INCOME. THE ASSESSING OFFICER ASSESSED TH E RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AND OTHER INCOMES COMPRISING DI VIDEND INCOME AND INTEREST INCOME AS INCOME FROM OTHER SOURCES. FURT HER THE AO DID NOT ALLOW ANY EXPENDITURE CLAIMED BY THE ASSESSEE AS BUSINESS EXPENDITURE. THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY THE LD. C IT (A) BUT ON SECOND APPEAL THIS TRIBUNAL VIDE CONSOLIDATED ORDER DATED 13.12.2 007 REMANDED THE MATTER TO THE RECORD OF THE ASSESSING OFFICER BY FOLLOWING TH E EARLIER ORDER DATED 30.10.2007 FOR THE ASSESSMENT YEAR 2001-02 WHEREIN THE SIMILAR ISSUE WAS CONSIDERED AND HELD THAT ADMINISTRATIVE EXPENSES IN CURRED BY THE ASSESSEE IN RESPECT OF HOLDING ON ASSETS WERE ALLOWABLE AS DEDU CTION UNDER INCOME FROM OTHER SOURCES ON THE BASIS OF DECISION OF HONBLE B OMBAY HIGH COURT CASE OF HINDUSTAN CHEMICAL WORKS LTD. VS. CIT, 124 ITR 561. ACCORDINGLY, THE AO WAS DIRECTED TO ALLOW THE ADMINISTRATIVE EXPENDITURE UN DER THE HEAD INCOME FROM OTHER SOURCES FOR THE ASSESSMENT YEAR 2001-02. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER IN GIVIN G THE AFFECT TO THE ORDER OF THIS TRIBUNAL ASKED THE ASSESSEE TO FURNISH THE DET AILS OF ADMINISTRATIVE EXPENDITURE AND TO FILE THE PROOF OF THE SAME. THE ASSESSEE FURNISHED THE DETAILS OF THE EXPENSES INCLUDING THE EXPENSES IN T HE NATURE OF LEGAL AND PROFESSIONAL CHARGES. THE ASSESSING OFFICER INTER ALIA DISALLOWED THE LEGAL AND ITA 4486 & 4487 / M/ 2010 M/S METALLICA INDUSTRIES LTD 3 PROFESSIONAL CHARGES ON THE GROUND THAT THE ASSESSE E HAS NOT BEEN ABLE TO SUBSTANTIATE THEM BY ANY PROOF. ON APPEAL THE LD. CIT (A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPE CT OF LEGAL AND PROFESSIONAL CHARGES FOR WANT OF MATERIAL IN SUPPORT OF THE CLAI M. 4. THE LEARNED AR OF THE ASSESSEE FILED A LETTER AL ONG WITH THE FEE BILL OF NEETA V. PARIKH, ADVOCATE, IN SUPPORT OF THE CLAIM OF THE LEGAL EXPENSES AND SUBMITTED THAT SINCE THE ASSESSEE COMPANY BECAME SI CK WAY BACK 1994-95 ON ACCOUNT OF LABOUR TROUBLE AND VARIOUS OTHER REASONS ATTACHED THERE TO. THEREFORE, THE ASSESSEE WAS NOT ABLE TO TRACE OUT T HE RELEVANT PAPERS AND BILLS IN SUPPORT OF THE CLAIM OF THE LEGAL EXPENSES. FUR THER, SINCE THE ASSESSEE COMPANY TRANSFERRED ITS RECORDS INCLUDING THE BOOKS OF ACCOUNT TO NEW DELHI WHERE SOME OF THE DIRECTORS HAVE BEEN STAYING, THE RECORDS WERE NOT READILY AVAILABLE AND TRACEABLE AT MUMBAI. HE HAS FURTHER SUBMITTED THAT DUE TO UNAVOIDABLE CIRCUMSTANCES THE ASSESSEE COULD NOT PR ODUCE THE RELEVANT MATERIAL EVIDENCE BEFORE THE LOWER AUTHORITIES AND URGED THAT THE ADDITIONAL EVIDENCE MAY BE ADMITTED IN SUPPORT OF THE CLAIM OF THE ASSESSEE. ON THE OTHER HAND THE LEARNED DR HAS VEHEMENTLY OPPOSED TH E APPLICATION OF THE ASSESSEE FOR ADMISSION OF ADDITIONAL EVIDENCE AND S UBMITTED THAT DESPITE THE SECOND ROUND OF LITIGATION THE ASSESSEE COULD NOT P RODUCE THE RELEVANT MATERIAL AND EVIDENCE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT (A). THEREFORE, NO FURTHER OPPORTUNITY COULD BE GIVEN TO THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ACC ORDINGLY PERUSED THE MATERIAL ON RECORD. NO DOUBT THAT THE ASSESSEE HAS ALREADY AVAILED SUFFICIENT OPPORTUNITIES TO PRODUCE THE RELEVANT EVIDENCE IN S UPPORT OF THE CLAIM. HOWEVER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE BECAME SICK AND CLOSED ITS BUSINESS WAY BACK IN THE YEAR 1994-95 AND ITA 4486 & 4487 / M/ 2010 M/S METALLICA INDUSTRIES LTD 4 THEREAFTER SHIFTED ITS OFFICE FROM MUMBAI TO NEW DE LHI, THE REASON EXPLAINED BY THE ASSESSEE FOR NON-PRODUCTION OF RELEVANT EVIDENC E, IN OUR VIEW DESERVES TO BE CONSIDERED LENIENTLY. ACCORDINGLY IN THE INTERE ST OF JUSTICE WE GRANT ONE MORE OPPORTUNITY TO THE ASSESSEE TO PROVE ITS CLAIM BEFORE THE ASSESSING OFFICER. HENCE, THE ISSUE IS SET ASIDE TO THE RECO RD OF THE ASSESSING OFFICER TO EXAMINE AND VERIFY THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND THEN DECIDE THE ISSUE AS PER LAW. 6. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE AL LOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2011. SD/- SD/- (J. SUDHAKAR REDDY) (VIJAY PAL RA O) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE : 30-08-2011 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR B BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI