ITO 4(1)(2), MUMBAI V. IKAB SECURITIES & INVESTMENTS LTD, MUMBAI

ITA 4691/MUM/2009

• Counselvise Citation: 469119914 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 19-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 10-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P ARTH SARATHI NAIK
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Business income; Tax effect
• Section: 11

Judgement Text

ITA NO.4691 OF 2009 IKAB SECURITIES & INVESTMENTS LTD MUMBAI PAGE 1 O F 5 IN THE INCOME TAX APPELLATE APPELLATE APPELLATE APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI RAJENDRA SINGH , ACCOUNTANT MEMBER & SHRI VIVEK VARMA, JUDICIAL MEMBER I.T.A.NO. 4691/MUM/2009 ASSESSMENT YEAR : 2003-04 INCOME TAX OFFICER 4(1)2 6TH FLOOR, R.NO.636 AAYAKAR BHAVAN, MK ROAD MUMBAI VS. IKAB SECURITIES & INVESTMENTS LTD, RAHA BAHADUR COMPOUND BLDG NO.5, 2ND FLOOR, 43 TAMARIND LANE, FORT MUMBAI 400023 PAN NO: AAAC 1900 7N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARTHSARATHI NAIK, DR RESPONDENT BY : SHRI PRAKASH K. JOTWANI. DATE OF HEARING:19-04-2012. DATE OF PRONOUNCEMENT: 23-05-2012. O R D E R PER VIVEK VARMA, JM: THE APPEAL FILED BY THE DEPARTMENT, ARISES FROM THE ORDER OF CIT(A) IV, MUMBAI, DATED 12/05/2009. 2. AT THE TIME OF HEARING THE AR OF THE ASSESSEE CO MPANY MADE A PRELIMINARY OBJECTION WITH REGARD TO THE MAINTAINAB ILITY OF THE APPEAL FILED BY THE DEPARTMENT WITH REGARD TO THE TAX EFFE CT BEING LESS THAN RS. 3,00,000 AS PER THE INSTRUCTION NO. 3/2011 (F.N O.279/MISC. 142/2007-ITJ) DATED 9-2-2011. ACCORDING TO THE AR T HE TOTAL INCOME ASSESSED BY AO IS RS. 73,180/-. THIS IS AFTER THE A DJUSTMENT OF BUSINESS INCOME TAKEN AT LOSS OF RS. 77,398/- AND P OSITIVE INCOME FROM ITA NO.4691 OF 2009 IKAB SECURITIES & INVESTMENTS LTD MUMBAI PAGE 2 O F 5 INCOME FROM OTHER SOURCES (DIVIDEND) AT RS. 1,50, 574/-. THE AR THEN SUBMITTED THAT SINCE TAX EFFECT IS LESS THAN THE PR ESCRIBED LIMIT, THE APPEAL IS NOT MAINTAINABLE. THE DR REPLYING ON THIS PRELIMINARY OBJECTION SUBMITTED THAT IT IS NOT MERELY A QUESTIO N OF MONETARY LIMIT, BUT IT IS AN ISSUE, WHEREIN, IN THE ABOVE INSTRUCTI ONS, IT WAS CLARIFIED THAT THE NOTIONAL TAX HAS TO BE TAKEN INTO ACCOUNT ON DISPUTED ADDITIONS. HE PLEADED THAT NOTIONAL TAX ON THE DISP UTED AMOUNT OF DELETED AMOUNT, I.E. RS. 14,15,326 [WHICH COMPRISES OF ADDITION MADE BY THE AO ON ACCOUNT OF EXPENDITURE ATTRIBUTABLE TO SPECULATION BUSINESS AT RS. 16,89,402 AND REDUCED TO RS. 2,74,0 76 BY THE C1T(A)J, HAS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSES OF EXAMINING THE MAINTAINABILITY OF THE APPEAL ON MONETARY LIMITS. 3. IN THE REJOINDER, THE AR POINTED OUT THAT AS PER THE ASSESSMENT ORDER IT CAN BE SEEN THAT THE RETURN WAS FILED DECL ARING NIL INCOME AND THE INSTRUCTIONS READS RETURNED LOSS, BUT REDUCED OR ASSESSED AS INCOME. SO THE AR PLEADED THAT IN A CASE WHERE INC OME RETURNED IS NIL, THE INSTRUCTIONS DATED 9-2-2011 WHICH CLARIFY THE INSTRUCTIONS NO. 5/2008 DATED 15/05/2008 SHALL NOT BE APPLICABLE AND ONLY THE EARLIER INSTRUCTIONS WOULD BE APPLICABLE. THE AR PLACED COP Y OF THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CON TINENTAL CONSTRUCTIONS LTD., REPORTED IN 336 1TR 394 WHEREIN THE ISSUE WAS DEALT WITH, WITH REGARD TO MONETARY LIMIT. 4. WE HAVE GONE THROUGH THE JUDGMENT CITED AND ALS O THE INSTRUCTION WITH REFERENCE TO CIRCULAR NO. 5/2008, DATED 15/05/2008. ITA NO.4691 OF 2009 IKAB SECURITIES & INVESTMENTS LTD MUMBAI PAGE 3 O F 5 WE FIND THAT THE ISSUE OF NOTIONAL TAX HAS BEEN INS ERTED IN CIRCULAR NO. 5/2008, DATED 15/05/2008 AND ALSO IN INSTRUCTION NO . 3/2011 DATED 9.2.2011. READING THE SAID INSTRUCTIONS, WE ARE FAC ED WITH THE FOLLOWING SITUATIONS: 1) WHAT SHOULD BE THE EXACT MEANING OF MONETARY LI MIT FOR FILING OF APPEALS; 2) WHETHER THE SAID INSTRUCTION IS APPLICABLE IN T HE INSTANT CASE; THE IDEA OF SETTING UP MONETARY LIMIT OF FILING OF APPEAL BY THE DEPARTMENT BEFORE APPELLATE FORA WAS TO CUT AND TO REDUCE FURTHER LITIGATION IN THE APPELLATE FOR A WHERE THE APPEAL IS SOUGHT TO BE FILED. THE VARIOUS INSTRUCTIONS WERE BROUGHT ABOUT ON THIS ISSUE BY THE BOARD, VIDE INSTRUCTIONS NO. 1979 DATED 27-3-2000, NO. 1985 DATED 29- 6-2000, NO. 6 OF 2003 DATED 17-7-2003, NO. 19 OF 20 03 DATED 23-12- 2003, NO. 5/2004 DATED 27-5-2004, NO. 2/2005 DATED 24-10-2005 AND NO.5/2007 DATED 16-7-2007, WHERE IN THE CBDT (BOARD ) SET UP THE MONETARY LIMIT FOR DISCOURAGING SMALL AND UNFEASIBL E APPEALS BEFORE THE VARIOUS FORA, BUT THAT HAS BEEN CHANGED BECAUSE THE OTHER SIDE HAD STARTED TAKING ADVANTAGE IN CONNECTED CASES AND SUB SEQUENT YEARS CASES THAT THE DEPARTMENT HAS ACCEPTED THE FINDINGS OF THE FIRST APPELLATE AUTHORITY, THEREFORE, THE FINDINGS OF THE CIT(A) HAVE BECOME FINAL ON THE PARTICULAR ISSUE IN DISPUTE. TO CURB T HIS MISADVENTURE, THE BOARD HAS BEEN ISSUING INSTRUCTIONS IN INTERVALS SO THAT ACTUAL DISPUTES GETTING BIGGER IN CONNECTED AND/OR SUBSEQUENT YEARS DO NOT GO UNATTENDED. DELHI BENCH OF THE TRIBUNAL IN CASE OF ITO VS. SPECIALITY ITA NO.4691 OF 2009 IKAB SECURITIES & INVESTMENTS LTD MUMBAI PAGE 4 O F 5 COATINGS & LAMINATION LTD. (144 TTJ 532), HAS HELD THAT THE REAL TAX EFFECT AND NOT NOTIONAL TAX EFFECT HAS TO BE TAKEN INTO ACCOUNT WHILE COMPUTING THE MONETARY CEILING IN RESPECT OF APPEAL S. 5. PARA 11 INSTRUCTION NO. 3/2011 DATED 9.2.2011 I S VERY CLEAR, WHEREIN IT SPECIFIES, THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER 9TH FEBRUARY, 2011. HOWEVER THE CASES WHERE A PPEALS HAVE BEEN FILED BEFORE 9 TH FEBRUARY, 2011, ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 6. IN THE RESULT, WE FIND THAT: 01. ACTUAL TAX EFFECT BEFORE US IS LESS THAN THE P RESCRIBED MONETARY LIMIT. 02. THIS APPEAL IS FILED ON 10-08-2009 MUCH BEFORE THE ISSUE OF THIS INSTRUCTION WHICH IS DATED 09-02-2011. 7. IN THE LIGHT OF THE ABOVE, WE HOLD THAT THE APPE AL FILED BY THE REVENUE IS NOT MAINTAINABLE, HENCE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 23/05/2012. SD/- SD/- (RAJENDRA SINGH) (VIVEK VARMA ) ACCOUNTNAT MEMBER JUDIC IAL MEMBER MUMBAI: 23/05/2012. P/-* ITA NO.4691 OF 2009 IKAB SECURITIES & INVESTMENTS LTD MUMBAI PAGE 5 O F 5