ROHAN UMESH GANDHI, MUMBAI V. ITO 20(2)(4), MUMBAI

ITA 4747/MUM/2010

• Counselvise Citation: 474719914 RSA 2010
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARIGOVIND SINGH
• Assessee Lawyers: RAJNIKANT CHANIYARI
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 4746 & 4747/MUM/2010 (ASSESSMENT YEARS: 2005-06 & 2006-07) SHRI ROHAN UMESH GANDHI INCOME TAX OFFICER - 20(2)( 4) 601, REMI BIZCOURT, VIRA DESAI RD PIRAMAL CHAMBERS ANDHERI (W), MUMBAI 400058 VS. LALBAUG, MUMBAI 400012 PAN - AFYPG8633A APPELLANT RESPONDENT APPELLANT BY: SHRI RAJNIKANT CHANIYARI RESPONDENT BY: SHRI HARIGOVIND SINGH DATE OF HEARING: 04.09.2013 DATE OF PRONOUNCEMENT: 04.09.2013 O R D E R PER D. MANMOHAN, V.P. THESE APPEALS ARE FILED BY THE ASSESSEE AND THEY AR E DIRECTED AGAINST THE COMMON ORDER PASSED BY THE CIT(A)-31, MUMBAI. S INCE THE ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL, WE PROC EED TO DISPOSE OF THESE APPEALS BY A COMBINED ORDER FOR THE SAKE OF CONVENI ENCE. 2. IN RESPECT OF A.Y. 2005-06 THE ASSESSEE RAISED FIVE GROUNDS OUT OF WHICH GROUND NO. 4 DOES NOT ARISE OUT THE ORDER OF THE CIT(A) AND GROUND NO. 5 IS GENERAL IN NATURE. THEREFORE ONLY THE FIRS T THREE GROUNDS DESERVE TO BE CONSIDERED. SIMILARLY IN THE APPEAL FILED FOR A. Y. 2006-07 GROUNDS 3 & 4 WERE NOT PRESSED AND HENCE ONLY GROUND NO. 1 & 2 AR E TAKEN FOR CONSIDERATION. 3. IN RESPECT OF A.Y. 2005-06 THE CLAIM OF THE ASSESSE E IS THAT INTEREST EXPENSES OF ` 12,97,398/- CLAIMED IN THE CASE OF PROPRIETARY CONC ERN M/S. STAR PLASTIC OUGHT TO HAVE BEEN ALLOWED AS DEDUCTIO N. IT MAY BE NOTED THAT THE ASSESSEE, AN INDIVIDUAL BY STATUS, CARRIED ON B USINESS IN FOUR NAMES, I.E. IN THE NAME OF M/S. STAR PLASTICS, M/S. STAR INDUST RIES, M/S STAR POLYMERS AND M/S. NICE PLASTICS. M/S. STAR POLYMERS IS A SMA LL SCALE INDUSTRIAL ITA NO. 4746 & 4747/MUM/2010 SHRI ROHAN UMESH GANDHI 2 UNDERTAKING SET UP IN THE BACKWARD AREA OF SILVASSA AND M/S. STAR INDUSTRIES IS AN INDUSTRIAL UNDERTAKING SET UP IN T HE UNION TERRITORY OF DAMAN WHEREAS THE OTHER TWO PROPRIETARY CONCERNS AR E LOCATED IN MUMBAI. ASSESSEE CLOSED DOWN THE BUSINESS OPERATIONS IN MUM BAI BUT IT CLAIMED EXPENDITURE AGAINST THE PROPRIETARY CONCERNS. WE AR E CONCERNED HERE WITH THE CLAIM OF INTEREST EXPENDITURE IN THE CASE OF M/ S. STAR PLASTICS. FOR A.Y. 2005-06 HE DEBITED AN EXPENDITURE OF ` 12,97,398/- TOWARDS INTEREST EXPENDITURE AGAINST THE PROPRIETARY CONCERN, M/S. S TAR PLASTICS. FOR A.Y. 2006-07 THE INTEREST EXPENDITURE WORKS OUT TO ` 14,61,638/-. SIMILARLY THE ASSESSEE CLAIMED SALES AND DISTRIBUTION EXPENDITURE OF ` 1,27,146/- FOR A.Y. 2005-06 AND FOR THE YEAR 2006-07 HE CLAIMED DEDUCTI ON OF ` 1,68,902/-. FOR A.Y. 2005-06 HE HAS ALSO CLAIMED DEPRECIATION OF ` 34,564/-. THE AO DISALLOWED THE CLAIM OF DEDUCTION ON THE GROUND THA T THE ASSESSEE NO LONGER CARRIES ON THE SAID BUSINESS AND HENCE THE LOSS DEC LARED BY THE ASSESSEE FROM THE SAID UNIT WAS REJECTED. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) OBSERVED THAT SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE FOR A.Y. 2004-05 WHEREIN HE HAS GIVEN A CATEGORICAL FIN DING THAT THE LOAN RAISED WAS NOT UTILISED FOR BUSINESS PURPOSES AND HENCE AS SESSEE IS NOT ENTITLED TO CLAIM DEDUCTION UNDER SECTION 36(I)(III) OF THE ACT . FOR THE SAME REASON, FOR THE YEARS UNDER CONSIDERATION, THE LEARNED CIT(A) U PHELD THE ORDER OF THE AO. SIMILARLY, WITH REGARD TO THE OTHER EXPENSES AL SO THE LEARNED CIT(A) NOTICED THAT IN THE APPELLATE ORDER FOR A.Y. 2004-0 5 THE MATTER WAS CONSIDERED AT LENGTH TO HOLD THAT THE PROPRIETARY C ONCERN, M/S. STAR PLASTICS, HAS BEEN CLOSED DOWN AND HENCE DISALLOWANCE OF DIST RIBUTION EXPENSE INCLUDING DEPRECIATION IS IN ORDER. HOWEVER, THE AS SESSEE PREFERRED SECOND APPEAL BEFORE US CONTENDING, INTER ALIA, THAT THOUG H THE PROPRIETARY BUSINESS, CARRIED ON IN THE NAME OF M/S. STAR PLAST ICS, WAS CLOSED DOWN BUT THE SAME BUSINESS WAS CONTINUED FROM DAMAN AND HENC E IT WOULD NOT AMOUNT TO CLOSURE OF BUSINESS. HOWEVER, NO SUCH EVI DENCE WAS FURNISHED BEFORE US TO SUPPORT THE STAND. 4. AT THE TIME OF HEARING THE LEARNED D.R. SUBMITTED T HAT THE ISSUE STANDS SQUARELY COVERED BY THE DECISION OF THE ITAT D BENCH IN ASSESSEES OWN CASE FOR A.Y. 2004-05 (ITA NO. 626/MUM/2010 DAT ED 30.12.2011) ITA NO. 4746 & 4747/MUM/2010 SHRI ROHAN UMESH GANDHI 3 WHEREIN THE HON'BLE BENCH OBSERVED THAT THE BUSINES S IN THE NAME OF M/S. STAR PLASTICS WAS CLOSED DOWN AND THERE WAS NO BUSI NESS ACTIVITY DURING THE IMPUGNED YEAR. THEREFORE, THE HON'BLE BENCH OBSERVE D THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION TOWARDS INTEREST EX PENDITURE, DISTRIBUTION EXPENSES AND DEPRECIATION ON THE ASSETS FORMERLY HE LD IN THE NAME OF M/S. STAR PLASTICS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BUSINESS OF M/S STAR PLASTICS WAS CONTINUED FROM DAMAN BUT NO E VIDENCE, WHATSOEVER, WAS PLACED BEFORE US. HAVING REGARD TO THE FACT THA T IDENTICAL ISSUE WAS CONSIDERED IN ASSESSEES OWN CASE FOR EARLIER ASSES SMENT YEAR (SUPRA) WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE L EARNED CIT(A) AND, THEREFORE, WE DISMISS THE APPEALS FILED BY THE ASSE SSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2013. (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 4 TH SEPTEMBER, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 31, MUMBAI 4. THE CIT 20, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.