DCIT CEN CIR 8(3), MUMBAI V. RIDDHI SIDDHI BULLIONS LTD, MUMBAI

ITA 4840/MUM/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5545 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 28-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIYA
• Assessee Lawyers: CHETAN KARIA
• Keywords: Speculation loss
• Section: 143(3); 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE HONBLE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND HONBLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 4840 /MUM/ 2015 (ASSESSMENT YEAR: 2010 - 11 ) DCIT, CENTRAL CIRCLE - 8(3) ROOM NO. 659, 6TH FLOOR AAYAKAR BHAVAN, M.K. ROAD , MUMBAI 400020 VS. M/S. RIDDHI SIDDHI BUILLIONS LTD. BULLION HOUSE 115, TAMBAKATA, MUMBADEVKI , MUMBAI 400003 PAN AAACR6727L APPELLANT RESPONDENT ITA NO. 4514 /MUM/ 2015 (ASSESSMENT YEAR: 2010 - 11 ) M/S. RIDDHI SIDDHI BUILLIONS LTD. BULLION HOUSE 115, TAMBAKATA, MUMBADEVKI , MUMBAI 400003 VS. DCIT, CENTRAL CIRCLE - 8(3) ROOM NO. 659, 6TH FLOOR AAYAKAR BHAVAN, M.K. ROAD , MUMBAI 400020 PAN AAACR6727L APPELLANT RESPONDENT REVENUE BY: SHRI CHAITANYA ANJARIYA ASSESSEE BY: SHRI CHETAN KARIA DATE OF HEARING: 09 . 08 .2018 DATE OF PRONOUNCEMENT: 05 . 11 .2018 O R D E R PER SANDEEP GOSAIN, JM THE PRESENT TWO APPEALS FILED BY THE REVENUE AS WELL AS ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 50 , MUMBAI DATED 28 . 05 .201 5 AND IT RELATES TO A.Y. 2010 - 11 . ITA NO S . 4840 & 4514 /MUM/ 2015 M/S. RIDDHI SIDDHI BUILLIONS LTD. 2 2. FIRST WE SHALL TAKE UP APPEAL OF THE REVENUE IN ITA NO. 4840/MUM/2014 . IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CI T(A) ER RED IN ALLOWING DEDUCTION/EXEMPTION OF THE PROFIT FROM SEZ UNIT U/S. 10A OF THE I T. ACT, 1961 IN THE LIGHT OF STRONG EVIDENCE THAT NO MANUFACTURING ACTIVITY FOR MANUFACTURE OF GOLD MEDALLIONS WAS CARRIED OUT IN THE SE Z UNIT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF LOSS OF RS. 9,27,09,970/ - IN DIAMOND TRADE.' 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) E RRED IN RESTRICTING THE DISALLOWANCE U/S. 40A(2)(B) ON INTEREST PAID TO SISTER CONCERN RIDDHI SIDDHI COMMODITIES PVT. LTD. TO THE EXCESS AMOUNT OVER AND ABOVE 4% AS UNREASONABLE AND EXCESSIVE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INTEREST OF RS. 25,32,829/ - ON ACCOUNT OF INTEREST FREE LOANS ADVANCED BY THE ASSESSEE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 41,11,965/ - BEING DISALLOWANCE OF FORWARD CONTRACT LOSS HOLDING THE SAME TO BE BUSINESS LOSS AS AGAINST SPECULATION LOSS WITHIN THE MEANING OF SEC. 43(5) OF THE I.T. ACT. ITA NO S . 4840 & 4514 /MUM/ 2015 M/S. RIDDHI SIDDHI BUILLIONS LTD. 3 3. REGARDING GROUND NO. 1, I.E. DISALLOWANCE OF CLAIM OF EXEMPTION UNDER SECTIO N 10A OF THE INCOME TAX ACT, 1961 (HEREINAFTER 'THE ACT') OR RS. 1,11,14,719/ - THE LEARNED A.R. SUBMITTED THAT IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL FOR A.Y. 2009 - 10 IN ASSESSEE'S OWN CASE AND DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT WHILE DECIDING THE ISSUE THE CIT(A) HAS ALSO RELIED UPON THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2009 - 10. THE LEARNED D.R. HAS FAIRLY ACCEPTED THE ARGUMENT OF THE ASSESSEE THAT THE ISSUE IS CO VERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2009 - 10. IN VIEW OF THE ABOVE GROUND NO. 1 RAISED BY THE REVENUE IS REJECTED. 4. GROUND NO. 2 IS WITH REGARD TO DISALLOWANCE OF DIAMOND TRADING LOSS OF ` 9,27,09,970/ - . THE LEARNED A.R. SUBMITTED THAT SIMILAR ISSUE IS ALSO CONSIDERED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2009 - 10 AND DECIDED IN FAVOUR OF THE ASSESSEE. THE LEARNED D.R. DID NOT OBJECT TO THE CONTENTIONS OF THE ASSESSEE. FROM THE RECORD WE FOUND THAT SIMILAR IDENTIC AL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2009 - 10. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE REJECT GROUND NO. 2 OF THE REVENUE. 5. GROUND NO. 3 RELATES TO DISALLOWANCE OF INTEREST UNDER SECTION 40A(2)(B) OF THE ACT OF ` 63,49,918/ - . ACCORDING TO THE LEARNED A.R. IDENTICAL IS CONSIDERED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2009 - 10 AND ITA NO S . 4840 & 4514 /MUM/ 2015 M/S. RIDDHI SIDDHI BUILLIONS LTD. 4 DECIDED IN FAVOUR OF THE ASSESSEE. THE LEARNED D.R. FAIRLY ACCEPTED THE CONTENTIONS OF THE ASSESSEE THAT THE ISSUE IS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEE'S OWN CASE FOR A.Y. 2009 - 10. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS GROUND NO. 3 OF THE REVENUE. 6. THE LEARNED A.R. SUBMITTED THAT GROUND NO. 4 RELATING TO DISALLOWANCE OF INTER EST OF RS. 25,32,829/ - ON ACCOUNT OF INTEREST FREE LOANS IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER AND THE DECISION OF THE TRIBUNAL IN THE CASE OF AHUJA PLATINUM PROPERTIES LTD. THE LD. CIT(A) HAD ALSO CATEGORICALLY MENTIONED THAT THIS ISSUE HAD ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY LD. CIT(A) VIDE ORDER DATED 06.09.13 FOR AY 2009 - 10 AND THE SAID ORDER WAS ALSO UPHELD BY THE COORDINATE BENCH OF ITAT IN ITA NO. 5811/MU M/13 AND ITA NO. 6653/MUM/13. IT WAS ALSO TAKEN INTO CONSIDERATION BY LD. CIT(A) THAT ASSESSEE HAD SUFFICIENT FUNDS AND THAT THERE WAS NO DIVERSION OF FUNDS FOR NON INTEREST BEARING ACTIVITIES. ON THE OTHER HAND, LD. D.R. DID NOT HAVE ANY OBJECTION. IN VIE W OF THE ABOVE GROUND NO. 4 OF REVENUE IS DISMISSED. 7. GROUND NO. 5 RELATES TO DISALLOWANCE OF FORWARD CONTRACT LOSS OF RS. 41,11,965/ - . THE LEARNED A.R. SUBMITTED THAT THIS ISSUE ALSO SQUARELY COVERED BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BADRIDAS GAURIDU P. LTD. 261 ITR 256 AND THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF SOORAJ MULL NAGARUMULL 129 ITR 168 (CAL). THE ITA NO S . 4840 & 4514 /MUM/ 2015 M/S. RIDDHI SIDDHI BUILLIONS LTD. 5 LEARNED D.R. FAIRLY ACCEPTED THE CONTENTIONS OF THE LEARNED A.R. FROM THE RECORD WE FOUND THAT THE ISSUE I S DECIDED IN FAVOUR OF THE ASSESSEE IN THE CASES OF BADRIDAS GAURIDU P. LTD. (SUPRA) AN D SOORJ MULL NAGARUMULL (SUPRA) AND ALSO THE FACT THAT THIS ISSUE HAD ALREADY BEEN DECIDED BY LD. CIT(A) IN ASSESSEES OWN CASE FOR AY 2009 - 10 VIDE ORDER DATED 06.09.13 AND THE SAME WAS ALSO UPHELD BY THE COORDINATE BENCH OF ITAT IN ITA NO. 5811 & 6653/MUM/13 AND HELD THAT THE TRANSACTIONS ARE HEDGING TRANSACTIONS AND THE SAME WERE TREATED AS NORMAL BUSINESS LOSS. T HEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE CITED JUDGEMENTS WE DISMISS THE GROUND NO. 5 RAISED BY THE REVENUE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . 9. NOW WE WILL TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO. 4514/MUM/2015. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ID. CIT(A) ERRED IN LAW IN NOT TREATING THE ORDER PASSED U/S. 143(3) BY THE ASSESSING OFFICER AS INVALID AND BAD IN LAW. 2. (A) THE ID. CIT(A) ERRED IN FACTS AND LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE COMMISSION EXPENSES PAID TO MAGIA FAMILY MEMBERS AMOUNTING TO RS. 53.00,000/ - DESPITE AMPLE UNDISPUTED EVIDENCES WERE PLACED ON RECORD SUBSTANTIATING THE SAME. (B) THE ID. CIT(A ) ERRED IN FACTS AND LAW IN NOT APPRECIATING THE FACT THAT SIMILAR COMMISSION EXPENSES WERE ALSO INCURRED TOWARDS MAGIA FAMILY MEMBERS IN THE IMMEDIATELY PRECEDING ITA NO S . 4840 & 4514 /MUM/ 2015 M/S. RIDDHI SIDDHI BUILLIONS LTD. 6 YEAR AND WAS EVEN ALLOWED BY THE ASSESSING OFFICER UNDER IDENTICAL SET OF FACTS AND CIRCUMST ANCES. 3. (A) THE ID. CIT(A) ERRED IN FACTS AND LAW IN CONFIRM ING THE DISALLOWANCE OF INTEREST RSBL COMMODITIES PVT. LTD. U/S. 40A(2)(B) TO THE EXTENT PAID BEYOND THE RATE OF 4% P.A. TREATING IT AS EXCESSIVE AND UNREASONABLE. (B) THE ID. C1T(A) ERRED IN FACTS AND LAW IN NOT APPRECIATING THE FACT THAT THE PROVISIONS OF SECTION 40A(2)(B) ARE NOT APPLICABLE AS M/S. RSBL COMMODITIES PVT. LTD. TO WHOM THE INTEREST IS PAID HAS DULY OFFERED THE SAME AS INCOME IN ITS RETURN OF INCOME WHICH FALLS UNDER THE SAME TA X BRACKET. 10. GROUND NO. 1 RAISED BY THE ASSESSEE IN GENERAL IN NATURE, THEREFORE IT DOES NOT REQUIRE ANY ADJUDICATION. 11. GROUND NO. 2 IS REGARDING DISALLOWANCE OF COMMISSION EXPENSES FOR ` 53,00,000/ - . THE LEARNED A.R. SUBMITTED THAT THIS ISSUES IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2009 - 10 WHEREIN IT IS DECIDED IN FAVOUR OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT ITAT HAD DIRECTED THE AO TO EXAMINE ALL THE TRANSACTIONS INVOLV ING BUYERS CREDIT FACILITY QUA THE COMMISSION PAYMENTS. THEREFORE AO IN VIEW OF THE DIRECTIONS OF THE ITAT CARRIED OUT VERIFICATIONS ON THE VARIOUS DETAILS SUBMITTED BY THE ASSESSEE TO ESTABLISH NEXUS AS WELL AS GENUINENESS OF COMMISSIONS PAYMENT, THEREFOR E ALLOW THE RELIEF TO THE ASSESSEE WHILE GIVING EFFECT TO THE ORDER OF ITAT TO AY 2009 - 10. THE LEARNED D.R. HAS ALSO FAIRLY ACCEPTED THE CONTENTIONS OF THE ITA NO S . 4840 & 4514 /MUM/ 2015 M/S. RIDDHI SIDDHI BUILLIONS LTD. 7 ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2009 - 10, GROUND NO. 2 IS ALLOWED . 12. GROUND NO. 3 REGARDING DISALLOWANCE OF INT EREST UNDER SECTION 40A(2)(B) HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF ITAT IN ASSESSEES OWN CASE FOR AY 2009 - 10 WHEREIN IT WAS CATEGORICALLY BEEN HELD BY THE ITAT THAT ASSESSEE HAD PAID EXCESS MARGIN MONEY TO A COUPLE OF CLIENTS AND TO SISTERS CONCERN AND HAD PAID EXCESSIVE INTEREST ABOVE 4% ACCORDINGLY, AO WAS DIRECTED TO CALCULATE EXCESS INTEREST OVER AND ABOVE 4%. CONSEQUENT TO THE ORDER OF ITAT, THE ASSESS EE COMPANY PROVIDED DETAILS OF INTEREST PAYMENT MADE AND CALCULATIONS OF EXCESS PAYMENT MADE OVER AND ABOVE 4% AND ACCORDINGLY, AO WHILE GIVING EFFECT TO THE ORDER OF ITAT IN ASSESSEES OWN CASE FOR AY 2009 - 10 DISALLOWED THE EXCESS INTEREST PAID OVER 4%. T HE LD. DR FAIRLY ACCEPTED THE ABOVE CONTENTIONS RAISED BY THE ASSESSEE. THEREFORE RESPECTFULLY FOLLOWING THE JUDGMENT OF ITAT IN ASSESSEES OWN CASE FOR AY 2009 - 10, WE DISMISS THIS GROUND RAISED BY THE ASSESSEE. 13. CONSEQUENTLY, APPEAL FILED BY THE ASSESSE IS PARTLY ALLOWED. 14. IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED WHILE THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH NOVEMBER , 2018 . SD/ - SD/ - ( R.C. SHARMA ) ( SANDEEP GOSAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 5 TH NOVEMBER , 2018 ITA NO S . 4840 & 4514 /MUM/ 2015 M/S. RIDDHI SIDDHI BUILLIONS LTD. 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - 50 , MUMBAI 4. THE PR. CIT , CENTRAL - 4 , MUMBAI 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.