BHAVNANI & SON P. LTD, MUMBAI V. ACIT 10(1), MUMBAI

ITA 4980/MUM/2010

• Counselvise Citation: 498019914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Keywords: Business expenditure; Opportunity of being heard
• Section: 14A

Judgement Text

1 ITA 4980/ M/2010,M/S BHAVANI & SON P. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B BEFORE SHRI B.R. MITTAL, J.M. AND SHRI R.K. PANDA, A.M. ITA NO. 4980/MUM/2010 ASSESSMENT YEAR 2006-07 M/S BHAVANI & SON PVT. LTD., WACO HOUSE, MASRANI LANE, KURLA, MUMBAI - 400070. PAN AAACB3332K VS. ASST. COMMISSIONER OF INCOME- TAX- 10(3), ROOM NO. 455, 4 TH FLOOR, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI.20 APPELLANT RESPONDENT APPELLANT BY SMT. ARATI VISSANJI RESPONDENT BY MR. G.P. TRIVEDI DATE OF HEARING 17.10.2011 DATE OF PRONOUNCEMENT 21.10.2011 ORDER PER R.K. PANDA A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DT. 17.03.2010 OF THE CIT(A)- 21, MUMBAI RELATING TO A. Y. 2006-07. 2. GROUNDS OF APPEAL NO. 1 BY THE ASSESSEE READS AS UNDER:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN CONFIRMING `THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF ` 54,235/- PAID AS BROKERAGE ON TRANSFER OF EQUITY SH ARES. YOUR APPELLANTS SUBMIT THAT THE SAID EXPENDITURE OUGHT T O BE ALLOWED AS CLAIMED. WITHOUT PREJUDICE TO THE ABOVE, YOUR APPELLANTS SUB MIT THAT AT LEAST ` 29,700/- OUGHT TO BE ALLOWED AS A DEDUCTION FROM SHORT 2 ITA 4980/ M/2010,M/S BHAVANI & SON P. LTD. TERM CAPITAL GAINS. FURTHER, ` 13,085/- OUGHT TO BE ADDED AS THE COST OF INVESTMENT IN EQUITY SHARES. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE A.O. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT MISCELLANEOUS EXP ENSES DEBITED TO THE P&L ACCOUNT INCLUDES BROKERAGE ON SALE OF EQUITY SHARES AMOUNTING TO ` 54,235/-. HE NOTED THAT THE INCOME FROM THE SALE OF SHARES HA S BEEN COMPUTED AS CAPITAL GAIN. THEREFORE, HE DISALLOWED AN AMOUNT OF ` 54235/- ON THE GROUND THAT THESE EXPENSES ARE NOT ALLOWABLE AS BUSINESS EXPEND ITURE. 2.2 IN APPEAL, THE LD. CIT(A) DISMISSED THE GROUND RAISED BY THE ASSESSEE BY HOLDING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. THE APPELLANT CLAIMED THE EXPENDITURE AS BUSINESS EXPENDITURE, WH EREAS THE SAME PERTAINING TO SALE OF SHARES ON WHICH CAPITAL GAIN WAS EARNED BY THE APPELLANT. SINCE THE INCOME WAS NOT ASSESSA BLE UNDER THE HEAD BUSINESS & PROFESSION, THEREFORE, THE A.O. W AS JUSTIFIED IN NOT ALLOWING THE RELATED EXPENSES AS BUSINESS EXPEN DITURE. THE APPELLANTS CLAIM OF ALLOWING THE SAME UNDER THE HE AD CAPITAL GAIN IS ALSO NOT ACCEPTABLE SINCE, THE RELEVANT WO RKING OF CAPITAL GAIN HAVE NOT BEEN FILED. IN THE FACTS AND CIRCUMST ANCE, THIS GROUND IS DISMISSED. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PURSUED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT AN AMOUNT OF ` 29,700/- INCURRED BY THE ASSESSEE TOWARDS BROKERAG E WAS WRONGLY DEBITED TO THE MISCELLANEOUS EXPENSES. HOWE VER, THE SAME IS OTHERWISE DEDUCTIBLE WHILE CALCULATING THE SHORT TERM CAPITAL GAIN. IT IS THE SUBMISSION OF THE LD. D.R. THAT ALTHOUGH THE ASSESSEE HAS FILED V ARIOUS DETAILS IN THE PAPER BOOK, NEITHER THE A.O. NOR THE LD. CIT(A) HAS VERIF IED ALL THESE DETAILS. THEREFORE, IT SHOULD BE SET ASIDE TO THE FILE OF THE A.O. FOR ADJUDICATION. WHILE GOING 3 ITA 4980/ M/2010,M/S BHAVANI & SON P. LTD. THROUGH THE VARIOUS DETAILS FILED BY THE ASSESSEE I N THE PAPER BOOK WE FIND ALTHOUGH THESE DETAILS WERE FILED BEFORE THE A.O. A S CERTIFIED BY THE ASSESSEE IN THE PAPER BOOK, THE A.O. HAS NOT EXAMINED THE ALLOW ABILITY OR OTHERWISE OF THE CLAIM OF BROKERAGE AMOUNTING TO ` 29700/-. WE, THEREFORE, RESTORE THE ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO EXAMINE TH E SAME AND PASS APPROPRIATE ORDER AS PER LAW. NEEDLESS TO SAY THE A.O. SHALL GI VE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SO FAR AS THE DEDUCTION OF ` 13,085/- IS CONCERNED, THE SAME DOES NOT ARISE OUT OF THE ORDER OF THE A.O. OR THE LD. CIT(A). THEREFORE, THE CLAIM OF ` 13085/- BY THE ASSESSEE IS REJECTED. GROUND OF AP PEAL NO. 1 BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 4. GROUNDS OF APPEAL NO. 2 RELATES TO THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF ` 3,15,608/- MADE BY THE A.O. U/S 14A R.W.S. RULE 8D OF THE INCOME TAX RULES. 4.1 BOTH THE PARTIES FAIRLY AGREED THAT THE MATTER REQUIRES FRESH ADJUDICATION AT THE LEVEL OF THE A.O. IN THE LIGHT OF THE DECISI ON OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCE MFG. CO. LTD. VS. DCIT REPORTED IN 328 ITR 81. ACCORDINGLY, THIS GROUND BY THE ASSESSEE IS RE STORED TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN THE LIGHT OF THE RATIO LA ID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT. GROUND OF APPEAL NO. 2 B Y THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND OF APPEAL NO. 3 FOR WHICH THE LD. D.R. HAS N O OBJECTION. ACCORDINGLY GROUND OF APPEAL NO. 3 IS DISMISSED AS NOT PRESSED. 6. GROUNDS OF APPEAL NO. 4 BY THE ASSESSEE BEING GE NERAL IN NATURE IS DISMISSED. 4 ITA 4980/ M/2010,M/S BHAVANI & SON P. LTD. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 21.10.2011. SD/- SD/- (B.R. MITTAL) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 21.10.2011. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 21, MUMBAI 4. THE CIT M.C. X, MUMBAI 5. THE DR BENCH, B 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI