ACE CO-OPERATIVE BANK LTD, MUMBAI V. ITO 1(1)(3), MUMBAI

ITA 5149/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8404 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-01-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 22-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MALTHI R SRIDHARAN
• Keywords: Depreciation
• Section: 143(3); 80P

Judgement Text

I.T.A NO.5149/ MUM/2010 ACE CO-OPERATIVE BANK LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR I.T.A NO.5149/ MUM/2010 ASSESSMENT YEAR: 2006-07 ACE CO-OPERATIVE BANK LTD . .. APPELLANT OLD AIRPORT, SANTACRUZ (E), MUMBAI. PA NO.AAAA 9400 H VS INCOME TAX OFFICER 1(1)(3) ,. RESPONDEN T MUMBAI. APPEARANCES: S.P.PANEKAR FOR THE APPELLANT MALTHI R.SRIDHARAN , FOR THE RESPONDENT O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 26 TH MARCH, 2010, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMEN T YEAR 2006-06. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE IS AGGRIE VED OF CIT(A)S SUSTAINING NON BANKING EXPENSES TO ` .2,20,505 AS AGAINST ` .6,25,135 CLAIMED BY THE ASSESSEE. 3. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. I N THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER TOOK NOTE OF ASSESSEES CL AIM THAT AN EXPENSE OF ` .6,25,135 IS INCURRED TO EARN NON BANKING INCOME OF ` .2,76,116. EVEN THOUGH THE I.T.A NO.5149/ MUM/2010 ACE CO-OPERATIVE BANK LTD 2 ASSESSEE HAD GIVEN SPECIFIC DETAILS OF EXPENSES SO INCURRED, THE AO DECLINED TO ACCEPT THE SAME AND PROCEEDED TO ALLOCATE THE EXPENSE FOR THE SAME RATIO WHICH WAS BORNE BY NON BANKING INCOME TO THE TOTAL INCOME. I N OTHER WORDS, AS AGAINST SPECIFIC CLAIMS OF EXPENSES MADE BY THE ASSESSEE, THE AO ADOPTED CO MPUTATION OF CLAIM OF EXPENSES ON PROPORTIONATE BASIS. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. TH E ASESSEE IS NOT SATISFIED AND IS IN APPEAL BEFORE THE TRIBUNAL. 4. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PER USED THE MATERIAL ON RECORD, I SEE MERITS IN THE CLAIM OF THE ASSESSEE. I HAV E NOTED THAT THE ASSESSEE HAS GIVEN PARTICULARS OF EXPENDITURE INCURRED TO EARN NO N BANKING INCOME BUT THE AUTHORITIES BELOW HAVE SIMPLY BRUSHED ASIDE THE SAME. ON THE CONTRARY, THE AO HAS ADOPTED COMPUTATION OF EXPENSES ON PROPORTIONATE BASIS BUT THAT COULD HAVE BEEN RELEVANT ONLY WHEN SEGREGATION OF EXPENSES WAS NOT POSSIB LE OR ANY SPECIFIC DEFECTS WERE NOTED FOR SEGREGATION OF EXPENSES SO DONE BY THE A SSESSEE. THE CIT (A) HAS ALSO CONFIRMED THIS APPROACH OF THE AO BY MAKING VAGU E OBSERVATIONS TO THE EFFECT THAT THE AO HAS DONE THIS PROPORTIONATE ALLOCATION O F EXPENDITURE IN A VERY SCIENTIFIC MANNER. IN VIEW OF THESE DISCUSSIONS AND BEA RING IN MIND THE ENTIRETY OF THE FACTS, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE AO ACCEPT THE CLAIM MADE BY THE ASSESSEE. 5. GROUND NO.1 IS THUS ALLOWED. 6. IN GROUND NOS.2,3 & 4, THE ASSESSEE HAS RAISED THE FOLL OWING GRIEVANCES:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE OFFICER WAS NOT JUSTIFIED IN NOT ALLOWING TERMINAL DEPRECIATION OF ` .2,12,703. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD OFFICER WAS NOT JUSTIFIED IN NOT ALLOWING FBT OF ` .1,62,293. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD OFFICER WAS NOT JUSTIFIED IN RECTIFYING THE ERROR OF ` .32,42,970 IN SE. 80P AND SETTING OFF THE ADJUSTMENTS AGAINST SECTION 80P. 7. I HAVE NOTICED THAT NONE OF THESE GRIEVANCES IS DE ALT WITH BY THE CIT (A) BY WAY OF SPEAKING ORDER. HE HAS MADE SOME GENERAL OBSER VATIONS AND ALSO NOTED THAT I.T.A NO.5149/ MUM/2010 ACE CO-OPERATIVE BANK LTD 3 THE ASSESSEE DID NOT PRESS THESE GROUNDS FOR ONE REASON OR A NOTHER. LEARNED COUNSEL FOR THE ASSESSEE APPEARING BEFORE ME, HOWEVER, SUBMITS THAT THESE OBSERVATIONS OF THE CIT (A) ARE NOT CORRECT. LD D.R. STATES THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE CIT (A) FOR FRESH ADJUDICATION ON MERITS AND BY WAY OF A SPEAKING ORDER. IN VIEW OF THESE DISCUSSIO NS, I AM OF THE CONSIDERED VIEW THAT THE MATTER DESERVES TO BE REMITTED TO THE FILE OF THE CIT (A) ON ALL THE ABOVE THREE ISSUES WITH THE DIRECTION TO DECIDE THE MA TTER AFRESH ON MERITS BY WAY OF A SPEAKING ORDER IN ACCORDANCE WITH LAW AND AFTER GIVING THE ASSESSEE ANOTHER OPPORTUNITY OF HEARING. WITH THESE DIRECTIONS, THE M ATTER IS RESTORED TO THE FILE OF THE CIT (A. 8. GROUND NOS.2,3 & 4 ARE ALLOWED FOR STATISTICAL PURP OSES. 9. IN THE RESULT, APPEAL IS PARTLY ALLOWED IN THE MA NNER INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY, 2011 SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 23 RD FEBRUARY, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),1, MUMBAI 4. COMMISSIONER OF INCOME TAX,1 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH SMC, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI I.T.A NO.5149/ MUM/2010 ACE CO-OPERATIVE BANK LTD 4 I.T.A NO.5149/ MUM/2010 ACE CO-OPERATIVE BANK LTD 5