ACIT 10(1), MUMBAI V. JUNIPER HOTELS P. LTD, MUMBAI

ITA 5155/MUM/2010

• Counselvise Citation: 515519914 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 28-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 22-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL BHANDARI
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, I BENCH, MUMBAI. BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER AND PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NOS. 5155 & 5156 / MUM/2010 ASSESSMENT YEARS: 2005-06 AND 2006-07 ACIT 10(1) .. APPELLANT 455, AAYAKAR BHAVAN, M.K. ROAD M.K.ROAD,MUMBAI VS JUNIPER HOTELS P.LTD. .. RESPONDENT OFF WESYTERN EXPRESS HIGHWAY, SANTACRUZ(E),MUMBAI PA NO.AAECS 6336 E APPEARANCES: O.A.MAO, FOR THE APPELLANT SUNIL BHANDARI, , FOR THE RESPONDENT DATE OF HEARING : 28.11.2011 DATE OF PRONOUNCEMENT : 30-11-2011 O R D E R PER BENCH: 1. BY WAY OF THESE TWO APPEALS, THE ASSESSING OFFI CER HAS CALLED INTO QUESTION CORRECTNESS OF THE CIT(A)S SEPARATE ORDER DATED 5 .4.2010, IN THE MATTER OF I.T.A NOS. 5155 & 5156 / MUM/2010 ASSESSMENT YEARS: 2005-06 AND 2006-07 2 ASSESSMENT UNDER SECTION 143(3) OF THE I.T.ACT, FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07. SINCE COMMON GROUND RAISED IN THESE A PPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. IN GROUND NO.1 IN BOTH THE APPEALS, THE ASSESSIN G OFFICER RAISED THE FOLLOWING GRIEVANCE: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF PA YMENT OF RS.28,167, 589 AND RS.25,48,821/- IN THE ASSESSMENT YEARS 2005-06 AND 2006-07, RESPECTIVELY, IN RESPECT OF EMPLOYEES CONTRIBUTION TO PF MADE WITHIN THE GRACE PERIOD, WITHOUT APPRECIATING THE FACT THAT THERE IS NO PROVISION TO CONSIDER THE GRACE PERIOD IN THE I.T.ACT. EXPLANATION TO SECTION 3691)(VA) SPEAKS OF THE DUE DATE AND NOT THE GRACE PERIOD. 3. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE L IKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE PAYMENTS OF RS.28,17,589 AND RS.25,48,821 FOR THE A SSESSMENT YEARS 2005-06 AND 2006-07, RESPECTIVELY, IN RESPECT OF PROVIDENT FUND AND ESIC DUES BEYOND THE DUE DATE. THE ASSESSING OFFICER WAS OF THE VIEW THAT IN TERMS OF PROVISIONS OF SECTION 2(24)(X) OF THE ACT, IF THE EMPLOYEES CONTRIBUTION TO PF/ESIC IS NOT PAID WITHIN THE STIPULATED DUE DATE OF THE RESPECTIVE FUNDS, THE SA ME IS TO BE TAXED INCOME IN THE HANDS OF THE EMPLOYERS. THE ASSESSING OFFICER NOTE D THAT THE PAYMENTS HAVE BEEN MADE AFTER THE DUE DATE. ACCORDINGLY, THE AO TREAT ED THE SAID AMOUNTS OF RS.28,17,589 AND RS.25,48,821 FOR BOTH THE ASSESSME NT YEAR AS INCOME IN THE HANDS OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE CARRIED T HE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) WAS OF THE VIEW THAT, CONSISTEN T WITH THE STAND TAKEN BY THE JURISDICTIONAL TRIBUNAL, AS LONG AS THE PAYMENTS H AVE BEEN PAID WITHIN THE GRACE PERIOD, THE SAME ARE REQUIRED TO HAVE BEEN TREATED AS HAVING BEEN MADE WITHIN TIME AND, ACCORDINGLY, TO THAT EXTENT ACTION OF THE AO C ANNOT BE SUSTAINED IN LAW. IT WAS IN THIS BACKGROUND THAT THE AMOUNTS PAID WITHIN THE GR ACE PERIOD WERE TREATED AS HAVING BEEN MADE WITHIN THE DUE DATE AND, ACCORDING LY, TO THAT EXTENT THE ADDITION I.T.A NOS. 5155 & 5156 / MUM/2010 ASSESSMENT YEARS: 2005-06 AND 2006-07 3 MADE BY THE AO WAS DELETED. THE ASSESSING OFFICER IS AGGRIEVED WITH THE RELIEF ALLOWED BY THE CIT(A) AND IS IN APPEAL BEFORE US FO R BOTH THE ASSESSMENT YEARS. 4. HAVING HEARD THE RIVAL CONTENTIONS, AND HAVING P ERUSED THE MATERIAL ON RECORD, WE SEE NO MERITS IN THE GRIEVANCE OF THE AS SESSING OFFICER. THE CIT(A) HAS RIGHTLY OBSERVED THAT AS HAS BEEN CONSISTENTLY THE STAND TAKEN BY THE COORDINATE BENCHES OF THE TRIBUNAL THAT AS LONG AS THE AMOUNTS DEPOSITED WITHIN THE GRACE PERIOD PERMISSIBLE UNDER LAW, THE PAYMENTS SO MADE HAS TO BE TREATED AS HAVING BEEN MADE IN TIME. THE ADDITION MADE BY THE AO, IN RESPECT OF AMOUNTS PAID WITHIN THE GRACE PERIOD, WAS INDEED UNCALLED FOR. WE, THE REFORE, APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE. 5. GROUND NO.1 IS THUS DISMISSED. 6. IN GROUND NO.2, FOR BOTH THE APPEALS, THE ASSESS ING OFFICER HAS RAISED THE FOLLOWING GRIEVANCE: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DIRECTING TO TREAT THE INTEREST INCOME ON BANK FDS AS BUSINESS INCOME WITHOUT APPRECIATING THAT THE SA ID INTEREST INCOME WAS NOT DERIVED FROM THE BUSINESS ACTIVITY OF THE A SSESSEE COMPANY. 7. SO FAR AS THIS GRIEVANCE IS CONCERNED, THE RELEV ANT MATERIAL FACTS ARE LIKE THIS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS ING OFFICER NOTED THAT THE ASSESSEE HAS INTEREST INCOME AMOUNTING TO RS.2,53,3 84 AND RS.6,77,201 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07, RESPECTIVELY, WHICH HAS BEEN INCLUDED IN THE BUSINESS INCOME. THE ASSESSING OFFICER PROCEEDE D TO TREAT THE BANK INTEREST AS INCOME FROM OTHER SOURCES. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) TOOK NOTE OF ASSESSEES ARGUMENTS THAT BANK INTEREST WAS EARNED ON DEPOSITS KEPT AS MARGIN MONEY FOR L.C. BANK GUARANTEES, ETC, REQUIRE D IN THE COURSE OF BUSINESS AND, I.T.A NOS. 5155 & 5156 / MUM/2010 ASSESSMENT YEARS: 2005-06 AND 2006-07 4 THEREFORE, TAXABLE UNDER THE HEAD BUSINESS INCOME . THE CIT(A) ACCEPTED THIS CONTENTION AND REVERSED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING THAT CONSIDERING THE ASSESSEES SUBMISSIONS AND THE DIR ECT NEXUS BETWEEN THE RECEIPTS AND THE BUSINESS ACTIVITY, THE AO IS DIRECTED TO CO NSIDER THE RECEIPT UNDER THE HEAD BUSINESS INCOME. THE ASSESSING OFFICER IS AGGRIE VED AND IS IN APPEAL BEFORE US. 8. AS LEARNED DEPARTMENTAL REPRESENTATIVE POINTS OU T THAT THERE IS NO MATERIAL BEFORE US TO COME TO THE CONCLUSION THAT THERE WAS A DIRECT NEXUS BETWEEN THE INTEREST RECEIPTS AND BUSINESS ACTIVITY, NOR COULD THE LEARNED COUNSEL FOR THE ASSESSEE POINT OUT AS TO WHAT WAS THE MATERIAL ON T HE BASIS OF WHICH THE CIT(A) GAVE THE IMPUGNED RELIEF. IN THIS VIEW OF THE MATTER AN D WITH THE CONSENT OF THE PARTIES, WE DEEM IT FIT AND PROPER TO REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE DENOVO. THE AO SHALL GIVE DUE AND FAIR OPPORTUNITY TO THE ASSESSEE AND SHALL DEAL WITH THE ISSUE BY WAY OF A SPEAKING ORDE R IN ACCORDANCE WITH LAW AND SUCH MATERIAL AND ARGUMENTS AS THE ASSESSEE MAY BE IN A POSITION TO PRODUCE WITH REGARD THE DIRECT NEXUS BETWEEN THE INTEREST RECEIPTS AND BUSINESS ACTIVITY. ACCORDINGLY, THE ISSUE IS REMITTED TO THE FILE OF THE ASSESSING OFFICER. 9. GROUND NO.2 IS TREATED AS ALLOWED FOR STATISTICA L PURPOSES. 10. IN THE RESULT, BOTH THE APPEALS ARE TREATED AS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2011 SD/- (B.R.MITTAL) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 30 TH NOVEMBER 2011 PARIDA I.T.A NOS. 5155 & 5156 / MUM/2010 ASSESSMENT YEARS: 2005-06 AND 2006-07 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 21 4. COMMISSIONER OF INCOME TAX, MC-10, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH I MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI