MAFATLAL INDUSTRIES LTD, MUMBAI V. ACIT 6(3), MUMBAI

ITA 5202/MUM/2011

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9934 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 18-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 07-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Keywords: Opportunity of being heard; Speculation loss; Corroborative evidences; TDS; Set aside; Capital Gains
• Section: 43B; 244A; 37(1); 201; 64; 37

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI RAVISH SOOD (JM) I.T.A. NO. 5202 /MUM/ 201 1 (ASSESSMENT YEAR 20 0 4 - 0 5 ) C.O . NO. 71 /MUM/201 2 (ASSESSMENT YEAR 200 4 - 0 5 ) MAFTLAL INDUSTRIES LIMITED 3 RD FLOOR, MAFTLAL HOUSE BACKBAY RECLAMATION MUMBAI - 400 020. V S. ACIT - 6(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 5250 /MUM/201 1 (ASSESSMENT YEAR 200 4 - 0 5 ) ACIT - 6(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. MAFTLAL INDUSTRIE S LIMITED 3 RD FLOOR, MAFTLAL HOUSE BACKBAY RECLAMATION MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN : AAACM2813L ASSESSEE BY SHRI GIRISH DAVE DEPARTMENT BY SHRI H.N. SINGH DATE OF HEARING 24 . 6 . 201 9 DATE OF PRONOUNCEMENT 20 . 9 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : - THESE ARE CROSS APPEALS BY THE ASSESSEE AND REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARISING OUT OF ORDER OF LEARNED CIT APPEALS DATED 23.3.2011 AND PERTAIN TO ASSESSMENT YEAR 2004 - 05. APROPOS ASSESSEE'S APPEAL 2. GROUND NO. 1 TO 11 OF THE APPEAL RELATES TO THE ISSUE THAT LEARNED CIT APPEALS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST AMOUNTING TO RUPEES MAFTLAL INDUSTRIES LIMITED 2 2,58,04,502 / - ESTIMATED INTEREST AT THE RATE OF 15% ON CERTAIN ADVANCES WHICH ARE GIVEN TO RELATED PART IES. 3. UPON HEARING BOTH THE PARTIES AND PERUSING THE RECORDS IT TRANSPIRES THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE AS DONE BY HIM IN EARLIER YEARS. UPON ASSESSEE'S APPEAL LEARNED CIT (A) CONFIRMED THE SAME HOLDING THAT THE SAME ISSUE IS COVE RED AGAINST THE ASSESSEE BY THE ORDER OF LEARNED CIT ( APPEALS ) FOR ASSESSMENT YEARS 97 - 98 TO ASSESSMENT YEARS NUMERALS 2 003 - 04. IN THIS REGARD IT IS NOTED THAT ITAT IN ASSESSEE'S OWN CASE FOR EARLIER YEARS H AS REMITTED THE ISSUE TO THE FILE OF ASSESSING OFF ICER FOR FRESH CONSIDERATION IN LIGHT OF EARLIER TRIBUNAL ORDERS AND ALSO THE JUDGEMENT OF THE HONOURABLE SUPREME COURT IN THE CASE OF S . A . BUILDERS ( 288 ITR 1 ) . 4. IN LIGHT OF THE AFORESAID PRECEDENT FROM THE ITAT IN ASSESSEE'S OWN CASE BOTH THE COUNCEL AGREED THAT THE ISSUE MAY BE SIMILARLY REMITTED. ACCORDINGLY THIS ISSUE IS REMITTED TO THE FILE OF ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH IN LIGHT OF ITAT ORDER IN EARLIER YEARS AS REFERRED ABOVE. 5. GROUND NO. 12 RELATES TO ISSUE OF VALUATION OF CLOSING STOCK OF FINISHED GOODS. 6. LEARNED COUNSEL OF THE ASSESSEE FAIRLY AGREED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY SEVERAL T RIBUNAL ORDERS IN ASSESSEE'S OWN CASE FOR EARLIER YEARS. HOWEVER THE LEARNED COUNSEL OF THE ASSESSEE PLEA DED THAT IF THE CLOSING STOCK IS TINKERED/CHANGED THE CONSEQUENTIAL EFFECT SHOULD ALSO BE GIVEN TO THE CORRESPONDING OPENING BALANCE. 7. UPON HEARING BOTH THE COUN SE L AND USING THE RECORDS IN OUR CONSIDERED OPINION THE ISSUE IS COVERED AGAINST THE ASSESSEE BY TRI BUNAL ORDERS IN ASSESSEE'S OWN CASE FOR EARLIER YEARS. HOWEVER THE LEARNED COUNSEL OF THE ASSESSEE'S PLEA THAT THE CHANGE IN CLOSING BALANCE SHOULD HAVE A CONSEQUENTIAL EFFECT IN THE CORRESPONDING OPENING BALANCE IS COGENT AND DESERVES TO SUCCEED. MAFTLAL INDUSTRIES LIMITED 3 ACCORDIN GLY WE HOLD THAT THE CHANGE IN CLOSING STOCK HAS ALSO GOT TO BE REFLECTED IN THE CORRESPONDING OPENING BALANCE OF THE STOCK. 8. GROUND NO. 13 RELATES TO THE ISSUE OF PUJA EXPENSES OF RUPEES 1,70,932 / - . 9. I T TRANSPIRES THAT TRIBUNAL IN SEVERAL ORDERS IN ASSESSEE'S OWN CASE FOR EARLIER YEARS HAS ALLOWED THESE EXPENSES. WE NOTE THAT NO CHANGE S IN FACTS HAVE BEEN SHOWN. HENCE FOLLOWING ITAT DECISION IN ASSESSEE OWN CASE WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE DISALLOWANCE. 10 . GROUND NO . 14 RELATES TO PAYMENT TO RELATIVES OF THE DECEASED EMPLOYEES OF RUPEES 36,000 /. 11. I T TRANSPIRES THAT T RIBUNAL BY SEVERAL ORDERS IN ASSESSEE'S OWN CASE EARLIER HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF ASSESSEE. 1 2 . GROUND NO. 15 TO 17 REFERRED TO THE ISSUE OF V RS EXPENDITURE OF RUPEES 4,26, 57,097 / - . 13. I T TRANSPIRES THAT THIS ITAT IN ASSESSEE'S OWN CASE FOR ASSESSMENT Y EAR 98 - 99 VIDE ORDER DATED 22/80/2014 HAS HELD THAT THE SAID EXPENDITURE IS ALLOWABLE UNDER SECTION 37(1) OF THE IT ACT, AFTER VERIFICATION OF THE DETAILS OF EXPENDITURE CLAIMED BY THE ASSESSEE. 14. RESPECTFULLY FOLLOWING THE PRECEDENT WE HOLD THAT THIS E XPENDITUR E IS ALLOWABLE UNDER SECTION 37 (1 ) AFTER VERIFICATION OF THE DETAILS OF EXPENDITURE BY THE ASSESSING OFFICER . 15. GROUND NO. 18 TO 21 RELATED TO DISALLOWANCE UNDER SECTION 14 A OF RUPEES 10,25,550 / - . MAFTLAL INDUSTRIES LIMITED 4 16. L EARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ITAT VIDE ORDER DATED 21/10/2015 ASSESSMENT YEAR 1999 - 2000 IN ITA NO. 4597/ M UM/2005 HAS RESTORED THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT I N THE CASE OF GODREJ AND BOYC E M ANUFACTURING CO . LTD . ( 328 ITR 81 ) . LEARNED COUNSEL SUBMITTED THAT SIMILAR DIRECTIONS HAVE BEEN GIVEN BY THE ITAT IN ASSESSEE'S OW N CASE FOR ASSESSMENT YEAR 2001 - 02 AND ASSESSMENT YEAR 2002 - 03. 17. RESPECTFULLY FOLLOWING THE PR E CEDE NT IN ASSESSEE'S OWN CASE WE SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH IN LIGHT OF THE HONOURABLE JURISDICTIONAL HIGH COURT DECISION REFERRED ABOVE. 18. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE HAS MADE FURTHER SUBMISSION THAT INV ESTMENT WERE MADE IN THE EARLIER ASSESSMENT YEARS OUT OF OWN FUNDS. IN THIS VIEW OF THE MATTER LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE UPON SEVERAL CASE LAWS FROM HONOURABLE JURISDICTIONAL HIGH COURT FOR THE PROPOSITION THAT IF INVESTMENTS ARE MADE FOR EARNING TAX FREE INVESTMENTS OUT OF INTEREST FREE OWN FUNDS NO DISALLOWANCE ON ACCOUNT OF INTEREST IS REQUIRED. THE HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF R ELIANCE U TILITIES & POWER LTD. ( 313 ITR 340 ) IS RELEVANT IN THIS REGARD. RESPECTFULLY FOLLOWING THE PRECEDENT FROM HONOURABLE JURISDICTIONAL HIGH COURT WE DIRECT THE ASSESSING OFFICER TO CONSIDER THIS ASPECT OF THE ISSUE OF ALSO CONSIDERING THE HONOURABLE JURISDICTIONAL HIGH COURT DECISION AS ABOVE. 19. GROUND NO. 22 RELATES T O DISALLOWANCE OF INTEREST UNDER SECTION 43B OF RS. 7 , 52 , 63 , 667 / - . ANOTHER RELATED GROUND IN GROUND AND 23 RELATES TO DISALLOWANCE OF UNPAID SALES TAX UNDER SECTION 43B OF RS. 8,76,314 / - . 20. B RIEF FACTS ON THIS ISSUE ARE AS UNDER : - DURING THE COURSE O F ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE ASSESSING OFFICER THAT IN T HE COMPUTATION OF INCOME THE ASSESSEE HAS MADE A FOLLOWING NOTE : MAFTLAL INDUSTRIES LIMITED 5 'AS PER THE SANCTION LETTER SCHEME OF BIFR, INTEREST OF RS. 7,52,63,667/ - OR FUNDED INTEREST TERM LOANS FROM SCHEDUL E BANKS HAS ACCRUED BUT IT IS NO T PAYABLE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF AGREEMENTS GOVERNING SUCH LOANS. THE SAME WILL BE PAYABLE TO THE SCHEDULE BANKS FROM THE YEAR STARTING FROM 2009 - 2010 TO 2011 - 2012. AS THE AMOUNT OF INTEREST IS NOT PA YABLE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREE MENT DURING THE RELEVANT PREVIOUS YEAR THE SAME HAS NOT BEEN CONSIDERED FO R DISALLOWANCE U/S. 43B IN THE ABOVE STATEMENT OF TOTAL INCOME'. THE AO AFTER CONSIDERING THE REPLY OF THE APPELLANT ON THE ABOVE NOTE WHICH WAS REQUIRED AS PER QUESTIONS RAISED BY THE AO DURING THE ASSESSMENT PROCEEDINGS HAS OBSERVED AS UNDER: - 'AS PER THE PROVISIONS OF SECT ION 43B THE INTEREST PAYMENT TO BANKS IS ALLOWED ONLY ON ACTUAL PAYMENT BASIS. IN FACT THE ASSESS EE IS GIVEN TIME TILL THE DUE DATE FOR FILING ROI TO EFFECT SUCH PAYMENTS. IN THE EVENT SUCH PAYMENT IS NOT ACTUALLY PAYABLE BUT IS GIVEN A DEFERRED BENEFIT BY THE CONCERNED BANK, THE INTEREST AMOUNT CANNOT BE ALLOWED AS A DEDUCTION TILL SUCH TIME IT IS AC TUALLY PAID. THE DEDUCTION IS HOWEVER ALLOWABLE IN THE YEAR IN WHICH IT IS ACTUALLY PAID. THE PROVISIONS OF SECTION 43B READ W ITH EXPLANATION 3C AND 3 - D ARE VERY CL EAR. FURTHER RELIANCE IS PLACED IN CIRCULAR NO. 7/2006 DATED 17TH JULY 2006 ISSUED BY THE CB DT WHICH HAS PROVIDED CLARIFICATION REGARDING DEDUCTION OF INTEREST U/S. 43B IN VIEW OF CL ARIF IC ATORY AMENDMENTS TO SECTION 43B THROUGH THE FINANCE ACT 2006. IT IS VERY CATEGORICALLY STATED THAT 'THE CL ARIF ICTO RY EXPLANATION ONLY REITERATE THE RATIONAL THA T CONVERSION OF INTEREST INTO LOAN OR BORROWING OR ADVANCE DOES NOT AMOUNT TO ACTUAL PAYMENT'. SINCE THIS PAYMENT HAS NOT BEEN PAID IN A. Y. 2004 - 05 AND ALSO BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME THE DEDUCTION IS NOT ALLOWED IN A.Y. 2004 - 05 AN D ACCORDINGLY THE SUM OF RS. 7,52,63,667/ - IS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. SIMILARLY REGARDING THE ADDITION MADE ON ACCOUNT OF UNPAID SALES TAX WHICH HAS BEEN ADDED BACK TO THE INCOME OF THE APPELLANT U/S. 43B THE AO HAS OBSERV ED THAT AS THE AMOUNT HAS NOT BEEN PAID IT CANNOT BE ALLOWED U/S. 43B AND HAS TO BE ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT. HOWEVER IT HAS ALSO BEEN STA TED HERE THAT THE SUM WOULD BE ALLOWABLE IN THE ACTUAL YEAR OF PAYMENT. 21. B EFORE THE LEARNE D CIT (A) ASSESSEE ARGUED THAT : - MAFTLAL INDUSTRIES LIMITED 6 9.3. THE APPELLANT HAS ARGUED THAT AS THE INTEREST WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT AND AS THE INTEREST HAS BEEN CONVERTED INTO FUNDED INTEREST TERM LOAN TO BE PAID IN THE LATER YEAR EVEN THOUGH IT HAS NOT BEEN PAID IN THE CURRENT YEAR IT SHOULD BE ALLOWED AS DEDUCTION. SIMILARLY FOR THE UNPAID SALES TAX THE APPELLANT HAS STATED THAT AS IT HAS NOT PASSED THROUGH THE PROFIT AND LOSS ACCOUNT THEREFORE SECTION 43B IS NOT APPLICABLE . 22. H OWEVER THE LEARNED COMMI SSION OF INCOME TAX ( APPEALS ) WAS NOT CONVINCED HE UPHELD THE ORDER OF THE ASSESSING OFFICER . 23. A GAINST THIS ORDER , THE ASSESSEE IS IN APPEAL BEFORE US. 24. THE SUBMISSION S OF THE LEARNED COUNSEL OF THE ASSESSEE ARE AS UNDER : - 1. NOTE NO. 9 TO TH E STATEMENT OF TOTAL INCOME . 2. THE APPELLANT SUB MI TS THAT INTEREST ON FUNDED INTEREST T E R M LOANS (FITL) FROM THE SCHEDULED BANK HAS ACCRUED BUT NOT PAYABLE AS PER THE SANCTIONED SCHEME OF BIFR. 3. THE APPE LLANT SUBMITS THAT INTEREST OF RS. 7,52,63, 667 / - IS INTEREST ON FITL AND IT IS NOT CONVERTED INTO LOANS. ACCORDINGLY, EXPLANATION 3D TO SECTION 43B BROUGHT BY FINANCE ACT, 2006 W.E.F. 01 APRIL 1997 IS NOT APPLICABLE. 4. IF INTEREST IS NOT PAYABLE AS PER THE TERMS OF AGREEMENT, INTEREST SHALL NOT BE DISALLOWED UNDER SECTION 43B. RELIANCE IS PLACED ON BOMBAY HIGH C OURT DECISION IN CASE OF CIT V. HINDUSTAN CONSTRUCTION CO. LTD. (3741 ITR 101). 5. EXPLANATION 2 TO SECTION 43B IS APPLICABLE ONLY TO CLAUSE (A) OF SECTION 43B I.E. ANY S UM PAYABLE BY WAY OF TAX, DUTY, CESS OR FEE AND NOT TO OTHER CLAUSES. RELIANCE IN THIS CONNECTION IS PLACED ON THE MUMBAI TRIBUNAL IN CASE OF GRASIM INDUSTRIES LIMITED V. DCIT (64 TTJ MUMBAI 357). 1. LETTER DATED 5 OCTOBER 2006 FILED WITH THE ASSESSING OF FICER . 2. THE APPELLANT SUBMITS THAT SALES TAX IS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT AND NO DEDUCTION IS CLAIMED WHILE COMPUTING TAXABLE TOTAL PROFIT/INCOME. 3. REFER ANNEXURE - 12 OF THE TAX AUDIT REPORT. 4. RELIANCE IS PLACED ON THE FOLLOWIN G DECISIONS: A. JET LITE (INDIA) LTD V. CIT [2015] 379 ITR 185 (DELHI HC) B. CIT V. S.B.FOUNDRY [1990 ] 185 ITR 555 (ALL. HC) C . INDIA CARBON LTD. V. INSPECTING ASSISTANT COMMISSIONER OF INCOME TAX [1993] 200 ITR 759 (GAUHATI HC) MAFTLAL INDUSTRIES LIMITED 7 D. DYNAVISION LTD. V. ACIT [2009] 121 ITD 461 (CHENNAI TRIB.) E. ITO V. THAKERSI BABUBHAI & CO. [1986] 18 ITD 593 (AHD. TRIB.) F. S. GOVINDRAJA REDDIAR V. ITO [1986] 19 ITD 177 (COCHIN TRIB.) 5. WITHOUT PREJUDICE TO ABOVE, RELIANCE IS ALS O PLACED ON: A. LETTER DATED 20 AUGUST 2002 ISSUED BY THE GOVERNMENT OF GUJARAT GRANTING DEFERMENT OF SALES TAX TILL 22 MAY 2005 . B. CBDT CIRCULAR NO. 496 DATED 25 SEPTEMBER 1987 . 25. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON CARE FUL CONSIDERATION WE FIND THAT THESE ISSUES NEED FACTUAL VERIFICATION OF THE SUBMISSION OF THE ASSESSEE AT THE LEVEL OF THE ASSESSING OFFICER. FURTHER, THE ASSESSING OFFICER SHALL CONSIDER THE SUBMISSIONS ALONGWITH THE CASE LAWS MENTIONED ABOVE. FURTHER T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. GUJRAT CYPROMET LTD. [ CIVIL APPEAL NO(S). 5347/2010 D ATED 21.2.2019 ] WOULD BE APPLICABLE TO THE CONVERSION OF INTEREST TO LOAN. HENCE, SECTION 43B WOULD BE ATTRACTED IN THAT REGARD. THE ASSESSING OFFICER SHALL CONSIDER THIS ASPECT ALSO. 2 6 . G ROUND NO. 24 AND 25 RELATED TO PRIOR PERIOD EXPENSES . 27 . B RIEF FACT S ON THIS ISSUE ARE AS UNDER : - THE ORDER OF THE ASSESSING OFFICER SHOWS THAT ON PERUSAL OF ANNEXURE - 15 OF THE AUDIT REPORT IT BECAME EVIDENT THAT THE APPELLANT HAD DEBITED RS. 75,69,200/ - AS PRIOR PERIOD EXPENSES. IN THE SHOW CAUSE GIVEN TO THE APPELLANT REGARDING THE ALLOWABILITY IN THE CURRENT YEAR BY THE ASSESSING OFFICER THE APPELLANT HAD MADE NO OTHER SUBMISSION EXCEPT FOR THE DETA ILS SUBMITTED IN THE AUDIT REPORT. THE AO HAD THEREFORE PROCEEDED TO DISALLOW THE CLAIM OF THE APPELLANT HOLDING THAT PRIOR PERIOD EXPENSES ARE NOT ALLOWED DURING THE YEAR UNDER CONSIDERATION IN THE MERCANTILE SYSTEM OF ACCOUNTING. 28 . B EFORE THE LEARNED CIT ASSESSEE SUBMITTED THAT : - IN THE SUBMISSION MADE THE APPELLANT HAS STATED THAT THESE EXPENSES RELATE TO PURCHASE OF SEMI - FINISHED GOODS AND THE CRYSTALLISATION FOR PAYMENT HAD MATERIALISED DURING THE CURRENT YEAR ONLY AND THEREFORE IT SHOULD BE ALL OWED MAFTLAL INDUSTRIES LIMITED 8 AS DEDUCTION. THE APPELLANT HAS RELIED UPON THE ORDER OF THE CIT (A) DATED 29/3/2005 FOR A.Y. 1998 - 99 WHEREIN THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE IN THE YEAR TO WHICH THE EXPENDITURE PERTAINS. THE APPELLANT HAS FURTH ER STATED THAT AS THE EXPENDITURE HAS CRYSTALLISED IN A.Y. 2004 - 05 THEY SHOULD BE ALLOWED AS A DEDUCTION IN THE SAID YEAR. THE APPELLANT HAS RELIED UPON THE CERTIFICATION OF THE AUDITOR IN THE TAX AUDIT REPORT TO INDICATE THAT THE EXPENDITURE CRYSTALLISED IN A.Y. 2004 - 05 . 2 9 . H OWEVER THE LEARNED CIT (A) WAS NOT CONVINCED. HE UPHELD THE ORDER OF THE ASSESSING OFFICER. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US. 30 . WE HAVE HEARD BOTH THE COUNCIL AND PERUSED THE RECORDS. THE SUBMISSION OF THE LEARNE D COUNSEL OF THE ASSESSEE IS AS UNDER : - 1. PRIOR PERI OD EXPENDITURE IS IN RESPECT OF SEMI - FINISHED GOODS - ANNEXURE 15 TO TAX AUDIT REPORT. 2. THE APPELLANT SUBMITS THAT THERE IS BOUND TO BE OVER FLEW OF INFORMATION AT THE END OF ACCOUNTING PERIOD AN D SOME OF THE EXPENSES OF EARLIER YEARS MAY BE BOOKED IN CURRENT YEAR, WHICH SHOULD BE ALLOWED IN THE YEAR IN WHICH THEY ARE BOOKED/CRYSTALLIZED. 3. RELIANCE IN THIS REGARD IS PLACED ON: A. CIT V/S. NAGRI MILLS CO. LTD. (1958) 33 ITR 681 (BOM) B. C IT V/S. VISHNU INDUSTRIAL GASES P. LTD, (ITA NO. 229/1988)(DELHI) C. R ASHTRIYA CHEMICALS & FERTILIZERS LTD. V/S. JCIT (ITA. NOS. 1013/ MUM/2001 AND 3863/MUM/2006) (BOMBAY TRIB.) D. MAHARASHTRA STATE ELECTRICITY TRANSMISSION CO. LTD. V/S. ACIT IN IT A. NO. 2212/MUM/2011 (BOMBAYTRIB.) E . STERLITE INDUSTRIES INDIA LTD. (2006) 6 SOT 497 (BOMBAY TRIB.) F . TOYO ENGINEERING INDIA LTD. (2006) 5 SOT 616 (BOMBAY TRIB.) G . BANK OF INDIA V DCIT (2012) 139 ITD 493 (BOMBAY TRIB.) 4. IN THE CURRENT YEAR, THE PRIOR PERIOD EXPENSES CONSTITUTE ONLY 0.43% OF TOTAL REVENUE. RELIANCE IS PLACED ON THE DECISION OF THE DELHI BENCH OF THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF ESCORTS LTD. V/S. ACIT REPORTED IN (2004) 89 TTJ PAGE 221 WHEREIN IT HAS BEEN HELD THAT A SUM OF MONEY SO PAID IN A PARTICULAR YEAR CAN BE ALLOWED IN THAT YEAR EVEN IF IT RELATED TO PREVIOUS ACCOUNTING YEARS HAVING REGARD TO THE SUBSTANTIAL TURNOVER OF AN ASSESSEE. MAFTLAL INDUSTRIES LIMITED 9 31. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON C AREFUL CONSIDERATION WE HOLD THAT IT IS INCUMBENT UPON THE ASSESSEE TO SUBMIT THE DETAILS OF EXPENDITURE WHICH IS BEING CLAIMED TO BE ALLOWED AS PRIOR PERIOD EXPENDITURE ALONG WITH THE SUPPORTING EVIDENCES WHERE NE CESSARY. WE AGREE WITH THE AUTHORITIES BEL OW THAT MERE MENTION IN THE TAX AUDIT REPORT SHALL NOT RENDER THE VERIFICATION BY THE INCOME TAX OFFICER A REDUNDANT EXERCISE. HENCE, WE DIRECT THIS ISSUE SHOULD BE CONSIDER A FRESH IN THE LIGHT OF OUR OBSERVATIONS AND SUBMISSIONS OF THE ASSESSEE AS ABOVE. NEEDLESS TO ADD ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 3 2 . G ROUND NO. 26 TO27 RELATING TO BAD DEBT WRITTEN OF AMOUNTING TO RUPEES 25, 50, 0 00/ - . 3 3 . A SSESSEE HAS DEBITED A SUM OF RUPEES 33.30 LAKHS AS BAD DEBT. OU T OF I T THE SAME SUM OF RUPEES 25, 50,000 / - PERTAINS TO ADVANCES WRITTEN OFF OF IBIZA INDUSTRIES LTD THE DISALLOWANCE OF THE SAME WAS CONFIRMED BY THE LEARNED CIT APPEALS . T HE LEARNED CIT ( APPEALS ) HELD THAT THE AMOUNT CLAIMED AS BAD DEBT CANNOT BE QUALIFIED AS TRADING TRAN SACTION AT ALL. THAT THE SAME WAS A LOAN ADVANCED TO SUBSIDIARY COMPANY EARLIER YEARS. THAT THE BUSINESS NECESSITY OF WHICH WAS NOT ESTABLISHED. HE HELD THAT THE AMOUNT WAS NEVER A PART OF INCOME OF THE ASSESSEE IN EARLIER YEARS. ACCORDINGLY HE UPHELD THE DISALLOWANCE . 3 4 . A GAINST THE ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD BOTH THE COUNCIL AND PERUSED THE RECORDS. THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE ARE AS UNDER : 1. LETTER DATED 24 TH NOVEMBER , 2006 TO ASSISTANT C OMMISSION OF INCOME - TAX. 2. LETTER DATED 5 OCTOBER 2006 TO ASSISTANT COMMISSION OF INCOME - TAX. 3. THE MAIN INTENTION BEHIND ADVANCING LOANS TO 'IBIZA INDUSTRIES LTD . WAS EXPANSION OF ITS EXISTING BUSINESS, REDUCING COMPETITION, INCREASING THE MARKET SHARE IN THE INDUSTRY. MAFTLAL INDUSTRIES LIMITED 10 4. 'IBIZA INDUSTRIES LTD.' INCURRED HUGE LOSSES AND ITS ENTIRE NET WORTH WAS ERODED. FURTHER, BIFR DECLARED IBIZA AS SICK INDUSTRIAL COMPANY AND THEREFORE, THE ADVANCES WERE WRITTEN OFF. 5. RELIANCE IN THIS REGARDS IS P LACED ON THE DECISIONS: A. INVESTA INDUSTRIAL CORPORATION LTD, (119 ITR 380) (BOMBAY HC) B. VASSANJI SONS & CO. (P.) LTD. VS, C1T [1980] 125 ITR 462 (BOM. HC) C. JACKIE SHROFF V/S. ACIT (2019) 174 ITD 770 (MUMBAI TRIB.) 35. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ASSESSEE HAS GRANTED ADVANCES TO ITS SUBSIDIARY IN EARLIER YEARS FOR EXPANSION OF ITS EXISTING BUSINESS. THE SAID SUBSIDIARY INCURRED HUGE LOSS AND NETWORTH WAS ERODED. FURTHER, BIFR DECLARED THE SAID COMPANY AS S ICK INDUSTRIAL COMPANY AND HENCE ADVANCES WERE WRITTEN OFF. THESE WRITE OFF HAS BEEN DISALLOWED BY THE AUTHORITIES BELOW. LEARNED CIT(A) HAS HELD THAT THE SAME CAN BE ALLOWED AS WRITE OFF ONLY IF THE SAME HAS BEEN CONSIDERED EARLIER AS TRADING INCOME. IN O UR CONSIDERED OPINION LEARNED CIT(A) HAS ERRED IN THIS REGARD AS ADVANCES WERE GIVEN TO THE SUBSIDIARY IN EARLIER PERIOD FOR EXPANSION OF ITS EXISTING BUSINESS . W RITE OFF OF THE SAME QUALIFIES TO BE ALLOWED AS BUSINESS LOSS. IT IS NOT DISPUTED THAT SAID AD VANCES NEEDS TO BE WRITTEN OFF IN VIEW OF THE LOSS OF THE SAID COMPANY AND THE FACTS THAT ITS ENTIRE NETWORTH ERODED AND ALSO BIFR DECLARED IT AS A SICK INDUSTRIAL COMPANY. SO WRITE OFF OF THESE ADVANCES WAS FULLY JUSTIFIED AND ALLOWABLE AS BUSINESS LOSS. IN THIS REGARD DECISION S OF HON'BLE JURISDICTIONAL HIGH COURT REFERRED ABOVE ARE ALSO GERMANE AND SUPPORT THE CASE OF THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 36. GR OUND NO . 28 RELATES TO RENT FROM SEA FACE PARK - RUPEES 100000 / - 37. DURING THE COURSE OF ASSESSMENT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS OFFERED RENTAL INCOME FROM HOUSE PROPERTY, SEAFACE PARK AT RS. 5,552/ - . THE ASSESSING OFFICER OBSERVED T HAT THIS INCOME PERTAINS TO FOUR FLATS. HE SUBMITTED THAT NO DETAIL WAS FURNISHED AS TO WHETHER THESE FLATS ARE LOCATED. HE PROCEEDED TO MAKE AN ESTIMATE OF RS. 1 LAKH OF LUMP - SUM BASIS. 38. UPON ASSESSEES APPEAL LEARNED CIT(A) CONFIRMED THE SAME. MAFTLAL INDUSTRIES LIMITED 11 39. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 40. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THIS ISSUE NEEDS TO BE CONSIDERED AFRESH BY THE ASSESSING OFFICER BY FOLLOWING THE RATIO FROM THE DECISION OF HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE OF TIPTOP TYPOGRAPHY ( INCOME TAX APPEAL NO .1213 OF 2011 DATED 8.8.2014) . IN THIS CASE HON'BLE JURISDICTIONAL HIGH COURT HAS EXPOUNDED THAT MUNICIPAL RATABLE VALUE IS ACCEPTABLE UNLESS THE ASSESSING OFFICER BRINGS ON RECORD TH AT THE ASSESSEE HAS DELIBERATELY UNDERSTATED THE RENT. IN THIS VIEW OF THE MATTER WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH IN THE LIGHT OF HON'BLE JURISDICTIONAL HIGH COURT DECISION CITED ABOVE. 41. GROUND NO. 29 TO 31 RELATED TO LON G - TERM CAPITAL LOSS OF RUPEES 53, 26,039 / - 42. BRIEF FACTS ON THIS ISSUE ARE AS UNDER : - DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS SHOWN LOSS OF RS.53,26,039/ - AS LONG TERM CAPITAL LOSS IN THE RETURN OF INCOME FILED. THE LOSS WAS COMPUTED AS U NDER: LOSS FROM SHARES ALU FLUORIDE LTD AT RS.43,90,164/ - . IT WAS STATE D THAT THESE SHARES NUMBERING 4 LAKH WERE PURCHASED IN THE YEAR 4/2 /1999 AT A COST OF 40 LAKHS. THEY WERE SOLD AT RS.32 LAKHS IN THE YEAR UNDER CONSIDERATION AND AFTER TAKING THE COST INFLATION INDEX THE ACQU I SITIO N VALUE OF THE SHARES ON DATE OF SALE WAS CALCULATED AT RS. 75,90,164 - THE ASSESSING OFFICER HAS HELD THAT AS THE BUSINESS OF THE ASSESSEE WAS ARISING OUT OF SALE OF TEXTILE, EXEMPTION PROVIDED IN THE EXPLANATION TO SECTION 7 3 WOULD APPLY . A S SECTION 73 WOULD C L E ARLY APPLY, THE LOSS INCURRED BY THE ASSESSEE IS IN THE NATURE OF SPECU L ATIO N LOSS AND WO ULD AMOUNT TO RS.8 LAKHS I.E. THE RS.40 LAKHS BEING PURCHASE PRICE MINUS RS. 32 LACS BEING SALE PRICE. THE APPELLAN T STATES THAT IT IS NOT COVERED UNDER THE PROVISIONS OF SECTION 73 AT ALL AND THEREFORE AS THE SHARES ARE TO BE CONSIDERED AS LONG TERM INVESTMENT/ASSET OF THE COMPANY INCOME/LOSS ON THEM IS TO BE TREATED UNDER THE HEAD CAPITAL GAINS/LOSS . S IMILARLY THE SA ME SUBMISSION HAS BEEN HELD FOR LOSS FROM BONDS OF INDIAN CHAMBER OF COMMERCE AT RS.18750 AND LOSS FROM UNITS OF US 64 SCHEME OF UTI AT RS.9,17,125/ - . MAFTLAL INDUSTRIES LIMITED 12 43. UPON ASSESSEES APPEAL LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS UNDER : - I HAVE CAREFULLY CONSIDERED THE ORDER OF THE ASSESSING OFFICER AND THE SUBMISSION OF THE APPELLANT. I FIND THAT THE RELIANCE OF THE ASSESSING OFFICER ON THE EXPLANATION TO SECTION 73 OF THE INCOME TAX ACT FOR OBSERVING THAT THE LOSS DECLARED BY THE APPELLANT WHICH IS BEING CONSIDERED HERE FORMS SPECULATION LOSS IS ABSOLUTELY CORRECT. THE APPELLANT COMPANY IS THE BUSINESS OF TEXTILES AND THEREFORE DOES NOT FALL UNDER THE EXEMPTED BRACKET AS MENTIONED IN THE EXPLANATION SECTION 73 AT ALL. EXPLANATI ON TO SECTION 73 IS A DEEMING PROVISION. UNDER THE SPECIFIED CIRCUMSTANCES EVEN A NORMAL BUSINESS IS REGARDED AS A SPECULATION BUSINESS. UNDER THIS EXPLANATION IT IS NOT TO BE ARGUED WHETHER THE TRANSACTION IS A SPECULATIVE TRANSACTION IN TERMS OF SECTION 43 (5) OR NOT. EVEN THOUGH THE TRANSACTION IS NOT A SPECULATIVE TRANSACTION IT IS TO BE REGARDED AS A SPECULATIVE TRANSACTION AS IT IS A PART OF BUSINESS OF THE PURCHASE AND SALE OF SHARES BY A COMPANY, WHICH DOES NOT FALL INTO EXPECTED CATEGORIES MENTIONE D IN EXPLANATION TO SECTION 73 . THEREFORE IF A LOSS OCCURS IN SUCH A TRANSACTION IT HAS TO BE REGARDED AS SPECULATIVE LOSS UNDER THE PROVISIONS OF EXPLANATION TO SECTION 73. RELIANCE IS PLACED ON THE JUDGEMENT OF MERFIN (I) LTD VERSUS DCIT (2000) 80 ITD 39 9 (HYD - TRIB). KEEPING IN VIEW THE PROVISIONS OF THE SAID SECTION, I FIND THAT THE AO'S ACTION CANNOT BE FAULTED WITH AND THEREFORE THE SAME ARE CONFIRMED AND UPHELD . 44. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 45. WE HAVE HEARD BOT H THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT SINGLE TRANSACTION OF SALE OF SHARES IN ABSENCE OF SYSTEMATIC OR ORGANIZED COURSE OF ACTIVITY OR CONDUCT ON PART OF THE ASSESSEE DOES NOT CONSTITUTE SPECULATIVE BUSINESS. HE FURTHER SUBMITTED THAT LEARNED CIT(A) HAS NOT ADJUDICATED UPON THE LOSS FROM UNITS OF US64 SCHEME OF UTI. IN THIS REGARD HE PLACED RELIANCE ON THE DECISION OF MUMBAI ITAT IN THE CASE OF RAPTAKOS BRETT & CO.LTD. VS. DCIT (69 SOT 383) . 46. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORD, WE NOTE THAT THE DI S ALL O W ANCE IN THIS REGARD IS NOT BASED UPON HOLDING THE TRANSACTION TO BE SPECULAT IVE IN ITSELF . LEARNED CIT(A) HAS GIVEN A CORRECT FINDING THAT E XPLA NA TION TO SECTION 73 OF THE ACT IS APPLICABLE AS DEEMING PROVISION AND UNDER THE SPECIFIED CIRCUMSTANCES EVEN A NORMAL BUSINESS IS REGARDED AS SPECULATION BUSINESS. THAT UNDER THIS EXPLANATION IT IS NOT TO BE ARGUED MAFTLAL INDUSTRIES LIMITED 13 WHETHER THE TRANSACTION IS A SPECULATIVE TRANSACTION IN TERMS OF SECTION 43(5). AS TRA NSACTION IS HIT BY THE PROVISION OF SECTION 73 LOSS HAS TO BE REGARDED AS SPECULATIVE LOSS AND HENCE, AS REGARDS LOSS FROM SHARES OF ALU FLUORIDE LTD., WE UPHOLD THE ORDER OF LEARNED CIT(A). 47. AS REGARDS TREATMENT OF LOSS FROM UNITS OF US64 IS CONCERNE D, WE NOTE THAT LEARNED CIT(A) HAS NOT GIVEN ANY SPECIFIC FINDING IN THIS REGARD. WE REMIT THIS ASPECT TO THE FILE OF THE ASSESSING OFFICER AND TO CONSIDER THE SAME AFRESH IN THE LIGHT OF DECISION REFERRED BY LEARNED COUNSEL OF THE ASSESSEE. 48. G ROU ND NO. 32 REL ATES TO TDS CREDIT OF RUPEES 3, 332 / - . 49. G ROUND NO. 33 RELATES TO INTEREST UNDER SECTION 244A . 50. THESE ARE CONSEQUENTIAL GROUNDS. THE LEARNED CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO VERIFY AND DECIDE. WE DO NOT FIND ANY INFIRMITY IN T HIS REGARD. R EVENUE'S APPEAL 51. T HE GROUNDS RAISED READ AS UNDER : - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN TREATING THE INCOME OF RS.1,05,01,520/ - UNDER THE HEAD 'INCOME FROM OTHER SOURCES' IN SPITE OF TH E FACT THAT IT CONTAINED SERVICE CHARGES FROM AIR - CONDITIONING & OTHER SERVICES RECEIVED BEING INTEGRAL PART OF THE LET OUT PROPERTY AND THUS TREATING INCOME FROM HOUSE PROPERTY AS INCOME FROM OTHER SOURCES.' 2. 'THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 52. BRIEF FACTS ON THIS ISSUE ARE AS UNDER : - THE ASSESSEE HAS SHOWN LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES OF RS. 1,05,01,520/ - . THIS WAS ARRIVED AT AS UN DER : - RECEIPT FROM AIR CONDITIONING AND OTHER SERVICES RS. 42,94, 055/ - LESS : EXPENSES RS.1,47,95,575/ - INCOME/LOSS AT : RS. 1, 0 5,01, 520/ - MAFTLAL INDUSTRIES LIMITED 14 53. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER REQUIRED THE APPELLANT TO EXPLAIN WHY RECEIPTS FROM AIR CONDITIONING AND OTHER SERVICES SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES SHOULD NOT BE COMPUTED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. REPLY OF THE APPELLANT WAS GIV EN BY LETTER DATED 6/12/2006. THE APPELLANT ALSO SUBMITTED SPECIMEN COPIES OF TENANT AGREEMENT AND UTILITY AGREEMENT. THE AO DID NOT ACCEPT THE SUBMISSION MADE BY THE APPELLANT. ON EXAMINATION OF THE DETAILS OF EXPENSES FILED BY THE APPELLANT IT WAS NOTICE D BY THE AO THAT THE EXPENSES INCURRED ARE WITH REGARD TO AIR CONDITIONING EXPENSES, ELECTRICITY MAINTENANCE, WATER CHARGES, ELECTRICITY CHARGES FOR COMMON LIGHTNING ETC. IT WAS HELD THAT THESE EXPENSES HAVE BEEN INCURRED FOR THE INTEGRAL PART OF LETTING O UT PREMISES ON RENT. IF THE PREMISES HAD NOT, BEEN LET OUT ON RENT INCURRING OF SUCH EXPENSES ON ACCOUNT OF ELEVATORS/WATER CHARGES/ETC WOULD NOT HAVE ARISEN. HOLDING THAT IT IS CLEAR THAT THE ACTIVITY OF LETTING OUT BY THE ASSESSEE WITH SERVICE CHARGES IS ONE AND THE SAME AND THEY ARE NOT SEPARABLE THE ENTIRE AMOUNT IS TO BE TAXED AS HOUSE PROPERTY INCOME. IT WAS ALSO HELD THAT THE OTHER EXPENSE EXCEPT FOR MUNICIPAL TAXES CAN BE ALLOWED IN VIEW OF THE FACT THAT 30% DEDUCTION ON A FLAT BASIS IS PROVIDED UND ER SECTION 22 (A) TO SPECIFICALLY TAKE CARE OF SUCH EXPENSES 54. THE AO ALSO RELIED ON THE DECISION OF THE HONOURABLE SUPREME COURT IN THE CASE OF SHAMBOO INVESTMENTS PVT LTD VERSUS CIT 263 ITR 143 HOLDING THAT THIS JUDGEMENT OF THE HONOURABLE SUPREME COU RT HAS OVERRULED ALL THE OTHER JUDGEMENTS THAT THE APPELLANT HAS RELIED UPON. IT WAS ALSO STATED BY THE AO THAT THE APPELLANT HAD BEEN FOLLOWING A DIFFERENTIAL TREATMENT IN RESPECT OF MAFATLAL HOUSE WHICH ALSO JUSTIFIES THE STAND TAKEN. ACCORDINGLY THE AO HAD PROCEEDED TO RECOMPUTE THE RENTAL VALUE IN RESPECT OF MAFATLAL CENTRE AND ARRIVED AT AN INCOME OF RS. L,31,76,578/ - UNDER THE HEAD INCOME FROM HOUSE PROPERTY. FOR MAFATLAL HOUSE THE AMOUNT WORKED OUT UNDER THE HEAD INCOME FROM HOUSE PROPERTY WAS CALCUL ATED AT RS.78,79,609/ - AS DETAILED IN THE ORDER OF THE ASSESSING OFFICER. SIMILARLY FROM SEA FACE PARK THE RENTAL VALUE OF THE 4 FLATS WERE CALCULATED AT RS. 1 LAKH KEEPING IN VIEW THE RENTAL RATES IN MUMBAI MAFTLAL INDUSTRIES LIMITED 15 DURING THE LAST 3 YEARS. THE TOTAL INCOME FROM H OUSE PROPERTY WAS THEREFORE COMPUTED AT RS. 2,11,56,207/ - IN TOTAL . 55. UPON ASSESSEES APPEAL LEARNED CIT(A) HELD AS UNDER : - I HAVE CAREFULLY CONSIDERED THE ABOVE ISSUE. AS FAR AS THE QUESTION REGARDING THE HEAD UNDER WHICH THIS SERVICE CHARGES RECEIV E D BY T H E APPELLANT IS TO BE CHARGED IT IS SEEN THAT THE APPELLANT'S CONTENTION THAT THE DEPARTMENT HAS BEEN ACCEPTING THE METHOD OF COMPUTATION OFFERED BY THE APPELLANT IN EARLIER YEARS WITHOUT QUESTIONING AND THEREFORE IT IS NOT OPEN TO THE DEPARTMENT TO QUESTION THE SAME NOW CARRIES WEIGHT. A RE A DING OF T H E ASSESSMENT ORDERS FOR THE EARLIER YEARS CLEARLY INDICATE THAT THE ASSESSING OFFICERS HAVE ACCEPTED THE COMPUTATION OFFERED BY THE APPELLANT IN TOTALITY. UNDER THE CIRCUMSTANCES I FIND THAT THE STATEME NT OF THE APPELLANT TH AT IT IS NOT OPEN TO THE DEPARTMENT TO TAKE A DIFFERENT STAND SUDDENLY WITHOUT AN Y DIFFERENT FACTS EMERGING IS ABSOLUTELY CORRECT. EVEN ON THE MERIT OF TH E CASE I FIND THAT THE CASE LAWS THAT HAVE BEEN SUBMITTED BY THE APPELLANT ARE I N THE APPELLANT'S FAVOUR. THE APPELLANT HAS ALSO BEEN ABLE TO BRING O UT THE DISTINGUISHING FACTS BETWEEN ITS OWN CASE AND THAT OF SHAMBOO INVESTMENTS PVT LTD ON WHICH THE AO HAS RELIED S PECIALLY IN REGARD TO THE FACT THAT THERE ARE TWO SEPARATE AGREEMENTS MADE BY THE APPELLANT. THEREFORE THE INCOME DERIVED FROM THE PREMISES CANNOT ALL BE TREATED AS INCOME FRO - HOUSE PROPERTY. LOOKING INTO THE CAPACITY IN WHICH THE INCOME HAS BEEN DEEMED AN D THE VERY FACT THAT THERE ARE SEPARATE AGREEMENTS, IT WILL BE HELD T HAT THERE ARE TWO SETS OF INCOME IS DERIVED UNDER TWO DIFFERENT HEAD I.E. THE RENTALS REALISED FROM THE PROPERTY SHOULD BE TAXED UNDER THE HEAD INCO M E FRO M HOUSE PROPERTY AND THE AMOUNTS RECEIVED AS SERVICE CHARGES WHICH : S NOT Z PART OF THE RENT BUT REPRE SENTS THE VALUE OF SERVICES PROVIDED BY .THE APPELLANT SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOUR C E . 56. AGAIN S T THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US , Q UA THE DI C I SI ON OF LEARNED CIT(A) HOLDING THE SERVICE CHARGES TO BE SEPARAT E INCOME DISTINCT FROM RENT. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT LEARNED CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT DEPARTMENT HAS BEEN ACCEPTING SERVICE CHARGES AS INCOME FROM OTHER SOURCES AND THE METHOD OF COMPUTATION HAS BEEN ACCEPTED IN EARLIER WITHOUT ANY QUESTION. HENCE, ON THIS PLAN K LEARNED CIT(A) HAS HELD THAT DEPARTMENT CANNOT BE A TAKE CONTRARY STAND. WE FIND OURSELVES IN AGREEMENT WITH THE VIEW OF LEARNED CIT(A) . T HOUGH RES JUDICATA D OES NOT APPLY TO THE INCOME TAX PROCEEDINGS. HOWEVER, IT HAS BEEN REITERATED BY HIGHER COURT , IN SEVERAL CASE LAWS THAT WITHOUT ANY CHANGE IN LAW OR FACTS SETTLED POSITION SHOULD NOT BE CHANGED. IN THIS CASE, WE FIND THAT THE ASSESSING OFFICER HAS NOT MAFTLAL INDUSTRIES LIMITED 16 BROU GHT ON RECORD THAT THERE IS ANY CHANGE IN FACTS OR LAW ON THIS ISSUE AS COMPARED TO EARLIER YEARS. FURTHERMORE, ON MERITS ALSO, LEARNED CIT(A) HAS GIVEN FINDING THAT THERE ARE SEPARATE AGREEMENTS AND THE INCOME UNDER SEPARATE AGREEMENTS HAVE TO BE CONSIDER ED UNDER SEPARATE HEADS. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A). 57. T HE GROUNDS RAISED READ AS UNDER : - THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT DECIDING THE FOLLOWING GROUNDS OF APPEAL: GROUND NO. 21 THE LE ARNED ASSESSING OFFICER ERRED IN DISALLOWING EXPENSES OF RS. 1,47,95,575 CLAIMED BY THE APPELLANT UNDER THE HEAD 'INCOME FROM OTHER SOURCES '. GROUND NO. 22 THE LEARNED ASSESSING OFFICER ERRED IN CALCULATING INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURC ES' AS NIL . 2. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 58. U PON HEARING BOTH THE COUN SE L IT TRANSPIRES THAT THE ISSUE RAISED WAS VERY MUCH THERE BEFORE THE LEARNED COMMISSION OF INCOME TAX APPEALS. HOWEVER THE SAME HAS N OT BEEN DEALT BY THE LEARNED CIT ( APPEALS ) . ACCORDINGLY , WE REMIT THIS ISSUE TO THE FILE OF LEARNED CIT ( APPEALS ) TO CONSIDER THE ISSUE AND GIVE A FINDING. NEEDLESS TO ADD ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD . 59. IN THE RESULT, AS SESSEES APPEAL AND CROSS OBJECTION ARE PARTLY ALLOWED AND REVENUES APPEAL STANDS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 20 . 9 . 201 9 . SD/ - SD/ - ( RAVISH SOOD ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 20 / 9 / 20 1 9 MAFTLAL INDUSTRIES LIMITED 17 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASS ISTANT REGISTRAR ) PS ITAT, MUMBAI