VELVET HOLDINGS P.LTD, MUMBAI V. ASST CIT CEN CIR 31, MUMBAI

ITA 5214/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2788 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 05-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 234B; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND PAWAN SINGH, JM ./ I.T.A. NO . 5214 / MUM/20 1 2 ( / ASSESSMENT YEA R : 200 9 - 10 ) M/S VELVET HOLDINGS PVT LTD, 32, MADHULI, 3 RD FLOOR, DR.ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI - 400018 / VS. THE ASSTT. COMMISSIONER OF INCOME TAX - CC 3 1 , MUMBAI . ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAA CV4445R / APPELLANT BY SHRI DHARMESH SHAH / RESPONDENT BY SHRI P RAMOD NIKALJE / DATE OF HEARING : 2.11 . 201 5 / DATE OF PRONOUNCEMENT: 2.11. 201 5 / O R D E R P ER B R BASKARAN, AM: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26.06.201 2 PASSED BY THE LD. CIT(A) - 40, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2009 - 10. 2. AT THE TIME OF HEARING, THE LD. COUNSEL APPEARING FOR THE ASSESSEE DID NOT PRESS GROUND NOS. 1 TO 3 AND HENCE THESE GROUNDS ARE DISMISSED AS NOT PRESSED. GROUND NO.7 IS GENERAL IN NATURE. THE REMAINING THREE GROUNDS RELATE TO THE FOLLOWING ISSUES: A) REJECTION OF CLAIM OF INTEREST EXPENDITURE UNDER THE NORMAL PROVISIONS OF THE ACT; ITA NO. 5214 / MUM/20 12 2 B) REJECTION OF INTEREST LIABILITY UNDER SECTION 115JB OF THE ACT; AND C) COMPUTATION OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 3. THE ASSESSEE IS ONE OF THE NOTIFIED ENTITIES COMING UNDER HARSHAD MEHTA GRO UP AGAINST WHOM STOCK SCAM CHARGES ARE PENDING. THE LD A.R SUBMITTED THAT THE ISSUES (A) AND (B) REFERRED ABOVE GO TOGETHER AND IN THE IMMEDIATELY PRECEDING YEAR , IDENTICAL ISSUES WERE SET ASIDE TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION . HE AL SO FURNISHED A COPY OF DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NO .91/ MUM/20 13 (AY : 2008 - 09 ) DATED 25.8. 201 5. 4 . THE LD. DR DID NOT CONTRADICT THE FACTUAL ASPECTS PRESENTED BY THE LD.AR. 5 . AFTER HEARING RIVAL CONTEN TIONS, ON PERUSAL OF THE RECORD AND BY FOLLOWING THE ORDER PASSED OF THE TRIBUNAL PASSED IN ASSESSEES OWN CAS E (SUPR A), WE SET ASIDE BOTH THE ISSUES TO THE FILE OF THE LD.CIT(A) FOR FRESH ADJUDICATION OF THE SAME. 6 . THE LAST ISSUE RELATES TO THE CHARG ING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 7 . THE LD. COUNSEL FILED A PETITION IN FORM NO.8 AS PER THE PROVISIONS OF SEC. 158A(1) OF THE ACT. HE SUBMITTED THAT THE ASSESSEE HAD ALSO FILED SIMILAR PETITION FOR THE ASSESSMENT YEAR 2008 - 09. THE L D D.R SUBMITTED THAT THE SUBMISSION MADE BY HIM IN THE PRECEDING YEAR MAY BE CONSIDERED FOR THIS YEAR ALSO. WE NOTICE THAT AN IDENTICAL ISSUE WAS CONSIDERED IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09 (SUPRA) AND FOR THE ITA NO. 5214 / MUM/20 12 3 SAKE OF CONVENIEN CE, WE EXTRACT BELOW THE RELEVANT DISCUSSIONS MADE IN THAT ORDER: 5. THE NEXT ISSUE RELATES TO THE CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 6. THE LD. COUNSEL CONTENDED THAT THE CHARGING OF INTEREST IS BEING CONTESTED ON TWO GROUNDS, VIZ ., (A) THE VERY LIABILITY TO PAY THE INTEREST U/S 234A, 234B AND 234C OF THE ACT IS BEING AGITATED, SINCE THE ASSESSEE WAS DISABLED FROM PAYING ADVANCE TAX BY ATTACHING ALL THE ASSETS BELONGING TO THE ASSESSEE AND (B) MANNER OF COMPUTATION OF INTEREST U/S 234B AND 234C, IF IT IS HELD THAT THE ASSESSEE IS LIABLE TO PAY ADVANCE TAX. 7. WITH REGARD TO THE FIRST ISSUE, THE HONBLE BOMBAY HIGH COURT HAS ALREADY HELD IN THE CASE OF DIVINE HOLDINGS PVT LTD AND CASCADE HOLDINGS PVT. LTD THAT THE PROVISION OF S ECTIONS 234A, 234B AND 234C ARE MANDATORY IN NATURE AND WOULD ALSO APPLY TO THE NOTIFIED ENTITIES ALSO. THE LD. COUNSEL SUBMITTED THAT THE TRIBUNAL, BY FOLLOWING THE ABOVE SAID DECISIONS OF HONBLE BOMBAY HIGH COURT IN ASSESSMENT YEAR 2007 - 08, HAS HELD TH AT THE ASSESSEE WOULD BE LIABLE TO PAY INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS PREFERRED AN APPEAL AGAINST THE SAID DECISION OF THE TRIBUNAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AND THE SAM E IS PENDING. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS FILED A DECLARATION IN FORM NO.8 IN TERMS OF SECTION 158A(1) OF THE ACT AND ACCORDINGLY, HE SUBMITTED THAT THIS LEGAL ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO WITH A DIRECTION TO FOLLOW T HE DECISION RENDERED BY THE HONBLE BOMBAY HIGH COURT FOR THE ASSESSMENT YEAR 2007 - 08. 8. THE LD. SPECIAL COUNSEL APPEARING FOR THE REVENUE SUBMITTED THAT THE APPEAL FILED BY THE ASSESSEE BEFORE THE HONBLE BOMBAY HIGH COURT HAS NOT BEEN ADMITTED SO FAR. HOWEVER, WHEN IT WAS POINTED OUT THAT THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE FILE OF THE AO BY TAKING COGNIZANCE OF DECLARATION FILED BY THE ASSESSEE, THE LD. SPECIAL COUNSEL AGREED THAT THE SIMILAR DIRECTION MAY BE GIVEN IN THE INSTANT CASE ALSO. WE NOTICE THAT THE TRIBUNAL HAS PASSED THE FOLLOWING ORDER IN THE CASE OF M/S FORTUNE HOLDINGS PVT LTD V/S ACIT IN ITA NO.6829, 6840,6830/MUM/2013 IN AY 2001 - 02 TO 2003 - 04 IN RESPECT OF THIS ISSUE: ITA NO. 5214 / MUM/20 12 4 7. IT HAS ALREADY MENTIONED THAT ASSESSEE HAS FILED A D ECLARATION IN FORM NO.8 UNDER SECTION 158A, THEREFORE, ACCORDING TO THE DECLARATION FILED THE ISSUE IS DECIDED AGAINST THE ASSESSEE WITH A DIRECTION THAT WHEN THE DECISION ON THE QUESTION OF LAW IN RESPECT OF ASSESSMENT YEAR 2007 - 08 BECOMES FINAL, THE SAME SHALL BE APPLIED TO THE PRESENT APPEALS IN ACCORDANCE WITH SUB - SECTION (5) OF SECTION 158A OF THE ACT. ACCORDINGLY, THIS GROUND FOR ALL THE THREE YEARS IS DECIDED AGAINST THE ASSESSEE IN THE MANNER AFORESAID. BY FOLLOWING THE ABOVE SAID DECISION, WE AL SO SET ASIDE THIS MATTER WITH SIMILAR DIRECTIONS. 9. WITH REGARD TO THE SECOND LIMB, THE LD A.R SUBMITTED THAT THE INTEREST U/S 234B AND 234C OF THE ACT SHOULD BE COMPUTED, AFTER DEDUCTING THE TAX DEDUCTIBLE AT SOURCE FROM THE INCOME OF THE ASSESSEE. IN SUPPORT OF THIS CONTENTION, HE INVITED OUR ATTENTION TO THE DECISION RENDERED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF FORTUNE HOLDINGS PVT LTD FOR AY 2001 - 02 TO 2003 - 04 (SUPRA). A PERUSAL OF THE ABOVE ORDER OF THE TRIBUNAL, WE NOTICE THAT THIS ISSUE HAS BEEN DISPOSED OF WITH THE FOLLOWING OBSERVATIONS: 8. APROPOS GROUND NO.4 OF ALL THE THREE APPEALS, THIS ISSUE WAS STATED TO BE COVERED BY THE DECISION OF TRIBUNAL IN GROUP CASE NAMELY M/S.TOPAZ HOLDING PVT. LTD. VS. ACIT, COPY OF THIS DEC ISION IS FILED AT PAGE 11 TO 13 OF THE PAPER BOOK. THIS ISSUE IS DECIDED VIDE PARA 3 TO 3.1 AND THE SAME IS REPRODUCED AS UNDER: 3. NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S. 234 OF THE ACT. BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFIE D ENTITY, THAT THE PROVISIONS OF S. 234A, 234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLIED WITH, THAT THE ASSETS WERE ALREADY IN ATTACHMENT OF THE CUSTODIAN APPOINTED UNDER THE PROVISIONS OF THE SPECIAL COURTS ACT, THAT THE TRIBUNAL IN THE CASE OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE VIEW IN FAVOUR OF THE APPELLANT, THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIVINE HOLDINGS PVT. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVISIONS OF SECTIONS 234A, 234B AND 234C OF T HE ACT WERE MANDATORY AND WERE APPLICABLE TO THE NOTIFIED ENTITIES ALSO, THAT THE ASSESSEE WAS IN THE ITA NO. 5214 / MUM/20 12 5 PROCESS OF FILING AN APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE SUPREME COURT, THAT THE INCOME EARNED IN THE YEAR UNDER CONSIDERATION WAS SUBJECTED TO PROVISIONS OF TDS, THAT THE CHANGEABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD BE AFTER CONSIDERING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED. THE APPELLANT RELIES IN THIS REGARD ON THE FOLLOWING DECISIONS. HE RELIED UPON THE CASES OF MOTOROLA INC. V. DCIT [95 ITD 269 (DEL.(SB)], SEDCO FORES DRILLING CO. LTD. [264 ITR 320],NGC NETWORK ASIA LLC [313 ITR 187] ,SUMMIT BHATACHARYA [ 300 ITR (AT) 347 (BOM)(SB)], VIJAL GOPAL JINDAL [ITA NO. 4333/DEL/2009] & EMILLO RUIZ BERDE JO [320 ITR 190 (BOM)].DR RELIED UPON THE CASES OF DEVINE HOLDINGS PVT. LTD. 3.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF DEVINE HOLDINGS PVT. LTD. HONBLE BOMBAY HIGH COURT HAS HELD THAT PROVIS IONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO. THEREFORE, UPHOLDING THE ORDER OF THE FAA TO THAT EXTENT, WE HOLD THAT PROVISIONS OF SECTION 234 OF THE ACT ARE APPLICABLE. AS FAR AS CALCULATION PART IS CONCERNED, WE FIND ME RITS IN THE SUBMISSION MADE BY THE ASSESSEE. THEREFORE, WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSIDERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED AND AFTER AFFORDI NG A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO. 5 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. 8.1 IN THIS VIEW OF THE SITUATION, AFTER HEARING BOTH THE PARTIES THE ISSUE RAISED IN GROUND NO.4 FOR ALL THE THREE APPEALS IS RESTORED BA CK TO THE FILE OF AO FOR FRESH ADJUDICATION IN THE MANNER AS DIRECTED IN THE AFOREMENTIONED CASE. WE DIRECT ACCORDINGLY. THIS GROUND IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. BY FOLLOWING THE ABOVE SAID DECISIONS OF TRIBUNAL, WE SET ASIDE THE MATTER O F COMPUTATION OF INTEREST U/S 234A, 234B AND 234C TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS. ITA NO. 5214 / MUM/20 12 6 8 . BY FOLLOWING THE ABOVE SAID DECISIONS OF TRIBUNAL, WE SET ASIDE THE MATTER OF COMPUTATION OF INTEREST U/S 234A, 234B AND 234C TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED ACCORDINGLY ON 2 ND NOVEMBER , 2 015. 2 ND NOV , 2 015 SD SD ( PAWAN SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 2 ND NOV , 2 015. . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI