ACIT CIR 4(2), MUMBAI V. CITIGROUP GLOBAL MARKETS INDIA P. LTD, MUMBAI

ITA 5231/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1566 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 11-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R DAS
• Assessee Lawyers: A V SONDE
• Keywords: Depreciation; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KUM AR ,(AM) ITA NO.5231/MUM/2009 ASSESSMENT YEAR :2002-03 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-4(2) ROOM NO.642, 6HT FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. CITIGROUP GLOBAL MARKETS INDIA PVT. LTD. BAKHTWAR, 4 TH FLOOR NARIMAN POINT MUMBAI-400 021. ..( RESPONDENT ) P.A. NO. (AAECS 7234 F) APPELLANT BY : SHRI K.R. DAS RESPONDENT BY : SHRI A. V. SONDE O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 8.6.2009 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2002-03. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF RESEARCH BASED STOCK BROKING, T RADING AND INVESTMENT BANKING. THE RETURN WAS FILED DECLARING T OTAL INCOME OF RS.8,47,91,121/-. WHILE MAKING THE ASSESSMENT THE ASSESSING OFFICER ITA NO.5231/M/09 A.Y:02-03 2 INTERALIA DISALLOWED BAD DEBTS RS.5,50,03,219/-, DEPRECIATION O F BSE CARD RS.59,06,050/-, DISALLOWANCE OF LOSS ON SALE OF SHARES U/S.94(7) RS.13,21,084/-, DISALLOWANCE U/S.14A RS.1,31,670/- AND DEDUCTION U/S.40(A) RS.4,17,30,478/- AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.20,81,58,795/- VIDE ORDER DATED 27 .1.2005 PASSED U/S.143(3) OF THE I.T. ACT, 1961(THE ACT). WHILE MAKI NG THE ASSESSMENT THE ASSESSING OFFICER ALSO INITIATED PENALTY PRO CEEDING U/S.271(1)(C) OF THE ACT AND ACCORDINGLY THE ASSESSEE WAS ASKE D TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE LEVIED U/S.2 71(1)(C) OF THE ACT. IN RESPONSE IT WAS INTERALIA SUBMITTED BY THE ASSESSEE, IN BRIEF, THAT THE ASSESSEE HAS MADE CLAIMS BASED ON FACTUAL A ND LEGAL POSITION AT THAT TIME. THEREFORE, PENALTY IS NOT LEVI ABLE. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS CONCEAL ED PARTICULARS OF INCOME TO THE EXTENT OF RS.5,62,48,561/- (BAD DEBTS OF RS.5,50,03,219/- AND DISALLOWANCE U/S.94(7) OF RS.12,45 ,342/-) AND, HENCE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S.271(1) (C) OF THE ACT READ WITH EXPLANATION-1 THERETO AND ACCORDINGLY HE IMPOSED PENALTY OF RS.1,96,86,996/- EQUIVALENT TO THE TAX SOUGHT TO BE E VADED ON THE CONCEALED INCOME OF RS.5,62,48,561/-, VIDE ORDER DATED 30.3.2007 PASSED U/S.271(1)(C) OF THE ACT. ON APPEAL THE LD. CIT( A), WHILE OBSERVING THAT THE TRIBUNAL HAS DELETED THE ADDITION ON ACCOUNT OF BAD DEBTS IN RESPECT OF THREE PARTIES RS.5,50,03,219/- AND D ISALLOWANCE OF ITA NO.5231/M/09 A.Y:02-03 3 DEPRECIATION ON BSE CARD OF RS.59,06,050/-. THUS, THE VERY BASIS FOR LEVY OF PENALTY ON THESE ISSUES CEASES TO EXIST AND ACCORDING LY PENALTY ON THE SUM OF RS.5,50,03,219/- AND RS.59,06,050/- DOES NOT SURVIVE. HOWEVER, WITH REGARD TO THE PENALTY ON DISALLOWANCE ON ACCOUNT OF LOSS ON SALE OF SHARE U/S.94(7), THE LD. CIT(A) WHILE OBSER VING THAT THE EXPLANATION OF THE ASSESSEE IS FOUND TO BE NOT BONAFIDE CONFIRMED THE LEVY OF PENALTY ON THE SAID AMOUNT AND ACCORDINGLY PAR TLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DE LETION OF PENALTY ON THE ADDITION MADE ON ACCOUNT OF BAD DEBTS WHICH IS SUB -JUDICE BEFORE THE HONBLE BOMBAY HIGH COURT. 4. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED T HAT THE TRIBUNAL IN THE ASSESSEE'S OWN APPEAL CITIGROUP GLOBAL MARKETS IND IA PVT. LTD. VS. DCIT AND VICE VERSA IN ITA NO.1157/M/06, ITA NO.14 93/MUM/2007 AND VICE VERSA IN ITA NO.537/M/06 FOR THE ASSESSMENT YEAR S 2002-03 AND 2003-04 VIDE ORDER DATED 19.2.2009 HAS DELETED T HE DISALLOWANCE OF BAD DEBTS, THEREFORE, THE ISSUE MAY BE DECIDED ACCORDI NGLY. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED ON RECORD THE COPY O F THE SAID ORDER OF THE TRIBUNAL. ITA NO.5231/M/09 A.Y:02-03 4 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT THAT THE TRIBUNAL IN ASSESSEE'S APPEAL SUPRA, VIDE ORDER DATED 19. 2.2009 HAS DELETED THE DISALLOWANCE OF BAD DEBTS BY FOLLOWING THE DECISION IN CIT VS. STAR CHEMICALS (BOM.)P. LTD. IN 220 CTR 319 (BOM.) AND DCIT VS. OMAN INTERNATIONAL BANK (SAOG) IN (2006) 286 ITR (A T) 08(SB)(MUM.). SINCE THE VERY BASIS OF LEVY OF PENALTY ON THE ABOVE ISSUE CEASED TO EXIST, THEREFORE, THE PENALTY HAS NO LEGS TO STAND AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDING OF T HE LD. CIT(A) IN DELETING THE IMPUGNED PENALTY, IMPOSED BY THE ASSESSING OFFICER. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED . 6. IN THE RESULT, THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.6.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI, DATED: 4.6.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.5231/M/09 A.Y:02-03 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 26.5.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 28.5.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 4.6.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 7.6.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER