PRAKASH SHANKAR WAGH, MUMBAI V. ACIT 19(3), MUMBAI

ITA 5240/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75378 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KALPESH TURALKAR
• Keywords: Business income; Business expenditure; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.5240/M/2012 ( / ASSESSMENT YEAR: 2008 - 2009 ) SHRI PRAKASH SHANKAR WAGH, KALPAK HOUSE, 128 TURNER ROAD, BADRA (W), MUMBAI 400050. / VS. ACIT - 19(3), 3 RD FLOOR, PIRAMAL CHAMBERS, MUMBAI 400 012. ./ PAN : AAAPW 4280 C ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MS. AARTI SATHE & MR. KALPESH TURALKAR / RESPONDENT BY : SHRI RAVI PRAKASH, DR / DATE OF HEARING : 15.1.2014 / DATE OF PRONOUNCEMENT : 15 .1.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 17.8.2012 IS AGAINST THE ORDER OF THE CIT (A) - 30, MUMBAI DATED 27.6.2012 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UN DER: 1. THE CIT (A) HAS ERRED IN CONFIRMING THE INCOME FROM FINANCE ACTIVITY AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS OR PROFESSION AND HAS FURTHER FAILED TO APPRECIATE THAT THE APPELLANT HAS CONSISTENTLY SHOWN IN ITS RETURN THE ACTIVITY FROM FINANCE AS INCOME FROM BUSINESS OR PROFESSION AND THE SAME IS ACCEPTED AND ASSESSED BY THE INCOME TAX DEPARTMENT AS SUCH IN THE EARLIER ASSESSMENT YEAR . 2. THE LD CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF THE GENUINE BUSINESS EXPENSES INCURRED OF RS. 14,31,203/ - FOR THE PURPOSE OF AND DURING THE COURSE OF CARRYING OF THE BUSINESS. 3. THE LD CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE ASSES SMENT WITHOUT ANY BASIS BY TOTAL DISREGARD TO AND WITHOUT APPRECIATING THE MATERIAL EVIDENCE AVAILABLE ON RECORDS AND HAS FURTHER ERRED IN NOT GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 2 3 . AT THE OUTSET, MS. AARTI SATHE, LD COUNSEL FOR THE A SSESSEE MENTIONED THAT THIS IS THE CASE WHERE THE ASSESSEE HAS BEEN IN THE ACTIVITY OVER THE YEARS AND RELIED ON THE COPIES OF RE - ASSESSMENT ORDER AND THE ASSESSMENT ORDER FOR THE EARLIER ASSESSMENT YEARS. THE ASSESSEE EARNED INTEREST INCOME FROM THE BANK AND THE SAME IS OFFERED AS BUSINESS INCOME CONSIDERING THE NEXUS OF THE SAID INCOME TO THE BUSINESS ACTIVITIES OF THE ASSESSEE. THE REGULAR AND OTHER BUSINESS EXPENSES ARE CLAIMED IN THE P&L ACCOUNT, WHICH SHOWS THE SAID INTEREST RECEIPTS AS BUSINESS INC OME. THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE AO CONSIDERING THE ABSENCE OF ANY ACTIVE BUSINESS IN THE YEAR UNDER CONSIDERATION . AO TAXED THE SAME AS INCOME FROM OTHER SOURCES. FURTHER, AO DENIED THE BUSINESS EXPENSES DEBITED TO THE P & L ACCOUNT HOLDING THAT THESE EXPENSES DID NOT CONSTITUTE BUSINESS EXPENSES. THE ASSESSEES SUBMISSION THAT THE EXPENDITURE ARE MANDATORILY REQUIRED TO BE INCURRED FOR MAINTENANCE OF THE OFFICE DURING THE LULL, WAS REJECTED BY THE AO. DURING THE FIRST APPELLATE PRO CEEDINGS, CIT (A) CONFIRMED THE SAME. 4. BEFORE US, IN THIS FACTUAL MATRIX, LD COUNSEL PRAYED FOR SETTING ASIDE THE MATTER TO THE FILES OF THE AO FOR EXAMINING THE ISSUE AFRESH AFTER BOTH ON THE FACTS OF TAXABILITY OF INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS WELL AS THE ALLOWABILITY OF EXPENSES DEBITED TO THE P & L ACCOUNT. I T IS ALSO THE SUBMISSION OF THE ASSESSEE, WITHOUT PREJUDICE, IN CASE THE INTEREST INCOME IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES, ASSESSEE IS ENTITLED FOR THE SET OFF OF THE EXPENSES INCURRED FOR EARNING OF THE SAID INTEREST INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 57( III ) OF THE ACT. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE AO AND THE CIT (A). CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE REQUEST OF THE ASSESSEE SHOULD BE ACCEPTED AND THE MATTER IS R EMANDED TO THE FILES OF THE AO FOR EXAMINATION AND DECISION OF BOTH THE ISSUES OF TAXABILITY OF INTEREST INCOME UNDER THE CORRECT HEAD OF INCOME AS WELL AS THE ALLOWABILITY OF THE EXPENSES INCURRED FOR MAINTENANCE OF THE OFFICE OR BUSINESS. AO IS DIRECTED TO ADJUDICATE THE SAME AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 3 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES . ORDER PRON OUNCED IN THE OPEN COURT ON 1 5 T H JANUARY, 2014. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 15 .1 .2014 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI