Kisan Discretionary Family Trust, Ahmedabad V. The Dy.CIT.,Circle-10, Ahmedabad

ITA 529/AHD/2009

• Counselvise Citation: 52920514 RSA 2009
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 19-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Source of fund; Set aside

Judgement Text

, , . .. . . .. . , , , , . .. . . .. .!'#$ !'#$ !'#$ !'#$ , % % % % & & & & IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SHRI A.K.GARODIA, A.M.) . ITA NO. 529/AHD./2009 : ' ()- 2005-06 KISAN DISCRETIONARY FAMILY TRUST, AHMEDA BAD (,- /APPELLANT) -VS- (PAN : AAATK 2653D) D.C.I.T., CIRCLE-10, AHMEDABAD ( ./,- /RESPONDENT ) . ITA NO. 597/AHD./2009 : ' ()- 2005-06 D.C.I.T., CIRCLE-10, AHMEDABAD (,- /APPELLANT) -VS- KISAN DISCRETIONARY FAMILY TRUST, AHMEDABAD ( ./,- /RESPONDENT ) ' 01 2 3 / ASSESSEE BY : SHRI H.C.SHAH, A.R. 4 2 3 / REEVENUE BY : SHRI P.R.GHOSH, SR.D.R. 5'6 2 1% / DATE OF HEARING : 18/10/2011 7'( 2 1% / DATE OF PRONOUNCEMENT : 20/10/2011 / ORDER PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THESE CROSS APPEALS ARE AGAINST THE ORDER DATED 19 -12-2008 OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AHMEDABAD FOR THE ASSESSMENT YEAR 2005-2006. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN ITS AP PEAL IN ITA NO.529/AHD/2009 READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING DISALLOWANCE OF ACCOUNTING CHAR GES OF RS.5,00,000/-. ITA NO. 529-AHD-09 & 597-AHD-09 2 3. WE HAVE HEARD BOTH THE SIDES. IT IS PERTINENT TO NOTE THAT ITAT A BENCH IN ASSESSEES OWN CASE IN ITA NO.1753/AHD/2009 FOR THE ASSESSMENT YEAR 2004-05, VIDE ITS ORDER DATED 06/05/2011, RESTORED THIS MATTER TO THE FILE OF THE AO. THE RELEVANT DISCUSSION IS CONTAINED IN PARA 14 AND 14.1 OF THE IMPUGNED ORDER, WHICH READS AS UNDER: 14. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ITAT,A' BENCH, AHMED ABAD IN THE CASE OF DCIT - VS- KISAN DISCRETIONARY FAMILY TRUST IN ITA NO.1966 /A/2007 BY ITS ORDER DATED 12.10.2007 IN PARA 9 OBSERVED AS UNDER: '9. AFTER CAREFUL CONSIDERATION OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION TH AT THERE CANNOT BE ANY DISPUTE AS TO THE LIABILITY OF SUCH TYPE OF EXP ENSES, BUT WHILE CONSIDERING THE JUSTIFICATION FOR ALLOWING SUCH EXP ENSES; ONETHING WHICH IS TO BE KEPT IN MIND, IS THE REASONABLENESS OF THE -EXPENDITURE VISA-AVIS TO THE EXIGENCIES/REQUIREMENTS, OF THE BUSINESS WHI CH MAY INCLUDE THE QUANTUM OF SERVICES, QUALITY OF SERVICES, NECESSITY FOR SUCH SERVICES, SO ON AND SO FORTH AND, THEREFORE, IF WE CONSIDER THE ASSESSEE S PRESENT CLAIM IN THE LIGHT OF THESE REQUIREMENTS, FT WILL BE SEEN THAT THOUGH THE ASSESSEE'S BUSINESS EXIGENCIES MAY HAVE REQUIRE D SUCH SERVICES, BUT KEEPING IN VIEW THE NATURE OF SOURCES OF INCOME AS WELL AS THE QUANTUM OF THE INCOME ONE CANNOT PREVENT HIMSELF FROM COMIN G TO THE CONCLUSION THAT BUSINESS EXIGENCIES WERE NOT COMMENSURATE TO T HE QUANTUM OF EXPENDITURE; MEANING THEREBY THAT REQUIREMENTS OF S UCH SERVICES TO MEET THE BUSINESS EXIGENCIES WAS FAR FAR LITTLE THAN THE QUANTUM OF EXPENDITURE. THE ASSESSEE, DURING THIS YEAR, HAD IN COME EITHER FROM OTHER SOURCES, SUCH AS, INTEREST AND DI VIDEND ON OLD INVESTMENTS/DEPOSITS AND LOANS, ETC. AND/OR INCOME FROM CAPITAL GAIN FOR WHICH THE REQUIREMENT OF CONSULTANT AND ACCOUNTANT WAS VERY LITTLE ONE. SIMILARLY, THE BROKERAGE ACTIVITIES CARRIE D ON BY THE ASSESSEE ALSO DID NOT REQUIRE SERVICES TO SUCH A LARGE EXTEN T/SCALE, MEANING THEREBY THAT THOUGH THE ASSESSEE MIGHT HAVE REQUIRE D SUCH SERVICES, BUT IT WAS NOT TO SUCH A SCALE SO AS TO MAKE THE ASSESS EE TO INCUR SUCH A HUGE EXPENSES.' 14. IT IS PERTINENT TO NOTE THAT THE RATIO OF AFO RESAID DECISION IS NOT CONSIDERED BY ANY OF THE DEPARTMENTAL AUTHORITIES BELOW. WE, T HEREFORE, SET ASIDE THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON DISALLOWANCE OF SERVICE CHARGES/RENT IN RESPECT OF ALL THE ASSESSEE S AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TH AT THE ASSESSING OFFICER WILL RE-WORK OUT THE DISALLOWANCES, IF ANY, KEEPING IN V IEW THE RATIO OF THE DECISION OF ITAT 'A' BENCH, AHMEDABAD IN THE CASE OF KISAN D ISCRETIONARY FAMILY ITA NO. 529-AHD-09 & 597-AHD-09 3 TRUST FOR THE ASSESSMENT YEAR 2003-04, AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. 3.1 IN VIEW OF THE ABOVE, WE, FOLLOWING THE DECISIO N OF THE ITAT, A BENCH DATED 06.05.2011 IN ASSESSEES OWN CASE FOR THE ASSESSMEN T YEAR 2004-2005, SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE T HE SAME TO HIS FILE WITH THE DIRECTION THAT HE WILL RE-ADJUDICATE THIS ISSUE AFRESH, AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. 4. THE ONLY ISSUE RAISED BY THE REVENUE IN ITS APPE AL IN ITA NO.597/AHD/2009 READS AS UNDER: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.25,74,403/- MADE ON ACCOUNT OF INTEREST INCOME O N ACCRUAL BASIS BY THE A.O. 5. WE HAVE HEARD BOTH THE SIDES. AT THE TIME OF HEA RING BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERE D IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE IN ITA NO.1560/AHD/2009 FOR THE ASSESSMENT YEAR 2004-05 VIDE DECISION DATED 18.09.2009 OF THE ITAT, A BENCH, A HMEDABAD. THE LD. D.R., APPEARING ON BEHALF OF THE REVENUE, COULD NOT CONTR OVERT THE AFORESAID SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. HOWEVER, THE DATE OF MATURITY OF REC BONDS IS TO BE VERIFIED BY THE AO AND IF THE DATE OF MATURITY FALL S IN THE ASSESSMENT YEAR UNDER APPEAL, THEN THE ENTIRE INTEREST INCOME ON REC BOND S IS REQUIRED TO BE TAXED IN THIS YEAR ON CASH BASIS. THEREFORE, THE AO SHOULD EXAMIN E THIS ASPECT AND DECIDE THE ISSUE AFRESH, AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8 2 7'( #' ) 20/10 /2011 ' 9 2 !6 : THIS ORDER PRONOUNCED IN THE OPEN COURT ON 20/10/2011. SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20/10/2011 ITA NO. 529-AHD-09 & 597-AHD-09 4 2 22 2 .1; .1; .1; .1; <;(1) <;(1) <;(1) <;(1)- -- - 1. ,- 2. ./,- 3. 1 5@ 4. 5@- - 5. ;C! .1' , , : 6. !$ E8 , F/ 4 , : TALUKDAR/ SR. P.S.