ADDL CIT 9(1), MUMBAI V. KISHORE BAHAJANDAS BAJAJ, MUMBAI

ITA 5313/MUM/2012

• Counselvise Citation: 531319914 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHUVEER MADNAPPA
• Assessee Lawyers: V C SHAH

Judgement Text

, ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANJAY GARG,JUDICIAL MEMBER /. ITA NO. 5 3 1 3 - 14 /MUM/201 2 , / ASSESSMENT YEAR - 20 0 5 - 0 6,0 9 - 10 DCIT - RANGE - 9(1) ROOM NO.223, AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400 020. VS SHRI KISHORE BHAJANDAS BAJAJ 501,KRYSTAL, 206 WATERFIELD ROAD, BANDRA (W) MUMBAI - 400 050. PAN: ACPPB 3650 G ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SMT. V.C. SHAH / REVEN UE BY :SHRI RAGHUVEER MADNAPPA / DATE OF HEARING : 15 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 23 - 09 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLEN GING THE ORDER S ,DATED 26.06 .2012 AND 27.06.2012 ,OF THE CIT(A ) - 19 ,MUMBAI THE A SSESS ING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL FOR THE ABOVE MENTIONED TWO AY.S. : ITA NO.5313/MUM/2012 A.Y. 2005 - 06 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) IS RIGHT IN DELETING THE ADDITION OF RS.20,00 ,000/ - MADE BY THE AO U/S. 41(1) OF THE I.T.ACT, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO SUBMIT THE REQUIRED DETAILS CALLED BY AO TO SUBSTANTIATE HIS CLAIM. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET AS IDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA NO.5314/MUM/2014 A.Y. 2009 - 10 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) IS RIGHT IN ALLOWING ASSESSEE TO CARRY FORWARD HIS BUSINESS LOSS WITHOUT SETTING IT OFF AGAINST THE INCOME FROM CAPITAL GAIN OF CURRENT YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) IS RIGHT I N ALLOWING ASSESSEE TO CARRY FORWARD BUSINESS LOSS WITHOUT APPRECIATING THE FACT, THAT HE HAS ALREADY SET OFF HIS BUSINESS LOSS AGAINST CAPITAL GAINS IN HIS RETURN FOR AY - 2009 - 10 ALSO SHOWN AS CARRY FORWARD OF LOSS, THUS CLAIMING IT TWICE. 3. THE APP ELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA/5313/MUM/2012 - AY.2005 - 0 6: ASSESSEE ,AN I NDIVIDUAL,DERIVING INCOME FROM STITCHING,FILED HIS RETURN OF INCOME ON 30. 1 0 . 2005 ,DECLARING INCOME OF RS. 59.24 LAKHS.COMPLETING THE ASSESSMENT ON 0 7.12.200 7 , U/S. 143(3)OF THE ACT,THE AO DETERMIN ED H IS INCOME AT RS. 92.71LAKHS . AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) WHO PARTLY CONFIRMED THE ORDER OF THE AO.THE AO AND THE ASSESSEE PREFERRED APPEALS BEFORE THE TRIBUNAL.VIDE ITS ORDER DATED 04.02.2011,THE TRIBUNAL RESTORED BACK THE MATTER TO THE FILE OF K B BAJAJ - 5313 - 14/MUM/12 - AY.05 - 06 &08 - 09 2 THE AO.IN HIS ORDER DATED 30.12.2011,PASSED U/S.143(3)R.W.S.254 OF THE ACT,THE AO CALCULATED THE INCOME OF THE ASSESSEE AT RS.92,71,670/ - 2. EFFECTIVE GROUND OF APPEAL DEALS WITH DELETING THE ADDITION OF RS.20 LAKHS MADE BY THE AO U/ S.4 1(1)OF THE ACT. THE FIRST APPELLATE AUTHORITY(FAA) HELD THAT THE AO HAD DISALLOWED LOAN AS SAME WAS NOT EXPLAINED BY THE ASSESSEE WITH DOCUMENTARY EVIDENCES,THAT THE ASSESSEE HAD SHOWED LOAN TAKEN FROM KEIC SETH & SONS IN THE BOOKS OF ACCOUNTS,THAT THE A SSESSEE CLAIMED THAT RECEIPTS WERE PERSONAL RECEIPTS, THAT NO DEDUCTION WAS EVER CLAIMED IN RESPECT OF AMOUNT RECEIVED,THAT THE TRANSACTION WAS NOT RELATED TO THE BUSINESS OF THE ASSESSEE ,THAT AMOUNT WAS RECEIVED MANY YEARS AGO,THAT THE LIABILITY APPEARED IN THE SCHEDULE OF LOANS AND ADVANCES,THAT LOAN APPEARED IN THE BALANCE SHEET OF 1994,THAT LOAN DID NOT PERTAIN TO THE YEAR UNDER APPEAL,THAT REMISSION OF UNSECURED PERSONAL LOAN COULD NOT BE TAXED U/S.41(1)OR 28(4)OF THE ACT,THAT THERE HAD BEEN NO ALLOWAN CE OR DEDUCTION IN ANY PRECEDING YEAR.FINALLY,THE FAA ALLOWED THE APPEAL OF THE ASSESSEE . 3 . BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THEAO . THE AUTHORISED REPRESENTATIVE(AR)RELIED UPON THE ORDER OF THE FAA. WE HAVE HEARD THE RIVAL SU BMISSIONS AND PERUSED THE MATERIAL.WE FIND THAT THE AO HAD APPLIED THE PROVISIONS OF SECTION 41(1)WITHOUT GIVING A FINDING THAT THE ASSESSEE HAD CLAIMED A DEDUCTION IN EARLIER YEARS FOR THE DISPUTED SUM.THEREFORE,WE HOLD THAT THE FAA HAD RIGHTLY HELD THAT PROVISIONS OF SECTION 41(1)WERE NOT APPLICABLE AS SAME WAS NOT A BUSINESS TRANSACTION. IN THE CASE OF SHIVLAL CONSTURCTION THE HONBLE DELHI HIGH COURT(355ITR218) FOUND THAT THE NO ALLOWANCE OR DEDUCTION HAD BEEN MADE IN THE ASSESSMENT OF THE ASSESSEE IN AN Y EARLIER YEAR.THEREFORE,DISMISSING THE APPEAL FILED BY THE DEPARTMENT IT HELD AS UNDER: .VERY FIRST CONDITION FOR INVOKING SECTION 41(1) OF THE INCOME - TAX ACT, 1961, IS THAT AN ALLOWANCE OR DEDUCTION OUGHT TO HAVE BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF ANY LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE. CONSEQUENTLY, THERE WAS NO QUESTION OF INVOKING SECTION 41(1) . RESPECFULLY,FOLLOWING THE PRINCIPLE LAID DOWN BY THE ABOVE JUDGMENT,WE DECIDE THE EFFECTIVE GROUND OF APPEA L AGAINST THE AO. ITA/5314/MUM/2012 - AY.200 9 - 10 : 4. EFFECTIVE GROUND OF APPEAL DEALS WITH CARRY FORWARD OF BUSINESS LOSS.DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A LETTER BEFORE THE AO AND STATED THAT AFTER FILING OF RETURN HE NOTICED THAT HE HAD DEBITED AN AMOUNT OF RS.2.50 LAKHS AS COMMISSION AND BROKERAGE,THAT THE SAID SUM PERTAINED TO BROKERAGE PAID BY HIM FOR ARRANGING SALE OF SHARES,THAT DEDUCTION OF RS. 2.50 LAKHS DEBITED UNDER THE HEAD COMMISSION AND BROKERAGE WAS NOT ALLOWABLE,THAT THE INCOME FROM BUSINESS SHOULD BE REVISED ACCORDINGLY. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ,THE AO HELD THAT THE ASSESSEE HAD REQUESTED TO REVISE THE INCOME AFTER THE CASE WAS SELECTED FOR SCRUTINY,THAT THE REQUEST WAS MADE TO AVOID THE INITIATIO N OF PENALTY U/S.271(1) (C) OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA AND CONTENDED THAT HE HAD INCOME FORM SALARY,HOUSE PROPERTY,LOSS FROM BUSINESS AND LOSS UNDER THE HEAD UNDER THE HEAD CAPITAL GAINS I.E.LTCG.IT WAS FURTHER ARGUED THAT LOSS FROM BUSINESS SHOULD NOT BE ADJUSTED AGAINST THE INCOME FROM CAPITAL GAINS AS PER THE PROVISIONS OF SECTION 71(2) OF THE ACT,THAT FULL TAX ON CAPITAL GAIN WAS PAID,THAT THE AO HAD COMPLETED THE ASSESSMENT BY ADJUSTI NG THE BUSINESS LOSS AGAINST THE INCOME FROM LTCG. K B BAJAJ - 5313 - 14/MUM/12 - AY.05 - 06 &08 - 09 3 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ,THE FAA HELD THAT SECTION 71 DEALT WITH SET OFF OF LOSS FROM ONE HEAD AGAINST THE INCOME FROM ANOTHER HEAD,THAT THE ASSESSEE HAD NO OPTION NOT TO SET OFF B USINESS LOSS AGAINST INCOME UNDER ANY HEAD OTHER THAN CAPITAL GAINS.THE FAA REFERRED TO THE CASES OF BRITISH INSULATE CALENDER(202ITR354)AND WARNER LOMBARD CO. (205ITR395)AND HELD THAT THE ASSESSEE HAD EARNED LTCG OF RS.1.21 CRORES DURING THE YEAR,THAT HE SUFFERED A LOSS IN BUSINESS,THAT HE EXERCISED THE OPTION TO PAY TAX ON LTCG AND PAID THE TAX ACCORDINGLY,THAT HE DID NOT DESIRE THAT LOSS UNDER OTHER HEAD OF INCOME BE ADJUSTED FROM LTCG IN VIEW OF SECTION 71(2)OF THE ACT,THAT THE CLAIM MADE BY THE ASSESSE E WAS AS PER LAW.SHE DIRECTED THE AO TO ALLOW THE ASSESSEE TO CARRY FORWARD THE BUSINESS LOSS. 6. BEFORE US,THE DR AND THE AR SUPPORTED THE ORDERS OF THE AO AND THE FAA RESPECTIVELY. WE FIND THAT ASSESSEE HAD MADE AN OPTION AS PER THE PROVISIONS OF SECTION 71(2)OF THE ACT AND THE FAA HAD ALLOWED HIS APPEAL.WE FIND THAT IN THE CASE OF BRITISH INSULATE CALENDER(SUPRA) THE HON BLE COURT HAS DEALT THE ISSUE AS UNDER: IT WOULD APPEAR FROM THE ABOVE THAT SECTION 70 TALKS OF SET OFF OF LOSS FROM ONE SOURCE AGAINS T THE INCOME FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. THERE IS NO DIFFICULTY IN UNDERSTANDING THE PROVISIONS OF THIS SECTION. SECTION 71 TALKS OF SET OFF OF LOSS FROM ONE HEAD AGAINST INCOME FROM ANOTHER HEAD. AS NOTED ABOVE, IT IS THE ASSESSEE'S CONTENTION THAT IT HAS AN OPTION NOT TO SET OFF BUSINESS LOSS AGAINST INCOME UNDER OTHER HEAD. ON THE CONTRARY, THE REVENUE'S CONTENTION IS THAT THERE IS NO OPTION OF ANY SORT AS CONTENDED ON BEHALF OF THE ASSESSEE, IN THE MATTER OF SET OFF OF LOSS UNDER ONE HEAD AGAINST INCOME UNDER OTHER HEAD OF THE SAME YEAR. IT IS ONLY IN THE CASE OF SETTING OFF OF LOSS AGAINST THE INCOME UNDER THE HEAD 'CAPITAL GAINS' THAT AN OPTION IS GIVEN TO THE ASSESSEE IN VIEW OF THE EXPRESSION IF THE ASSESSEE SO DESIRED USED IN SUB - SECTION (2) OF SECTION 71 OF THE ACT. ON A CAREFUL READING OF SECTION 71 OF THE ACT, IT IS VERY MUCH APPARENT THAT THE ASSESSEE HAS NO OPTION OF EXERCISING SETTING OFF OF BUSINESS LOSS AGAINST INCOME UNDER ANY OTHER HEAD OTHER THAN THE INCOME UNDER THE HEAD ' CAPITAL GAINS ' . RESPECTFULLY,FOLLOWING THE ABOVE JUDGMENT,WE ENDORSE THE ORDER OF THE FAA AND DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL S FILED BY THE AO FOR BOTH THE YEARS STAND DISMISSED . . . . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER,2015. 23 , 2015 SD/ - SD/ - ( / SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCO UNTANT MEMBER / MUMBAI, /DATE: 23 .09.2015 . . . JV. SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNE D CIT(A)/ , 4. THE CONCERNED CIT / K B BAJAJ - 5313 - 14/MUM/12 - AY.05 - 06 &08 - 09 4 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TR UE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.