Lalita Steel Industries (P) Ltd, Kolkata V. J.C.I.T (OSD) under CIT - IV, Kolkata

ITA 539/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100212 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRABAL CHOWDHURY JCITSRDR
• Keywords: Business income; Depreciation; Business expenditure
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 539 / KOL / 2013 ASSESSMENT YEAR :2009-10 LALITA STEEL INDUSTRIES (P) LTD. 227, AJC BOSE ROAD, KOLKATA-700020 [ PAN NO.AAACL 5434 G ] V/S . JCIT(OSD) UNDER CIT- IV, AAYAKAR BHAWAN, P7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SUBASH AGARWAL, ADVOCATE /BY RESPONDENT SHRI PRABAL CHOWDHURY, JCIT-SR-DR /DATE OF HEARING 13-11-2015 /DATE OF PRONOUNCEMENT 04-12-2015 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA IN APPEAL NO.281/ XX/10/11-12 DATED 04.01.2012. ASSESSMENT WAS FRAMED BY JCIT(OSD ) UNDER CIT-IV, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28.11.2011 FOR ASSESSMEN T YEAR 2009-10. ITA NO.539/KOL/2013 A.Y.2009-10 LALITA STEEL INDS.(P) LTD. V. JCIT(OSD) UNDER CI T-IV KOL. P AGE 2 2. ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF 52,36,580/- MADE BY ASSESSING OFFICER ON ACCOUNT OF PROPORTIONATE EXPENSES WHICH WAS CLAIMED AS ATTRIBUTABLE TO SHORT TERM CAPITAL GAINS (STCG) SHOWN U/S 111A OF THE ACT . 3. FACTS OF THE CASE ARE THAT ASSESSEE IS A PRIVATE LIMITED COMPANY AND HAVING REGISTRATION WITH RESERVE BANK OF INDIA AS N ON-BANKING FINANCIAL CORPORATION (NBFC FOR SHORT) AND ENGAGED IN THE BUS INESS OF GRANTING LOAN AND ADVANCE, INVESTMENT AND SHARE TRADING. DURING T HE YEAR UNDER CONSIDERATION, ASSESSEE HAS EARNED STCG OF 1,10,62,567/- ARISING OUT OF SALE OF EQUITY SHARE AND MUTUAL UNITS. THE ASSESSEE HAS SHOWN THE FOLLOWING EXPENSE IN ITS PROFIT AND LOSS ACCOUNT:- (1) ADMINISTRATIVE EXPENSE AMOUNTING TO 17,75,305/-; (2) INTEREST EXPENSE OF 93,99,773/-; (3) DEPRECIATION OF 6,90,490/-; ASSESSEE HAS CLAIMED THE EXPENSE OF 52,36,580- AGAINST THE INCOME UNDER HEAD STCG AS STATED ABOVE BUT AO DISALLOWED A SUM O F 52,36,580/- AS CLAIMED BY ASSESSEE AGAINST STCG SHOWED U/S111A OF THE ACT ON THE GROUND THAT THE CAPITAL GAIN IS CHARGED TO TAX AT SPECIAL RATE AND NO EXPENDITURE IS ALLOWABLE FOR DEDUCTION AGAINST THAT INCOME. ACCORD INGLY, AO DISALLOWED THE EXPENSES CLAIMED BY ASSESSEE FOR AN AMOUNT OF 52,36,580/- AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) WHO UPHOLD THE ACTION OF ASSESSING OFFICER BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FINDING OF THE AO AND THE WR ITTEN SUBMISSION FILED BY THE AR I THINK STDCG U/S/ 111A OF THE IT ACT, 19 61 IS CHARGED AT A SPECIAL RATE, THEREFORE, A.O IS JUSTIFIED IN NOT AL LOWING ANY EXPENDITURE INCURRED FOR THIS PURPOSE. SO FAR AS, ARS ARGUMENT S THAT THE EXPENDITURE SHOULD BE ALLOWED AS BUSINESS EXPENSES THEN IN THAT SITUATION THE AR/ASSESSEE SHOULD HAVE SHOWN THEIR I NCOME FROM STCG ITA NO.539/KOL/2013 A.Y.2009-10 LALITA STEEL INDS.(P) LTD. V. JCIT(OSD) UNDER CI T-IV KOL. P AGE 3 AS BUSINESS INCOME INSTEAD OF INCOME U/S. 111A OF T HE IT ACT, 1961. THEREFORE, AOS ACTION OF NOT ALLOWING ANY EXPENDIT URE IN THIS CASE SEEMS JUSTIFIED, THUS, ASSESSEES APPEAL GROUNDS NO . 2 AND 3 ARE DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. SHRI SUBASH AGARWAL LD. AUTHORIZED REPRESENTATIVE A PPEARING ON BEHALF OF ASSESSEE AND SHRI PRABAL CHOWDHURY, LD. DEPARTMENTA L REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. LD. AR SUBMITTED THAT ASSESSEE IS ENGAGED I N BUSINESS OF SALE AND PURCHASE OF SHARE AND ALL THE EXPENSES CLAIMED IN P ROFIT AND LOSS ACCOUNT WERE IN CONNECTION WITH BUSINESS OF ASSESSEE AND PR AYED FOR ALLOWABILTY OF THOSE EXPENSES. ON THE OTHER HAND, LD. DR VEHEMENTL Y RELIED ON THE ORDERS OF AUTHORITIES BELOW. FROM THE AFORESAID DISCUSSION, W E FIND THAT ASSESSEE DURING THE YEAR HAS EARNED PROFIT WHICH WAS TAXABLE AT SPE CIAL RATE UNDER HEAD STCG AND ASSESSEE HAS CLAIMED EXPENSE AGAINST THAT INCOM E WHICH WAS DISALLOWED BY AO ON THE GROUND THAT INCOME IS CHARGEABLE AT A SPECIAL RATE. THEREFORE, NO EXPENSE OF WHATSOEVER WILL BE ALLOWED FROM THE I NCOME SHOWED U/S. 111A OF THE ACT. BEFORE US THE LD. AR FURTHER TOOK ALTER NATIVE PLEA STATING THAT IF SUCH EXPENSES ARE NOT ALLOWED AGAINST THE STCG U/S. 111A OF THE ACT THEN ALLOW THEM AS BUSINESS EXPENDITURE AGAINST INCOME U NDER HEAD OF BUSINESS. LD. AR FURTHER SUBMITTED THAT ASSESSEE HAS INCURRED THIS EXPENDITURE FOR THE PURPOSE OF ITS BUSINESS AND IN CASE SAME ARE NOT AL LOWED AGAINST THE INCOME UNDER THE HEAD STCG THEN THE SAME SHOULD BE ALLOWED AGAINST THE BUSINESS INCOME OF THE ASSESSEE. AFTER CONSIDERING THE PLEA OF LD. AR, IN VIEW OF HIS SUBMISSION, WE RESTORE THIS MATTER TO THE FILE OF A O WITH A DIRECTION THAT IF THESE EXPENSES ARE HAVING CONNECTIONS WITH THE BUSI NESS OF ASSESSEE THEN IT SHOULD BE ALLOWED AS BUSINESS EXPENDITURE AS SPECIF IED IN THE CHAPTER 6 OF THE ITA NO.539/KOL/2013 A.Y.2009-10 LALITA STEEL INDS.(P) LTD. V. JCIT(OSD) UNDER CI T-IV KOL. P AGE 4 INCOME TAX ACT AND AS PER THE PROVISIONS OF SECTION 28 TO 44D OF THE ACT. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTI CAL PURPOSE. 6. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 04/ 12/2015 SD/- SD/- (MAHAVIR SINGH) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 04 /1 2 /2015 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-LALITA STEEL INDS.(P)LTD. 227 AJC BOSE R OAD, KOLKATA-20 2. /RESPONDENT-JCIT(OSD)UNDER CIT-IV, AAYAKAR BHAWAN, P7, CHOWRINGHEE SQUARE, KOLKATA -700 069 3. * +,- - . / CONCERNED CIT KOLKATA 4. - - .- / CIT (A) KOLKATA 5.01233+,, - +, , / DR, ITAT, KOLKATA 6.26789 / GUARD FILE. BY ORDER/ -, /TRUE COPY/ / - +, ,