FORTUNE HOLDINGS P.LTD, MUMBAI V. ASST CIT CEN CIR 31, MUMBAI

ITA 5405/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100726 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 24-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Question of law
• Section: 234B; 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN ,AM AND AMARJIT SINGH , JM ./ I.T.A. NO S . 1462,1460, 1459 / MUM/20 1 1 ( / ASSESSMENT YEA R S : 200 4 - 05 , 20 05 - 06 AND 2006 - 07 ) M/S FORTUNE HOLDINGS PVT. LTD., 32, MADHULI, 3 RD FLOOR, DR.ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI - 400018 / VS. DY. COMMISSIONER OF INCOME TAX - CC - 31, ROOM NO.409, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPE LLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO S.190/ MUM/20 13 ITA NOS.5405/MUM/2012 ( / ASSESSMENT YEA R S : 2008 - 09 & 2009 - 10) M/S FORTUNE HOLDINGS PVT.LTD., 32, MADHULI, 3 RD FLOOR, DR.ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI - 400018 / VS. ASSTT. COMMISSIONER OF INCOME TAX - CC - 31, ROOM NO.409, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) AND ITA NO.2899/MUM/2013 (ASSESSMENT YEARS 2010 - 11) M/S FORTUNE HOLDINGS PVT.LTD., 32, MADHULI, 3 RD FLOOR, DR.ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI - 400018 / VS. DY. COMMISSIONER OF INCOME TAX - CC - 31, ROOM NO.409, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAAC F2166P ITA NO. 1459 / MUM/20 11 AND OTHER FIVE APPEALS. 2 / APPELLANT BY S/SHRI DHARMESH SHAH AND NILESH MEHTA / RSPONDENT BY DR.P.DANIAL / DATE OF HEARING : 2 5 .8 . 201 5 / DATE OF PRONOUNCEMENT: 25 . 8. 201 5 / O R D E R P ER B ENCH: THESE SIX APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE LD. CIT(A) - 40, MUMBAI. SINCE IDENTICAL ISSUES ARE URGED IN THESE SIX APPEALS , THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS URGED IN AY 2004 - 05 TO 2006 - 07 ARE IDENTICAL IN NATURE. AT THE TIME OF HEARING, THE LD. COUNSEL APPEARING FOR THE ASSESSEE PRESSED THE GROUND NO 4 RELATING TO THE REJECTION OF CLAIM OF INTEREST EXPENDITURE. ACCORDINGLY OTHER GROUNDS ARE DISMISSED AS NOT PRESSED. 3. THE GROUNDS URGED IN AY 2008 - 09 TO 2010 - 11 ARE IDENTICAL IN NATURE. AT THE TIME OF HEARING, THE LD A.R PRESSED THE GR OUNDS RELATING TO THE FOLLOWING ISSUES: - A) REJECTION OF CLAIM OF INTEREST EXPENDITURE UNDER THE NORMAL PROVISIONS OF THE ACT; B) REJECTION OF INTEREST LIABILITY UNDER SECTION 115JB OF THE ACT; AND C) COMPUTATION OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. ACCORDINGLY , THE REMAINING GROUNDS AND ALSO THE ADDITIONAL GROUND URGED BY THE ASSESSEE ARE DISMISSED AS NOT PRESSED. ITA NO. 1459 / MUM/20 11 AND OTHER FIVE APPEALS. 3 4. THE ISSUE RELATING TO REJECTION OF INTEREST CLAIM IN AY 2004 - 05 TO 2006 - 0 7 AND ALSO THE ISSUES RELATI NG TO INTEREST LISTED AS (A) AND (B) ABOVE IN AY 2008 - 09 TO 2010 - 11 GO TOGETHER. THE ASSESSEE IS ONE OF THE NOTIFIED ENTITIES COMING UNDER HARSHAD MEHTA GROUP AGAINST WHOM STOCK SCAM CHARGES ARE PENDING. WITH REGARD TO ABOVE SAID ISSUE RELATING TO REJECTI ON OF INTEREST CLAIM, THE LD. A.R SUBMITTED THAT THESE ISSUES ARE BEING SET ASIDE BY THE TRIBUNAL TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION IN ALL OTHER GROUP CASES BELONGING TO HARSHAD MEHTA. 5 . THE LD. COUNSEL SUBMITTED THAT THE IDENTICAL ISSUES WERE ALSO CONSIDERED BY THE TRIBUNAL, VIDE ITS ORDER DATED 22 - 4 - 2015, IN THE ASSESSEES OWN CASE IN ITA NO.6829, 6840,6830 /MUM/2013 RELATING AY 2001 - 02 TO 2003 - 04 AND THE ISSUES WERE RESTORED TO THE FILE OF THE LD CIT(A). HE SUBMITTED THESE ISSUES MAY A LSO BE RESTORED TO THE FILE OF THE LD CIT(A) WITH SIMILAR DIRECTIONS. ON A PERUSAL OF THE ORDER PASSED BY THE TRIBUNAL FOR AY 2001 - 02 TO 2003 - 04, REFERRED ABOVE, WE NOTICE THAT THE TRIBUNAL HAS FOLLOWED THE DECISION RENDERED IN THE CASE OF M/S GROWMORE LEA SING AND INV.LTD V/S ACIT (ITA NO.5135 AND 5136/MUM/2012 (AY - 2007 - 08 AND 2009 - 10) AND ITA NO.2151/MUM/2013 (AY - 2010 - 11), WHEREIN ALSO AN IDENTICAL ISSUE WAS DISCUSSED WITH THE FOLLOWING OBSERVATIONS: 3. GROUND NO. 4 RELATES TO THE DISALLOWANCE OF INTEREST EXPENSE. THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE DECISION RELIED UPON BY THE LD. CIT(A) WHILE DISPOSING THIS GROUND HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF THE LD. CIT(A). 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NO T BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WHILE DISPOSING THE GROUND RELATING TO THE DISALLOWANCE OF INTEREST, WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE FINDINGS GIV EN IN THE CASE OF EMINENT HOLDINGS PVT. LTD. WE FIND THAT THE TRIBUNAL IN THE ITA NO. 1459 / MUM/20 11 AND OTHER FIVE APPEALS. 4 CASE OF EMINENT HOLDINGS IN ITA NOS. 2139, 2140 AND 2141/MUM/2013 HAVE FOLLOWED THE DECISION OF THE TRIBUNAL GIVEN IN COMMON GROUP CASE OF HITESH S. MEHTA AT PARA 2.3 OF THE ORDE R AND RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO ORDINATE BENCH, WE RESTORE THIS ISSUE TO THE FILES OF THE LD. CIT(A) FOR FRESH ADJUDICATION AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. BEFORE CLOSING THIS ISSUE, THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE LD. CIT(A) HAS HELD THAT THE ISSUE OF INTEREST EXPENDITURE IS PENDING BEFORE THE HONBLE SPECIAL COURT. IT IS THE SAY OF THE LD. COUNSEL THA T THE PROCEEDINGS IN WHICH THE SAID ISSUE OF INTEREST WAS ISSUED BY THE CUSTODIAN HAVE BEEN ALREADY CONCLUDED WHICH FACT HAS ALREADY BEEN RECORDED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. WE, THEREFORE, DIRECT THE LD. CIT(A) TO CONSIDER THIS FACT WHILE DEC IDING THE ISSUE AFRESH. THE LD. CIT(A) MAY ALSO DIRECT FOR THE TAXING OF INCOME IN THE HANDS OF THE RECIPIENT (FAMILY MEMBERS) IN ACCORDANCE WITH THE METHOD OF ACCOUNTING FOLLOWED BY THEM AND AS PER THE PROVISIONS OF THE LAW. GROUND NO. 4 IS TREATED AS ALL OWED FOR STATISTICAL PURPOSE. BY FOLLOWING THE ABOVE SAID DECISION, THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE LD CIT(A) WITH SIMILAR DIRECTIONS. SINCE THE FACTS PREVAILING IN THE INSTANT CASE IS ALSO IDENTICAL IN NATURE, AFTER HEARING BOTH THE PARTIES, THE ABOVE MENTIONED ISSUES ARE RESTORED TO THE FILE OF THE LD. CIT(A) WITH A SIMILAR DIRECTIONS GIVEN BY THE TRIBUNAL IN THE CASE OF M/S GROWMORE LEASING & INV. LTD (SUPRA). 6. THE NEXT ISSUE URGED IN THE APPEALS FILED FOR AY 2008 - 09 TO 2010 - 11 RELATES TO THE CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 7 . THE LD. COUNSEL CONTENDED THAT THE CHARGING OF INTEREST IS BEING CONTESTED ON TWO GROUNDS, VIZ., (A) THE VERY LIABILITY TO PAY THE INTEREST U/S 234A, 234B AND 234C OF THE ACT IS B EING AGITATED, SINCE THE ASSESSEE WAS DISABLED FROM PAY ING ADVANCE TAX BY ATTACHING ALL THE ASSETS BELONGING TO ITA NO. 1459 / MUM/20 11 AND OTHER FIVE APPEALS. 5 THE ASSESSEE AND (B) MANNER OF COMPUTATION OF INTEREST U/S 234B AND 234C, IF IT IS HELD THAT THE ASSESSEE IS LIABLE TO PAY ADVANCE TAX. 8 . WITH REGARD TO THE FIRST ISSUE, THE HONBLE BOMBAY HIGH COURT HAS ALREADY HELD IN THE CASE OF DIVINE HOLDINGS PVT LTD AND CASCADE HOLDINGS PVT. LTD THAT THE PROVISION OF SECTIONS 234A, 234B AND 234C ARE MANDATORY IN NATURE AND WOULD ALSO APPLY TO THE NOTIF IED ENTITIES ALSO. THE LD. COUNSEL SUBMITTED THAT THE TRIBUNAL, BY FOLLOWING THE ABOVE SAID DECISIONS OF HONBLE BOMBAY HIGH COURT IN ASSESSMENT YEAR 2007 - 08, HAS HELD THAT THE ASSESSEE WOULD BE LIABLE TO PAY INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS PREFERRED AN APPEAL AGAINST THE SAID DECISION OF THE TRIBUNAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AND THE SAME IS PENDING. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS FILED A DECLARATION IN FORM NO.8 IN TERMS OF SECTION 158A(1) OF THE ACT AND ACCORDINGLY, HE SUBMITTED THAT THIS LEGAL ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO WITH A DIRECTION TO FOLLOW THE DECISION RENDERED BY THE HONBLE BOMBAY HIGH COURT FOR THE ASSESSMENT YEAR 2007 - 0 8. 9 . THE LD. SPECIAL COUNSEL APPEARING FOR THE REVENUE SUBMITTED THAT THE APPEAL FILED BY THE ASSESSEE BEFORE THE HONBLE BOMBAY HIGH COURT HAS NOT BEEN ADMITTED SO FAR. HOWEVER, WHEN IT WAS POINTED OUT THAT THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE FILE OF THE AO BY TAKING COGNIZANCE OF DECLARATION FILED BY THE ASSESSEE, THE LD. SPECIAL COUNSEL AGREED THAT THE SIMILAR DIRECTION MAY BE GIVEN IN THE INSTANT CASE ALSO. WE NOTICE THAT THE TRIBUNAL HAS PASSED THE FOLLOWING ORDER IN THE CASE OF M/S FORTUNE HOLDINGS PVT LTD V/S ACIT IN ITA NO.6829, 6840,6830/MUM/2013 IN AY 2001 - 02 TO 2003 - 04 IN RESPECT OF THIS ISSUE: 7. IT HAS ALREADY MENTIONED THAT ASSESSEE HAS FILED A DECLARATION IN FORM NO.8 UNDER SECTION 158A, THEREFORE, ACCORDING TO THE ITA NO. 1459 / MUM/20 11 AND OTHER FIVE APPEALS. 6 DECLARATION FIL ED THE ISSUE IS DECIDED AGAINST THE ASSESSEE WITH A DIRECTION THAT WHEN THE DECISION ON THE QUESTION OF LAW IN RESPECT OF ASSESSMENT YEAR 2007 - 08 BECOMES FINAL, THE SAME SHALL BE APPLIED TO THE PRESENT APPEALS IN ACCORDANCE WITH SUB - SECTION (5) OF SECTION 158A OF THE ACT. ACCORDINGLY, THIS GROUND FOR ALL THE THREE YEARS IS DECIDED AGAINST THE ASSESSEE IN THE MANNER AFORESAID. BY FOLLOWING THE ABOVE SAID DECISION, WE ALSO SET ASIDE THIS MATTER WITH SIMILAR DIRECTIONS. 10 . WITH REGARD TO THE SECOND LIMB, THE LD A.R SUBMITTED THAT THE INTEREST U/S 234B AND 234C OF THE ACT SHOULD BE COMPUTED, AFTER DEDUCTING THE TAX DEDUCTIBLE AT SOURCE FROM THE INCOME OF THE ASSESSEE. IN SUPPORT OF THIS CONTENTION, HE INVITED OUR ATTENTION TO THE DECISION RENDERED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR AY 2001 - 02 TO 2003 - 04 (SUPRA). A PERUSAL OF THE ABOVE ORDER OF THE TRIBUNAL, WE NOTICE THAT THIS ISSUE HAS BEEN DISPOSED OF WITH THE FOLLOWING OBSERVATIONS: 8. APROPOS GROUND NO.4 OF ALL T HE THREE APPEALS, THIS ISSUE WAS STATED TO BE COVERED BY THE DECISION OF TRIBUNAL IN GROUP CASE NAMELY M/S.TOPAZ HOLDING PVT. LTD. VS. ACIT, COPY OF THIS DECISION IS FILED AT PAGE 11 TO 13 OF THE PAPER BOOK. THIS ISSUE IS DECIDED VIDE PARA 3 TO 3.1 AND THE SAME IS REPRODUCED AS UNDER: 3. NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S. 234 OF THE ACT. BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFIED ENTITY, THAT THE PROVISIONS OF S. 234A, 234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLIED WIT H, THAT THE ASSETS WERE ALREADY IN ATTACHMENT OF THE CUSTODIAN APPOINTED UNDER THE PROVISIONS OF THE SPECIAL COURTS ACT, THAT THE TRIBUNAL IN THE CASE OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE VIEW IN FAVOUR OF THE APPELLANT, THAT THE HONBL E BOMBAY HIGH COURT IN THE CASE OF DIVINE HOLDINGS PVT. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVISIONS OF SECTIONS 234A, 234B AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO THE NOTIFIED ENTITIES ALSO, THAT THE ASSESSEE WAS IN T HE PROCESS OF FILING AN APPEAL AGAINST THE SAID ORDER ITA NO. 1459 / MUM/20 11 AND OTHER FIVE APPEALS. 7 BEFORE THE HONBLE SUPREME COURT, THAT THE INCOME EARNED IN THE YEAR UNDER CONSIDERATION WAS SUBJECTED TO PROVISIONS OF TDS, THAT THE CHANGEABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD B E AFTER CONSIDERING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED. THE APPELLANT RELIES IN THIS REGARD ON THE FOLLOWING DECISIONS. HE RELIED UPON THE CASES OF MOTOROLA INC. V. DCIT [95 ITD 269 (DEL.(SB)], SEDCO FORES DRILLING CO. LTD. [264 ITR 320],NGC NETWORK ASIA LLC [313 ITR 187] ,SUMMIT BHATACHARYA [ 300 ITR (AT) 347 (BOM)(SB)], VIJAL GOPAL JINDAL [ITA NO. 4333/DEL/2009] & EMILLO RUIZ BERDEJO [320 ITR 190 (BOM)].DR RELIED UPON THE CASES OF DEVINE HOLDINGS PVT. LTD. 3.1. WE HAVE HEARD T HE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF DEVINE HOLDINGS PVT. LTD. HONBLE BOMBAY HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO. THEREFORE, UPHOLDI NG THE ORDER OF THE FAA TO THAT EXTENT, WE HOLD THAT PROVISIONS OF SECTION 234 OF THE ACT ARE APPLICABLE. AS FAR AS CALCULATION PART IS CONCERNED, WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE. THEREFORE, WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSIDERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO. 5 IS ALLOWED IN PART IN FAVOUR O F THE ASSESSEE. 8.1 IN THIS VIEW OF THE SITUATION, AFTER HEARING BOTH THE PARTIES THE ISSUE RAISED IN GROUND NO.4 FOR ALL THE THREE APPEALS IS RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN THE MANNER AS DIRECTED IN THE AFOREMENTIONED CASE. W E DIRECT ACCORDINGLY. THIS GROUND IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. BY FOLLOWING THE ABOVE SAID DECISIONS OF TRIBUNAL, WE SET ASIDE THE MATTER OF COMPUTATION OF INTEREST U/S 234A, 234B AND 234C TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS. ITA NO. 1459 / MUM/20 11 AND OTHER FIVE APPEALS. 8 11 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 25TH AUGUST 2015. 25TH AUGUST, 2015 SD SD ( AMARJIT SINGH ) ( B.R. B ASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 25TH AUG , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /IT AT, MUMBAI