ITO 10(1)(1), MUMBAI V. ASHA S. GUJARATHI, MUMBAI

ITA 5455/MUM/2011

• Counselvise Citation: 545519914 RSA 2011
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 22-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: DALPAT SHAH

Judgement Text

, , ,, , INCOME TAX APPELLATE TRIBUNA L MUMBAI - A BENCH MUMBAI . . , / ! ! ! ! , BEFORE S/SH.B.R.MITTAL,JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 5455/MUM/2011, ' ' ' ' # # # # / ASSESSMENT YEAR 2008-09 ITO 10(1)(1) R.NO. 453, AAYAKAR BHAVAN, MUMBAI. VS. ASHA S. GUJARATHI 9, N GAMADIA ROAD, OFF, PEDDAR ROAD, MUMBAI-400026 PAN: AABPG4571G ( $% / ASSESSEE ) ( &'$% / RESPONDENT) $% $% $% $% ( (( ( ) ) ) ) / ASSESSEE BY :SHRI JAVED AKHTAR &'$% ( ) / RESPONDENT BY :SHRI DALPAT SHAH ' ' ' ' ( (( ( +, +, +, +, / DATE OF HEARING : 30 . 10 .2013 -.# ( +, / DATE OF PRONOUNCEMENT : 04 . 12 .2013 ' ' ' ' , 1961 ( (( ( 254 )1( +/+ +/+ +/+ +/+ 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,A.M: CHALLENGING THE ORDER DTD.06.05.2011 OF THE CIT(A)- 21,MUMBAI, ASSESSING OFFICER(AO) HAS FILED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUG NED IN THE GROUNDS ENUMERATED BELOW: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE THAT THE INVESTMENT WAS NOT MADE BY THE ASSESSEE. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE THAT THE DIVIDEND INCOME IS EXEMPTED IN THE HANDS O F THE TRUST AS DIVIDEND DISTRIBUTION TAX WAS ALREADY PAID BY THE RESPECTIVE COMPANY. 3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT (A) FAILED TO APPRECIATE THAT THE DIVIDEND INCOME WOULD BE EXEMPT IN THE HAN DS OF THE TRUST, AND WHEN THE SAME IS DISBURSED TO THE ASSESSEE, IT BECOMES ASSESSEES INCOME FROM OTHER SOURCES. 4.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT (A) FAILED TO APPRECIATE THAT THE TRUST HAS NOT FILED ITS RETURN OF INCOME & HENCE THE ENTIRE INCOME IS ASSESSABLE IN THE BENEFICIARY NOT AS DIVIDEND INCOM E BUT AS INCOME FROM OTHER SOURCES AS THE THE IDENTITY OF THE ASSESSEE IS DISTINCT & DIFFEREN T FROM THAT OF THE TRUST. 5.THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON T HE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 6.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2 ITA NO. 5455/MUM/20131 ASHA S. GUJARATHI 2. ASSESSEE,AN INDIVIDUAL,DERIVED INCOME FROM OTHER SO URCES BEING INTEREST RECEIVED FROM BANK AND TRUST. ON PERUSAL OF THE COMPUTATION OF INCOME FILE D BY THE ASSESSEE,AO FOUND THAT ASSESSEE HAD RECEIVED DIVIDEND OF RS.2,36,81,672/-WHICH INCLUDED DIVIDEND INCOME OF AIV TRUST OF RS. 80,14,717/ AND DIVIDEND INCOME OF ASHA TRUST OF RS. 13,73,255/ AND SAME HAD BEEN CLAIMED EXEMPTION U/S.10(34) AND (35) OF THE ACT,THAT THE I NVESTMENTS,ON WHICH THE DIVIDEND INCOME WAS RECEIVED,WAS NOT MADE BY THE ASSESSEE,THAT THE DIVI DEND WARRANT ISSUED BY ASIAN PAINTS LTD IN FAVOUR OF VEENABEN A. VAKIL,WHO WAS A TRUSTEE IN BO TH THE TRUSTS.CONSIDERING THESE FACTS AO HELD THAT THE DEDUCTION CLAIMED U/S.10(34),(35) WAS NOT APPLICABLE TO THE ASSESSEE,THAT THE INVESTMENT HAD BEEN DIRECTLY MADE BY AFORESAID TRUSTS IN THE A SIAN PAINTS LTD.,THAT TRUST HAD NOT FILED RETURN OF INCOME.AO ISSUED A SHOW CAUSE NOTICE ASKING THE ASS ESSEE TO EXPLAIN AS TO WHY THE DEDUCTION CLAIMED U/S.10(34)AND(35) SHOULD NOT BE DISALLOWED AS AGAINST DIVIDEND INCOME RECEIVED FROM TRUST.AFTER CONSIDERING THE SUBMISSION AO HELD THAT THE CASE RELIED UPON BY THE ASSESSEE WAS NOT RELEVANT AS IT DEALT WITH DEDUCTION U/S.80K OF THE ACT,THAT BOTH THE TRUSTS HAD NOT FILED ANY RETURN O F INCOME,THAT THE INVESTMENTS ON WHICH THE DIVIDEND I NCOME WAS RECEIVED HAD NOT BEEN INVESTED BY THE ASSESSEE.FINALLY,HE HELD THAT THE DIVIDEND REC EIVED BY THE TRUST OF RS. 93,87,972/- WAS TO BE TREATED AS A INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R HE HELD THAT THE TWO TRUSTS HAD RECEIVED DIVIDEND OF RS. 80,14,717/- AND RS.13,73,255/-,THAT THE TRUSTS HAD NOT FILED ANY RETURN OF INCOME, THAT HAD THE TRUSTS FILED RETURN OF INCOME THESE TW O AMOUNTS OF DIVIDEND WOULD HAVE BEEN TREATED EXEMPT IN THE HANDS OF TRUSTS U/S.10(34) AND 10(35) OF THE ACT,THAT THE ASSESSEE WAS THE 100% BENEFICIARY OF THE TRUSTS,THAT THE TRUSTS HAD PASSE D DIVIDEND INCOME TO THE ASSESSEE,THAT DIVIDENDS WERE REQUIRED TO BE TREATED IN THE HANDS OF ASSESSE E AS DIVIDEND RECEIVED FROM THE COMPANIES IN WHICH THE INVESTMENTS WAS MADE BY THE TRUST.FINALLY ,HE DIRECTED THE AO TO CONSIDER THESE TWO AMOUNTS IN THE HANDS OF THE ASSESSEE AS DIVIDEND IN COME AND TO GRANT HER EXEMPTION U/S.10 (34)/ 10(35) IN RESPECT OF THESE TWO AMOUNT. 2.2. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR)SUBMITTE D THAT TRUSTS IN QUESTION WERE NOT ASSESSED TO TAX, THAT TRUST DEEDS WERE NOT PRODUCED,THAT ASS ESSEE HAD NOT MADE INVESTMENT IN THE TRUSTS.AUTHORISED REPRESENTATIVE(AR) SUBMITTED THAT THE ASSESSEE WAS PAYING TAX ON BEHALF OF THE TRUSTS,THAT THE AO HAD NOT CONSIDERED THE PROVISION S OF SECTION 161(1)R.W.S.166 OF THE ACT,THAT SAID INCOME IN THE HANDS OF TRUSTS WOULD HAVE BEEN EXEMP T IN THE HANDS OF THE TRUSTS,THAT INCOME FROM THE TRUSTS WAS SHOWN BY THE ASSESSEE IN HER RETURNS OF INCOME FOR EARLIER YEARS,THAT INCOME IN THE HANDS OF THE TRUSTS WAS EXEMPT,THAT INCOME RECEIVED BY THE ASSESSEE FROM THE TRUSTS COULD NOT BE TAXED IN HER HANDS.HE RELIED UPON THE JUDGMENTS DEL IVERED IN THE CASES OF H.E.H.MIR OSMAN ALI BHAHADUR(59ITR666),PUJA INVESTMENTS PVT.LTD.(272ITR 606),MRS.AMY F.CAMA (TRUSTEE OF ESTATE OF LATE M.R.ADENWALLA-237ITR82),MRS.ARUNDHATI BALKR ISHNA(177ITR275). 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.IT IS FOUND THAT ASSESSEE HAD RECEIVED INCOME FROM ASHA VAKIL TRUST AND A I VAKIL TRUST,THAT DIVIDEND INCOME RECEIVED BY THE TRUSTS WAS SHOWN IN THE RETURN OF I NCOME OF THE ASSESSEE.FROM THE DIVIDEND WARRANT(PGS.14- OF THE PAPER BOOK)IT IS CLEAR THAT EXCEPT IN THE CASE OF ONE WARRANT (PG.16) IN OTHER WARRANTS NAME OF THE TRUSTS IS NOT APPEARING.IN THE DIVIDEND WARRANTS OF ASIAN PAINTS NAME OF VEENABEN ARVIND VAKIL IS APPEARING AND NOT OF THE T RUST. SIMILARLY IN THE DIVIDEND WARRANTS OF ELCID INVESTMENTS LTD.,THREE PERSONS HAVE BEEN ADDR ESSED AS SHARE HOLDERS.AS THE TRUSTS HAVE NOT FILED RETURNS OF INCOME IT IS NOT KNOWN AS WHAT IS THE RELATION OF THE ASSESSEE AND THE TRUSTS.AO/ 3 ITA NO. 5455/MUM/20131 ASHA S. GUJARATHI FAA HAS NOT LOOKED IN TO THESE VITAL ISSUES.WE ARE OF THE OPINION THAT THE MATTER NEEDS FURTHER INVESTIGATION.THEREFORE,IN THE INTEREST OF JUSTICE, WE ARE REMITTING BACK THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION.HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.EFFECTIVE GROUND OF APPEAL FILED BY THE AO IS ALLOWED,IN PART. AS A RESULT,APPEAL FILED BY THE AO STANDS PART LY ALLOWED. 1 2 '1+ VF/KDKJH 3 4 0 5+ ( + 67. ORDER PRONOUNCED IN THE OP EN COURT ON 04 TH DECEMBER, 2013. 0 ( -.# 9 4 FNLA FNLA FNLA FNLACJ CJCJ CJ .2013 . ( /. SD/- SD/- ( . . . B.R.MITTAL ) ( ! ! ! ! / RAJENDRA ) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, :' /DATE: 04 .12.2013 SK 0 0 0 0 ( (( ( &+; &+; &+; &+; < ;#+ < ;#+ < ;#+ < ;#+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR A BENCH, ITAT, MUMBAI / ;?/ &+' . , ,, , , . . . 6. GUARD FILE/ / @ . ';+ &+ //TRUE COPY// 0' / BY ORDER, A / 6 DY./ASST. REGISTRAR , /ITAT, MUMBAI.