SUBHKAM MONETARY SERVICES P.LTD, MUMBAI V. ITO 2(3)(2), MUMBAI

ITA 5491/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55940 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: R C JAIN
• Keywords: Depreciation
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI T.R. SOOD (ACCOUNTANT MEMBER) ITA NO.5491/MUM/2010 ASSESSMENT YEAR-2005-06 M/S. SUBHKAM MONETARY SERVICES PVT. LTD., THE INTERNATIONAL HOUSE. 4 TH FLOOR, NEW MARINE LINES, CROSS ROAD NO. 1, NEAR AMERICAN CENTRE, 16, M.K. ROAD, CHURCHGATE, MUMBAI-400 020 PAN-AANCS 3565L VS. THE ITO, WARD 2(3)(2), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.C. JAIN RESPONDENT BY: SHRI G.P. TRIVEDI DATE OF HEARING :16.11.2011 DATE OF PRONOUNCEMENT: 25.11.2011 O R D E R PER B.R. MITTAL, JM : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2005-06 AGAINST ORDER OF LD. CIT(A) DT.17.5.2010. 2. IN GROUND NO. 1 OF APPEAL, ASSESSEE HAS DISPUTED IN CONFIRMING DISALLOWANCE OF RS. 1,46,112/- U/S. 14A OF THE ACT. 3. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE OBSERVE THAT A O MADE ADHOC DISALLOWANCE OF RS. 1,46,112/- U/S. 14A R.W. RULE 8 D OF I.T. RULES IN RESPECT OF DIVIDEND INCOME WHICH IS EXEMPTED IN ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. CIT(A) HAS CONFIRMED SAID A CTION OF AO BY APPLYING DECISION OF SPECIAL BENCH IN THE CASE OF DAGA CAPIT AL MANAGEMENT PVT. LTD . VS ITO 312 ITR (QAT) 01 (SB)(MUM). ITA NO. 5491/M/2010 2 4. HOWEVER SAID DECISION OF SPECIAL BENCH OF ITAT HAS BEEN REVERSED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD. VS DCIT 328 ITR 81, WHEREIN IT HAS BEEN HELD THAT RULE 8D OF I.T. RULE IS PROSPECTIVE IN NATURE AND IS APPLICABLE FROM ASSESS MENT YEAR 2008-09. IN VIEW OF ABOVE, WE SET ASIDE THE ORDERS OF AUTHORITI ES BELOW AND RESTORE THE MATTER TO AO WITH A DIRECTION TO RE-DECIDE THE SAME AFTER GIVING DUE OPPORTUNITY OF HEARING TO ASSESSEE AS PER LAW. THER EFORE GROUND OF APPEAL TAKEN BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOS ES. 5. GROUND NO. 2 OF APPEAL IS AS UNDER: THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT WAS NOT ENTITLED TO DEPRECIATION ON LEASED OUT MACHINERY. 6. THE RELEVANT FACTS ARE THAT ASSESSEE CLAIMED DEP RECIATION OF RS. 3,48,551/- ON LEASED PLANT AND MACHINERY. THE AO S TATED THAT ASSESSEE HAS NOT SHOWN ANY LEASE RENT/LEASED INCOME FROM THOSE A SSETS. THE ASSESSEE STATED BEFORE AO THAT DUE TO FINANCIAL PROBLEM, LES SEE HAD NOT PAID LEASE RENT TO ASSESSEE. THEREFORE ASSESSEE HAS STOPPED BOOKIN G INCOME AS IT WAS DOUBTFUL OF RECOVERY. SINCE SAID MACHINERIES ARE U SED BY LESSEE, WEAR AND TEAR OF MACHINERY WILL BE CONTINUED AND ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION IRRESPECTIVE OF FACT THAT NO LEASE REN T HAS BEEN RECEIVED. THE AO DID NOT ACCEPT SAID CONTENTION OF ASSESSEE AND DISA LLOWED CLAIM OF DEPRECIATION. 7. IN THE FIRST APPEAL, LD. CIT(A) HAS CONFIRMED ACT ION OF AO ON THE GROUND THAT CREDENTIALS OF SUBMISSION OF ASSESSEE A RE SUSPECTED. HENCE, ASSESSEE IS IN FURTHER APPEAL BEFORE TRIBUNAL. 8. DURING THE COURSE OF HEARING, LD. AR MADE HIS SU BMISSION ON THE LINES OF SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. HE S UBMITTED THAT EVEN IF ASSESSEE HAS RECEIVED LEASE RENT, ASSESSEE IS ENTIT LED TO CLAIM DEPRECIATION AS PER PROVISIONS OF ACT. HOWEVER, LD. DR SUBMITTED T HAT ASSESSEE IS FOLLOWING ITA NO. 5491/M/2010 3 MERCANTILE SYSTEM OF ACCOUNTING THEREFORE LEASE REN T HAS TO BE CREDITED IRRESPECTIVE OF THE FACT THAT IT WAS NOT RECEIVED. HE FURTHER SUBMITTED THAT THERE IS NO EVIDENCE THAT SAID PLANTS AND MACHINERI ES ARE STILL ON LEASE AND ASSESSEE HAS NOT TAKEN POSSESSION THEREOF. HE FURT HER SUBMITTED THAT THERE IS NO EVIDENCE THAT SAID LEASE ASSETS ARE IN EXISTENCE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. IN REJOINDER, LD. AR REFERRED TO LETTER DT. 7 TH JULY, 2010 WHICH IS ADDRESSED TO AO DURING THE COURSE OF PEN ALTY PROCEEDINGS AND STATED THE FACTS THAT MACHINE WAS ON LEASE AND LEAS ED RENT WAS NOT RECEIVED BY ASSESSEE. HOWEVER, LD. AR COULD NOT PLACE ANY E VIDENCE THAT SAID MACHINERY CONTINUED TO BE ON LEASE AND ASSESSEE FAI LED TO RECOVER LEASE RENT FROM LESSEE. 10. BE THAT AS IT MAY, WE ARE OF THE CONSIDERED VIE W THAT MATTER HAS NOT BEEN CONSIDERED IN THE RIGHT PERSPECTIVE BY AUTHORI TIES BELOW. THERE IS NO FINDING BY AO AS TO WHETHER SAID PLANT AND MACHINER Y ARE STILL OWNED BY ASSESSEE AND HAVE BEEN GIVEN ON LEASE AND IF SO TO WHOM. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE ON RECORD, WE CONSIDER IT PRUDENT TO RESTORE THIS ISSUE TO THE FILE OF AO WITH A DIRECTION TO DECIDE THE ISSUE AS PER PROVISIONS OF ACT AFTER GIVING DUE OPPORTUNITY OF HEARING TO ASSE SSEE AND CONSIDERING SUCH EVIDENCES AS MAY BE PLACED BEFORE HIM. HENCE, GROU ND NO. 2 OF APPEAL TAKEN BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOS ES BY SETTING ASIDE ORDERS OF AUTHORITIES BELOW. 11. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 25 TH DAY OF NOVEMBER, 2011 SD/- SD/- ( T.R. SOOD) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 25 TH NOVEMBER, 2011 RJ ITA NO. 5491/M/2010 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI