DGP SECURITIES LTD, MUMBAI V. ADDL CIT RG 6(2), MUMBAI

ITA 5737/MUM/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9155 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 12-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 11-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Business income; Business expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNALD BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./ I.T .A. NO . 5469 / MUM/20 1 1 ( / ASSESSMENT YEAR : 20 07 - 08 ) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 6(2), ROOM NO.563, AAYAKAR BHAVAN, M K ROAD, CHURCHGATE, MUMBAI - 400020 / VS. M/S DGP SECURITIES LTD, 5 TH FLOOR, DGP HOUSE, 88 - C, OLD PRABHADE VI ROAD, PRABHADEVI, MUMBAI - 400025 ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO .5737 /MUM/20 11 ( / ASSESSMENT YEAR : 20 07 - 08 ) M/S DGP SECURITIES LTD, 5 TH FLOOR, DGP HOUSE, 88 - C, OLD PRABHA DEVI ROAD, PRA BHADEVI, MUMBAI - 400025 / VS. ADDL.COMMISSIONER OF INCOME TAX, RANGE 6(2), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AABCS4946F / REVENUE BY SHRI LOVE KUMAR / ASSESSEE BY SHRI J P BAIRAGRA / DATE OF HEARING : 1 2 . 3 . . 2015 / DATE OF PRONOUNCEMENT : 25. 3. 2015 / O R D E R PER B R BASKARAN, AM : THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 05 - 01 - 2011 PASSED BY LD CIT(A) - 12, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR 2007 - 08. THE APPEAL OF THE ASSESSEE IS BARRED BY LIMITATION BY 11 ITA. NO . 5469 /M UM/ 20 1 1 AND 5737/M/2011 2 DAYS. THE ASSESSEE HAS MOVED A PETITION BEFORE THE BENCH REQUESTING FOR CONDONATION OF DELAY. WE HEARD THE PARTIES ON THIS PRELIMINARY ISSUE. HAVING REGARD TO THE SUBMISSIONS MADE BY THE ASSESSEE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE DISALLOWANCE OF EXPENSES MADE BY THE AO AND THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING THE ADDITION RELATING TO STAMP DUTY PAID TO NSE. 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A SHARE BROKER. HOWEVER DURING THE YEAR UNDER CONSIDERATION, THE INCOME DECLARED BY THE ASSESSEE CONSISTED OF DIVIDENDS, PROFIT ON SALE OF INVESTMENTS AND OTHER INCOME. THE AO NOTICED THAT THE ASSESSEE DID NOT ANY INCOME FROM SHARE BROKING ACTIVITY. HOWEVER, THE ASSESSEE HAD CLAIMED VARIOUS TYPES OF EXPENSES INCLUDING INTEREST. THE AO NOTICED THAT THE ASSESSEE HAD NOT REVIVED THE SHARE BROKING ACTIVITY EVEN AFTER THE EXPIRY OF MORE THAN 3 YEARS AND HENCE HE TOOK THE VIEW THAT THE ASSESSEE HAS DISCONT INUED THE BUSINESS OF SHARE BROKING. ACCORDINGLY, HE DISALLOWED THE ENTIRE EXPENSES CLAIMED BY THE ASSESSEE. THE ASSESSEE HAD CLAIMED STAMP DUTY CHARGES PAYABLE TO NSE DURING THE YEAR UNDER CONSIDERATION, EVEN THOUGH IT WAS RELATED TO PRIOR YEARS. THE A SSESSEE CLAIMED THE SAME ON THE REASONING THAT THE DISPUTE RELATING TO THE SAME GOT SETTLED DURING THE YEAR UNDER CONSIDERATION AND HENCE THE SAME HAS GOT CRYSTALLISED DURING THE YEAR UNDER CONSIDERATION. THE AO DID NOT AGREE WITH THE CONTENTIONS OF THE A SSESSEE AND ACCORDINGLY HE DISALLOWED THE SAID CLAIM ALSO. IN VIEW OF THE ABOVE, THE AO ASSESSED THE INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. ITA. NO . 5469 /M UM/ 20 1 1 AND 5737/M/2011 3 4. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) GRANTED RELIEF IN RESPECT OF STAMP DUTY CHARGES PAID TO NSE AND CONFIRMED THE DISALLOWANCE MADE BY THE AO. 5. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT IT HAS NOT DISCONTINUED THE SHARE BROKING BUSINESS, BUT HAS ONLY TEMPORARILY SUSPENDED THE SAME DUE TO UNFAVOURABLE MARKET C ONDITIONS. IN SUPPORT OF THE SAME, IT WAS SUBMITTED THAT THE ASSESSEE IS STILL HOLDING THE NSE MEMBERSHIP AND HAS NOT SURRENDERED THE SAME. FURTHER THE ASSESSEE IS MAINTAINING THE EXISTING INFRASTRUCTURE IN - TACT. ACCORDINGLY THE LD A.R CONTENDED THAT TH E TAX AUTHORITIES ARE NOT JUSTIFIED IN CONCLUDING THAT THE ASSESSEE HAS DISCONTINUED THE BUSINESS. ON THE CONTRARY, THE LD D.R PLACED STRONG RELIANCE ON THE ORDER OF TAX AUTHORITIES. 6. HOWEVER, WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE. IT I S AN UNDISPUTED FACT THAT THE ASSESSEE IS HOLDING THE NSE MEMBERSHIP CARD, MEANING THEREBY, THE ASSESSEE HAS NOT INTENDED TO DISCONTINUE THE SHARE BROKING BUSINESS. IF THE ASSESSEE HAD NO SUCH INTENTIONS, THEN THE ASSESSEE, AS A PRUDENT BUSINESSMAN, WOULD HAVE SOLD THE NSE MEMBERSHIP CARD. FURTHER, IT IS ALSO SEEN THAT THE ASSESSEE IS MAINTAINING THE INFRASTRUCTURE IN - TACT AND HENCE IT HAD CLAIMED THE EXPENSES INCURRED IN MAINTAINING THE ESTABLISHMENT AND INFRASTRUCTURE. THIS FACT FURTHER REINFORCES THE CONTENTION OF THE ASSESSEE THAT THE SHARE BROKING BUSINESS WAS SUSPENDED TEMPORARILY. AGAIN, IF THE INTENTION OF THE ASSESSEE WAS TO DISCONTINUE THE SHARE BROKING BUSINESS, THEN THERE WAS NO NECESSITY TO INCUR EXPENSES IN MAINTAINING THE INFRASTRUCTURE. BOTH THE TAX AUTHORITIES HAVE TAKEN ADVERSE VIEW, SINCE THE ASSESSEE HAS NOT REVIVED THE SHARE BROKING BUSINESS FOR MORE THAN 3 YEARS. HOWEVER, IN OUR VIEW, THE SAME COULD NOT BE THE SOLE DETERMINING FACTOR THAT IS REQUIRED TO BE CONSIDERED. THE DISCUSSI ONS MADE SUPRA WOULD SHOW THAT THE ASSESSEE HAS NOT INTENDED TO DISCONTINUE THE BUSINESS ACTIVITY. ACCORDINGLY, WE ARE OF THE ITA. NO . 5469 /M UM/ 20 1 1 AND 5737/M/2011 4 VIEW THAT THE EXPENSES AND ALSO THE INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE SHOULD BE ALLOWED AS BUSINESS EXPENSES INCURRED FOR THE PURPOSES OF BUSINESS. ACCORDINGLY, THE VARIOUS INCOME DECLARED BY THE ASSESSEE SHOULD ALSO BE ASSESSED AS BUSINESS INCOME ONLY, AS IN THE CASE OF PAST YEARS. 7. THE DEPARTMENT IS CONTESTING THE RELIEF GRANTED BY THE LD CIT(A) IN RESPECT OF S TAMP DUTY EXPENSES. THE AO DISALLOWED THE SAME ON THE REASONING THAT THE SAME RELATES TO THE PRIOR YEARS, WHEREAS, THE LD CIT(A) HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE THAT THE SAME SHOULD BE CONSIDERED TO BE THE EXPENDITURE OF THE YEAR UNDER CONSIDE RATION, SINCE THE DISPUTE GOT CRYSTALLISED DURING THE YEAR UNDER CONSIDERATION. IT IS A WELL SETTLED PROPOSITION THAT THE EXPENDITURE SHALL BE DEEMED TO HAVE ACCRUED IN THE YEAR IN WHICH THE LIABILITY GOT CRYSTALLISED AND IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE ASSESSEE HAD CHALLENGED THE STAMP DUTY LEVY AND THE SAME GOT SETTLED DURING THE YEAR UNDER CONSIDERATION. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL FILED BY THE A SSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 TH M AR , 2015 . 25TH MARCH , 2015 SD SD ( / SANJAY GARG ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI : 25TH MARCH , 201 5 . . . ./ SRL , SR. PS ITA. NO . 5469 /M UM/ 20 1 1 AND 5737/M/2011 5 / 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) , /ITAT, MUMBAI