M/s. Progressive (Coal Sales) Enterprises Pvt. Ltd., Kolkata V. ITO, Ward - 5(2). Kolkata, Kolkata

ITA 604/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62081 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 19-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K R MONDAL
• Assessee Lawyers: M P SUREKA
• Keywords: Business income
• Section: 143(3); 80HHC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . ! . '# ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM ] $ $ $ $ / I.T.A NO. 604/KOL/2011 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2004-05 M/S. PROGRESSIVE (COAL SALES) ENTERPRISES VS. INCO ME-TAX OFFICER, WD-5(2), KOLKATA PVT. LTD. (PAN:AACCP0057D) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 18.04.2012 DATE OF PRONOUNCEMENT: 18.04.2012 FOR THE APPELLANT: SHRI M. P. SUREKA FOR THE RESPONDENT: SHRI K. R. MONDAL '. / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-VI, KOLKATA IN APPEAL NO. 1137/ CIT(A)-VI/2009-10/WARD-5(2)/KOL DATED 21.01.2 011. ASSESSMENT WAS FRAMED BY ITO, WARD-5(2), KOLKATA U/S. 143(3) OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004-05 VIDE HIS ORDER DA TED 04.12.2006. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) IN REJECTING THE CLAIM OF SET OFF OF BROUGHT FORWARD LOSSES BY TREAT ING THE INCOME RECEIVED BY ASSESSEE FROM INTEREST ON FDRS OF BANK AS INCOME FROM OTHER SOURC ES INSTEAD OF BUSINESS INCOME AS CLAIMED BY ASSESSEE. FOR THIS, ASSESSEE HAS RAISED FOLLOWI NG GROUND NO.1: 1. THAT ON THE FACTS AND CIRCUMSTANCES, THE LD. CI T(A)-VI,KOL ERRED IN LAW AND ON FACTS IN CONFIRMING THE LD. ITO WARD-5(2)/KOLKATA IS REJE CTING THE CLAIM OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS OF ASST. YEAR 2002-03 ON THE GROUND OF TREATING THE INTEREST RECEIVED ON BANK FIXED DEPOSITS AMOUNTING TO RS.1,0 4,892/- AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME AS CLAIMED. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE HAS DISCLOSED RECEIPT OF INTEREST OF R S.1,15,484/- ON LOANS, INTEREST ON FDR AT RS.1,04,892/- AND INTEREST ON I. T. REFUND OF RS.10 ,082/- IN ITS P&L ACCOUNT. THE ASSESSING OFFICER TREATED THIS INTEREST INCOME AS INCOME FROM OTHER SOURCES EXCLUDING THE SAME FROM BUSINESS INCOME AND DISALLOWED DEDUCTION U/S. 80HHC BY INVOKING CLAUSE (BAA) ACCORDINGLY. THE CIT(A) ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER BY GIVING FOLLOWING FINDING: 2 ITA 604/K/2011 M/S. PROGRESSIVE (COAL SALES ) ENTERPRISES P. LTD. . A.Y. 04-05 I HAVE CONSIDERED THE ABOVE SUBMISSION OF LD. AR. HERE THE ISSUE BE DECIDED IS WHETHER THE THREE TYPES OF INTEREST EARNED BY THE A SSESSEE CONSTITUTE HIS BUSINESS INCOME OR NOT. IN RESPECT OF THE INTEREST ON LOANS GIVEN, I FIND THAT THE ASSESSEE HAS BEEN IN THE BUSINESS OF GIVING LOANS SINCE BEGINNIN G. IT HAS BEEN GIVING LOANS AND EARNING INTEREST ON THE SAME IN THE PAST ALSO. THER EFORE, IT CANNOT BE DENIED THAT INTEREST EARNED ON LOANS IS ITS BUSINESS INCOME. IN EARLIER YEARS ALSO THE INTEREST ON LOANS HAS BEEN TREATED AND ACCEPTED AS BUSINESS INC OME. AS REGARDS THE INTEREST ON FDR, I FIND THAT THIS HAS BEEN ACQUIRED BY THE ASSE SSEE OUT OF ITS SHARE CAPITAL FUNDS ONLY. THUS IT SHOWS THAT THE FUNDS OF THE ASSESSEE HAVE BEEN INVESTED IN THE FDR WHICH DOES NOT HAVE ANY RELATION WITH THE SHARE TRADING A ND LOAN GIVING ACTIVITIES OF THE ASSESSEE, LD. AR HAS CLAIMED THAT THIS FDR WAS UTIL IZED BY ONE OF ITS SISTER CONCERNS TO GIVE A BANK GUARANTEE TO COAL INDIA LTD. AND THEREF ORE IT SHOULD BE TREATED AS INDIRECT FINANCING OR LOAN GIVING TO THAT SISTER CONCERN. I FIND THAT FOR ALLOWING ITS FDR TO BE USED BY THE SISTER CONCERN THE ASSESSEE DID NOT REC EIVE ANY KIND OF CHARGES FROM THAT SISTER CONCERN. THEREFORE, IT WILL BE TOO FAR- FETC HED TO TREAT THIS TRANSACTION AS A PART OF THE FINANCING BUSINESS OF THE ASSESSEE. HENCE, I AM OF THE VIEW THAT THE ACQUISITION OF FDR OUT OF SHARE CAPITAL IS MERELY AN INVESTMENT AN D THE INTEREST ON FDR SHOULD BE TREATED AS INCOME FROM OTHER SOURCES. AS REGARDS TH E INTEREST ON I T REFUND THERE CANNOT BE ANY DOUBT THAT IT IS AN INCOME FROM OTHER SOURCES. 4. WE FIND THAT THE ASSESSEE BEFORE US CONTENDED TH AT IT IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND EARNED INCOME FROM INTEREST A ND DIVIDEND. ACCORDING TO ASSESSEE, ITS PRINCIPAL BUSINESS IS THAT OF FINANCING INDUSTRIAL ENTERPRISES AND DEALING IN SHARES. WHEN QUERY WAS RAISED FROM THE BENCH, THE LD. COUNSEL FOR THE ASSESSEE COULD NOT REPLY TO THE FACT THAT WHAT WAS THE AMOUNT OF DEALING IN SHARES AND INDUST RIAL FINANCING. ACCORDING TO THE ORDERS OF THE LOWER AUTHORITIES AND FACTS AVAILABLE BEFORE US , WE FIND THAT ONLY INCOME IS ON ACCOUNT OF INTEREST ON LOAN, INTEREST OF FDRS AND INTEREST ON I.T. REFUND. THE ASSESSEE MIGHT HAVE UTILISED THESE FDRS FOR BANK GUARANTEE FOR ONE OF ITS SISTER CONCERN TO GIVE TO COAL INDIA LTD. GIVING A GUARANTEE TO BANK FOR ITS SISTER CONCERN, IT CANNOT BE TERMED AS BUSINESS OF FINANCING. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HE ASSESSEE HAS EARNED INTEREST ON FDR AT RS.1,04,892/- AND FOR THIS INTEREST, LOWER AUTHORIT IES HAVE HELD THE SAME AS INCOME FROM OTHER SOURCES BECAUSE THE ASSESSEE IS NOT DOING ANY FINA NCING BUSINESS. THE ASSESSEE BEFORE US NOW COULD NOT CONTROVERT ANY OF THE ABOVE FINDINGS. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE LOWER AUTHORITIES HAVE RIGHTLY HELD THE INTERES T INCOME AS INCOME FROM OTHER SOURCES AND WE CONFIRM THE SAME. ASSESSEES APPEAL IS DISMISSE D. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. 6. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . ! ! ! ! . '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 18TH APRIL, 2012 3 ITA 604/K/2011 M/S. PROGRESSIVE (COAL SALES ) ENTERPRISES P. LTD. . A.Y. 04-05 /0 %12 3 JD.(SR.P.S.) '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT M/S. PROGRESSIVE (COAL SALES) ENTERPRI SES PVT. LTD., 32, EZRA STREET, ROOM NO. 854, KOL-700 001. 2 ,-*+ / RESPONDENT ITO, WARD-5(2), KOLKATA. 3 . .% ( )/ THE CIT(A), KOLKATA 4. 5. .% / CIT KOLKATA 5=> ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%?/ BY ORDER, 2 /ASSTT. REGISTRAR .