ITO 14(2)(2), MUMBAI V. PATTANI OPTICALS & CONTACT LENS CLINIC, MUMBAI

ITA 6061/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2992 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 15-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 6061/MUM/2014 (ASSESSMENT YEAR : 2010-11) INCOME TAX OFFICER 14(2)(2), R.NO. 304, 3 RD FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI -21 ... APPELLANT VS. M/S. PATTANI OPTICALS & CONTACT LENS CLINIC , 42, RIDGE ROAD, MINI PURAB APARTMENT, WALKESHWAR,MUMBAI 400 026 PAN : AAAFP 8247L .... RESPONDENT APPELLANT BY : SHRI SUNIL KUMAR AGARWAL RESPONDENT BY : MS. VINITA SHAH DATE OF HEARING : 20/10/2015 DATE OF PRONOUNCEMENT : 20/10/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL IS PREFERRED BY THE REVEN UE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 23/07/ 2014 OF CIT(A)-25, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2010-11, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICE R DATED 11/03/2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961( I N SHORT THE ACT). 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 2 ITA NO. 6061/MUM/2014 (ASSESSMENT YEAR : 2010-11) 1. ON THE FACTS AND IN THE CIRCUMSTANCES, THE CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.17,63,276/- BEING INTEREST PAID TO THE PARTNERS ON NOTIONAL CAPITAL BEING CAPITAL ACCRETION ON REVALUA TION OF SHOP. 2 . ON THE FACTS AND IN THE CIRCUMSTANCES, THE CI T(A) HAS ERRED IN ALLOWING THE INTEREST PAID TO THE PARTNERS ON CAPITAL BALANC ES WHICH REFLECTS BOOK ENTRY ONLY, THE PARTNERS DID NOT BRING ANY MONEY OR NEW CAPITAL ASSET IN THE FIRM. 3. FOR THE ABOVE MENTIONED REASON AND ANY OTHER REA SONS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE OR DER OF THE CIT(A) BE QUASHED AND THAT OF THE AO BE RESTORED. 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE R ESPONDENT ASSESSEE IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINES S OF RETAIL TRADING OF SPECTACLES, ETC. IN THE ASSESSMENT FINALIZED UNDER SECTION 143(3) ON 11/3/2013, THE ASSESSING OFFICER MADE A DISALLOWANC E OF RS.17,63,276/- OUT OF INTEREST PAID TO PARTNERS ON NOTIONAL CAPITA L. THE RELEVANT BACKGROUND IS THAT SHOP PREMISES OWNED BY THE ASSES SEE FIRM WERE REVALUED IN THE PAST ASSESSMENT YEAR OF 2000-01 AN D CORRESPONDING CREDIT WAS GIVEN TO THE CAPITAL ACCOUNT OF THE PART NERS. IN ASSESSMENT YEAR 2000-01 AND IN SOME OF THE SUBSEQUENT ASSESSM ENT YEARS INCLUDING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER TREATED SUCH AMOUNT CREDITED TO THE PARTNER S CAPITAL ACCOUNT AS A NOTIONAL CAPITAL AND DISALLOWED INTEREST PAID ON SUCH CAPITAL BALANCE. FOR ASSESSMENT YEAR UNDER CONSIDERATION, SUCH DISALLOWANCE WORKED OUT TO RS.17,63,276/-, WHICH IS THE SUBJECT MATTER OF DISPUTE BEFORE ME. 4. THE CIT(A) HAS SINCE SET ASIDE THE ACTION OF TH E ASSESSING OFFICER BY NOTICING THAT IN THE PRECEDING ASSESSMENT YEARS OF 2007-08 AND 2008-09 IN ASSESSEES OWN CASE, THE TRIBUNAL VIDE I TS ORDERS IN ITA NO.1818/MUM/12 DATED 03/1/2014 HAS DELETED THE DI SALLOWANCE, AFTER CONSIDERING THE JUDGMENT OF THE HONBLE SUPRE ME COURT IN THE 3 ITA NO. 6061/MUM/2014 (ASSESSMENT YEAR : 2010-11) CASE OF MUNJAL SALES CORPORATION VS. CIT, 298 ITR 2 98(SC). AGAINST SUCH DECISION THE REVENUE IS IN APPEAL BEFORE THE TRIBUN AL. 5. BEFORE ME IT WAS A COMMON POINT BETWEEN THE PART IES THAT THE PRECEDENT RELIED UPON BY THE CIT(A) CONTINUE TO HOL D THE FIELD AS THE SAME HAS NOT BEEN ALTERED BY ANY HIGHER AUTHORITY A ND, THEREFORE, THE ISSUE IS LIABLE TO BE DECIDED IN THE LIGHT OF SUCH PRECEDENT. THERE IS NO CHANGE IN THE FACTS FOR THE INSTANT YEAR, WHICH HA S BEEN BROUGHT OUT BY THE LD. DEPARTMENTAL REPRESENTATIVE BEFORE ME, AND UNDER THESE CIRCUMSTANCES FOLLOWING THE ORDER OF THE TRIBUNAL D ATED 3/01/2014 (SUPRA), I HEREBY AFFIRM THE CONCLUSION OF THE CIT( A). 6. AS A CONSEQUENCE, THE APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF THE HEARING ON 20/10/2015 IN THE PRE SENCE OF BOTH THE PARTIES. SD/- (G.S. PANNU) ACCOUN TANT MEMBER MUMBAI, DATED 20/10/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS