ASST., CIT 14(3), MUMBAI V. H.P. SHAH & CO, MUMBAI

ITA 6292/MUM/2010

• Counselvise Citation: 629219914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 20-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: VJAY MEHTA
• Keywords: Question of law; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 6292/MUM./2010 (ASSESSMENT YEAR : 2005-06 ) ASSTT. COMMISSIONER OF INCOME TAX RANGE-14(3), EARNEST HOUSE NARIMAN POINT MUMBAI 400 021 .. APPELLANT V/S M/S. H.P. SHAH & CO. 689, GOVIND CHOWK M.J. MARKET MUMBAI 400 021 PAN AAAFH3805N .... RESPONDENT REVENUE BY : MR. V.V. SHASTRI ASSESSEE BY : MR. VJAY MEHTA DATE OF HEARING 12.10.2011 DATE OF ORDER 21.10.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE REVENUE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 15 TH JUNE 2010, PASSED BY THE COMMISSIONER (APPEALS)-XXV, MUMBAI, FOR ASSESSMENT YEAR 2005-06, ON THE FOLLOWING GROUNDS:- 1. THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANC E OF INTEREST U!S.36(1)(III) OF THE L.T.ACT, OF RS. 7,92,000/-BY RELYING IN ASSESSEES OWN CASE FOR AY 2003-04 AGAINST CIT(A)S ORDER. HOW EVER, FOR A.Y. M/S. H.P. SHAH & CO. ITA NO. 6292/MUM./2010 2 2003-04 DEPT. HAD PREFERRED APPEAL BEFORE HONBLE I TAT VIDE ORDER IN ITA NO.3694/M/06 DTD. 15.1.2009. RESTORED BACK THE ISSUE TO AC AND HELD THAT ASSESSEES OWN CAPITAL WAS NOT SUFFICIENT TO INVESTMENT MADE IN MUTUAL FUNDS, AND THEREFORE WARRANTED FOR PROPOR TIONATE DISALLOWANCE. 2. THE LD.CIT(A) HAS ERRED IN DELETING THE SAID DIS ALLOWANCE AND FAILED TO APPRECIATE THE FACT THAT THERE IS A DIVER SION OF FUNDS USED FOR NON-BUSINESS PURPOSES BY WAY OF MAKING VARIOUS INVE STMENTS IN MUTUAL FUNDS OF RS. 66 LAKHS AND AT THE SAME TIME A SSESSEE HAD TAKEN NEW LOAN OF RS.69 LAKHS FROM RELATIVES AND SISTER C ONCERNS AND PAID INTEREST 12% DURING THE YEAR. 2. MR. VIJAY MEHTA, APPEARED ON BEHALF OF THE ASSESSEE . 3. LEARNED DEPARTMENTAL REPRESENTATIVE AGREED BEFORE U S THAT THE TAX EFFECT IN THE REVENUES APPEAL IS LESS THAN ` 3,00,000. AS PER CBDT INSTRUCTION NO.3 OF 2011, DATED 9 TH FEBRUARY 2011, THE APPEAL BEFORE THE APPELLATE TRIBUNAL CAN BE FILED BY THE REVENUE, WHE N THE TAX EFFECT EXCEEDS THE MONITORY LIMIT OF ` 3,00,000. 4. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V/ S MADHUKAR K. INAMDAR (HUF), 318 ITR 149 (BOM.) HELD AS FOLLOWS:- THE CIRCULAR DATED MAY 15, 2008 IN GENERAL AND PAR AGRAPH (5) THEREOF IN PARTICULAR LAY DOWN THAT EVEN IF THE SAME ISSUE, IN RESPECT OF THE SAME ASSESSEE, FOR OTHER ASSESSMENT YEARS IS INVOLV ED, THE DEPARTMENT SHOULD NOT FILE APPEAL, IF THE TAX EFFEC T IS LESS THAN ` 4 LAKHS. IN OTHER WORDS, EVEN IF THE QUESTION OF LAW IS OF RECURRING NATURE, THE REVENUE IS NOT EXPECTED TO FILE APPEALS IN SUCH CASES, IF THE TAX IMPACT IS LESS THAN THE MONETARY LIMIT FIXE D BY THE CENTRAL BOARD OF DIRECT TAXES. THE BOARD HAS ALSO ISSUED A CIRCULAR ON JUNE 5, 2007, DIRECTING THE DEPARTMENT TO EXAMINE ALL APPEA LS PENDING BEFORE THE COURT ON A CASE TO CASE BASIS WITH FURTHER DIRE CTION TO WITHDRAW CASES WHEREIN THE CRITERIA OF MONETARY LIMITS AS PE R THE PREVAILING INSTRUCTION ARE NOT SATISFIED, UNLESS THE QUESTION OF LAW INVOLVED OR RAISED IN APPEAL OR REFERRED TO THE HIGH COURT FOR OPINION IS OF A RECURRING NATURE REQUIRED TO BE SETTLED BY THE HIGH ER COURT. THE CIRCULAR MAKES IT CLEAR THAT ON THE DATE OF ISSUANC E OF THE CIRCULAR, PREVAILING INSTRUCTIONS FIXING MONETARY LIMIT WILL HOLD GOOD EVEN FOR PENDING CASES. THE CIRCULAR DATED MAY 15, 2008 WOUL D BE APPLICABLE TO PENDING CASES REQUIRING THE DEPARTMENT TO WITHDRAW CASES WHEREIN THE TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS. THE CIRCULAR DATED MAY 15, 2008, WOULD BE APPLICABLE TO CASES PE NDING BEFORE THE COURT EITHER FOR ADMISSION OR FOR FINAL DISPOSAL AN D IT IS BINDING ON THE REVENUE. M/S. H.P. SHAH & CO. ITA NO. 6292/MUM./2010 3 5. SIMILAR VIEW WAS TAKEN BY THE HON'BLE JURISDICTIONA L HIGH COURT IN THE JUDGMENT IN CIT V/S PITHWA ENGINEERING WORKS, (2005 ) 276 ITR 519 (BOM.), AND THE HON'BLE DELHI HIGH COURT IN M/S. P.S. JAIN & CO., 335 ITR 591 (DEL.). APPLYING THE PROPOSITIONS LAID DOWN IN THESE CASE L AWS TO THE FACTS OF THE PRESENT CASE, WE DISMISS THE REVENUES APPEAL. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 21 ST OCTOBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, H BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI