K.S.R. FINANCIAL CONSULTANTS & INVESTORS P.LTD, MUMBAI V. ITO 1(2)(2), MUMBAI

ITA 6593/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93000 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: H N MOTIWALLA
• Keywords: Business income; Rule of consistency
• Section: 37(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 6593 /MUM/ 2013 ( / ASSESSMENT YEAR : 2009 - 10 M/S. K.S.R. FINANCIAL CONSULTANTS & INVESTORS PVT. LTD., C/O H.N. MOTIWALLA & CO., 508, SHARDA CHAMBERS, 33, NEW MARINE LINES, MUMBAI - 400 020 / VS. THE ITO 1(2)(2), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAACK 4213E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI H.N. MOTIWALLA / RESPONDENT BY : SHRI ASGHAR ZAIN / DATE OF HEARING : 2 4 . 0 6 .2015 / DATE OF PRONOUNCEMENT : 2 4 .0 6 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 20 , MUMBAI DT. 5.8.2013 PERTAINING TO ASSESSMENT YEAR 2009 - 10. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER O F THE AO IN RESPECT OF TAXING ITA. NO. 6593/M/2013 2 INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND BY DOING SO DEN IED ALL ADMINISTRATIVE EXPENSES AND FINANC IAL EXPENSES AS CLAIMED BY THE ASSESSEE. 3. THE ASSESSEE IS IN THE BUSINESS OF CONSULTANCY SERVICES. TH E RETURN FOR THE YEAR UNDER CONSIDERATION WAS TAKEN UP FOR SCRUTINY ASSESSMENT. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH A DETAILED NOTE ON THE NATURE OF BUSINESS ACTIVITY, DETAILS OF INCOME. THE ASSESSE E EXPLAINED THAT THE MAIN BUSINESS OF THE COMPANY WAS INVESTMENT ACTIVITY FROM WHICH THE ASSESSEE HAD INTEREST INCOM E FROM LOANS AND FIXED DEPOSITS. IT WAS FURTHER EXPLAINED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS EARNED THE INTEREST IN COME WHICH WAS TREATED AS BUSINESS RECEIPTS FROM WHICH ADMINISTRATIVE EXPENSES AND FINANCIAL CHARGES HAVE BEEN DEDUCTED. THE NET BUSINESS INCOME HAS BEEN SHOWN AT RS. 5,95,140/ - . THE AO DID NOT ACCEPT THIS SUBMISSION OF THE ASSESSEE. THE AO WAS OF THE O PINION THAT THE ASSESSEE HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO ESTABLISH THAT THE INVESTMENT ACTIVITY OF THE ASSESSEE INCLUDES MONEY LENDING AND THAT THE INTEREST INCOME HAS BEEN GENERATED IN PURSUANCE OF ITS BUSINESS ACTIVITIES. THE AO CONCLUDED BY T AKING INTEREST INCOME AS INCOME FROM OTHER SOURCES AND DENIED THE CLAIM OF ADMINISTRATIVE EXPENSES AND FINANCIAL CHARGES. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 5. THE LD. COUNSEL FOR THE ASSESSEE REI TERATED WHAT HAS BEEN SUBMITTED BEFORE THE AO. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. ITA. NO. 6593/M/2013 3 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND WITH THE ASSISTANCE OF THE LD. COUNSEL WE HAVE ALSO GONE THROUGH THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD. THE ASSESSMENT ORDER PERTAINING TO A.Y. 2001 - 02 EXHIBITED AT PAGE - 27 OF THE PAPER BOOK IS WORTH MENTIONING. IN THE SAID ASSESSMENT, THE ASSESSEES BUSINESS HAS BEEN ACCEPTED AS THAT OF FINANCE. IN THAT YEAR ALSO, THE ONLY SOURCE OF INCOME WAS INTEREST , WHICH HAS BEEN ACCEPTED AND TAXED UNDER THE HEAD BUSINESS INCOME. ONCE THE REVENUE HAS ACCEPTED THE BUSINESS ACTIVITY OF THE ASSESSEE, THEN FOR THE SAME SOURCE OF INCOME IN SUBSEQUE NT YEAR S, THE REVENUE AUTHORITIES CANNOT TAKE A DIFFERENT STAND. THIS IS AGAINST THE RULE OF CONSISTENCY AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS CIT 193 ITR 321. 7.1. DRAWING SUPPORT FROM THE FINDING OF THE AO FOR A.Y. 2001 - 02, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO TREAT THE INTEREST INCOME UNDER THE HEAD BUSINESS INCOME AND CONSIDER THE ADMINISTRATIVE EXPENSES AND FINANCIAL EXPENSES AS ALLOWABLE EXPENDITURE U/S. 37(1) OF THE ACT. 8. IN THE RE SULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 2 4 TH JUNE , 2015 SD/ - SD/ - ( I.P. BANSAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 2 4 TH JUNE , 2015 . . ./ RJ , SR. PS ITA. NO. 6593/M/2013 4 / COPY OF THE ORDER FORWARDE D 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