PRABHAKAR S. GHOLE, MUMBAI V. ITO 15(2)(2), MUMBAI

ITA 6598/MUM/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62436 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-04-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 29-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SAXENA
• Section: 148; 6; 28; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 6598/MUM/2009 ASSESSMENT YEAR 2002-03 PRABHAKAR S. GHOLE, 6, OM SHRI GURUDEV, 18 TH ROAD, KHAR (W), MUMBAI 400 052 PAN: AJCPG 3913F VS. THE INCOME TAX OFFICER 15(2)(2), MUMBAI-400 020. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJIV KHANDELWAL, REVENUE BY : SHRI V. SAXENA, DR DATE OF HEARING : 25-04-2012 DATE OF PRONOUNCEMENT : 18-05-2012 ORDER PER RAJENDRA, A.M. THE FOLLOWING ARE THE GROUNDS OF APPEAL FILED BY TH E APPELLANT AGAINST THE ORDER DT. 28-10-2009 OF THE CIT(A)-26, MUMBAI: '1.THE LEARNED COMMISSIONER OF INCOME TAX-APPEAL-26 , MUMBAI ERRED IN CONFIRMING THE ADDITION OF ` 50,00,000/- MADE BY THE LEARNED INCOME TAX OFFICER 15(2)(2), MUMBAI TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD PROFITS AND GAINS OF B USINESS OR PROFESSION RELYING ON THE PROVISIONS OF SECTION 4 AND SECTION 28(IV) OF THE I.T. ACT, 1961. '2. THE LEARNED COMMISSIONER OF INCOME TAX-APPEAL-2 6, MUMBAI ERRED IN CONFIRMING THE TREATMENT OF ` 50,00,000/- GIVEN BY THE LEARNED INCOME TAX OFFICER 15(2)(2), MUMBAI BY TREA TING SUM OF ` 50,00,000 CREDITED TO PARTNERS CAPITAL ACCOUNT IN THE BOOKS OF ITA NO. 6598/MUM/2009 PRABHAKAR S. GHOLE, , 2 THE FIRM TOWARDS HIS SHARE OF GOODWILL AS TAXABLE I N THE HANDS OF THE PARTNER I.E., APPELLANT. '3. THE LEARNED COMMISSIONER OF INCOME TAX-APPEAL-2 6, MUMBAI ERRED IN CONFIRMING THE TREATMENT OF ` 50,00,000/- GIVEN BY THE LEARNED INCOME TAX OFFICER 15(2)(2), MUMBAI BY TREA TING GOODWILL CREDITED TO APPELLANT PARTNERS CAPITAL ACCOUNT IN THE BOOKS OF THE FIRM ASHTAVINAYAK DEVELOPERS AS BENEFIT ACCRUING FROM THE PARTNERSHIP FIRM AS LIABLE TO TAX IN THE HANDS OF T HE PARTNER. '4. THE LEARNED COMMISSIONER OF INCOME TAX-APPEAL-2 6, MUMBAI ERRED IN CONFIRMING THE TREATMENT OF ` 50,00,000/- GIVEN BY THE LEARNED INCOME TAX OFFICER 15(2)(2), MUMBAI BY TAXING ` 50,00,000/- AS APPELLANTS INCOME THOUGH THERE IS NO TRANSFER OF GOODWILL BY THE FIRM TO ITS PARTNERS. '5. THE LEARNED COMMISSIONER OF INCOME TAX-APPEAL-2 6, MUMBAI OUGHT TO HAVE CONSIDERED THAT ONCE GOODWILL IS RETA INED AS AN ASSET BY THE PARTNERSHIP FIRM OF M/S. ASHTAVINAYAK DEVELOPERS IN ITS BALANCE SHEET AS ON 31-03-2002 UPTO 31-03-2008 SUBMITTED TO HI, THERE CANNOT BE A TRANSFER OF GOODWILL BY THE F IRM TO ITS PARTNERS. GOODWILL, IF DISTRIBUTED BY THE PARTNERS HIP FIRM TO ITS PARTNER, IT WILL CEASE TO EXIST IN THE BOOKS OF THE PARTNERSHIP FIRM. '6. THE LEARNED COMMISSIONER OF INCOME TAX-APPEAL-2 6, MUMBAI ERRED IN CONFIRMING THE TREATMENT OF ` 50,00,000/- GIVEN BY THE LEARNED INCOME TAX OFFICER 15(2)(2), MUMBAI BY TREA TING THE TRANSACTION OF CREDIT OF SHARE IN GOODWILL TO THE P ARTNERS CAPITAL ACCOUNT IN THE BOOKS OF THE FIRM AS BENEFIT U/S. 28 (IV) OF THE I.T. ACT, AS THERE CANNOT BE A BENEFIT TO THE PARTNER WH EN THERE IS NO LOSS/EXPENSES TO THE FIRM. '7. THE LEARNED COMMISSIONER OF INCOME TAX-APPEAL-2 6, MUMBAI ERRED IN CONFIRMING THE DECISION TO TAX THE CREDIT OF GOODWILL AS ROYALTY OR REMUNERATION IN THE HANDS OF THE PARTNER IS NOT TENABLE IN LAW. BECAUSE AS PER THE EXPRESS PROVISIONS OF T HE INCOME TAX ACT ONLY THE REMUNERATION WHICH IS ALLOWED AS DEDUC TION IN THE HANDS OF THE FIRM CAN BE BROUGHT TO TAX IN THE HAND S OF THE PARTNER. ITA NO. 6598/MUM/2009 PRABHAKAR S. GHOLE, , 3 2. FACTS OF THE CASE : ASSESSING OFFICER(AO)ISSUED A NOTICE U/S. 148 OF TH E IT ACT, 1961 (ACT). ASSESSEE FILED RETURN OF INCOME ON 26.11.2008 BUT A MOUNT RECEIVED ON ACCOUNT OF GOODWILL FROM M/S. ASHTAVINAYAK DEVELOPE RS WAS NOT SHOWN. SO, AO ISSUED SUMMONS TO M/S. ASHTAVINAYAK. 3. FROM THE DISCUSSION HELD WITH THE AUTHORISED REPRESENTATIVE(AR)OF M/S.ASHTAVINAYAK AO FOUND THA T FROM 01.01.1994 TILL 2002 THERE USED TO BE CHANGES IN TH E PARTNERSHIP, BUT NO CONSTRUCTION WORK WAS CARRIED OUT BY THE FIRM.ON 27.02.2002, THERE WAS INDENTURE OF PARTNERSHIP AND M/S. MATOSHREE REA LTORS PVT LTD. WAS ADMITTED TO PARTNERSHIP FIRM AND FOLLOWING CLAU SE WERE PUT UP. DURING THE COURSE OF BUSINESS NEGOTIATED TO ACQUIR E PROPERTIES SITUATED AT MIRANDAWADI, D.L. VAIDYA ROAD, DADAH, MUMBAI-28, BEING PROPERTY BELONGS TO MUMBAI MUNICIPAL CORPORATION WAS OCCUPIE D BY 39 TENANTS TO DEVELOP THE SAME IN THAT RESPECT MADE VARIOUS PE RSONAL EFFORTS AND MUMBAI MUNICIPAL CORPORATION HAS APPROVED THE RE-DE VELOPMENT SCHEME AND THE OCCUPANCY PRICE IS FIXED OF ` 5,00, 01,482.81/- SUBJECT TO THE FIRM UNDERTAKING LIABILITY TO MAKE PAYMENT OF T HE SAID OCCUPANCY PRICE AS ALSO TO CARRY OUT THE SAID SCHEME AT THE O WN COST, CHARGES AND EXPENSES.NOW IT HAS BEEN AGREED THAT THE FIRM HAS E ARNED GOODWILL OF ` ONE CRORE BY THE PERSONS ON THE FACTS NUMERABLE EF FORTS MADE BY THE PARTNERS TOWARDS MAKING THE PROJECT VIABLE BY NEGOT IATION WITH THE TENANTS/OCCUPANTS OF SCHEME SUBMITTING TO THE MUNIC IPAL AUTHORITIES AND SUCH GOODWILL BE CREDITED IN THE BOOKS OF ACCOU NTS OF THE FIRM. ACCORDINGLY, ` 50 LACS WAS CREDITED TO THE ASSESSEE MR. PRABHAKAR S. GHOLE AND ` 50 LACS TO MR. SUNIL G. KARVE, IN THE BOOKS OF THE FIRM M/S. ASHTAVINAYAK DEVELOPERS AND THESE AMOUNTS WERE SHOWN AS WORK IN PROGRESS. ON 31.08.2003 A RETIREMENT CUM PARTNERSHIP DEED WAS EXECUTED AND PRABHAKAR S. GHOLE, MR. SUNIL G. KARVE AND KUMAR DU RGESH PRABHAKAR GHOLE RETIRED FROM THE FIRM. AFTER RETIRE MENT FROM PARTNERSHIP FIRM MR. GHOLE WITHDREW THE FOLLOWING A MOUNT FROM THE M/S. ASHTAVINAYAK - 04.09.2003 ` 30,00,000/- 05.05.2005 ` 5,00,000/- 17.08.2005 ` 10,00,000/- 27.09.2005 ` 5,15,000/- ITA NO. 6598/MUM/2009 PRABHAKAR S. GHOLE, , 4 4. CONSIDERING ABOVE FACTS AO HELD THAT GOODWILL AM OUNTING TO ` 50 LAKHS WAS TAXABLE U/S. 28 (IV) OF THE ACT. HE RE FERRED TO CASE OF VINAY KUMAR PATNI 293 ITR 54 (AT) NAGPUR. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). AF TER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT(A) DECIDED THE MAT TER AS UNDER: IT IS VERY APPARENT FROM THE RECORDS ITSELF THAT R IGHT FROM THE BEGINNING FROM 01-01-1994 NO SUCH BUSINESS LIKE CONSTRUCTION OF BUILDINGS OR BUSINESS OF DEVELOPERS OR BUILDERS HAS BEEN STARTED , NEVERTHELESS THERE HAS BEEN CHANGE OF PARTNERSHIP AND RE-INDUCTION OF NEW PARTNERS WITHOUT ANY VISIBLE REASON. IT TRANSPIRES FROM THE RECORDS ITSELF THAT AFTER INTRODUCING M/S. MATOSHREE REALTORS PVT. LTD., ORIG INAL PARTNERS INCLUDING APPELLANT HAVE MADE THEMSELVES, DISAPPEAR ED FROM THE PARTNERSHIP WITHOUT DOING ANY VISIBLE BUSINESS ACTI VITIES WHICH CAN BE PRESUMED TO BE EARNING ACTIVITIES PROVES THE FACT T HAT PARALLEL TO THE PROVISIONS OF PARTNERSHIP DEED, THERE MIGHT HAVE BE EN SOMETHING MORE IN SUCH DEVICE OF PARTNERSHIP DEED CHANGED FREQUENT LY FROM TIME TO TIME AND ULTIMATELY WITHOUT EARNING ANY PROFIT FROM DEMO NSTRATED BUSINESS ACTIVITIES, SUCH PARTNERS HAVE OBTAINED ` 1 CRORE IN THE NAME OF GOODWILL BECAUSE OF BUILDING PROJECT APPROVED BY AND OBTAINE D FROM MUNICIPAL AUTHORITIES, MUMBAI REVEALS THE FACT THAT THERE MIG HT BE INVOLVEMENT OF PARTNERS IN REAL ESTATE BUSINESS PARALLEL TO THEIR BOOKS OF ACCOUNT AND DUE TO THAT THERE IS NO VISIBLE BUSINESS ACTIVITIES ON RECORD BUT ONLY WITH A VIEW TO HAVE BENEFIT OF SOME UNDER HAND DEALING O F THE REAL ESTATE RELATED WITH SUCH PROJECT KNOWN FOR DEVELOPMENT OF PROPERTY SITUATED AT MIRANAWADI, D.L. VAIDYA ROAD, DADAR, MUMBAI-28 SUCH INCOME IS RECEIVED. ONE CAN EASILY COMPREHEND THAT DUE TO NE GOTIATION AND DEALINGS FOR ` 1 CRORE, THESE TWO PARTNERS HAD MADE THE DISAPPEAR ANCE OF THEM FROM THE PARTNERSHIP AND ULTIMATELY THE PRO PERTY HAS BEEN UTILIZED AND CORRESPONDING INCOME HAS BEEN ENJOYED BY MRS. MENAKA RAJAN SHIRODKAR AND M/S. MATOSHREE REALTORS PVT. LT D., IT IS VERY APPARENT FROM THE RECORDS ITSELF THAT M/S. MATOSHRE E REALTORS PVT. LTD., HAS ULTIMATELY BECOME DESTINATION OF INCOME OF THE PROJECT WHEREAS THE WHOLE WORK IN PROGRESS WAS DONE BY THE APPELLANT AN D SHRI SUNIL G. KARVE. IT CAN BE SEEN FROM THE RECORDS ITSELF THAT AS ON 31-03-2003 THERE WAS TOTAL WORK IN PROGRESS OF THE PROJECT OF ` 1,09,38,265/- WHICH WAS ON ACCOUNT OF CREDIT IN CAPITAL OF ` 50,15,000/- IN THE NAME OF THE APPELLANT AND ` 50,50,000/- IN THE NAME OF SHRI SUNIL G. KARVE WHE REAS KUMAR DURGESH PRABHAKAR GHOLE DEPOSITED ONLY AN AMO UNT OF ` 10,000/- AND IN THE NAME OF M/S. MATOSHREE REALTOR S PVT. LTD., ONLY AN AMOUNT OF ` 7,08,064/- WAS SHOWN AS CAPITAL. THE TOTAL WIP SH OWN IN THE BALANCE SHEET WAS OF ` 1,09,58,064/-. THIS FACT REVEALS THAT THE PROJECT WAS BEING DEVELOPED BY THREE PARTNERS VIZ. MR. DURGESH PRABHAKAR GHOLE, SUNIL G. KARVE AND APPELLANT BUT I N FINANCIAL YEAR 2003-04 THESE THREE MAIN PARTNERS RETIRED FROM THE PARTNERSHIP AND ONLY MRS. MENAKA RAJAN SHIRODKAR AND MATOSHREE REAL TORS PVT. LTD., BECAME THE PARTNERS. MRS. MENAKA RAJAN SHIRODKAR W AS NEWLY INTRODUCED WITH ONLY CAPITAL OF ` 10,707/- WHERE AS THE SECOND NEW ITA NO. 6598/MUM/2009 PRABHAKAR S. GHOLE, , 5 PARTNER I.E., M/S. MATOSHREE REALTORS PVT. LTD., HA D INTRODUCED A NEW CAPITAL AND HAD ACCUMULATED INVESTMENT OF ` 2,48,17,876/-. THE ORIGINAL PARTNERS HAD WITHDRAWN SOME OF THEIR CAPIT AL AND THEREAFTER DISAPPEARED FROM THE PARTNERSHIP ENJOYING THE FURTH ER RECEIPT OF GOODWILL CREDITED IN THEIR ACCOUNT IN FINANCIAL YEA R 2001-02 RELEVANT TO ASSESSMENT YEAR 2002-03. THEREFORE, IT IS VERY EVI DENT THAT ONLY FOR REASON TO DISAPPEAR FROM THE PARTNERSHIP IN THE GUI SE OF RETIREMENT, THESE TWO PARTNERS HAVE RECEIVED ` 1 CRORE AS THEIR INCOME WHICH IS NOT IN FACT ACTUAL GOODWILL OF A BUSINESS EARNED ON ACC OUNT OF REPUTATION IN REAL ESTATE BUSINESS. HERE, IT IS RELEVANT TO MENT ION THAT ON 03-07-2009, I HAD PUT A VERY SPECIFIC QUESTION TO SHRI ATUL G. GHORPADE, C.A., THE AUTHORISED REPRESENTATIVE OF THE APPELLANT, TO CLAR IFY THE BASIS OF CALCULATION OF GOODWILL AND FURNISH NECESSARY EVIDE NCE RELEVANT TO THIS CALCULATION. BUT EVEN AFTER LAPSE OF DATE OF HEARI NG AND CONSUMPTION OF SUBSTANTIAL TIME, NEITHER APPELLANT NOR COULD AUTHO RIZED REPRESENTATIVE SUBMIT ANY SUCH EVIDENCE OF CALCULATION OF GOODWILL PROVED THE FACT THAT IN ACTUALITY THERE WAS NO GOODWILL LIKE ELEMENT WHI CH GAVE RISE TO INTRODUCTION OF ` 1 CRORE CLAIMED TO BE INCLUDED WORK IN PROGRESS. IN FACT SUCH SO CALLED GOODWILL WAS CREATED WITH A VIE W TO ENHANCE THE CAPITAL OF THE PARTNERS SO THAT IN SUBSEQUENT YEAR MONEY CAN BE PARTED WITH AS THERE WAS A PROJECT UNDER HAND OF THE PARTN ERS, WHICH WAS TO BE UTILIZED MAINLY BY M/S. MATOSHREE REALTORS PVT. LTD., THEREFORE, IT IS VERY OBVIOUS THAT SUCH CREDIT OF GOODWILL IN THE AC COUNTS OF PARTNER IS A VALUE OR A BENEFIT WHETHER CONVERTIBLE INTO MONEY O R NOT ARISES FROM BUSINESS OR THE EXERCISE OF PROFESSION, HENCE AS PE R THE PROVISION OF LAW UNDER CLAUSE (IV) OF SECTION 28 OF INCOME TAX ACT, SUCH INCOME IS TAXABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION. NEVERTHELESS, IT IS PERTINENT TO POINT OUT THAT ON 27-02- 2002 ` 50,00,000/- HAS BEEN CREDITED TO THE PARTNERS CAP ITAL ACCOUNT I.E., RELEVANT FOR A.Y. 2002-03 AND WHILE ACCREDITING THE ACCOUNTS OF THE PARTNER, FIRM M/S. ASHTAVINAYAK DEVELOPERS HAD INCR EASED THE WORK IN PROGRESS MEANING THEREBY THAT IN THE HANDS OF THE F IRM EXPENDITURE IS INHERITED IN THE NAME OF WORK IN PROGRESS SO THAT I N SUBSEQUENT YEAR SUCH EXPENDITURE WILL HAVE EFFECT IN PROFIT AND LOS S ACCOUNT AND IN CONSEQUENCE THERE WOULD BE INCREASE OF EXPENDITURE AND REDUCTION OF PROFIT. HERE, IT IS ALSO IMPORTANT TO NOTE THAT TH IS 1 CRORE RUPEES IS NOT AN ACTUAL GOODWILL ARISEN FROM THE REPUTATION AND P ROFITABILITY OF THE BUSINESS OF EARLIER YEAR BUT IT IS THE WAY OF GIVIN G MONEY TO THE PARTNERS FOR THEIR DISAPPEARANCE FROM THE FIRM HAVING PROSPE CTIVE BUSINESS RELATED WITH DEVELOPMENT OF REAL ESTATE. THEREFORE , DECISIVE FACTOR OF THIS ISSUE IS NOT THE GOODWILL BUT SOMETHING ELSE. IN FACT, SUCH PARTING OF AMOUNT OF ` 1 CRORE BETWEEN TWO MAIN PARTNERS IS OF CONSIDERAT ION OF GOING OUT FROM THE PARTNERSHIP AND HANDING OVER THE PARTNERSHIP TO ONE M/S. MATHOSHREE REALTORS PVT. LTD., AND SMT. MENAKA RAJAN SHIRODKAR. 5. BEFORE US,AR SUBMITTED THAT AMOUNT IN QUESTION W AS NOT RECEIVED IN THE YEAR UNDER CONSIDERATION, THAT THE ASSESSEE WAS NOT ITA NO. 6598/MUM/2009 PRABHAKAR S. GHOLE, , 6 COVERED BY SEC.28(IV),THAT THOUGH GOODWILL WAS BROU GHT INTO BOOKS OF ACCOUNTS YET SAME WAS NOT CLAIMED AS DEDUCTION IN P &L A/C.,THAT GOODWILL WAS PART OF WORK IN PROGRESS.AR RELIED UPO N 252 ITR 454 AND 203 ITR 24.HE ALSO REFERRED TO THE MATTER OF THE OT HER PARTNER- DR.SUNIL G KARVE -THAT HAD TRAVELLED UP TO THE TRIB UNAL. DR SUBMITTED THAT WHOLE TRANSACTION WAS A MAKE BELIEVE, THAT FRO M 1994 TO 1999 THERE WERE NO BUSINESS ACTIVITIES RELATED WITH WORK IN PROGRESS. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND PURSING THE MATERIAL AVAILABLE, WE ARE OF THE OPINION THAT PROVISIONS OF SEC. 28(IV) ARE NOT APPLICABLE IN THE CASE UNDER CONSIDERATION. SECTION 28 READS AS UNDER- SEC.28. PROFITS AND GAINS OF BUSINESS OR PROFESSION.- THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME- TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', -THE VALUE OF ANY BENEFIT OR PERQUISITE, WHETHER CO NVERTIBLE INTO MONEY OR NOT, ARISING FROM BUSINESS OR THE EXERCISE OF A PROFESSION WE FIND THAT IN THE ASSESSMENT YEAR UNDER CONSIDERA TION GOODWILL WAS CREDITED TO THE A/C. OF THE PARTNER AN D THERE WAS NO WITHDRAWAL OF CASH. IN OTHER WORDS, ONLY ENTRIES W ERE PASSED IN THE BOOKS OF A/CS.WITH REGARD TO GOODWILL. AS PER RECO RDS AVAILABLE FIRST WITHDRAWAL (RS.30 LAKHS) FROM THE ACCOUNT OF THE FI RM WAS ON 04-09- 2003 AND BALANCE ` 20 LAKHS WERE WITHDRAWN IN THE MONTHS OF MAY, AUGUST AND SEPTEMBER OF 2009. WE ARE OF THE OPINION THAT MERE BOOK ENTRIES DOE NO T ATTRACT PROVISIONS OF SEC.28(IV) OF THE ACT. CASE RELIED U PON BY THE AR ALSO SUPPORT OUR VIEWS. IN THE CASE OF BALVANTRAI VITHALDAS SHAH (196 ITR 379)QUESTION BEFORE THE HONBLE GUJARAT HIGH COURT WAS : 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AMOUNT OF RS. 60,000 RECEIVED BY THE ASSESSEE ON HI S RETIREMENT FROM THE FIRM OF M/S. MODI DYES AND INDUSTRIES CANNOT BE EXIGIBLE TO CAPITAL GAINS TAX UNDER SECTION 45 OR CANNOT BE CHARGEABLE TO TAX UNDER SECTION 28(IV) OF THE INCOME-TAX ACT, 1961 ?' HONBLE COURT DECIDED THE ISSUE, REFERRING THE EARL IER JUDGMENTS ON THE SUBJECT, AS UNDER : ..SINCE THE QUESTION WHICH HAS BEEN REFERRED TO U S IS DIRECTLY COVERED BY THE DECISIONS OF THIS COURT IN CIT V. MO HANBHAI PAMABHAI ITA NO. 6598/MUM/2009 PRABHAKAR S. GHOLE, , 7 [1973] 91 ITR 393, WHICH IS CONFIRMED IN CIT (ADDL. ) V. MOHANBHAI PAMABHAI [1987] 165 ITR 166 BY THE SUPREME COURT AN D CIT V. JAYANTILAL LAXMICHAND (INCOME-TAX REFERENCE NO. ILL OF 1974, DECIDED ON SEPTEMBER 4, 1975). FOLLOWING SAID DECISIONS AND FOR THE REASONS RECORDED THEREIN, WE ANSWER THE QUESTION WHICH HAS BEEN REFERRED TO US FOR OUR OPINION IN THE AFFIRMATIVE AND AGAINST T HE REVENUE. RESPECTFULLY FOLLOWING THE ABOVE MENTIONED JUDGMENT S WE REVERSE THE ORDER OF THE CIT(A). APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MAY, 2012. SD/- SD/- (N.V. VASUDEVAN) (RAJENDR A) JUDICIAL MEMBER AC COUNTANT MEMBER MUMBAI, DATE 18 TH MAY 2012 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI