ACIT 16(2), MUMBAI V. B.D. FIBRE ASSOCIATES, MUMBAI

ITA 6709/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3269 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SACHIDANANDA DUBE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6709/MUM/2014 ASSESSMENT YEAR : 2010-11 THE ACIT 16(2) MUMBAI VS. B D FIBRE ASSOCIATES 32 ASHIYANA NAPEAN SEA ROAD, MUMBAI- 400 036 PAN AAATB1773B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SACHIDANANDA DUBE RESPONDENT BY : SHRI SUNIL TALATI DATE OF HEARING : 3 1 .0 5 .201 6 DATE OF PRONOUNCEMENT : 08 .0 6 . 201 6 O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF THE CIT(A) 27, MUMBAI, IN APPEAL NO.CIT(A)-27/AC-16(2)/9/13-14 DAT ED 28.08.2014. THE ASSESSMENT WAS FRAMED BY THE ACIT 16(2), MUMBAI, FO R A.Y. 2010-11 VIDE HIS ORDER DATED 15.2.2013 U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE ONLY ISSUE IN THIS APPEAL OF THE R EVENUE IS AGAINST THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCE OF INTEREST PAID T O BENEFICIARIES AS WELL AS ITS DEDUCTIBILITY. FOR THIS THE REVENUE HAS RAISED THE FOLLOWING GROUND: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTORING THE MATTER TO THE FILE OF THE A.O. TO DETERMINE THE ASSESSEES LIABILITY TO PAY INTEREST TO ITS BENEFICIARIES AS WELL AS ITS DEDUCTIBILITY, AS THIS TANTAMOUNT TO SE TTING ASIDE THE ASSESSMENT IN VIOLATION OF THE PROVISION OF SECTION 251(1)(A) OF THE ACT, 1961?. THE LD. CIT(A) CANNOT SET ASIDE A CASE UNDE R I.T.ACT. ITA NO.6709/MUM/2014 SHRI B D FIBRE ASSOCIATES 2 2. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE IS A DISCRETIONARY TRUST AND IS BEING ASSESSED IN THE STATUS OF AOP. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT IT IS NOT ENTITLE D FOR THE CLAIM OF INTEREST PAID TO 100 BENEFICIARIES OF THE TRUST AMOUNTING TO RS.53.3 0 LACS AND HE ASSESSED THE SAME AS INCOME FROM OTHER SOURCES. THE CIT(A) DELETED THE ADDITION AND DIRECTED THE AO TO EXAMINE THE NECESSARY DETAILS IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2008-09 IN ITA NO. 785 3/MUM/2011 DATED 31.10.2013, THE CIT(A) REPRODUCED THE RELEVANT FINDING OF THE T RIBUNAL. AGGRIEVED, AGAINST SETTING ASIDE THE MATTER BACK TO THE FILE OF THE AO AND STATING THAT THE CIT(A) HAS VIOLATED THE PROVISIONS OF SECTION 251(1)(A) OF THE ACT, THE REVENUE IS IN APPEAL BEFORE US. 3. ACCORDING TO THE LEARNED SENIOR DR, THE POWERS O F THE CIT(A) IN RESPECT OF SETTING ASIDE THE ASSESSMENT OR REMANDING THE MATTE R BACK IS NOW WITHDRAWN. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE TR IBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1989-90 IN ITA NO. 5080/BOM/1992 ORDER DATED 2 9.03.1995 HAS ALLOWED THE CLAIM OF THE ASSESSEE. HE REFERRED TO PAGE 3 OF TH E TRIBUNAL ORDER AND THE RELEVANT FINDINGS OF THE TRIBUNAL READS AS UNDER: 4. ...IN THIS VIEW OF THE MATTER, WE ARE OF THE OP INION THAT THE INTEREST PAYABLE TO THE BENEFICIARIES IS DEDUCTIBLE FOR THE ASSTT. YRS. UNDER APPEAL. WE MAY FURTHER POINT OUT THAT THERE WAS NO DISPUTE IN EARLIER YEARS (WHICH WERE SUBJECT MATTER OF APPEALS BEFORE THE TRIBUNAL) WHERE INTERESTS WERE ASSESSED IN THE HANDS OF THE BENEFIC IARIES ON THEIR DETERMINATE SHARE AND THE TRIBUNAL HAD GIVEN RELIEF TO THE ASSESSEE ON THE BASIS, INTER ALIA, THAT IT WOULD BE A DOUBLE TA XATION IF THAT INTEREST INCOME HAS BEEN ADDED AGAIN THE HANDS OF THE ASSESS EE. WE, THEREFORE, ALLOW THE CONTENTION OF THE ASSESSEE IN THESE YEARS AND ALLOW THE APPEALS ON THIS GROUND. ITA NO.6709/MUM/2014 SHRI B D FIBRE ASSOCIATES 3 THE LEARNED COUNSEL FOR THE ASSESSEE ALSO STATED TH AT IN A.YS. 1986-87 AND 1987-88, THE TRIBUNAL IN ITA NOS. 4143 & 4144/MUM/1991 HAS A LSO ALLOWED THE CLAIM OF THE ASSESSEE AND HE REFERRED TO THE RELEVANT PARA 4 OF THE ORDER, WHICH READS AS UNDER: 4. .... WE MAY FURTHER POINT OUT THAT THERE WAS NO DISPUTE IN EARLIER YEARS (WHICH WERE SUBJECT MATTER OF APPEALS BEFORE THE TRIBUNAL) WHERE INTERESTS WERE ASSESSED IN THE HANDS OF THE BENEFIC IARIES ON THEIR DETERMINATE SHARES AND TEH TRIBUNAL HAD GIVEN RELIE F TO THE ASSESSEE ON THE BASIS, INTER-ALIA, THAT IT WOULD BE A DOUBLE TA XATION IF THAT INTEREST INCOME HAS BEEN ADDED AGAIN IN THE HANDS OF THE ASS ESSEE. WE, THEREFORE, ALLOW THE CONTENTION OF THE ASSESSEE IN THESE YEARS AND ALLOW THE APPEALS ON THIS GROUND. IN VIEW OF THE ABOVE, THE LEARNED COUNSEL FOR THE A SSESSEE STATED THAT EXACTLY IDENTICAL CLAIM ON IDENTICAL FACTS HAS CONSISTENTLY BEEN ALLOWED BY THE TRIBUNAL AND THERE IS NO ISSUE OF RESTORING BACK THE SAME. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AS REGARDS THE FACTS TH ERE IS NO DISPUTE. THERE IS NO DISPUTE THAT THE TRIBUNAL IN A.YS. 1986-87 AND 1987 -88 VIDE ORDER DATED 29.03.1995 AND ALSO IN A.Y. 1989-90 VIDE ORDER DATED 29.03.199 5 HAS ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF INTEREST DISTRIBUTED AMONG T HE BENEFICIARIES AND ALLOWED DEDUCTION TO THE TRUST. BUT NOW IN THE LATEST DECI SION OF THE TRIBUNAL FOR A.Y. 2008- 09, THE TRIBUNAL HAS REMANDED THE MATTER BACK TO TH E FILE OF THE AO TO DECIDE THE ISSUE REGARDING DEDUCTIBILITY OF INTEREST PAID TO B ENEFICIARIES IN TERMS OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CI T VS. TANVI SAJANI FAMILY TRUST (1994) 209 ITR 497 (GUJ). THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY AGREED ON THE PROPOSITION OF REMANDING THE MATTER BACK TO THE FILE OF THE AO. IN TERMS OF THE ABOVE, WE RESTORE THE MATTER BACK TO THE FILE OF TH E AO AND DIRECT HIM TO DECIDE THE ISSUE OF PAYMENT OF INTEREST TO ASSESSEES BENEFICI ARIES AS WELL AS DEDUCTIBILITY IN ITA NO.6709/MUM/2014 SHRI B D FIBRE ASSOCIATES 4 TERMS OF THE DECISION OF THE HONBLE GUJARAT HIGH C OURT IN THE CASE OF CIT VS. TANVI SAJANI FAMILY TRUST (SUPRA). 5. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 8 TH JUNE 2016. SD/- SD/- (RAJESH KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED :8 TH JUNE, 2016. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI