FOURTUNE HOLDINGS P.LTD, MUMBAI V. ACIT CC 23, MUMBAI

ITA 6829/MUM/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1777 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2001-2002
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER . / ITA NO. 6829/MUM/2013 / ASSESSMENT YEAR 2001-02 . / ITA NO. 6840/MUM/2013 / ASSESSMENT YEAR 2002-03 . / ITA NO. 6830/MUM/2013 / ASSESSMENT YEAR 2003-04 M/S.FORTUNE HOLDINGS PVT. LTD. 32, MADHULI, DR. A.B.ROAD, WORLI, MUMBAI 400 018. / VS. THE ACIT, CC-31, ROOM NO.413, AAYKAR BHAVAN, MK ROAD, MUMBAI 400020 ! ./ ./ PAN/GIR NO. : AAACF 2166P ( !$ / APPELLANT ) .. ( %&!$ / RESPONDENT ) ASSESSEE BY SHRI DHARMESH SHAH RESPONDENT BY : DR. P. DANIEL ( ) * / DATE OF HEARING : 22/04/2015 ( ) * / DATE OF PRONOUNCEMENT : 22/04/2015 / O R D E R PER I.P.BANSAL, JM: ALL THESE APPEALS ARE FILED BY THE ASSESEE AND ARE DIRECTED AGAINST THREE SEPARATE ORDERS DATED 12/09/2013 PASSED BY LD. CIT( A) FOR ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04. GROUNDS OF APPEAL IN ALL THESE APPEALS ARE IDENTICAL EXCEPT THE DIFFERENCE IN FIGURES MENTIONE D IN GROUND NO.2. FOR THE SAKE OF CONVENIENCE, GROUND OF APPEAL FOR A.Y 2001- 02 ARE REPRODUCED BELOW: 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) O UGHT TO HAVE APPRECIATED ITA NOS. 6829,6840 &6830/MUM/2013 2 THAT AS PER THE DECISION OF HON'BLE SPECIAL COURT D ATED 30.04.2010 IN MP NO. 41 OF 1999, THE ASSETS UNDER CONSIDERATION AND THE CON SEQUENTIAL INCOME BELONGS TO SHRI HARSHAD S. MEHTA AND HENCE THE INCOME ASSESSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN TAXED IN THE HANDS OF SHRI HARSH AD S. MEHTA AND NOT IN THE HANDS OF THE APPELLANT. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE AMOUNTING TO RS.57,70,806/-. 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTEREST U/S, 234B A ND 234C OF THE ACT. 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME ASSESSED IN THE HA NDS OF THE APPELLANT WERE SUBJECTED TO THE PROVISIONS OF TDS AND HENCE, ON TH E SAID AMOUNT OF TAX, NO INTEREST CAN BE COMPUTED U/S: 234B AND 234C OF THE ACT. 2. IN RESPECT OF OTHER ASSESSMENT YEARS THE FIGURES AS MENTIONED IN GROUND NO.2 IS AS UNDER: ASSESSMENT YEAR AMOUNT. 2002-03 RS. 57,70,806/- 2003 - 04 RS.4,24,89,967/ - 3. AT THE TIME OF HEARING IT WAS POINTED OUT THAT G ROUND NO.1 OF EACH OF THE APPEAL IS NOT PRESSED BY THE ASSESSEE. IN RESPECT OF GROUND NO.2 &4 IT WAS SUBMITTED THAT THE ISSUES ARE COVERED BY THE EARLIE R ORDERS OF THE TRIBUNAL, COPIES OF WHICH ARE FILED IN THE PAPER BOOK. LD. C OUNSEL APPEARING ON BEHALF OF THE REVENUE DID NOT OBJECT SUCH CONTENTION OF LD. A R. 3.1 IT WAS FURTHER SUBMITTED THAT IN RESPECT OF GRO UND NO.3, THE MATTER WAS EARLIER DECIDED AGAINST THE ASSESSEE VIDE ORDER DAT ED 29/1/2014, IN RESPECT OF ASSESSMENT YEAR 2007-08 AND COPY OF SUCH ORDER IS ENCLOSED AT PAGES 5 TO 10 OF THE PAPER BOOK. IT WAS FURTHER SUBMITTED THAT A SSESSEE HAS PREFERRED AN APPEAL BEFORE HONBLE BOMBAY HIGH COURT AGAINST THE SAID ORDER WHICH IS INCOME TAX APPEAL (LODG) NO.236 OF 2015 AND THE SAI D APPEAL IS PENDING BEFORE HONBLE BOMBAY HIGH COURT. WITH REFERENCE TO SECTION158A THE ITA NOS. 6829,6840 &6830/MUM/2013 3 ASSESSEE HAS FILED A DECLARATION IN FORM NO.8. ON SUCH REQUEST OF THE ASSESSEE, LD. COUNSEL APPEARING ON BEHALF OF THE RE VENUE DID NOT OBJECT. THEREFORE, IT WAS SUBMITTED THAT THIS ISSUE MAY BE DECIDED AS PER EARLIER ORDER OF THE TRIBUNAL AND WHEN THE DECISION ON THE QUESTI ON OF LAW IN RESPECT OF A.Y 2007-08 BECOMES FINAL THEN THE SAME MAY BE APPLIED TO THE PRESENT APPEALS AS PER PROVISIONS OF SECTION 158A OF THE ACT. IT IS I N THIS MANNER WE HAVE PROCEEDED TO DECIDE THE PRESENT APPEALS. 4. APROPOS GROUND NO.1; THIS GROUND IN ALL THE YE ARS ARE DISMISSED BEING NOT PRESSED. 5. APROPOS GROUND NO.2, REFERENCE HAS BEEN MADE TO THE DECISION OF TRIBUNAL IN THE CASE OF GROUP CONCERN OF M/S. GROW MORE LEASING & INV. LTD. VS. ACIT, DECISION DATED 5/3/2015, IN WHICH ONE OF US (AM) IS A PARTY. SIMILAR ISSUE HAS BEEN RESTORED BACK TO THE FILE OF LD. CIT (A). COPY OF THIS DECISION IS FILED AT PAGE 1 TO 4 OF THE PAPER BOOK. RELEVANT D ISCUSSION IS IN PARA 3 TO 6, WHICH ARE REPRODUCED BELOW: 3. GROUND NO. 4 RELATES TO THE DISALLOWANCE OF INT EREST EXPENSE. THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE DEC ISION RELIED UPON BY THE LD. CIT(A) WHILE DISPOSING THIS GROUND HAS BEEN SET ASI DE BY THE TRIBUNAL TO THE FILE OF THE LD. CIT(A). 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BR ING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. WHILE DISPOSING THE GROUND RELATING TO THE DISALLOWANCE OF INTEREST , WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE FINDINGS GIVEN IN THE CASE OF EMINENT HOLDINGS PVT. LTD. WE FIND THAT THE TRIBUNAL IN THE CASE OF EMINENT HOLDINGS IN ITA NOS. 2139, 2140 AND 2141/MUM/2013 HAVE FOLLOWED THE DECISION OF THE TRI BUNAL GIVEN IN COMMON GROUP CASE OF HITESH S. MEHTA AT PARA 2.3 OF THE OR DER AND RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO ORDINATE BENCH, WE RESTORE THIS ISSUE TO THE FILES OF THE LD. CIT(A) FOR FRESH ADJUDICATION AFTER GIVING REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. 6. BEFORE CLOSING THIS ISSUE, THE LD. COUNSEL FOR T HE ASSESSEE POINTED OUT THAT THE LD. CIT(A) HAS HELD THAT THE ISSUE OF INTEREST EXPE NDITURE IS PENDING BEFORE THE HONBLE SPECIAL COURT. IT IS THE SAY OF THE LD. C OUNSEL THAT THE PROCEEDINGS IN WHICH THE SAID ISSUE OF INTEREST WAS ISSUED BY THE CUSTODIAN HAVE BEEN ALREADY ITA NOS. 6829,6840 &6830/MUM/2013 4 CONCLUDED WHICH FACT HAS ALREADY BEEN RECORDED BY T HE LD. CIT(A) IN THE IMPUGNED ORDER. WE, THEREFORE, DIRECT THE LD. CIT(A ) TO CONSIDER THIS FACT WHILE DECIDING THE ISSUE AFRESH. THE LD. CIT(A) MAY ALSO DIRECT FOR THE TAXING OF INCOME IN THE HANDS OF THE RECIPIENT (FAMILY MEMBERS) IN A CCORDANCE WITH THE METHOD OF ACCOUNTING FOLLOWED BY THEM AND AS PER THE PROVISIO NS OF THE LAW. GROUND NO. 4 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 5.1 ACCORDINGLY, AFTER HEARING BOTH THE PARTIES, F OLLOWING THE AFOREMENTIONED DECISIONS WE RESTORE THIS ISSUE TO THE FILE OF LD. CIT(A) IN THE SIMILAR MANNER AS HAS BEEN RESTORED BACK IN THE AFOREMENTIONED DECISI ON. FOR STATISTICAL PURPOSES, THIS GROUND OF ALL THE THREE APPEALS IS A LLOWED. 6. APROPOS GROUND NO.3; REFERENCE WAS MADE TO THE D ECISION OF TRIBUNAL IN ASSESSEES OWN CASE, WHICH IS DATED 29/1/2014 AND T HIS ISSUE IS DISCUSSED IN PARA-6 OF THE ORDER. FOR THE SAKE OF CONVENIENCE T HE SAME IS REPRODUCED BELOW: 6. SIMILARLY GRIEVANCE OF THE REVENUE IS CONSIDERE D BY THE TRIBUNAL IN ITA NO. 972/M/2011 VIDE PARA-15 & 16 ON PAGE-7 & 8 OF I TS ORDER WHEREIN THE TRIBUNAL HAS HELD AS UNDER: GROUND NO. 1 (D) AND 1(E) RELATE TO CHARGING OF INT EREST U/S. 234A, 234B & 234C OF THE ACT. THE LD. DR BROUGHT TO OUR NOTICE THAT THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS DIV INE HOLDING PVT. LTD. IN INCOME TAX APPEAL NO. 3334 OF 2010 WHICH HA S BEEN FOLLOWED BY THE TRIBUNAL IN THE CASE OF TOPAZ HOLDI NG PVT. LTD IN ITA NO. 7295/M/2012. WE FIND THAT THE HONBLE JURISDICT IONAL HIGH COURT HAS HELD THAT THE CHARGEABILITY OF INTEREST U /S. 234A, 2324B AND 234C OF THE ACT DOES NOT FALL WITHIN THE DOMAIN OF THE SPECIAL COURT (CONTROL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) AT 1992. SINCE LEVY OF INTEREST IS MANDATORY AND IS VE RY MUCH APPLICABLE IN THE CASE OF NOTIFIED PERSONS, RESPECT FULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), GROUND NO. 1 (D) AND 1 (E) ARE ALLOWED. NEEDLESS TO MENTIO N THAT THE LEVY OF INTEREST WOULD BE CONSEQUENTIAL. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. RESPECTFULLY FOLLOWING THE AFORESTATED FINDINGS OF THE TRIBUNAL, THE APPEAL FILED BY THE REVENUE IS ALLOWED. ITA NOS. 6829,6840 &6830/MUM/2013 5 7. IT HAS ALREADY MENTIONED THAT ASSESSEE HAS FILED A DECLARATION IN FORM NO.8 UNDER SECTION 158A, THEREFORE, ACCORDING TO TH E DECLARATION FILED THE ISSUE IS DECIDED AGAINST THE ASSESSEE WITH A DIRECTION T HAT WHEN THE DECISION ON THE QUESTION OF LAW IN RESPECT OF ASSESSMENT YEAR 2007- 08 BECOMES FINAL THE SAME SHALL BE APPLIED TO THE PRESENT APPEALS ACCORDANCE WITH SUB-SECTION (5) OF SECTION 158A OF THE ACT. ACCORDINGLY, THIS GROUND FOR ALL THE THREE YEARS IS DECIDED AGAINST THE ASSESSEE IN THE MANNER AFORESAI D. 8. APROPOS GROUND NO.4 OF ALL THE THREE APPEALS, TH IS ISSUE WAS STATED TO BE COVERED BY THE DECISION OF TRIBUNAL IN GROUP CASE N AMELY M/S.TOPAZ HOLDING PVT. LTD. VS. ACIT, COPY OF THIS DECISION IS FILED AT PAGE 11 TO 13 OF THE PAPER BOOK. THIS ISSUE IS DECIDED VIDE PARA 3 TO 3.1 AND THE SAME IS REPRODUCED AS UNDER: 3.NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S. 234 OF THE ACT.BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFIED ENTITY,T HAT THE PROVISIONS OF S. 234A, 234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLI ED WITH,THAT THE ASSETS WERE ALREADY IN ATTACHMENT OF THE CUSTODIAN APPOINT ED UNDER THE PROVISIONS OF THE SPECIAL COURTS ACT,THAT THE TRIBUNAL IN THE CAS E OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE VIEW IN FAVOUR OF THE A PPELLANT,THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIVINE HOLDINGS PV T. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVISIONS OF SECTIONS 234A,234B AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO TH E NOTIFIED ENTITIES ALSO,THAT THE ASSESSEE WAS IN THE PROCESS OF FILING AN APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE SUPREME COURT,THAT THE INCOME EARNED IN THE YEAR UNDER CONSIDERATION WAS SUBJECTED TO PROVISIONS OF TDS,TH AT THE CHANGEABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD BE AF TER CONSIDERING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED. THE APPELLANT RELIES IN THIS REGARD ON THE FOLLOWING DECISIONS. HE RELIED UPON T HE CASES OF MOTOROLA INC. V. DCIT [95 ITD 269 (DEL.(SB)], SEDCO FORES DRILLING C O. LTD. [264 ITR 320],NGC NETWORK ASIA LLC [313 ITR 187] ,SUMMIT BHATACHARYA [ 300 ITR (AT) 347 (BOM)(SB)], VIJAL GOPAL JINDAL [ITA NO. 4333/DEL/20 09] & EMILLO RUIZ BERDEJO [320 ITR 190 (BOM)].DR RELIED UPON THE CASES OF DEV INE HOLDINGS PVT. LTD. 3.1.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL BEFORE US.WE FIND THAT IN THE CASE OF DEVINE HOLDINGS PVT. LTD. HONBLE BOMBAY HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO.THEREFORE, UPHOLDING THE ORDER OF THE FAA TO THAT EXTENT,WE HOLD THAT PROVISIONS OF SECTION 234 OF THE ACT ARE APPLICABLE.AS FAR AS CALCULATION PART IS CONCERNED,WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE.THEREFORE, WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ITA NOS. 6829,6840 &6830/MUM/2013 6 ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSI DERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED AND AFT ER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.GROUND NO.5 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. 8.1 IN THIS VIEW OF THE SITUATION, AFTER HEARING BOTH THE PARTIES THE ISSUE RAISED IN GROUND NO.4 FOR ALL THE THREE APPEALS IS RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN THE MANNER AS DIRECTED I N THE AFOREMENTIONED CASE. WE DIRECT ACCORDINGLY. THIS GROUND IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. 9. IN THE RESULT, ALL THE THREE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 22/04/2015 ( 0 1 2 22/04/2015 ( SD/- SD/- ( / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 1 DATED 22/04/2015 / COPY OF THE ORDER FORWARDED TO : 1. !$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. 4) ( ) / THE CIT(A)- 4. 4) / CIT 5. 56 %)78 , * 78 , / DR, ITAT, MUMBAI 6. 9 / GUARD FILE. / BY ORDER, & 5) %) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS