Shriram Transport Finance Co.Ltd., CHENNAI V. ACIT, CHENNAI

ITA 700/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61219 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 03-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R SIVARAMAN

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 700/MDS/2012 ASSESSMENT YEAR : 2005 - 06 SHRIRAM TRANSPORT FINANCE COMPANY LTD., MOOKAMBIKA COMPLEX, NO.4, LADY DESIKA ROAD, MYLAPORE, CHENNAI 600 004. [PAN:AAACS7018R] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, VI(2), CHENNAI - 34. (APPELLANT) (RESPONDENT) A PPELLANT BY : SHRI R. SIVARAMAN, ADVOCATE RESPONDENT BY : SHRI SANJAY PUNGLIA, JCIT DATE OF HEARING : 31.05.2012 DATE OF PRONOUNCEMENT : 28.06.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) V, CHENNAI DAT ED 06.02.2012 IN CIT(A)-V/ITA NO. 227/2010-11 FOR THE ASSESSMENT YEA R 2005-06. SHRI R. SIVARAMAN, ADVOCATE REPRESENTED ON BEHALF OF THE AS SESSEE AND SHRI SANJAY PUNGLIA, JCIT REPRESENTED ON BEHALF OF THE R EVENUE. 2. THE ONLY ISSUE IN THE GROUNDS OF APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ASSESS ING OFFICERS ACTION IN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.700 700700 700/M/ /M/ /M/ /M/12 1212 12 2 DISALLOWING DIMINUTION IN VALUE OF INVESTMENTS OF ` .6,60,000/- IN RESPECT OF SHARES OF SHRIRAM ASSET MANAGEMENT CO. LTD. 3. THE ASSESSEE, FOR THE ASSESSMENT YEAR UNDER APP EAL, CLAIMED DEDUCTION OF ` .19,85,000/- IN RESPECT OF DIMINUTION IN VALUE OF I NVESTMENTS WRITTEN OFF. THE SAID PROVISION OF ` .19,85,000/- CONSISTS OF FOLLOWING: I. PROVISION RELATING TO SHRIRAM ASSET MANAGEMENT COMPANY LIMITED. : ` . 6,60,000 II. PROVISION RELATING TO 6.13% GOVERNMENT OF INDIA LOAN : ` . 13,25,000 TOTAL : ` . 19,85,000 THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT DISALLOWED ` .19,85,000/- STATING THAT RELEVANT ASSETS ARE SHOWN AS INVESTMENT IN THE BALANCE SHEET AND THEREFORE, THE DIMINUTION IN VALU E OF ASSET IS CAPITAL IN NATURE. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) AND CONTENDED THAT THE ASSE SSING OFFICER FAILED TO APPRECIATE THAT THE ASSESSEE IS A PROMOTER OF SHRIR AM MUTUAL FUND. SHRIRAM ASSET MANAGEMENT COMPANY LIMITED MANAGES THE FUND A ND THAT THE SHARES OF SHRIRAM ASSET MANAGEMENT CO. LTD. ARE HELD BY TH E ASSESSEE AS A PROMOTER AND BUSINESS ASSET. IT WAS FURTHER CONTEND ED THAT THIS PROVISION OF ` .6,60,000/- IN RESPECT OF SHRIRAM ASSET MANAGEMENT CO. LTD. HAS BEEN ASSESSED TO TAX IN THE ASSESSMENT YEAR 2007-08 ON I TS REVERSAL IN THE BOOKS I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.700 700700 700/M/ /M/ /M/ /M/12 1212 12 3 OF ACCOUNTING FOR THE YEAR ENDED 31.03.2007. THEREF ORE, IT IS CONTENDED THAT IF THIS AMOUNT IS DISALLOWED IN THE ASSESSMENT YEAR 2005-06, IT AMOUNTS TO DOUBLE ASSESSMENT. THE COMMISSIONER OF INCOME TAX ( APPEALS) DELETED PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS OF ` .13,25,000/- OUT OF ` .19,85,000/- IN RESPECT OF PROVISION RELATING TO 6. 13% GOVERNMENT OF INDIA BONDS 2008 BY FOLLOWING THE ORDERS OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 AND 2007-08. HOWEVE R, IN RESPECT OF PROVISION OF ` .6,60,000/- RELATING TO SHRIRAM ASSET MANAGEMENT CO . LTD., THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE DISALLOWANCE STATING THAT SIMILAR DISALLOWANCE HAS BEEN UPHELD BY THE IT AT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 I N I.T.A. NO. 320/MDS/2011. THE COMMISSIONER OF INCOME TAX (APPEA LS) ALSO HELD THAT THE ASSESSEE HAS NOT EXPLAINED HOW THE INVESTMENT I N SHARES OF SHRIRAM ASSET MANAGEMENT CO. LTD. CONSTITUTED BUSINESS PROM OTION ACTIVITIES AND THE ASSETS WERE HELD AS INVESTMENTS AND NOT AS STOC K IN TRADE. THEREFORE, HE HELD THAT THE DIMINUTION IN VALUE OF SHARES IS A CA PITAL LOSS. 5. THE ASSESSEE IS IN APPEAL BEFORE US. THE COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE SHARES HAVE BEEN HELD AS BUSINES S ASSET IN THE BOOKS. THE COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND PRAYED THA T THE DISALLOWANCE MAY BE DELETED. HE FURTHER SUBMITTED THAT THE OBSER VATIONS OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.700 700700 700/M/ /M/ /M/ /M/12 1212 12 4 COMMISSIONER OF INCOME TAX (APPEALS) THAT THIS TRIB UNAL HAS DECIDED SIMILAR ISSUE IN I.T.A. NO. 320/MDS/2011 IS MISPLAC ED. THE COUNSEL INVITED OUR ATTENTION TO THE ORDER OF THIS TRIBUNAL IN I.T. A. NO. 320/MDS/2011 DATED 10.10.2011 ESPECIALLY PARAS 18 TO 20 AT PAGES 13 TO 14 AND SUBMITTED THAT THIS TRIBUNAL HAS NOT DECIDED THE ISSUE IN RESPECT OF PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS OF THE SHARES OF SHRIRAM AS SET MANAGEMENT CO. LTD.. HE SUBMITTED THAT WHAT THE COMMISSIONER OF IN COME TAX (APPEALS) PROBABLY WANTS TO REFER TO WAS THE DIMINUTION IN VA LUE OF INVESTMENT MADE IN SECURITIES/SHARES OTHER THAN GOVERNMENT SECURITIES AND DURING THAT YEAR THE INVESTMENTS OTHER THAN IN GOVERNMENT SECURITIES WER E HELD IN GUJARAT STATE FINANCE CORPORATION LTD, BUT NOT IN SHRIRAM ASSET M ANAGEMENT CO. LTD. SO, THE TRIBUNAL HAD NOT DECIDED THIS ISSUE IN ITS ORDE R IN I.T.A. NO. 320/MDS/2011. THE COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER THE ASSETS WERE HELD AS STOCK IN TRADE OR INVESTMENTS. HE FURT HER SUBMITTED THAT IN ANY CASE, THE ASSESSEE REVERSED THIS PROVISION DURING T HE ASSESSMENT YEAR 2007-08, AS PROVISION WAS NO LONGER REQUIRED AND OF FERED TO TAX DURING THAT ASSESSMENT YEAR. THEREFORE HE SUBMITTED THAT SINCE THIS AMOUNT WAS ALREADY TAXED IN THE ASSESSMENT YEAR 2007-08, THERE IS NO LOSS TO THE REVENUE AND ON THE OTHER HAND, IF THE SAME IS DISAL LOWED DURING THIS ASSESSMENT YEAR ALSO, IT AMOUNTS TO DOUBLE DISALLOW ANCE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.700 700700 700/M/ /M/ /M/ /M/12 1212 12 5 7. THE COUNSEL FOR THE REVENUE RELIED ON THE ORDER S OF LOWER AUTHORITIES. 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND ORDERS OF LOWER AUTHORITIES. THE ASSESSEE HAS N OT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE SHARES OF SHRIRAM ASSET M ANAGEMENT CO. LTD. ARE HELD AS BUSINESS ASSETS AS CONTENDED AND REQUIRED T O MAKE PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT IN THE BOOKS OF A CCOUNT. THEREFORE, WE AGREE WITH THE VIEW TAKEN BY THE COMMISSIONER OF IN COME TAX (APPEALS) THAT THE ASSESSEE HAS NOT EXPLAINED HOW THE INVESTM ENTS IN SHARES OF SHRIRAM ASSET MANAGEMENT CO. LTD. CONSTITUTED BUSIN ESS ASSETS. HOWEVER, AS THE ASSESSEE REVERSED THIS PROVISION IN ITS BOOK S OF ACCOUNT AND OFFERED TO TAX IN THE ASSESSMENT YEAR 2007-08 DISALLOWING T HE SAME PROVISION DURING THE ASSESSMENT YEAR UNDER CONSIDERATION AMOUNTS TO DOUBLE DISALLOWANCE, WHICH IS NOT WARRANTED. THEREFORE, WE DIRECT THE AS SESSING OFFICER TO VERIFY AS TO WHETHER THE PROVISION OF ` .6,60,000/- MADE FOR DIMINUTION IN VALUE OF INVESTMENT IN RESPECT OF SHARES OF SHRIRAM ASSET MA NAGEMENT CO. LTD. WAS REVERSED AND HAD SUFFERED FOR TAX IN THE ASSESSMENT YEAR 2007-08 AND IF SO, NO DISALLOWANCE IS WARRANTED ON ACCOUNT OF THE VERY SAME PROVISION DURING THE ASSESSMENT YEAR 2005-06. WE DIRECT THE ASSESSIN G OFFICER ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.700 700700 700/M/ /M/ /M/ /M/12 1212 12 6 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 28 TH OF JUNE, 2012 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 28.06.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.