VISHWALAXMI TRADING & FINANCE P.LTD, MUMBAI V. ASST CIT CIR 8(3), MUMBAI

ITA 7244/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2399 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED RIZWAN
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , !' #$ , % , & BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I .T.A. NO.7244/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) M/S. VISHWALAXMI TRADING & FINANCE PVT. LTD. 101-B, TODI COMPLEX, 35, SAKI VIHAR ROAD, ANDHERI(E), MUMBAI - 400072 / VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 8(3), MUMBAI ' ./ !( ./ PAN/GIR NO. : AAACV9839M ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ASSESSEE BY: SHRI. RAKESH JOSHI DEPARTMENT BY: SHRI. MOHAMMED RIZWAN 7 ' / DATE OF HEARING: 27.08.2015 89: 7 ' /DATE OF PRONOUNCEMENT: 24.11.2015 ; / O R D E R PER AMARJIT SINGH, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 22.10.2012 OF THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS)-18, MUMBAI [HEREINAFTER REFERRED TO AS THE LEARNED CIT(A)] F OR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN DISALLOWING THE CLAIM OF EXPENSES OF RS. 3,16,32,702/- ON THE ALLEGED PLEA THAT THE COMPANY IS NOT ENGAGED IN ANY BUSINESS ACTIVITIES DURING THE YEAR UNDER CONSIDERATION, WITHOUT CONSID ERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN NOT CONSIDERING THE EXPLANATION GIVEN BY THE APPELLANT FOR CLAIM OF ITA NO.7244/MUM/2012 ASSESSMENT YEAR: 2009-10 2 EXPENSES AND DEPRECIATION DURING THE YEAR, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN NOT ALLOWING TO CARRY FORWARD, THE BUSIN ESS LOSS OF RS.3,16,32,702/- WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN NOT ALLOWING NETTING OF INTEREST INCOME WITH INTEREST EXPENSES AND MAKING AN ADDITION OF INTEREST AMOUNTING TO RS.9,30 ,390/- AS INCOME FROM OTHER SOURCES, WITHOUT CONSIDERING THE FACTS AND CI RCUMSTANCES OF THE CASE. 2. THE ASSESSEE FILED RETURN ON 25.09.2009 DECLARIN G TOTAL LOSS OF RS.3,18,23,121/-. THE RETURN OF INCOME WAS DULY PR OCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE CA SE WAS SELECTED FOR SCRUTINY THEREFORE; NOTICE U/S. 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE COMPANY ON 18.08.2010 WHICH WAS DULY SERVED. SUBSEQUENTLY, NO TICE U/S.142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 06.05.2011 CALLING FO R VARIOUS DETAILS/ DOCUMENTS. IN THE RETURN THE ASSESSEE COMPANY HAD SHOWN LOSS O F RS. 3,16,32,702/- UNDER THE HEAD BUSINESS. ON SCRUTINY OF THE PRECEDING YEAR ASSESSMENT, THE CREDIT TO THE P&L ACCOUNT WAS ON ACCOUNT OF DIVIDEND OF RS.1, 25,02,500/- AND SHARE OF LOSS OF RS.12,362/- FROM OXFORD MOULDING WHERE THE ASSESSEE COMPANY IS A PARTNER. THE DIVIDEND INCOME FALLS UNDER THE HEAD INCOME FROM OTHER SOURCES AND WAS EXEMPTED BY VIRTUE OF SECTION 10( 34) OF THE ACT. SO FAR AS THE LOSS OF THE SHARE FROM THE PARTNERSHIP FIRM, TH E SAME WAS ALSO COME U/S. 10(2A) OF THE ACT. HOWEVER, P&L ACCOUNTS REVEALS THAT THE CLAIMED DEDUCTION UNDER THE HEAD OF INCOME BUSINESS AMOUNTI NG TO RS. 4,41,80,907/- ON ACCOUNT OF ADMINISTRATIVE EXPENSES, FINANCIAL EXPEN SES AND DEPRECIATION. ALL THESE EXPENSES RESULTING TO CLAIM LOSS OF RS.3,16,3 2,702/- UNDER THE HEAD BUSINESS. ON SEEING RETURN, THE A.O. HAD ARRIVED AT THIS CONCLUSION THAT THE ASSESSEE COMPANY DID NOT DO ANY BUSINESS. THEREFOR E, THE SAID CLAIM WAS NOT ALLOWABLE, HENCE, THE LOSS TO THE TUNE OF RS.3,16,3 2,702/-WAS DISALLOWED AND THE OTHER CONTENTION WAS IN CONNECTION WITH THE DISALLO WANCE OF INTEREST TO THE TUNE ITA NO.7244/MUM/2012 ASSESSMENT YEAR: 2009-10 3 OF RS.9,30,390/- WHICH WAS SHOWN AS INTEREST INCOME . AFTER PASSING THIS ORDER BY A.O. ON 29.09.2011 THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE ASSESSMENT ORDER VIDE HIS ORDER D ATED 22.10.2012. FEELING AGGRIEVED THE ASSESSEE FILE THE PRESENT THE APPEAL BEFORE US. 3. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE REPR ESENTATIVES OF THE PARTIES AND HAVE GONE THROUGH THE RECORDS CAREFULLY . THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS ARGUED THAT THE ASSESSEE WAS E NGAGED IN THE BUSINESS AND OBJECT OF THE BUSINESS HAS BEEN EXPLAINED IN THE ME MORANDUM OF ASSOCIATION OF VISHWALAXMI TRADING & FINANCE PVT. LTD. IN CLAUSE ( A) AND ACCORDINGLY THE ASSESSEE COMPANY WAS DOING THE BUSINESS AND ALSO DR AW THE ATTENTION OF THE TRIBUNAL TOWARDS THE ORDER DATED 30.10.2009 PASSED U/S 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2007-08, WHEREIN THE NATURE OF BUSINESS OF THE ASSESSEE HAS BEEN EXPLAINED AND ACCORDINGLY THE ASSESSMENT WAS F INALISED AND IT IS SPECIFICALLY ARGUED THAT THERE IS TEMPORARY LULL IN THE BUSINESS, THEREFORE, NO BUSINESS HAS BEEN SHOWN IN THE SAID SPECIFIC PERIOD AND ASSESSING OFFICER PRESUMED THAT THE FIRM WAS NOT DOING BUSINESS, AND THEREFORE, DECLINED THE CLAIM FOR THE ASSESSEE. HENCE, THE ORDER OF THE LEARNED CIT(A) DATED 20.10.2012 IS WRONG AGAINST LAW AND FACT AND IS LIABLE TO BE SET ASIDE. CONTRARY TO IT THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPOR TED THE ORDER PASSED BY THE LEARNED CIT(A) IN THE LIGHT OF THE ARGUMENT MADE BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND BY PERUSING THE RECORD CAREFULLY IT CAME INTO THE NOTICE THAT THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPA NY SPEAKS ABOUT ITS OBJECT WHICH IS HEREBY AS UNDER:- A. TO CARRYON BUSINESS AS BUYERS, SELLERS, IMPORTE RS, EXPORTERS, DEALERS, COMMISSION AGENTS AND DEALERS I N STEEL SCRAPES, FERROUS & NON FERROUS METALS, MACHINERIES EQUIPMENTS, APPARATUS, GADGETS, APPLIANCES, ACCESSO RIES, SPARE PARTS, AUTOMOBILE MACHINERY AND THEIR COMPONENTS AN D SPARE PARTS AND, DEALERS IN JUTE AND JUTE GOODS, LAMINATI ON TEXTILES, COTTON, YARN, WOOL AND WOOLLEN GOODS; HANDICRAFTS, JEWELLERY, ORNAMENTS, STEELS, PLASTIC, RUBBER, CHEMICALS, ENGI NEERING ITA NO.7244/MUM/2012 ASSESSMENT YEAR: 2009-10 4 GOODS, MINERALS, ELECTRONIC, CLOTH, DRESSES, GARMEN TS, TRANSPORT, VEHICLES, FOOD PRODUCTS LIVE STOCKS, PAPER AND PAPE R PRODUCTS. B. TO CARRY ON THE BUSINESS OF A FINANCE COMPANY I.E. TO RECEIVE MONEY ON DEPOSIT AT INTEREST OR OTH ERWISE FOR FIXED PERIOD AND TO LEND MONEY ON ANY TERMS THAT M AY BE THOUGHT FIT. 4. THE ASSESSEE COMPANY HAS ALSO FILED THE ASSESSME NT ORDER DATED 30.10.2009 FOR THE ASSESSMENT YEAR 2007-08 HAS BEEN SHOWN ON PAGE 20 OF THE PAPER BOOK WHICH SPEAKS ABOUT THE BUSINESS OF THE A SSESSEE COMPANY. UNDOUBTEDLY, THE ASSESSING OFFICER ONLY CONSIDERS T HE CLAIM FOR THE PERIOD OF ASSESSMENT I.E. ASSESSMENT YEAR 2009-10. NO DOUBT, IT MAY HAPPEN THAT THERE WAS TEMPORARY LULL IN THE BUSINESS, THEREFORE, NO B USINESS INCOME HAS BEEN SHOWN IN THAT PARTICULAR PERIOD. THE ASSESSEE HAS SHOWN THE P&L A/C IN THE PAPER BOOK WHEREIN HE WAS DRAWING THE CLAIM ON THE BASIS OF EARLIER ASSESSMENT YEAR WHICH WAS PROPERLY CONSIDERED BY THE ASSESSING OFFICER. NO DOUBT, DECLINING THE CLAIM OF THE ASSESSEE WITHOUT CONSIDE RING THE EARLIER ASSESSMENT YEAR OR WITHOUT CONSIDERING THE CLAIM OF THE ASSESS EE WHICH HAS BEEN REFLECTED IN THE LEDGER AND ACCOUNT BOOK OR WITHOUT CONSIDERI NG THE TEMPORARY LULL IN THE BUSINESS, ANYHOW, IN THE VIEW OF THE SAID OBSERVATI ONS WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE IS REQUIRED TO BE FURTHER VERIFIED ON THE BASIS OF OBSERVATIONS ABOVE AND ACCORDINGLY, IS REQUIRED TO BE DECIDED IN ACCORDANCE WITH LAW. THEREFORE, IN THE SAID CIRCUMSTANCE WE S ET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THIS GROUND AND DIRECT THE A.O. T O VERIFY THE CLAIM OF THE ASSESSEE AFRESH, IN VIEW OF THE OBSERVATIONS MADE A BOVE. THE OTHER POINT WHICH HAS BEEN RAISED BY THE REPRESENTATIVE OF THE ASSESS EE IS THAT THE A.O. HAS NOT ALLOWED NET OF INTEREST INCOME WITH INTEREST EXPENS ES AND MAKE AN ADDITION OF THE INTEREST AMOUNTING TO RS.9,30,390/- AS INCOME FROM OTHER SOURCES. 5. THE A.O. HAS RECORDED THE REASONS IN THIS REGARD THAT THERE IS NOT CORRESPONDING CREDIT OF THE INTEREST TO THE P&L ACC OUNT. HOWEVER, THE ITA NO.7244/MUM/2012 ASSESSMENT YEAR: 2009-10 5 ASSESSEES REPRESENTATIVE EXPLAINED THAT THE INTERE ST RECEIVED HAS BEEN NETTED OFF AGAINST INTEREST PAYMENT AND THE NET INTEREST IS DE BITED TO THE P&L ACCOUNT. PURSUING TO THE P&L ACCOUNT FOR THE YEAR ENDING ON 30.03.2009 WHICH HAS BEEN REFLECTED AT PAGE 10 OF THE PAPER BOOK AND ON PURSU ING OF STATEMENT OF FINANCE COST FOR THE ASSESSMENT YEAR 2009-10 WHICH HAS BEEN REFLECTED AT PAGE 19 OF THE PAPER BOOK, IT SEEMS THAT THE INTEREST RECEIVED HAS BEEN NETTED OFF AGAINST THE INTEREST PAYMENT AND THE NET RESULT IS DEBITED TO T HE P&L ACCOUNT. IN VIEW OF THE ABOVE MENTIONED FACTS, WE ARE OF THE VIEW THAT THIS MATTER IS REQUIRED TO BE VERIFIED AGAIN ON APPRAISAL OF THE DETAILS OF P&L A CCOUNT AND FOR VERIFICATION, THE MATTER IS REQUIRED TO BE SET ASIDE. HENCE THE ORDER OF THE LEARNED CIT(A) DATED 22.10.2012 IN QUESTION IS HEREBY SET ASIDE AN D BOTH THE ISSUES ARE HEREBY ORDERED TO BE RESORTED BACK TO A.O. FOR A FRESH CON SIDERATION. 6. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH NOVEMBER, 2015 SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) / ACCOUNTANT MEMBER % /JUDICIAL MEMBER MUMBAI; < DATED : 24 TH NOVEMBER, 2015 MP MP MP MP ITA NO.7244/MUM/2012 ASSESSMENT YEAR: 2009-10 6 / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. =' ( ) / THE CIT(A)- 4. =' / CIT 5. > ?@ *%'% , , / DR, ITAT, MUMBAI 6. @AB C / GUARD FILE. / BY ORDER, +>' *%' //TRUE COPY// / !' (DY./ASSTT. REGISTRAR) '# $ , / ITAT, MUMBAI