WALLFORT FINANCIAL SERVICES LTD, MUMBAI V. ADDL CIT RG 4(2), MUMBAI

ITA 73/MUM/2010

• Counselvise Citation: 7319914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 23-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BEHARILAL
• Keywords: Business income; Opportunity of being heard; Corroborative evidences; TDS
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI D. K. AGARWAL, J.M. AND SHRI R.K. PANDA, A.M. ITA NO.73/MUM /2010 ASSESSMENT YEAR : 2006-07 M/S WALLFORT FINANCIAL SERVICES LTD., 205, GUNDECHA CHAMBERS, NAGINDAS MASTER ROAD, FORT, MUMBAI 400 001. P.A. NO.: AAACW 0617 L VS. ADDL. CIT, RG. 4(2), AAYAKAR BHAWAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) ITA NO. 1169/MUM /2010 ASSESSMENT YEAR : 2006-07 ADDL. CIT, RG. 4(2), ROOM NO. 642, 6 TH FLOOR, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI-400 020 VS. M/S WALLFORT FINANCIAL SERVICES LTD., 205, GUNDECHA CHAMBERS, NAGINDAS MASTER ROAD, FORT, MUMBAI 400 001. P.A. NO.: AAACW 0617 L (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. BEHARILAL DEPARTMENT BY : SHRI PAWAN VED O R D E R PER R.K. PANDA. THESE ARE CROSS APPEALS, THE FIRST ONE BY THE ASSES SEE AND THE SECOND ONE BY THE REVENUE ARE HAVE DIRECTED AGAINST THE OR DER DATED 3.11.09 OF THE LD. CIT(A)-8 MUMBAI RELATING TO A.Y. 2006-07. FOR THE SAKE OF CONVENIENCE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA 73// M/10,1169/M/10, WALLFOR T FINANCIAL SERVICES LTD. 2 ITA NO. 73/MUM/2010 (BY THE ASSESSEE FOR A.Y. 2006- 07) 2. GROUND NO. 1 BY THE ASSESSEE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE A.O. OF TREAT THE GAIN FROM PURCHASE AND SALE OF SHARES AS BUSINESS INCOME AS AGAINST SHORT TERM CAPITAL GAIN SHOWN BY THE APPELLANT. REASONS ASSIGNED BY HIM FOR DOING THE S AME ARE WRONG AND INSUFFICIENT. 3. AFTER HEARING BOTH THE SIDES, WE FIND THE LD. CI T(A) FOLLOWING HIS ORDER FOR THE A.Y. 2005-06, UPHELD THE ACTION OF THE A.O. IN TREATING THE INCOME OF ` 18,38,01,254/- AS BUSINESS INCOME AS AGAINST SHO RT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE. BOTH THE PARTIES FAIRLY AGREED THAT THE ISSUE HAS TO GO BACK TO THE FILE OF THE LD. CIT(A) SINCE HE HAS NOT PASSED A SPEAKING ORDER AND HAS NOT CONSIDERED THE VARIOUS SUBMISSIONS FILE D BEFORE HIM BY THE ASSESSEE. HE HAS ALSO FAILED TO CONSIDER THE SUBMI SSIONS DATED 22.10.09 FILED BEFORE HIM JUSTIFYING THE INCOME OF ` 18,38,01,254/- AS SHORT TERM CAPITAL GAIN AS AGAINST BUSINESS INCOME TREATED BY THE A .O. WE FIND THE ASSESSEE AT PARA NO. 4 OF THE SUBMISSIONS FILED BEFORE THE C IT(A) HAS TRIED TO EXPLAIN THE MOTIVE OF TAKING ADVANTAGE OF CONCESSIONAL TAX RATE WITH EFFECT FROM 1 ST OCTOBER 2004. THE LD. CIT(A), HOWEVER, HAS NOT AT ALL CONSIDERED THE WRITTEN SUBMISSION FILED BEFORE HIM AND HAS DECIDED THE ISS UE SIMPLY IN TWO LINES BY FOLLOWING HIS ORDER FOR THE PRECEDING ASSESSMENT YE AR. UNDER THESE CIRCUMSTANCES, WE DEEM IT PROPER TO RESTORE THE ISS UE TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION AND IN ACCORDANCE WIT H LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOL D AND DIRECT ACCORDINGLY. GROUND NO. 1 OF ASSESSEES APPEAL IS ACCORDINGLY TR EATED AS ALLOWED FOR STATISTICAL PURPOSE. 4. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) IN UPHOLDING THE DISALLOWANCE OF ` 1,1102,467/- MADE BY THE A.O. U/S 14A READ WITH PROVISIONS OF RULE 8(D). ITA 73// M/10,1169/M/10, WALLFOR T FINANCIAL SERVICES LTD. 3 4.1 BOTH THE PARTIES FAIRLY AGREED THAT THE ISSUE H AS TO GO BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO . LTD., VS. DCIT 328 ITR 81 (BOM). WE ACCORDINGLY RESTORE THE ISSUE TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN THE LIGHT OF THE JUDGMENT CITED ABO VE AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. GROUND NO. 2 OF ASSESSEES APPE AL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 5. GROUNDS OF APPEAL NO. 3 & 4 BEING GENERAL IN NAT URE ARE DISMISSED. ITA NO. 1169/MUM/2010 (BY REVENUE) 6. GROUNDS OF APPEAL NO. 1 TO 5, BY THE REVENUE REL ATE TO THE DELETION OF ` 4,34,950/- BY THE LD. CIT(A) WHICH WAS ADDED BY THE A.O. BEING PENALTY FOR VIOLATION OF THE BYE-LAWS OF THE STOCK EXCHANGE. 6.1 AFTER HEARING BOTH THE SIDES, WE FIND THE A.O. DISALLOWED AN AMOUNT OF ` 4,34,950/-ON THE GROUND THAT THE SAME HAS BEEN PAI D TO STOCK EXCHANGE AS PENALTY FOR INFRINGEMENT OF LAW. HE ALSO REJECTED THE ALTERNATE CLAIM OF THE ASSESSEE THAT IT BE TREATED AS COMPENSATION TO THE STOCK EXCHANGE ON THE GROUND THAT NO TDS HAS BEEN DEDUCTED BY THE ASSESSE E FOR SERVICES PROVIDED BY THE STOCK EXCHANGE TO THE MEMBERS. WE FIND THE LD. CIT(A) DELETED THE ADDITION BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES VS. ADDL. CIT REPORTED IN 25 SOT 440. W E FIND THE VIEW TAKEN BY THE LD. CIT(A) IS IN CONFORMITY WITH THE CONSISTENT VIEW TAKEN BY THE CO- ORDINATE BENCHES OF THE TRIBUNAL. WE DO NOT FIND A NY FORCE IN THE SUBMISSION OF THE LD. D.R. THAT THE CO-ORDINATE BENCHES OF THE TRIBUNAL HAVE NOT CONSIDERED THE DECISION RELIED ON BY THE A.O. ACCOR DINGLY, THE ABOVE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA 73// M/10,1169/M/10, WALLFOR T FINANCIAL SERVICES LTD. 4 7. IN GROUND NO. 6 & 7, THE REVENUE HAS CHALLENGED THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE OF DIFFERENCE IN INSTITUT IONAL BROKERAGE CLAIM AMOUNTING TO ` 4,89,813/- MADE BY THE A.O. 7.1 AFTER HEARING BOTH THE SIDES, WE FIND THE ASSES SEE HAS DEBITED A SUM OF ` 4,89,813/- TOWARDS DIFFERENCE IN INSTITUTIONAL BRO KERAGE. HOWEVER, DUE TO WANT OF ANY SUPPORTING EVIDENCE, THE A.O. REJECTED THE SUBMISSION MADE BY THE ASSESSEE AND DISALLOWED THE CLAIM OF EXPENDITUR E OF ` 4,89,813/-. IN APPEAL, THE LD. CIT(A) DELETED THE ADDITION BY HOLD ING AS UNDER:- AS MAY BE SEEN FROM THE SUBMISSION OF THE APPELLANT , BASICALLY APPELLANT HAS RECEIVED LESS BROKERAGE FROM THE INST ITUTION AND INSTEAD OF REDUCING THE AMOUNT FROM THE TOTAL BROKE RAGE ON THE CREDIT SIDE, THE APPELLANT HAS CLAIMED THE AMOUNT O F BROKERAGE NOT RECEIVED, I.E. THE DIFFERENCE OF TOTAL BROKERAGE BI LLED LESS ACTUAL BROKERAGE RECEIVED AND DEBITED THE SAME AS EXPENSES . THERE IS NO EVIDENCE TO SUGGEST THAT THE APPELLANT HAS RECEIVED THE BROKERAGE OF ` 4,89,813/-. IT IS BASICALLY QUESTION OF PRESENTAT ION OF ACCOUNTS AND THE REASON FOR MAKING DISALLOWANCE BY THE A.O. IS ITSELF VAGUE AND BASELESS. GROUND 5 IS, THEREFORE, ALLOWED. 7.2 WE FIND THE LD. CIT(A) HAS DELETED THE ADDITION MERELY ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM WITHOUT VERIFICATION OF THE RELEVANT DETAILS. THE SUBMISSIONS OF THE ASSESSEE B EFORE THE LD. CIT(A) THAT SINCE THERE IS CONSIDERABLE INCREASE IN VOLUME OF B ROKING BUSINESS AND, THEREFORE, THERE IS INCREASE IN THE EXPENDITURE ON ACCOUNT OF DIFFERENCE IN INSTITUTIONAL BROKERAGE, IN OUR OPINION, CANNOT BE THE BASIS FOR DELETING THE DISALLOWANCE MADE BY THE A.O. IT IS THE SETTLED PR OPOSITION OF LAW THAT FOR CLAIMING ANY EXPENDITURE AS DEDUCTION, THE ONUS IS ALWAYS ON THE ASSESSEE WHICH HAS NOT BEEN DISCHARGED IN THE INSTANT CASE. WE, THEREFORE, ARE OF THE OPINION THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DE LETING THE ADDITION MADE BY THE A.O. HOWEVER, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTERESTS OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE CLAIM BY PRODUCING EVIDENCE REGARD ING THE GENUINENESS OF SUCH CLAIM. THE A.O. SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND ITA 73// M/10,1169/M/10, WALLFOR T FINANCIAL SERVICES LTD. 5 DIRECT ACCORDINGLY. THE ABOVE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 8. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 27 TH DAY OF MAY, 2011. SD/- (D. K. AGARWAL) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED : 27.05.2011. COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. (A) 8, MUMBAI 4. CIT 4, MUMBAI 5. THE DR, G - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI R.K. ITA 73// M/10,1169/M/10, WALLFOR T FINANCIAL SERVICES LTD. 6 DATE INITIALS DRAFT DICTATED ON 24.5.11 DRAFT PLACED BEFORE THE AUTHOR 25.5.11, DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER AM/JM DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM APPROVED DRAFT COMES TO THE SR. PS KEPT FOR PRONOUNCEMENT ON. FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE ON WHICH FILE GOES TO THE AR DATE OF DISPATCH