A.C.I.T. 16(1), MUMBAI V. RAMGOPAL R. CHOUDHARI, MUMBAI

ITA 7491/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87848 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPDR
• Keywords: Business income; Maximum Marginal Rate
• Section: 80C; 143(3); 80IB

Judgement Text

, , , , , ,, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.7491/MUM/2011 ASSESSMENT YEAR: 2007-08) ACIT, CIRCLE--16(1), INCOME-TAX OFFICER, MATRU MANDIR, MUMBAI-400007 ! ! ! ! / VS. SHRI RAMGOPAL R. CHOUDHARY, 9 CHANCELLOR COURT, CARMICHEAL ROAD, MUMBAI - 400026 ( # / REVENUE) ( ! %& /ASSESSEE) P.A. NO.AACPC3046Q ! %& ' ( ' ( ' ( ' ( / // / ASSESSEE BY SHRI BHUPENDRA GANDHI (ACCOUNTS MANAGER) # ' ( ' ( ' ( ' ( / REVENUE BY : SHRI NEIL PHILIP-DR ! ' &) / // / DATE OF HEARING : 05/01/2015 *+, ' &) / DATE OF PRONOUNCEMENT : 09/01/2015 - - - - / / / / O R D E R PER JOGINDER SINGH (JM) : AGGRIEVED BY THE IMPUGNED ORDER DATED 11/07/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. THE ONLY GROUND RAISED PERTA INS TO DELETING THE AMOUNT OF RS.26,05,654/- HOLDING THAT THE ASSES SING OFFICER SHRI RAMGOPAL R. CHOUDHARY 2 HAS NOT UNDERSTOOD THE CONCEPT OF TAXATION OF THE F IRM AND HIS PARTNERS AS LAID DOWN IN INCOME TAX ACT, 1961 WITHO UT APPRECIATING THAT SECTION 2(45) OF THE INCOME TAX A CT, 1961, DEFINES TOTAL INCOME AS THE AMOUNT OF INCOME REFERR ED INTO SECTION 5 OF THE ACT COMPUTED IN THE MANNER LAID DO WN INTEREST HE ACT ITSELF. 2. AT THE TIME OF HEARING, SHRI NEIL PHILIP, LD. DR , ADVANCED HIS ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED BY SUBMITTING THAT THE ADDITION MADE IN THE ASSESSMENT ORDER ARE WITHIN THE PARAMETERS OF THE LAW. ON THE OTHER HAN D, THE MANAGER ACCOUNTS, SHRI BHUPENDRA GANDHI APPEARED FO R THE ASSESSEE. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE COMING TO AN Y CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION F ROM THE IMPUGNED ORDER FOR READY REFERENCE:- 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE APPELLANT. THE PROVISIONS RELATED TO TAXATION OF INCOME IN THE HANDS OF PARTNERS OF THE FIRM/MEMBERS OF THE AOP ETC. HAVE UNDERGONE A CHANGE BY FINANCE ACT, 1992. THE NEW PROVISIONS ARE INTENDED TO AVOID DOUBLE TAXATIO N OF THE INCOME IN THE HANDS OF THE FIRMS/AOP AND THE PARTNERS/MEMBERS THEREOF. ONCE THE INCOME IS TAXED IN THE HANDS OF THE FIRM/AOP THE SAID INCOME IS EXEMPT TO TAX IN THE HANDS OF THE PARTNERS/MEMBERS OF THE AOP. APPARENTLY, THE ASSESSING OFFICER HAS NOT UNDERSTOO D THE AMENDED PROVISIONS OF THE ACT. THE ASSESSING OFFIC ER CANNOT TAKE A STAND THAT THE INCOME THAT WAS NOT TA XED IN SHRI RAMGOPAL R. CHOUDHARY 3 THE HANDS OF THE FIRM/AOP ON ACCOUNT OF CERTAIN DED UCTIONS AVAILABLE TO THE FIRM/AOP IN COMPUTATION OF INCOME CAN BE TAXED IN THE HANDS OF THE PARTNERS/MEMBERS OF THE A OP. APPARENTLY, THE ASSESSING OFFICER HAS FAILED TO UND ERSTAND THE DIFFERENCE BETWEEN A DEDUCTION AND EXEMPTION. IN VIEW OF THE ABOVE, I HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT WARRANTED IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. APPELLANT SUCCEEDS ON T HIS GROUND. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R, LEADING TO THE ADDITION, CONCLUSION DRAWN IN THE IMPUGNED ORDE R, MATERIAL AVAILABLE ON RECORD AND THE ASSERTIONS MADE BY THE LD. DR ARE KEPT IN JUXTAPOSITION AND ANALYZED. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE SHARE TRADING, INCOM E FROM SALARY, BUSINESS INCOME AND HAVING SHARES IN AOP I.E. M/S C LOVER & POOJA. THE AOP, FOR THE YEAR UNDER CONSIDERATION, H AD TOTAL GROSS INCOME OF RS.7,00,51,017/- AND AFTER CLAIMING THE D EDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961 (HEREINAFTER T HE ACT), THE TOTAL INCOME STOOD AT RS.55,26,192/-. THE ASSESSME NT OF THE AOP, ALLOWING THE CLAIMED DEDUCTION U/S 80IB (10) O F THE ACT, WAS COMPLETED U/S 143(3) OF THE ACT. AN AMOUNT OF RS.28,35.828/-, BEING 1/24 TH SHARES IN THE GROSS TOTAL INCOME OF RS.7,00,51,017/- (OF AOP) WAS CREDITED. THE ASSESS EE IN HIS RETURN CLAIMED HIS SHARE OF INCOME AS EXEMPT FROM T AXATION BEING THE SHARE IN PROFIT OF THE AOP. IT IS PERTIN ENT TO MENTION HERE THAT THE AOP HAD ALREADY PAID TAX AT MAXIMUM M ARGINAL RATE. THE LD. ASSESSING OFFICER CONSIDERED THE TOT AL TAXABLE INCOME OF AOP I.E. RS.55,26,192/- INSTEAD OF TOTAL GROSS INCOME SHRI RAMGOPAL R. CHOUDHARY 4 OF RS.7,00,51,017/- FOR DETERMINING THE SHARE OF T HE ASSESSEE IN THE PROFITS OF AOP AND ACCORDINGLY, CALCULATED THE AMOUNT OF RS.2,30,715/- AS ASSESSEES SHARE (1/24 TH SHARES THEREIN). THE ASSESSING OFFICER ADDED RS.26,05,054/- TO THE INCOM E OF THE ASSESSEE HOLDING THAT SINCE THE ASSESSEE RECEIVED A SUM OF RS.28,35,829/- BY WAY OF CREDIT ENTRY IN CAPITAL AC COUNT, WHICH CONSTITUTES HIS INCOME (I.E. RS.28,35,829-2,30,175) . ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , THE ADDITION SO MADE WAS DELETED AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 2.3. KEEPING IN VIEW, THE TOTALITY OF FACTS NARRATE D HEREINABOVE, THE UNDISPUTED FACTS IS THAT THE AOP PAID THE TAX A T THE MAXIMUM MARGINAL RATE, THEREFORE, ONLY IF, THE INCO ME OF AOP IS EXEMPT THEN ONLY SHARES OF MEMBER OF AOP TAXABLE IN HIS HAND. SECTION 80A OF THE ACT SAYS THAT IF ANY DEDUCTION IS CLAIMED U/S 80C TO 80U OF THE ACT, IN COMPUTING THE TOTAL INCOM E OF AOP, IN RELATION TO SHARE OF MEMBERS OF AOP, WHICH MEANS SA ME DEDUCTION CANNOT BE CLAIMED TWICE IN COMPUTING THE TOTAL INCOME OF AOP AS WELL AS MEMBER OF SUCH AOP. THERE IS A F INDING IN THE IMPUGNED ORDER THAT THE ASSESSEE DID NOT CLAIM ANY DEDUCTION UNDER THESE SECTIONS FROM HIS TOTAL INCOME. IN VIE W OF THESE FACTS, ONCE THE INCOME IS TAXED IN THE HANDS OF THE AOP THEN THE SAME INCOME IS EXEMPT FROM TAXATION IN THE HANDS OF MEMBER OF SUCH AOP. THE STAND OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS) IS AFFIRMED. 2.4. SO FAR AS, THE OBSERVATION IN THE IMPUGNED OR DER THAT THE ASSESSING OFFICER HAS NOT UNDERSTOOD THE AMENDED PR OVISIONS OF SHRI RAMGOPAL R. CHOUDHARY 5 THE ACT OR FAILED TO UNDERSTAND THE DIFFERENCE BETW EEN DEDUCTION AND EXEMPTION COULD HAVE BEEN AVOIDED, THEREFORE, H IS OBSERVATION ABOUT ASSESSING OFFICER IS EXPUNGED. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED . % &. # ' %# ' #& /0 ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 05/01/2015. - ' *+, 1!. 05/01/2015 + ' 6 SD/- SD/- (SANJAY ARORA) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 1! DATED : 09/01/2015 F{X~{T? P.S/. !.. - ' 8&9 :9,& - ' 8&9 :9,& - ' 8&9 :9,& - ' 8&9 :9,&/ COPY OF THE ORDER FORWARDED TO : 1. ;< / THE APPELLANT 2. 8=;< / THE RESPONDENT. 3. > ( ) / THE CIT, MUMBAI. 4. > / CIT(A)- , MUMBAI 5. 9@6 8&! , , / DR, ITAT, MUMBAI 6. 6A B / GUARD FILE. -! -! -! -! / BY ORDER, =9& 8& //TRUE COPY// C CC C/ // // # / # / # / # (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI