TIME SECURITIES SERVICES P. LTD, MUMBAI V. ASST CIT CIR 8(3), MUMBAI

ITA 7492/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8478 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 18-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST; POOJA SWARUP
• Keywords: Business income; Depreciation; Business expenditure; Earning of tax free income; Wrong claim
• Section: 143(3); 14A; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH F & E , MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.7492/MUM/2012 (A Y - 2009-10) BENCH F M/S TIME SECURITIES SERVICES PVT. LTD. 101-B, TODI COMPLEX, 35, SAKI VIHAR ROAD, ANDHERI(E), MUMBAI-400072 VS. ACIT, CIRCLE- 8(3), MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.415/MUM/2015 (A Y - 2009-10) BENCH E, M/S TIME SECURITIES SERVICES PVT. LTD. 101-B, TODI COMPLEX, 35, SAKI VIHAR ROAD, ANDHERI(E), MUMBAI-400072 VS. ACIT, CIRCLE- 8(3), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAKESH JOSHI (AR) REVENUE BY : MS. POOJA SWARUP & SH.B.S. BIST (DR) DATE OF HEARING : 30.01.2017 DATE OF PRONOUNCEMENT : 01.02.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THESE TWO APPEAL FILED BY ASSESSEE U/S 253 OF THE I NCOME-TAX ACT (THE ACT) ARE RELATED WITH ASSESSMENT YEAR (AY) 2009-10. ITA NO. 7492/MUM/2012 IS RELATED WITH QUANTUM ASSESSMENT AND APPEAL ITA NO. 415/MUM /2015 IS AGAINST THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. AS BOTH THE APPEAL S ARE ARISING OUT OF ASSESSMENT ORDER FOR AY 2009-10, HENCE, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DECIDED BY COMMON ORDER TO AVOID THE CONFLICTING DECISION. 2 ITA NOS.7492/M/2012 & 415/M/2015 M/S. TIME SECURITIES SERVICES PVT. LTD. 2. FIRST, WE SHALL TAKE UP ITA NO. 7492/MUM/2012. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNE D ASSESSING OFFICER IN DISALLOWING THE CLAIM OF EXPENSES OF RS.55,27,162/- ON THE ALLEGED PLEA THAT THE COMPANY IS NOT ENGAGED IN ANY BUSINESS ACTIVITIES D URING THE YEAR UNDER CONSIDERATION, WITHOUT CONSIDERING THE FACTS AND CI RCUMSTANCES 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 OF LEARNE D ASSESSING OFFICER IN NOT CONSIDERING THE EXPLANATION GIVEN BY THE APPELLANT FOR CLAIM OF EXPENSES AND DEPRECIATION DURING THE YEAR, WITHOUT CONSIDERING T HE 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 OF LEARNE D ASSESSING OFFICER IN NOT ALLOWING TO CARRY FORWARD THE BUSINESS LOSS OF RS.5 5,27, 162/ - WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE BUSINESS OF TRADING AND INVESTMENT IN SHARE AND SECURITIES, FIL ED RETURN OF INCOME FOR RELEVANT AY ON 30.09.2009 DECLARING TOTAL LOSS OF RS. 63,17,307 /-. THE ASSESSMENT WAS COMPLETED ON 29.09.2011 U/S 143(3) OF THE ACT. THE ASSESSEE C LAIMED DIVIDEND INCOME OF RS. 1,27,36,050/- AS EXEMPTED UNDER SECTION 10(34) OF THE ACT. THE ASSESSING OFFICER (AO) ON PERUSAL OF PROFIT & LOSS ACCOUNT FOUND THAT ASSESSEE CLAIMED DEDUCTION OF RS. 55,27,162/- ON ACCOUNT OF EXPENSES. THE AO DISA LLOWED THE ENTIRE EXPENSES HOLDING THAT THERE IS NO BUSINESS ACTIVITY DURING T HE YEAR UNDER CONSIDERATION. THE ENTIRE EXPENDITURE IS ATTRIBUTABLE FOR EARNING THE EXEMPT INCOME AND THUS TREATED AS DISALLOWANCE U/S 14A R.W. RULE 8D AND INITIATED THE PENALTY U/S 271(1)(C) OF THE ACT. ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE W AS CONFIRMED. THUS, THE SECOND APPEAL IS FILED BEFORE US. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARGUED THAT T HE DISALLOWANCE MADE BY ASSESSEE IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 14A READ WITH RULE 8D. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT THE AO IS EN TITLED TO DISALLOW ONLY THE AMOUNT WHICH IS ATTRIBUTABLE FOR EARNING OF THE EXEMPT INC OME AND THE REMAINING AMOUNT HAS TO BE DISALLOWED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 37 OF THE ACT. ON THE OTHER HAND MS. POOJA SWARUP THE LD. DR FOR THE REVE NUE STRONGLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD DR FOR THE REVENUE SHO WN US THAT THAT IN THE PROFIT & 3 ITA NOS.7492/M/2012 & 415/M/2015 M/S. TIME SECURITIES SERVICES PVT. LTD. LOSS ACCOUNT, THE ASSESSEE HAS SHOWN TO HAVE GRAN TED LOAN AND ADVANCES TO M/S VISHWALAXMI TRADING & FINANCE PVT. LTD. OF RS. 142, 023,790/- AND HAS NOT SHOWN ANY INTEREST INCOME. WHILE MAKING REJOINDER SUBMISS ION THE LD. AR FOR THE ASSESSEE WITHOUT PREJUDICE TO HIS OTHER CONTENTION AGREED TO CONCEDE FOR THE ENTIRE DISALLOWANCE. HOWEVER, THE LD AR SUBMITTED THAT HIS ADMISSION IS WITHOUT PREJUDICE AND SHOULD NOT BE TREATED USED AGAINST HIS ADMISSIO N AGAINST ASSESSEE IN PENALTY PROCEEDINGS. 5. WE HAVE CONSIDERED THE CONTENTION OF LD. AR OF THE ASSESSEE. CONSIDERING THE CONTENTION OF LD. AR OF THE ASSESSEE, THE APPEAL OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. HOWEVER, WE MAY MAKE CLEAR THAT THERE IS N O ESTOPPEL AGAINST THE LAW. THE APPEAL OF THE ASSESSEE IN PENALTY PROCEEDINGS WOULD BE CONSIDERED ON ITS MERIT. 6. ITA NO. 415/MUM/2015, THE ASSESSEE HAS RAISED THE F OLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNE D' :ASSESSING OFFICER IN LEVYING A PENALTY OF RS.17,08,000/- U/S.271 (1)(C) OF THE INCOME TAX ACT,1961,BEING 100% OF TAX SOUGHT TO BE EVADED, WIT HOUT CONSIDERING 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 OF LEARNE D ASSESSING OFFICER IN LEVYING A PENALTY ON THE ISSUE OF DISALLOWANCE OF EXPENSES OF RS.55,27,162/- BY TREATING THE SAME WAS WRONGLY CLAIMED BY THE ASSESSEE, WITHO UT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LD. AR OF THE ASSESSEE ARGUED THAT ASSESSEE CLA IMED THE DEDUCTION OF RS. 55,27,162/- WHICH CONSISTS OF ADMINISTRATIVE EXPENS ES, FINANCIAL EXPENSES AND DEPRECIATION, ALL THE EXPENSES WERE DISALLOWED BY A O IN THE ASSESSMENT ORDER. THE ASSESSEE HAS NOT CONCEALED ANY INCOME NOR FURNISHED ANY INACCURATE PARTICULAR OF INCOME. THE LD. AR OF THE ASSESSEE FURTHER SUBMITTE D THAT MERE CLAIM OF ANY DEDUCTION WHICH IS FOUND TO BE NOT ADMISSIBLE OR UN TENABLE UNDER THE LAW DOES NOT ENTITLED THE AO TO LEVY THE PENALTY FOR CONCEALMENT OF INCOME. THE ASSESSEE HAS NOT CONCEALED ANY INCOME AND THERE WAS NO OCCASION FOR FILING INACCURATE PARTICULAR. THE LEGAL CLAIM MADE BY ASSESSEE WAS MERELY DISALLOWED BY AO. ON THE OTHER HAND, SH. B.S. BIST THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE ARGUED THAT THE DISALLOWANCE WAS SUSTAINED BY LD. CIT(A) AND AFTER ORDER OF LD. CIT(A), THE ASSESSEE WAS GIVEN S UFFICIENT OPPORTUNITY BEFORE PASSING THE ORDER. 4 ITA NOS.7492/M/2012 & 415/M/2015 M/S. TIME SECURITIES SERVICES PVT. LTD. 8. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE ORDER OF AUTHORITIES BELOW. IN THE RETURN OF INCOME, THE ASS ESSEE CLAIMED THE DEDUCTION OF RS. 55,27,162/- ON ACCOUNT OF ADMINISTRATIVE EXPENSES, FINANCIAL EXPENSES AND DEPRECIATION. THE AO DISALLOWED THE ENTIRE CLAIM OF EXPENDITURE U/S 14A OF THE ACT. THE DISALLOWANCE WAS SUSTAINED BY FIRST APPELLATE A UTHORITY (FAA) AGAINST WHICH THE ASSESSEE FILED APPEAL WHICH WE HAVE DECIDED VID E ITA NO. 7671/MUM/ 2012 (SUPRA) .THE AO LEVIED THE PENALTY HOLDING THAT THE ASSESSEE CLAIMED DIVIDEND INCOME OF RS. 1,27,36,050/-. THE ASSESSEE CLAIMED THE DEDU CTION OF RS. 55,27,162/- ON ACCOUNT OF ADMINISTRATIVE EXPENSES, FINANCIAL EXPEN SES AND DEPRECIATION. THE DIVIDEND INCOME OF THE ASSESSEE FALLS UNDER THE HEA D INCOME FROM OTHER SOURCES AND EXEMPT U/S 10(34) OF THE ACT. AS THE ASSESSEE-C OMPANY IS NOT AGAINST IN ANY BUSINESS ACTIVITY TO BE ELIGIBLE FOR DEDUCTION UNDE R THE HEAD BUSINESS INCOME. THUS, THE ENTIRE EXPENDITURE OF RS. 55,27,162/- WAS DISAL LOWED CONSIDERED BY AO AS CONCEALMENT OF INCOME. THE AO FURTHER CONCLUDED THA T THE ASSESSEE HAS NOT SUBSTANTIATED ITS CLAIM OF EXPENSES UNDER VARIOUS H EADS. THE ASSESSEE HAS NO BUSINESS ACTIVITIES DURING THE RELEVANT YEAR AND ASSESSEE CL AIMED HUGE EXPENDITURE BY PUTTING SUCH UNSUBSTANTIATED CLAIM OF EXPENDITURE. THUS, WI LLFULLY SOUGHT TO EVADE THE TAX AND LEVIED THE MINIMUM PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED AND WORKS OUT THE PENALTY AT RS. 17,08,000/-. THE LD. CIT(A) CONF IRMED THE PENALTY CONCLUDED THAT ASSESSEE EARNED THE DIVIDEND INCOME WHICH WAS CLAIM ED AS EXEMPT WHICH IS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES . HOWEVER, ASSESSEE CLAIMED BUSINESS EXPENSES OF RS. 55,27,162/-. THERE WAS NO BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AN D THUS, THE ASSESSEE MADE THE FALSE CLAIM OF EXPENSES. 9. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF AUTHORI TIES BELOW AND EXAMINED THE FACTS OF THE CASE INDEPENDENTLY. THE ASSESSEE CLAIMED EXP ENSES OF RS. 55,27,162/- WHICH WAS DISALLOWED BY AO. ON APPEAL BEFORE THE LD. CIT( A), THE DISALLOWANCE WAS CONFIRMED. FURTHER APPEAL WAS FILED BEFORE THE TRIB UNAL AND THE LD. AR OF THE ASSESSEE WHILE MAKING ALTERNATIVE SUBMISSION CONCEDED THE DI SALLOWANCE AS THE DIVIDEND INCOME OF THE ASSESSEE FALLS UNDER ONE HEAD OF INCO ME AND THE EXPENSES CLAIMED BY THE ASSESSEE WERE RELATED WITH THE ANOTHER HEAD OF THE INCOME. NEITHER THE AO MADE THE DISALLOWANCE IN ACCORDANCE WITH THE PROVISIONS OF RULE 8D NOR THE LD. CIT(A) 5 ITA NOS.7492/M/2012 & 415/M/2015 M/S. TIME SECURITIES SERVICES PVT. LTD. EXAMINED THE LEGALITY U/S 14A. HOWEVER, LD. AR OF THE ASSESSEE TO CUT SHORT THE CONTROVERSY CONCEDED THE DISALLOWANCE. WE HAVE SEEN THAT THE ASSESSEE HAS MERELY CLAIMED THE EXPENSES WHICH WERE NOT ALLOWABLE UNDER ONE HEAD OF THE INCOME. THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCU RATE PARTICULAR. IT IS SETTLED LAW THAT IN ALL CASES MERE DISALLOWANCE OF CLAIM OF EXP ENSES WOULD NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. WE MAY ALSO REFER THAT PENALTY PROCEEDING ARE DISTINCT FROM ASSESSMENT PROCEEDING. WE MAY NOT E THAT ASSESSEE HAS MADE SUCH A CLAIM WHICH WAS ULTIMATELY NOT ALLOWED. THE AO HAS NOT BROUGHT ANY NEW MATERIAL WHICH MAY SUGGEST THAT ASSESSEE HAS CONCEALED ANY P ART OF HIS ASSESSABLE INCOME. THE AO HAS NOT BROUGHT ON RECORD AS TO WHAT FACTS WERE UNEARTHED BY HIM WHICH MAY SUGGEST THAT THE ASSESSEE CONCEALED ITS INCOME. THU S, AS PER OUR CONSIDERED OPINION, THERE WAS NO CONCEALMENT OF INCOME ON THE PART OF A SSESSEE. THUS, THE APPEAL OF THE ASSESSEE AND THE PENALTY LEVIED BY AO IS DELETED. 10. IN THE RESULT, BOTH THE APPEAL ITA NO. 7492/M/2012 IS DISMISSED AND ITA NO.415/M/2015 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 ST FEBRUARY, 2017. SD/- SD/- (B.R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 01/02/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/