DCIT 24(3), MUMBAI V. MINAL ENTERPARISES, MUMBAI

ITA 7519/MUM/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0756 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KUMAR BIRLA
• Assessee Lawyers: VIMAL C PUNMIYA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.7519/M/2010 ASSESSMENT YEAR: 2006-07 DCIT 24(3), R.NO.701, C-11, 7 TH FLOOR, B.K.C., BANDRA (E), MUMBAI 400 062 VS. M/S. MINAL ENTERPRISES, 141, GUNDECHA HOUSE, JAWAHAR NAGAR, GOREGAON (WEST), MUMBAI 400 062 PAN: AAFFM 0605C (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIMAL C. PUNMIYA, A.R. REVENUE BY : SHRI PAWAN KUMAR BIRLA, D.R. DATE OF HEARING : 21.05.2015 DATE OF PRONOUNCEMENT : 10.07.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 18.08.2010 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2006-07. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS: '1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO TREAT T HE INTEREST INCOME AS INCOME OF THE ASSESSEE AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES IGNORING THE FACT THAT THE CASE IS COVERED BY THE DECISION OF HI GH COURT, BOMBAY IN THE CASE OF SHREE KRISHNA POLYSTER LTD. VS. DEPUTY COMMISSIO NER OF INCOME TAX (274 ITR 271) 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE INTEREST PAID ON UNSECURED LOANS AGAIN ST THE ABOVE STATED INTEREST INCOME CONSIDERING IT TO BE BUSINESS INCOME. ITA NO.7519/M/2010 M/S. MINAL ENTERPRISES 2 THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. THE AP PELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUND WHICH MAY BE NECESSARY. 3. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO A S THE AO) TREATED THE INTEREST INCOME AS 'INCOME FROM OTHER SOURCES' IN PLACE OF 'BUSINESS INCOME'. BY THE IMPUGNED ORDER, THE LD. CIT(A) ALLO WED THE ASSESSEE'S CLAIM OF BUSINESS INCOME AFTER HAVING THE FOLLOWING OBSER VATIONS: ' 4. I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGNED ASSESSMENT ORDER AND THE ASSESSMENT ORDER IN THE CASE OF SISTER CONCERN M/S. MAMTA ENTERPRISES FOR THE SAME ASSESSMENT YEAR 2006-07 AND ALSO THE CONTE NTS OF THE ORDER OF MY PREDECESSOR DATED 23/03/2010 (SUPRA) ALONG WITH THE SUBMISSIONS OF LD. AUTHORIZED REPRESENTATIVE PLACED ON RECORD. I FIND THAT THE SAME ASSESSING OFFICER HAS PASSED THE ORDERS FOR M/S. MAMTA ENTERP RISES FOR A.YRS. 2005-06 & 2006-07 AS WELL AS M/S. MINAL ENTERPRISES AND HAS T AKEN THE SAME STAND. I FIND NO MATERIAL DIFFERENCE IN EITHER THE ACTION OF THE LD. ASSESSING OFFICER OR THE FACTS AND CIRCUMSTANCES IN BOTH THE CASES. THEREFOR E, THERE APPEARS NO REASON FOR WHICH I SHOULD MAKE A DEPARTURE FROM THE DECISI ON MY LD. PREDECESSOR IN THE CASE OF M/S. MAMTA ENTERPRISES. FOR THE SAKE OF CLARITY, PARA 5 OF THE SAID APPELLATE ORDER IS REPRODUCED HEREUNDER:- 'I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AS SESSING OFFICER AND SUBMISSIONS OF THE APPELLANT FOR BOTH THE YEARS. AF TER CONSIDERING THE SUBMISSIONS OF THE APPELLANT AND VARIOUS CASE LAWS, SPECIALLY DECISION OF KARNATAKA HIGH COURT IN THE CASE OF SWISH CHANDRA & CO. VS. CIT 234 ITR 70 (KAR) AND DECISION OF BOMBAY HIGH COURT IN THE C ASE OF CIT VS. LOK HOLDINGS 308 ITR 356 (BOM) WHICH ARE FULLY APPLICAB LE ON THE FACTS OF THIS CASE. I AM OF THE VIEW THAT INTEREST EARNED ON SURP LUS FUNDS OF BUSINESS SHOULD BE ASSESSED AS BUSINESS INCOME AND NOT AS IN COME FROM OTHER SOURCES. FURTHER, THE SET OFF SHOULD BE ALLOWED ACC ORDING TO THE PROVISIONS OF THE ACT. THUS APPEALS FOR BOTH THE YEARS ARE ALLOWE D'. 5. IN VIEW OF THE ABOVE DISCUSSION, THE ACTION OF T HE LD. ASSESSING OFFICER IN THIS CASE ALSO IS NOT UPHELD AND THE ASSESSING OFFI CER IS DIRECTED TO TREAT THE INTEREST EARNED ON SURPLUS FUNDS OF BUSINESS TO BE THE BUSINESS INCOME AND ALLOW THE INTEREST PAID AGAINST THE SAME ACCORDINGL Y AS PER THE PROVISIONS OF I.T ACT, 1961. 4. WE FIND THAT THE ORDER OF THE LD. CIT(A) IN THE OWN CASE OF THE ASSESSEE FOR A.Y. 2007-08 WAS APPEALED BY THE DEPARTMENT BEF ORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 16.04.2013 IN ITA NO. 8185/M/2010 UPHELD THE ITA NO.7519/M/2010 M/S. MINAL ENTERPRISES 3 ORDER OF THE ID. CIT(A). AS THE FACTS AND CIRCUMSTA NCES IN THE INSTANT APPEAL ARE IN PARAMATERIA TO THE FACTS CONSIDERED BY THE T RIBUNAL IN THE ORDER FOR A.Y.2007-08, RESPECTFULLY FOLLOWING THE ORDER OF TH E TRIBUNAL WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE ID. CIT(A) FOR TR EATING THE INTEREST INCOME AS 'INCOME FROM BUSINESS'. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS HERE BY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.07.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 10.07.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.