M/S. DECCAN GOLD MINES LTD., MUMBAI V. ACIT 6(2), MUMBAI

ITA 785/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3383 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR RAJENDRA KUMAR
• Assessee Lawyers: KUNAL BESWAL
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 785/MUM/2011 ASSESSMENT YEAR : 2007-08 M/S DECCAN GOLD MINES LTD. A-303, 3 RD FLOOR, PRATHAMESH, RAGHUVANSHI MILLS COMPOUND LOWER PAREL, MUMBAI-400013 PAN :AAACW 1544 L VS. ACIT, RANGE 6(2), 5 TH FLOOR, AAYAKAR BHAVAN, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KUNAL BESWAL RESPONDENT BY : DR. RAJENDRA KUMAR DATE OF HEARING : 02.05.2013 DATE OF PRONOUNCEMENT : 17.05.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT (A)-12, MUMBAI DATED 06.12.2010 FOR THE ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING T HE ADMINISTRATIVE AND OTHER EXPENSES AMOUNTING TO RS.83,46,390/- EVEN THOUGH TH E BUSINESS WAS SET UP/COMMENCED. 1.1 WHILE DOING SO, ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A) FURTHER LEGALLY ERRED IN GIVING A FIN DING THAT THE APPELLANT HAD NOT SET UP ITS BUSINESS. 1.2 WITHOUT PREJUDICE AND IN ALTERNATIVE TO THE ABOVE, THE CIT(A) LEGALLY ERRED IN NOT ALLOWING THE SETTING OFF OF TH E INTEREST INCOME OF RS.45,03,490/- WITH SUCH EXPENDITURE. (REFERENCE 31 5 ITR 255) ITA NO 785/MUM/2011 M/S DECCAN GOLD MINES LTD. A SSESSMENT YEAR 2007-08. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE AO FOR TAXING THE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) LEGALLY ERRED IN NOT ALLOWING THE SET-OFF OF THE CARRY-FORWARD OF THE LOSSES. 3.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN THE ALTERNATIVE THE LD.CIT(A) FURTHER ERRED IN NOT ALLO WING THE SET OFF OF BROUGHT- FORWARD LOSSES/DEPRECIATION WHICH WERE DETERMINED A S PER THE RETURN(SUPRA)) OF INCOME FILED. THIS ISSUE COULD NOT BE THE MATTER OF THE DISPUTE AS THOSE EARLIER YEARS OF ASSESSMENTS WERE NOT IN DISPUTE BE FORE HER. 3.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) OUGHT TO HAVE ALLOWED THE SET OFF OF BROU GHT-FORWARD LOSSES AND DEPRECIATION AS PER THE RETURN OF INCOME FILED AND THE ASSESSMENT COMPLETED. 4. THE LD.CIT(A) ERRED IN CONFIRMING THE CHARGING O F INTEREST U/S234B/234C. 3. AT THE OUTSET, THE LD. AR OF THE ASSESSEE HAS PO INTED OUT THAT THE FIRST TWO GROUNDS ARE COVERED IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF THE ITAT IN THE ASSESSEES OWN CASE IN ITA NO. 7656/M/2010 FOR THE A.Y. 2005-06. THE LD. AR HAS ALSO SUBMITTED THE COPY OF THE SAID ORDER BEFORE US . IN THE SAID ORDER, THE CO- ORDINATE BENCH OF THE ITAT WHILE GIVING A FINDING T HAT THE ASSESSEES BUSINESS IS SET UP AND COMMENCED THE BUSINESS IN THAT YEAR, ALLOWED AN IDENTICAL EXPENDITURE INCURRED BY THE ASSESSEE. IN THE ABSENCE OF ANY DIF FERENCE IN FACT WHICH HAS BEEN BROUGHT BY THE REVENUE FOR THE YEAR UNDER CONSIDERA TION, WE, FOLLOWING THE SAID DECISION, DELETE THE DISALLOWANCE OF RS.83,46,390/- ON ACCOUNT OF ADMINISTRATIVE AND OTHER EXPENSES WHICH HAS BEEN MADE ON THE GROUND TH AT THE ASSESSEES HAS NOT SET UP/COMMENCED THE BUSINESS. ACCORDINGLY GROUND NO. 1 IS ALLOWED. 4. AS REGARDS GROUND NO.2 REGARDING THE INTEREST IN COME OF RS.45,03,490/- TREATING THE SAME AS INCOME FROM OTHER SOURCES AGAI NST THE ASSESSEE CLAIMING UNDER THE HEAD BUSINESS INCOME, IN THE AFOREMENTION ED ORDER OF THE ITAT, WHILE DECIDING AN IDENTICAL GROUNDS, HAS HELD AS UNDER: WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDER OF THE REVENUE AS WELL AS THE JUDGMENTS CITED BEFORE US. IT IS NOTICED THA T ALL THESE JUDGMENTS ARE PRONOUNCED TAKING INTO ACCOUNT THE RECEIPT OF INTER EST DURING THE PERIOD PRIOR TO COMMENCEMENT/SET UP OF THE BUSINESS. THE DISCUSS ION GIVEN IN THE ORDERS OF THE AO AS WELL AS CIT(A) ALSO REFLECTS THE MANNE R OF TREATMENT TOWARDS THE ITA NO 785/MUM/2011 M/S DECCAN GOLD MINES LTD. A SSESSMENT YEAR 2007-08. 3 INTEREST RECEIPTS EARNED DURING THE PERIOD PRIOR TO THE SET UP OF THE BUSINESS. THE IT AUTHORITIES HAVE EXAMINED THE ISSUE IN THE B ACKGROUND THAT THE BUSINESS YET TO SET UP OR COMMENCE. BUT THE FACT IS THAT THE SAID INTEREST RECEIPTS ARE EARNING AFTER SET UP OF THE BUSINESS O F ASSESSEE AS HELD BY US IN THE PARAGRAPHS ABOVE. THEREFORE, THIS ISSUE REQUIRE S FRESH ADJUDICATION CONSIDERING OUR FINDING ON THE MAIN ISSUE DISCUSSED AND ADJUDICATED ABOVE I.E. WHETHER THE BUSINESS OF ASSESSEE IS SET UP IN THE YEAR UNDER CONSIDERATION OR NOT. WE HAVE HELD THAT THE BUSINES S IS SET UP IN THE YEAR UNDER CONSIDERATION AND THE EXPENSES OF RS.67,57,19 0/- AS AN ALLOWABLE EXPENDITURE IN THE YEAR UNDER CONSIDERATION. AS SUC H, THE ORDERS OF THE REVENUE DO NOT CONTAIN REQUISITE DETAILS ON THE SOU RCE OF THE FUNDS KEPT WITH THE BANKS WHICH YIELDED INTEREST INCOME OF RS.7,84, 860/- AND THE DETAILS RELATED TO THE SOURCE OF THESE FUNDS KEPT WITH THE BANKS I.E. INTEREST BEARING FUNDS/ NON-INTEREST BEARING FUNDS/EXCESS FUNDS OR O THERWISE OWN FUNDS OF THE ASSESSEE ETC. IN THE SET ASIDE PROCEEDINGS, AO IS D IRECTED TO EXAMINE THESE ISSUES AFRESH AND ADJUDICATE THE SAME AFTER CONSIDE RING ALL THE DECISIONS CITED ABOVE AND ALSO OTHER RELEVANT JUDGMENTS WHICH ARE I N FORCE. ACCORDINGLY, GROUND NO. 2 IS SET ASIDE. WE, FOLLOWING THE SAID ORDER, IN SIMILAR FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, DIRECT THE AO TO DECIDE THIS ISSUE AFRESH IN THE SA ME LINE OF DIRECTION GIVEN BY THE ITAT AS ABOVE. ACCORDINGLY GROUND NO. 2 IS SET ASID E. 4. GROUND NO. 3 & 4 ARE CONSEQUENTIAL AND 5 IS GENE RAL IN NATURE WHICH DO NOT REQUIRE AND ADJUDICATOR. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF MAY, 2013. SD/- SD/- (P.M.JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17.05.2013. * SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.