BOI FINANCE LTD ( SINCE MERGED WITH BANK OF INDIA), MUMBAI V. ASST CIT 2(1), MUMBAI

ITA 7919/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100713 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-04-2015
• Assessment Year: 1992-1993
• Appeal Filed On: 24-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA SR
• Assessee Lawyers: RAJNIKANT CHANIYARI
• Keywords: Business income; Depreciation

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO.7919/MUM/2011 ASSESSMENT YEAR: 1992-93 BANK OF INDIA, 8 TH FLOOR, STAR HOUSE, TAXATION DEPARTMENT, BANDRA KURLA COMPLEX, BANDRA(EAST), MUMBAI-400051 / VS. ASST. COMMISSIONER OF INCOME TAX-2(1), AAYAKAR BHAVAN, MUMBAI-400020 ( !'# $ /ASSESSEE) ( % / REVENUE) P.A. NO. AAACB0472C !'# $ / ASSESSEE BY SHRI RAJNIKANT CHANIYARI % / REVENUE BY SHRI VIVEK BATRA SR.A.R DR & !%' ( $ ) / DATE OF HEARING : 03/08/2015 ( $ ) / DATE OF ORDER: 25/08/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 13/09/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE FIRST GROUND RAISED BY THE ASSESSEE PERTAINS TO CONFIRMING IN TREATING RS.36 LAKHS ON ACCOUNT OF COMMISSION ON SHARE BOI FINANCE LTD. ITA NO.7919/MUM/2011 2 APPLICATION MADE ON BEHALF OF PMS CLIENTS AS INCOME OF THE ASSESSEE. 2. DURING HEARING, WE HAVE HEARD, SHRI RAJNIKANT CHINAYARI, LD. COUNSEL FOR THE ASSESSEE AND SHRI VI VEK BATRA, LD. DR. THE CRUX OF ARGUMENTS ADVANCED ON BEHALF O F THE ASSESSEE IS THAT THE ASSESSEE WAS OPERATING ONLY ON BEHALF OF PMS CONSTITUENT, THEREFORE, ANY AMOUNT RECEIVED ON BEHALF OF THE SAID CONSTITUENT CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND FURTHER THE COMMISSION SO EARNED FROM PMS CONSTITUENT WAS OFFERED AS INCOME, THEREFORE, THERE IS NO QUESTION OF OFFERING ANY FURTHER INCOME. ON THE OTH ER HAND, THE LD. DR, DEFENDED THE CONCLUSION ARRIVED AT IN T HE IMPUGNED ORDER BY CONTENDING THAT RIGHT FROM ASSESS MENT STAGE, THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A FINANCE COMPANY WHOLLY O WNED SUBSIDIARY OF BANK OF INDIA. HPCL WAS THE CLIENT OF THE ASSESSEE UNDER PORTFOLIO MANAGEMENT SCHEME. THE AS SESSEE RECEIVED RS.20 CRORES ON PMS ACCOUNT FROM HINDUSTAN PETROLEUM KNOWN AS PMS HP. OUT OF THESE FUNDS, RS. 2,50 LAKHS WAS INVESTED IN PRIVATE PLACEMENT FOR SUBSCRI BING THE RIGHT SHARES ISSUE OF CEMENT CORPORATION OF GUJARAT LTD. AS ADVANCED SUBSCRIPTION ON 22/12/1989. THE RIGHT ISS UE WAS OPENED ON 02/01/1990. AS PER THE ASSESSEE, THERE WA S A DISPUTE AMONGST THE DIRECTORS OF THE COMPANY, THERE FORE, BOI FINANCE LTD. ITA NO.7919/MUM/2011 3 DELAY WAS CAUSED AND SHARE APPLICATION WAS SUBMITTE D ON 25/04/1990 AND SHARES WERE ALLOTTED IN MAY, 1992. WE ARE REPRODUCING HEREUNDER THE RELEVANT FINDING CONTAINE D IN THE IMPUGNED ORDER. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMIS SIONS OF THE ASSESSEE. AS HELD BY THE A.O. WHILE GIVING EFFE CT TO ITATS ORDER, ASSESSEE HAS NOT PRODUCED ANY EVIDENC E IN SUPPORT OF ITS CONTENTION THAT THE TRANSACTION AND THE SUBSCRIPTION WAS ON ACCOUNT OF PMS CLIENT, EVEN DUR ING APPELLATE PROCEEDINGS NO SUCH EVIDENCE HAS BEEN PRO DUCED BY THE ASSESSEE, THEREFORE, THE ADDITION MADE BY TH E A.O. IS CONFIRMED AND THE GROUND OF APPEAL IS REJECTED. IT IS ALSO NOTED THAT EARLIER, THE MATTER TRAVELLED TO THE TRIBUNAL, WHEREIN, THE ISSUE WAS RESTORED TO THE FI LE OF THE ASSESSING OFFICER. PURSUANT TO SET-ASIDE PROCEEDING S AGAIN THE ISSUE WAS EXAMINED AND ADDITION WAS MADE. THERE IS UNCONTROVERTED FINDING IN THE ASSESSMENT ORDER AS WELL AS IN THE IMPUGNED ORDER THAT EVEN AFTER SET-ASIDE PROCEE DINGS, THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CONTENTION THAT THE TRANSACTION AND SUBSCRIPTION WA S ON ACCOUNT OF PMS CLIENT ACCOUNT, THUS, THE ADDITION W AS AGAIN MADE. EVEN, THE SUBMISSION OF THE ASSESSEE VIDE LET TER DATED 23/06/2011 (AVAILABLE AT PAGE-4 & 5 OF THE IMPUGNED ORDER) WERE CONSIDERED AND BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO NO SUCH EVIDENCE WAS PRODUCED. E VEN BEFORE US, NO EVIDENCE WAS PRODUCED BY THE ASSESSEE , THEREFORE, WE HAVE NO OPTION BUT TO CONFIRM THE CON CLUSION BOI FINANCE LTD. ITA NO.7919/MUM/2011 4 DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL S), CONSEQUENTLY, THE STAND OF THE LD. FIRST APPELLATE AUTHORITY, ON THE ISSUE IN HAND, IS AFFIRMED. 3. THE NEXT GROUND RAISED BY THE ASSESSEE PERTAINS TO DISALLOWING THE LOSS ON REVALUATION OF SECURITIES A MOUNTING TO RS.7,48,614/-. THE CRUX OF ARGUMENT IS THAT THE ASS ESSEE ITSELF TREATED THE SECURITIES IN STOCK IN TRADE AND PROVID ED THE IMPUGNED LOSS IN ITS BOOKS OF ACCOUNTS, THUS, THE L D. COMMISSIONER OF INCOME TAX (APPEALS) IGNORED THE FA CT THAT PROFIT ARISING ON SALE OF SUCH SECURITIES ARE TAXED AS BUSINESS INCOME BY THE DEPARTMENT, ITSELF PROVES THAT THE SE CURITIES HELD AS STOCK IN TRADE. RELIANCE WAS PLACED IN THE CASE OF UCO BANK 240 ITR 355. ON THE OTHER HAND, THE LD. D R STRONGLY DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY SUBMITTING THAT THE ASSESSEE DID NOT PRODU CE SUFFICIENT EVIDENCE BEFORE THE ASSESSING OFFICER/CO MMISSIONER OF INCOME TAX (APPEALS) AND ALSO BEFORE THE TRIBUNA L. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE CLAIMED LOSS ON VALUATION OF SECURITIES/DEPRECIATION ON INVESTMENT AMOUNTING TO RS.7,48,614/-. WE FIND THAT PURSUANT TO SET-ASIDE P ROCEEDINGS FROM THE TRIBUNAL, IT WAS CLAIMED BY THE ASSESSEE T HAT THE APPELLANT HAS BEEN CONSISTENTLY SHOWING THE PROFIT ON SALE OF INVESTMENT AS BUSINESS INCOME AND NEVER OFFERED AS CAPITAL GAIN. EVEN BEFORE THE ASSESSING OFFICER, THE COPY OF ACCOUNTS ENDING 31 ST MARCH, 1992, WERE SUBMITTED BY THE ASSESSEE AND BOI FINANCE LTD. ITA NO.7919/MUM/2011 5 THE SAME WERE DULY EXAMINED. THE TRIBUNAL REMANDED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO FIND OUT WHETHER THE INVESTMENT IN SECURITIES IS IN THE NATU RE OF INVESTMENT ARE STOCK IN TRADE. WE ARE REPRODUCING H EREUNDER THE RELEVANT FINDING RECORDED BY THE LD. COMMISSION ER OF INCOME TAX (APPEALS):- I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISS IONS OF THE ASSESSEE. HON'BLE ITAT SET ASIDE THE ISSUE TO THE A.O. AGAINST THE INITIAL ASSESSMENT ORDER WITH A DIRECTION T HAT THE A.O. TO FIND OUT WHETHER THE INVESTMENT IN SECURITIES IS IN THE NATURE OF INVESTMENT OR STOCK-IN-TRADE. WHEREAS ASSESSEE COULD PRODUCE NO OTHER EVIDENCE BEFORE THE A.O. TO PROVE THAT IT IS STOCK-IN-TRADE EXCEPT THAT IT IS CLAIMED TH AT THE PROFIT ON SUCH TRANSACTIONS ON SALE OF THE SECURITI ES IS OFFERED AS BUSINESS PROFIT YEAR AFTER YEAR AND ALSO PRODUCED A CHART AS PER WHICH DEPRECIATION IS CALCULA TED FOR ENTRY IN THE BOOKS OF ACCOUNT. WHEREAS THESE INVESTMENTS ARE SHOWN IN THE CATEGORY OF INVESTMENT IN TH E BALANCE SHEET FOR WHICH ASSESSEE HAS CLAIMED THAT SU CH CLASSIFICATION IS MERELY TO COMPLY WITH THE SCHEDULE 6 REQUIREMENT OF COMPANIES ACT. THEREFORE, ASSESSEE HA S NOT PRODUCED SUFFICIENT EVIDENCE BEFORE THE A.O. HENCE, FOLLOWING THE DIRECTIONS OF HON'BLE ITAT THE A.O. HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. IN RESUL T, THE GROUND OF APPEAL IS REJECTED. THERE IS UNCONTROVERTED FINDING IN THE IMPUGNED ORDER THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE FO R SUBSTANTIATING ITS CLAIM OF PROVING THAT IT WAS HEL D AS STOCK IN TRADE. THESE INVESTMENT WERE SHOWN IN THE CATEGORY OF INVESTMENT ONLY IN THE BALANCE SHEET TO COMPLY WITH SCHEDULE- 6 OF THE COMPANY ACT. THUS, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS). BOI FINANCE LTD. ITA NO.7919/MUM/2011 6 4. THE NEXT GROUND PERTAINS TO CONFIRMING THE DISALLOWANCE OF RS.28,16,398/-, BEING ACCRUED INTER EST ON OVERDUE LEASE RENTALS. THE CRUX OF ARGUMENT ADVANCE D ON BEHALF OF THE ASSESSEE IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT APPRECIATE THE FACT THAT THER E WAS NO CERTAINTY OF THE REALIZATION OF THE SAID SUM AND TH E SAME ACCRUES ONLY AT THE TIME OF REALIZATION, THEREFORE, CANNOT BE CHARGED TO TAX BEFORE IT IS REALIZED. RELIANCE WAS PLACED UPON THE DECISION IN CIT VS ANNAMALAI FINANCE LTD. (2010 ) 319 ITR 196 (MAD.). ON THE OTHER HAND, THE LD. DR, DEFENDE D THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 4.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT, AS PER REVENUE, THE ASSESSEE DID NOT ACCO UNTED FOR THE INTEREST ON OVERDUE RENTALS ON ACCRUAL BASIS. THE STAND OF THE ASSESSEE IS THAT THERE WAS NO AGREEMENT FOR WAI VING OF PENAL INTEREST WITH THE PARTIES AND THE SAME ARE CO NSIDERED FROM CASE TO CASE BASIS. IT WAS ALSO PLEADED BY TH E LD. COUNSEL FOR THE ASSESSEE THAT IN SUBSEQUENT YEARS, THE PENA L INTEREST WAS ACCOUNTED FOR WHENEVER RECEIVE. ON EARLIER OCC ASION, THE MATTER WAS REMANDED BACK TO THE FILE OF ASSESSING O FFICER WITH A DIRECTION THAT THE ASSESSEE SHALL PRODUCE THE BAS IS FOR WAIVING OF SUCH INTEREST. THERE IS UNCONTROVERTED FINDING IN THE ASSESSMENT ORDER AS WELL AS IN THE IMPUGNED ORD ER THAT THE ASSESSEE COULD NOT PRODUCE ANY AGREEMENT OR BAS IS AND MERELY CLAIMED THAT IT WAS WAIVED ON CASE TO CASE B ASIS. IN THESE CIRCUMSTANCE, THE ASSESSING OFFICER ADDED THE PENAL BOI FINANCE LTD. ITA NO.7919/MUM/2011 7 INTEREST TO THE INCOME OF THE ASSESSEE. IDENTICAL I S THE SITUATION BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE RELEVANT FINDING RECORDED IN THE IMPUGNED ORDER ARE REPRODUCED HEREUNDER FOR READY REFERENCE AND ANALYS IS:- I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMIS SIONS OF THE ASSESSEE. THE HON'BLE ITAT HAD DIRECTED TO CONSIDER THE BASIS AND THE AGREEMENTS REGARDING WAIVER OF PENAL INTEREST BUT ASSESSEE HAS NEITHER FILED ANY BASIS NOR ANY AGREEMENT CLAIMING THAT THE RE IS NO SUCH AGREEMENT AND NO DECIDED BASIS BUT INTER EST IS WAIVED ON CASE TO CASE BASIS IN CERTAIN CIRCUMSTANCES, EVEN SUCH CIRCUMSTANCES HAVE ALSO BE EN NOT ENUMERATED. THEREFORE, THE ACTION OF THE A.O. I S CONFIRMED AND THE GROUND OF APPEAL IS REJECTED. TOTALITY OF FACTS CLEARLY INDICATES THAT EVEN PURSU ANT TO THE DIRECTION OF THE TRIBUNAL, THE ASSESSEE NEITHER FILED ANY BASIS NOR ANY AGREEMENT AND MERELY CLAIMED THAT IT WAS WAIVED ON CASE TO CASE BASIS AND THE CIRCUMSTANCES. EVEN, NO SUCH CIRCUMSTANCE WAS ADDUCED BEFORE THE ASSESSI NG OFFICER /COMMISSIONER OF INCOME TAX (APPEALS), THUS , WE FIND NO INFIRMITY IN THE IMPUGNED ORDER. FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 03/08/2015. SD/- SD/- ( R.C.SHARMA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & ' MUMBAI; *! DATED : 25/08/2015 BOI FINANCE LTD. ITA NO.7919/MUM/2011 8 F{X~{T? P.S/. !. . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. & 1$ ( +, ) / THE CIT, MUMBAI. 4. & 1$ / CIT(A)- , MUMBAI 5. 3%4 /$!' , +,) +' 5 , & ' / DR, ITAT, MUMBAI 6. 6 7' / GUARD FILE. / BY ORDER, 03,$ /$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI