Appeal details
Counselvise Citation
[2011] 119 COUNSELVISE.COM (IT) 6651 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-05-2011
Appeal Filed By
Assessee
Bench Allotted
A
Next Hearing Date
29-04-2011
Assessment Year
2007-2008
Appeal Filed On
10-05-2010
Judgement Text
, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () , , , !' ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I AKBER BASHA, AM] # # # # / I.T.A NO. 956/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2007-08 M/S. VALUE & WORTH VS. DEPUTY COMMISSIONER OF INCOME-TAX (PAN-AAFFV 5756 K) CIRCLE-36, KOLKATA. ()* /APPELLANT ) (+,)*/ RESPONDENT ) FOR THE APPELLANT: SHRI R. SALARPURIA FOR THE RESPONDENT: SHRI A. K. PRAMANICK ! / ORDER PER SHRI MAHAVIR SINGH/ : THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-XX, KOLKATA IN APPEAL NO. 86/CIT(A)-XX/DC.CIR-36/09-10/KOL DATED 15.02.20 10. THE ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-36, KOLKATA, U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORD ER DATED 10.09.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) IN CHALLENGING THE JURISDICTION OF ASSESSING OFFICER. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1. 1. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN DISMISSING THE APPE AL OF THE ASSESSEE FIRM AND CONFIRMING THE A.OS ORDER U/S 143(3) DT. 10.09.200 9 WITHOUT PROPERLY CONSIDERING THE RELEVANT FACTS OF THE CASE AND ALSO THE PROVISION O F LAW. THE DECISION OF THE LD. CIT(A) WAS WHOLLY UNREASONABLE AND BAD IN LAW. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SPEC IFICALLY STATED THAT HE IS NOT INTERESTED IN ARGUING THIS ISSUE AND ACCORDINGLY, THE SAME IS DIS MISSED AS NOT PRESSED. 4. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSSEE I S AGAINST THE ORDER OF CIT(A) IN CONFIRMING ACTION OF ASSESSING OFFICER IN ASSESSING INTEREST INCOME AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME DECLARED BY ASSESSEE UND ER THE HEAD BUSINESS AND PROFESSION. FOR THIS, THE ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 2 AND 3: 2 ITA 956/K/201 0 VALUE & WORTH A.Y. 07-08 2. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O WAS WHOLLY WRONG AND UNJUSTIFIED IN DEVIATING FROM HIS STAND T AKEN IN THE PRECEDING YEARS ASSESSMENT AND WRONGLY TREATING THE INTEREST INCOME OF RS. 18,05,204/- EARNED THIS YEAR ON THE TWO FIXED DEPOSITS AS INCOME FROM OTHER SOUR CE INSTEAD OF UNDER THE HEAD BUSINESS & PROFESSION AS BUSINESS INCOME . THE LD. CIT(A) WAS ALSO WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE WRONGFULL AUCTION OF THE A.O. 3. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE A.O WAS WHOLLY WRONG AND UNJUSTIFIED IN DEVIATING FROM HIS CORRECT STAND TAK EN IN THE PRECEDING YEARS ASSESSMENT AND WRONGLY TREATING THE INTEREST INCOME ON MUTUAL FUND ALSO AS INCOME FROM OTHER SOURCE INSTEAD OF UNDER THE HEAD BUSINESS & PROFES SION, COMPLETELY IGNORING OR OTHERWISE OVERLOOKING THE ACCOUNTS AND THE FACTS. T HE LD. CIT(A) WAS ALSO WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE WRONGFULL A CTION OF THE A.O WITHOUT ANY BASIS. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ASSESSMENT ORDER THAT ASSESSING OF FICER HAS NOTED ON PAGE 3 OF HIS ORDER THAT IT IS FURTHER FOUND THAT ASSESSEE HAS TAKEN INTERES T ON FIXED DEPOSIT & INCOME FROM MUTUAL FUND AS BUSINESS INCOME BUT AS THE NATURE OF BUSINESS OR PROFESSION OF THE ASSESSEE IS TRADING IN STOCK AND IN DERIVATIVES, THE INCOME FROM FIXED DEP OSIT AND MUTUAL FUNDS IS TREATED AS INCOME FROM OTHER SOURCES . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A) STATING THAT THIS AMOUNT OF RS.18,05,204/- EARNED IS BUSINESS INCOME AS THE ASSESSEE IS IN THE BUSINESS OF STOCK MARKET TRANSACTIONS AND FOR THAT IT HAS PROVIDED MA RGIN DEPOSIT TO THE STOCK EXCHANGE. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY ST ATING THE LD. AR OF THE ASSESSEE APPEARED FOR THE APPELLANT AND REITERATED THE SUBMISSION ALR EADY MADE BEFORE THE A.O. IN FIND NO SUBSTANCE IN THE SUBMISSION. THE A.O. HAS RIGHTLY A SSESSED THE INTEREST ON FIXED DEPOSITS AS INCOME FROM OTHER SOURCES. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 6. BEFORE US ASSESSEE CONTENDED THAT IT IS ENGAGED IN THE BUSINESS OF DEALING IN STOCK MARKET AND FOR THAT PURPOSE, FOR CARRYING ON THIS B USINESS, IT WAS REQUIRED TO PROVIDE MARGIN MONEY IN THE FORM OF FIXED DEPOSITS AND AS SUCH ON FIXED DEPOSITS IT HAD EARNED INTEREST OF RS.18,05,204/- AND ACCORDING TO IT, MAKING OF FIXE D DEPOSITS IS INTERLINKED WITH BUSINESS AND THERE WAS NO INTENTION TO EARN INTEREST BY MAKING F IXED DEPOSITS. ACCORDINGLY, ASSESSEE CONTENDED THAT THIS INTEREST INCOME FROM FIXED DEPO SITS SHOULD BE TREATED AS BUSINESS INCOME AS TREATED BY THE ASSESSEE IN ITS ACCOUNTS. WE FIND T HAT THE ASSESSEE HAS RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. M/S. A.P. FASHIONS (P) LTD. IN CIVIL APPEAL NO.1527 OF 2009 DATED 4 TH MARCH, 2009, WHEREIN THE ISSUE OF 80HHC WAS UNDER CONSIDERATION AND THE HONBLE APEX COURT HAS CONSIDERED THE ISSUE AS UNDER: THERE IS A CLEAR DISTINCTION BETWEEN INTEREST EARN ED ON INVESTMENT, INTEREST EARNED ON TRADING AND INTEREST EARNED ON MARGIN MONEY, FIXED DEPOSIT RECEIPT(S). WHENEVER 3 ITA 956/K/201 0 VALUE & WORTH A.Y. 07-08 THE QUESTION ARISES BEFORE THE ASSESSING OFFICER AS TO WHETHER THE INTEREST INCOME IS TAXABLE UNDER SECTION 28 OR UNDER SECTION 56 OF THE INCOME TAX ACT, THE ASSESSING OFFICER IS REQUIRED TO CONSIDER THE FACTS OF EACH C ASE AND ASCERTAIN WHETHER SUCH INCOME ARISES ON INVESTMENT OR ON TRADING OR IN THE COURSE OF BUSINESS. IN THE PRESENT CASE, THE ASSESSEE IS AN EXPORTER. ASSESSEE HAD EAR NED FOREIGN EXCHANGE. IN ORDER TO CARRY ON ITS BUSINESS ASSESSEE HAD BORROWED MONIES FROM ITS BANKERS. THE BANKERS LENT MONIES AGAINST COLLATERALS. IN THE CIRCUMSTANC ES, WE ARE OF THE VIEW THAT THE INTEREST INCOME FELL IN THE CATEGORY OF BUSINESS I NCOME AND IT WAS TAXABLE UNDER SECTION 28 AND NOT UNDER SECTION 56 OF THE 1961 ACT . FURTHER, IT MAY BE MENTIONED THAT IN EXPLANATION (BAA), 90 CENT OF THE INTEREST UNDOUBTEDLY IS DEDUCTIBLE PROVIDED IT IS AN INTEREST ARISING FROM NON-OPERATIONAL ACTIVIT Y THE WORD INTEREST HAS TO BE READ WITH OTHER WORTH OCCURRING IN EXPLANATION (BAA) VIZ ., COMMISSION, INTEREST, RENT ETC. THESE ITEMS OF INCOME, RENT, COMMISSION, INTEREST F ALL EITHER UNDER SECTION 28 OR SECTION 56. THEREFORE, IN EACH CASE THE ASSESSING O FFICER HAS TO ASCERTAIN AS TO WHAT IS THE BUSINESS OF THE ASSESSEE, WHAT ARE ITS ACTIVITI ES, WHETHER THE RECEIPT COMES IN THE CATEGORY OF OPERATIONAL INCOME OR OTHER INCOME AND THEREAFTER DECIDE THE HEAD OF INCOME UNDER WHICH THE RECEIPT WOULD FALL. IN THE P RESENT CASE, THE INTEREST OF MARGIN MONEY FIXED DEPOSIT RECEIPT(S) WAS C1ARLY BUSINESS INCOME UNDER SECTION 28 OF THE INCOME TAX ACT AND, THEREFORE, 90 PER CENT OF RS.3, 81,427/- WAS NOT DEDUCTIBLE. 7. WE FIND THAT NONE OF THE AUTHORITIES BELOW HAVE CONSIDERED THE ISSUE. THE ASSESSING OFFICER SIMPLY IN ONE LINE STATED THAT THIS INTERES T INCOME IS INCOME FROM OTHER SOURCES AND CIT(A) IS SIMPLY CONFIRMED THE SAME IN ONE LINE. N ONE OF THE AUTHORITIES BELOW PASSED ANY ORDER GIVING REASONS DESPITE THE FACT THAT THE ASSE SSEE HAS FILED COMPLETE WRITTEN SUBMISSIONS VIDE DATED 12.1.2010. AS NONE OF THE AUTHORITIES B ELOW HAVE PASSED A SPEAKING ORDER AND IT SEEMS THAT THE ASSESSEE IS ENGAGED IN THE STOCK MAR KET DOING STOCK MARKET TRANSACTION AND THE FIXED DEPOSIT ARE GIVEN AS MARGIN MONEY TO THE STOC K EXCHANGE AS PER RULES AND REGULATIONS OF STOCK EXCHANGE. THE RATIO LAID DOWN BY HONBLE APE X COURT IN THE CASE OF A. P. FASHIONS (P) LTD. (SUPRA) THAT THE AO SHOULD EXAMINE AS TO WHETH ER INTEREST INCOME IS TAXABLE U/S. 28 OF THE ACT OR U/S. 56 OF THE ACT. HONBLE APEX COURT RULE D THAT AO IS REQUIRED TO CONSIDER THE FACT OF EACH AND ASCERTAIN WHETHER SUCH INCOME ARISES ON IN VESTMENT OR ON TRADING OR IN THE COURSE OF THE BUSINESS OF THE ASSESSEE. WE DIRECT THE AO TO DECIDE THE ISSUE ACCORDINGLY. HENCE, WE, IN THE INTEREST OF JUSTICE, SET ASIDE THIS ISSUE TO TH E FILE OF THE CIT(A) TO PASS A SPEAKING ORDER, WHETHER THE ASSESSEE HAS EARNED THIS FIXED DEPOSIT INTEREST AS INCOME FROM OTHER SOURCES OR IT IS A BUSINESS INCOME. THE CIT(A) WILL ALSO CONSIDER T HE DECISION OF HONBLE APEX COURT IN THE CASE OF M/S. A. P. FASHIONS (P) LTD. (SUPRA). ACCO RDINGLY, THIS ISSUE OF THE ASSESSEES APPEAL IS SET ASIDE TO THE FILE OF THE CIT(A) AND ALLOWED FOR STATISTICAL PURPOSES. 8. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS CONSEQUENTIAL REGARDING ALLOWANCE OF STT REBATE U/S. 88E OF THE ACT. FOR THIS, THE ASSE SSEE HAS RAISED THE FOLLOWING GROUND NO.4: 4 ITA 956/K/201 0 VALUE & WORTH A.Y. 07-08 4. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O. WAS WHOLLY WRONG AND UNJUSTIFIED IN ARBITRARILY DISALLOWING WI THOUT ANY BASIS THE STT REBATE FROM INCOME-TAX U/S. 88E OF THE ACT ON THE ENTIRE BUSINE SS INCOME, INCLUDING THE AFORESAID INTEREST INCOME OF RS.18,05,204/- EARNED ON THE TWO FIXED DEPOSITS PLEDGED WITH NATIONAL STOCK EXCHANGE FOR AVAILING TRADING FACILI TIES AND THEREFORE, THE SAID INCOME IS ARISING FROM THE TAXABLE SECURITIES TRANS ACTIONS MADE IN ITS TRADING BUSINESS AND WHICH ARE CHARGEABLE UNDER THE HEAD BUSINESS & PROFESSION. THE LD. CIT(A) WAS ALSO WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE WRONGFUL ACTION OF THE A.O. 9. WE ARE OF THE VIEW THAT THIS BEING A CONSEQUENTI AL ISSUE TO THE FIRST ISSUE, WHETHER THE ASSESSEES INCOME IS BUSINESS INCOME OR INTEREST IN COME, THE CIT(A) WILL DECIDE AFRESH AFTER DECIDING THE FIRST ISSUE. THIS ISSUE IS ALSO SET A SIDE TO THE FILE OF THE CIT(A). 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13.5.2 011 SD/- SD/- , !' , (AKBER BASHA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( -' -' -' -') )) ) DATED 13TH MAY 2011 ./ $01 2 JD.(SR.P.S.) ! 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT M/S. VALUE & WORTH, C/O SALARPURIA JAJ ODIA & CO., 7, C.R. AVENUE, KOLKATA-72. 2 +,)* / RESPONDENT DCIT, CIRCLE-36, KOLKATA. 3 . $ ( )/ THE CIT(A), KOLKATA 4. 5. $ / CIT KOLKATA 4<= +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, ! $>/ BY ORDER, 1 /ASSTT. REGISTRAR .
