DCIT, Ernakulam V. Popular vehicles & Services Ltd, Cochin

MA 13/COCH/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6807 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-09-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 16-09-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 11-03-2011
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: A S NARAYANAMOORTHY CAAR
• Keywords: Proportionate interest
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM M.P. NO. 13/COCH/2011 (ARSG. OUT OF I.T.A. NO. 1015/COCH/2008) ASSESSMENT YEAR:2002-03 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(1), ERNAKULAM. VS. M/S. POPULAR VEHICLES & SERVICES LTD., KUTTUKARAN CENTRE, MAMANGALAM, KOCHI-25. [PAN:AABCF 3805G] (REVENUE-APPLICANT) (ASSESSEE-RESPONDENT) REVENUE BY MS. S. VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI A.S.NARAYANAMOORTHY, CA-AR DATE OF HEARING 16/09/2011 DATE OF PRONOUNCEMENT 26/09/2011 O R D E R PER SANJAY ARORA, AM: THIS MISCELLANEOUS PETITION (M.P.) BY THE REVENUE U/S. 254(2) OF THE INCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER) ARISES OUT OF THE ORDER BY THE TRIBUNAL IN THE ASSESSEES CASE FOR ASSESSMENT YEAR (A.Y.) 2002-03 DATED 13.4. 2010, PARTLY ALLOWING THE REVENUES APPEAL. 2. THE REVENUES M.P. IS DIRECTED AGAINST THE DELET ION BY THE TRIBUNAL OF THE DISALLOWANCE OF ` 22 . 16 LAKHS IN RESPECT OF PROPORTIONATE INTEREST ON TH E FUNDS ALLEGEDLY DIVERTED FOR THE PURCHASE OF SHARES OF ITS SISTER C ONCERNS BY THE ASSESSEE, WHICH WAS BY FOLLOWING ITS EARLIER DECISION IN THE ASSESSEES OW N CASE DATED 10.9.2008 FOR A.Y. 2004- 05, DISMISSING THE REVENUES APPEAL FOR THAT YEAR ( IN I.T.A. NO. 717/COCH/2007). THE M.P.. NO.13 /COCH/2011 (ASSTT. YEAR: 2002-03) 2 TRIBUNALS ORDER (IN ITA 717/COCH/2007) HAS SINCE B EEN REVERSED BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 06/10/20 09 (IN ITA NO. 47 OF 2009/COPY ON RECORD), STATING OF THE RELIANCE BY IT ON THE DECIS ION IN THE CASE OF S.A. BUILDERS LTD. VS. CIT (APPEALS) (2007) 288 ITR 01 (SC) AS NOT APPOSITE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS FORMS THE BASIS OF THE REVENUES M.P ., CLAIMING THAT IN VIEW THEREOF THE IMPUGNED ORDER, DELETING THE IMPUGNED ADDITION, COU LD NOT HOLD IN LAW. 3. DURING HEARING, THE LD. DR EMPHASIZED ON THE FOR EGOING FACTS, STATING THAT THE TRIBUNALS ORDER, BEING BASED ON ITS DECISION FOR A NOTHER YEAR, WHICH STANDS REVERSED BY THE HONBLE JURISDICTIONAL HIGH COURT, COULD NO LON GER HOLD IN LAW, PLACING RELIANCE, AMONG OTHERS, ON THE DECISION IN THE CASE OF CIT (ASSTT.) V. SAURASHTRA KUTCH STOCK EXCHANGE LTD ., 305 ITR 227 (SC). THE LD. AR, ON THE OTHER HAND , WAS AT PAINS TO BRING FORTH THE FACTUAL DIFFERENCE/S OBTAINING FOR THE TWO YEARS, I .E., FOR THE CURRENT YEAR (A.Y. 2002-03) AND A.Y. 2004-05. AS WOULD BE APPARENT FROM THE RE ADING OF THE DECISION BY THE HONBLE HIGH COURT, HE URGED, ITS FOCUS IS ON THE APPLICABI LITY OF SEC. 14A OF THE ACT, THE FACT REMAINS THAT THE ASSESSEE IS NOT A PARTNER IN ANY O F THE SISTER CONCERNS (5 IN NUMBER, ALSO LISTED AT PG. 10 OF THE ORDER OF THE FIRST APPELLAT E AUTHORITY) TO WHICH THE FUNDS STOOD ADVANCED, AND WHICH (PARTNERSHIP) STANDS ENTERED IN TO ONLY W.E.F. 31.3.2003, SO THAT THE SAID SECTION IS NOT APPLICABLE. IN REJOINDER, THE L D. DR WOULD SUBMIT THAT QUITE APART FROM SEC. 14A, THE HONBLE HIGH COURT HAS ALSO REJECTED THE ASSESSEES ALTERNATE PLEA, MADE WITH REFERENCE TO THE DECISION BY THE HONBLE APEX COURT IN THE CASE OF S. A. BUILDERS LTD. (SUPRA). 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WITHOUT DOUBT, THE TRIBUNAL HAS PASSED THE IMPUGNED ORDER BY FOLLOWING THE DECISION IN THE ASSESSEES OWN CASE FOR A.Y. 2004-05 (IN I.T.A. NO. 668 & 717/COC H/2007) VIDE ORDER DATED 10.9.2008 . SO, HOWEVER, THE LD. AR HAS ALLUDED TO SOME DISTING UISHING FEATURES IN THE FACTS OBTAINING FOR THE TWO YEARS, AND WHICH COULD BE RELEVANT IN D ECIDING THE ISSUE UNDER REFERENCE. THEREFORE, WHILE THE REVERSAL OF THE TRIBUNALS DEC ISION BY THE HONBLE JURISDICTIONAL HIGH COURT FOR ONE YEAR (A.Y. 2004-05), FOLLOWING WHICH IT HAS DECIDED THE ASSESSEES CASE FOR M.P.. NO.13 /COCH/2011 (ASSTT. YEAR: 2002-03) 3 THE CURRENT YEAR, OUGHT TO HAVE NORMALLY LED TO A C ORRESPONDING REVERSAL OF THE SAME, WE, TAKING NOTE THEREOF, ONLY CONSIDER IT PROPER, IN TH E FACTS AND CIRCUMSTANCES OF THE CASE, TO RESTORE THE TRIBUNALS ORDER IN RESPECT OF THE REVE NUES RELEVANT GROUNDS, I.E., GROUND NOS. 5 AND 6, TO BE DECIDED AFRESH ON MERITS, AFTER AFFORDING DUE OPPORTUNITY OF HEARING TO BOTH THE SIDES. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE REVENUES MISCELLANEOUS APPLI CATION IS PARTLY ALLOWED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 26TH SEPTEMBER, 2011 GJ COPY TO: 1. POPULAR VEHICLES & SERVICES LTD., KUTTUKARAN CEN TRE, MAMANGALAM, KOCHI- 682 025. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4( 1), ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .