M.B. POLISHING WORKS, V. DY CIT - 16(3),

MA 198/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 7066 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: VIJAYKUMAR J BIYANI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI RAJENDRA SINGH, A.M. AND SHRI V. DURGA RAO, J.M. M.A. NO. 198/MUM/2011 (IN ITA NO. 6995/MUM/2008 ASSESSMENT YEAR: 2004-05 M.B. POLISHING WORKS, APPLICANT 638, PANCHRATNA, OPERA HOUSE, MUMBAI 400 004. (PAN AAAFM2529E) VS. DY. COMMISSIONER OF INCOME TAX -16(3), RESPONDENT MUMBAI. APPLICANT BY : MR. VIJAYKUMAR J. BIYANI RESPONDENT BY : MR. C.G.K. NAIR DATE OF HEARING : 05/08/2011 DATE OF PRONOUNCEMENT: ORDER PER V. DURGA RAO, J.M.: THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSE E ARISES OUT OF THE ORDER OF ITAT F BENCH, MUMBAI BENCHES, MUM BAI, IN APPEAL ITA NO. 6995/MUM/2008 DATED 30 TH DECEMBER, 2009. THE ASSESSEE IN THE M.A., INTER-ALIA, STATED THAT THE TRIBUNAL WHIL E ADJUDICATING GROUND NO.2 REGARDING THE CIT(A) ERRED IN TAKING INTEREST RECEIVED FROM PRIVATE PARTIES AMOUNTING TO RS. 20,32,914/- A S INCOME FROM OTHER SOURCES IN STEAD OF BUSINESS INCOME AND FURTHER ERR ED IN NOT NETTING THE SAME AGAINST INTEREST PAYMENT MADE TO BANKS AND PRI VATE PARTIES FOR CALCULATING DEDUCTION U/S 80HHC, HELD AS UNDER:- M.A. NO. 198/MUM/2011 M/S M.B. POLISHING WORKS 2 THE ASSESSEE HAD RECEIVED INTEREST INCOME FROM PRIV ATE PARTIES ON LOANS ADVANCED TO THEM. BOTH THE AUTHORITIES BEL OW HELD THAT INTEREST INCOME IS INCOME FROM OTHER SOURCES AND TH E FINDING OF THE AO IS THAT MONEY HAD BEEN ADVANCED OUT OF SURPL US FUND HAD NOT BEEN CONTROVERTED BEFORE US BY PRODUCING ANY MA TERIAL. THERE IS ALSO NO MATERIAL TO SHOW THAT MONEY ADVANCED WAS IN CONNECTION WITH THE BUSINESS OF EXPORT. WE, THEREFO RE, CONFIRM THE ORDERS OF THE AUTHORITIES BELOW, ASSESSING THE INTE REST INCOME AS INCOME FROM OTHER SOURCES AND NOT ALLOWING ANY DEDU CTION ON ACCOUNT OF INTEREST PAYMENT. THIS GROUND OF APPEAL IS DISMISSED. 2. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS POINTED OUT THAT THE TRIBUNAL WHILE UPHOLDING THE ORDER OF THE CIT(A) HAS OBSERVED THAT INTEREST INCOME AS INCOME FROM OTHER SOURCES AND NOT ALLOWED THE NETTING OFF OF INTEREST TO EARN THE AFORESAID INCOME AS PER SECTION 57 OF THE ACT, AND THE TRIBUNAL HAS COMMITTED A MIS TAKE BY NOT CONSIDERING THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO NETTING OFF OF INTEREST EXPENDITURE IS CONCERNED. HE, THERE FORE, SUBMITTED THAT THE AFORESAID MISTAKE MAY BE RECTIFIED. THE LEARNED DR HAS NOT CONTROVERTED THE SUBMISSIONS OF THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND FROM THE ORDER OF THE TRIBUNAL THAT THE ASSESS EE HAS RAISED A SPECIFIC GROUND WITH REGARD TO NETTING OFF OF INTER EST, BUT, THE TRIBUNAL HAS ONLY CONSIDERED THE INTEREST INCOME TREATING TH E SAME AS INCOME FROM OTHER SOURCES BUT NETTING OFF OF THE INTEREST EXPENDITURE HAS NOT CONSIDERED, AND, THEREFORE, THE MISTAKE APPARENT O N RECORD, WHICH NEEDS TO BE RECTIFIED. WE, THEREFORE, DIRECT THE AO TO CONSIDER THE NETTING OFF OF THE INTEREST PAID ON THE MONEY BORR OWED U/S 57 OF THE ACT, IF THE ASESSSEE IS IN A POSITION TO EXPLAIN AN D PROVE THAT THE INTEREST EXPENDITURE INCURRED EXCLUSIVELY FOR THE P URPOSE OF EARNING INTEREST INCOME, AFTER PROVIDING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. M.A. NO. 198/MUM/2011 M/S M.B. POLISHING WORKS 3 4. IN THE RESULT, THE MA FILED BY THE ASSESSEE I S DISPOSED OFF, AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF AUGUST, 2011. SD/- SD/- (RAJENDRA SINGH) (V. DURGA R AO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 12 TH AUGUST, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, F BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.