LAFFANS PETROCHEMICALS LTD., Mumbai V. DY.COMM OF INCOME TAX,RG.10(2)(1), MUMBAI

MA 475/MUM/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0342 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-08-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Assessee Lawyers: SHEKAR GUPTA
• Keywords: Question of law; Set aside
• Section: 254(2); 13

Judgement Text

1 MA 475/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G MANJUNATHA (ACCOUNTANT MEMBER) AND SHRI RAM LAL NEGI (JUDICIAL MEMBER) M.A. NO.475/MUM/2019 (ARISING OUT OF ITA NO.1982/MUM/2018) (ASSESSMENT YEAR: 2008-09) LAFFANS PETROCHEMICALS LTD 13 TH FLOOR, 1302 B-WING, PLOT NO.C-66, G-BLOCK BANDRA KURLA COMPLEX BANDRA(E) MUMBAI-400 051 PAN : AAACL0456D VS DCIT - 10(2)(1) ROOM NO.509, 5 TH FLOOR AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 APPLICANT RESPONDENT APPLICANT BY SHRI. SHEKAR GUPTA , AR RESPONDENT BY SHRI. KAVITA P. KAUSHIK , DR DATE OF HEARING 0 8.11 .2019 DATE OF PRONOUNCEMENT 09 .1 2 .2019 O R D ER PER G MANJUNATHA: AM THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATI ON U/S 254(2) OF THE I.T.ACT, 1961 AND REQUESTED TO RECALL/RECTIF Y THE ORDER OF THE TRIBUNAL IN ITA NO.1982/MUM/2018, DATED 22/07/2019 FOR THE ASSESSMENT YEAR (AY) 2008-09. 2 MA 475/MUM/2019 2. THE ASSESSEE HAS NARRATED FACTS AND MISTAKES STA TED TO APPARENT ON RECORD IN THE ORDER OF TRIBUNAL DATED 22/07/2019 . THE RELEVANT CONTENTS OF MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE ARE AS UNDER:- 1. THE APPLICANT SUBMITS THAT THE DIRECTION GIVEN B Y THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN PARA 6 IS AS UNDER; 'HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE A O AND DIRECT HIM. TO VERIFY THE CLAIM OF THE ASSESSES M LIGHT OF DECISIO N OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD. (S UPRA.) WHERE THE HON'BLE COURT CLEARLY HELD THAT IF OWN FUNDS IS IN EXCESS OF INVESTMENTS MADE IN FIXED ASSETS, THEN THE GENERAL PRESUMPTION GOES IN FAVOUR OF THE ASSESSEE THAT INVESTMENTS IN ASSETS IS OUT OF O WN FUNDS. NEEDLESS TO SAY, THE ASSESSEE SHALL FURNISH NECESSARY EVIDEN CE INCLUDING CASH FLOW STATEMENT TO PROVE AVAILABILITY OF OWN FUNDS. IN CASE, THE ASSESSEE PROVES AVAILABILITY OF OWN FUNDS, THEN THE AO IS DIRECTED TO DELETE THE ADDITIONS MADE TOWARDS CAPITALIZATION OF INTEREST UNDER SECTION 36(1)(III) READ WITH EXPLANATION 8 TO SECTI ON 43(1) OF THE INCOME TAX ACT, 1961.' THE APPLICANT SUBMITS THAT THE DECISION OF THE BOMB AY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK 366 ITR 505 IN PARA 5 IS AS UN DER: 'WE FIND THAT THE FACTS OF THE PRESENT CASE ARE SQU ARELY COVERED BY THE JUDGMENT IN THE CASE OF RELIANCE UTILITIES AND POWE R LTD. (SUPRA). THE FINDING OF FACT GIVEN BY THE INCOME TAX APPELLATE T RIBUNAL IN THE PRESENT CASE IS THAT THE ASSESSEE'S OWN FUNDS AND O THER NON-INTEREST BEARING FUNDS WERE MORE THAN THE INVESTMENT IN THE TAX-FREE SECURITIES. THIS FACTUAL POSITION IS NOT ONE THAT IS DISPUTED. IN THE PRESENT CASE, UNDISPUTEDLY THE ASSESSEE'S CAPITAL, PROFIT RESERVE S, SURPLUS AND CURRENT ACCOUNT DEPOSITS WERE HIGHER THAN THE INVES TMENT IN THE TAX- FREE SECURITIES. IN VIEW OF THIS FACTUAL POSITION, AS PER THE JUDGMENT OF THIS COURT IN THE CASE OF RELIANCE UTILITIES AND PO WER LID. (SUPRA), IT WOULD HAVE TO BE PRESUMED THAT THE INVESTMENT MADE BY THE ASSESSEE WOULD BE OUT OF THE INTEREST-FREE FUNDS AVAILABLE W ITH THE ASSESSES. WE, THEREFORE, ARE UNABLE TO AGREE WITH THE SUBMISSION OF MR. SURESH KUMAR THAT THE TRIBUNAL HAD ERRED IN DISMISSING THE APPEAL OF THE REVENUE ON THIS GROUND. WE DO NOT FIND THAT QUESTIO N (A) GIVES RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND IS THEREFORE RE JECTED.' THE APPLICANT SUBMITS THAT IN THE SAID DECISION NO WHERE IT IS MENTIONED THAT A CASH FLOW STATEMENT IS TO BE FURNISHED TO PROVE AVA ILABILITY OF OWN FUNDS. HENCE, THE HONBLE ITAT MAY RECTIFY THE ORDER AND D ELETE THE SAID DIRECTION BECAUSE IT IS NOT IN CONFORMITY WITH THE DIRECTIONS OF THE HONBLE BOMBAY HIGH COURT. 3 MA 475/MUM/2019 2. PRAYER: I) THE HONBLE BENCH MAY BE PLEASED TO RECT IFY THE MISTAKE AS POINTED OUT HEREIN ABOVE AND RECALL THE ORDER DATED 22-07-2019 AND PASS A FRESH ORDER IN TERMS OF THE SECTION 254(1) O F THE ACT. II) THE HONBLE BENCH MAY RECALL THE ORDER D ATED 22-07-2019 AND PASS AN APPROPRIATE ORDER IN TERMS OF SECTION 254(1 ) OR MODIFY OR AMEND THE ORDER ALREADY PASSED. III) ANY OTHER RELIEF WHICH THE HON'BLE BENCH MAY DEEM FIT, 3. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THERE IS AN ERROR IN THE ORDER OF THE TRIBUNAL, IN AS MUCH AS, THE TRIBUNAL HAS FOLLOWED THE DECISION OF HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS HDFC BANK LTD (363 ITR 505), WHILE ARRIVING AT THE CONCL USION THAT WHEN, OWN FUNDS ARE SUFFICIENT TO COVER-UP THE INVESTMENTS, T HEN GENERAL PRESUMPTION GOES IN FAVOUR OF THE ASSESEE THAT INVE STMENTS IN FIXED ASSETS IS OUT OF OWN FUNDS, CONSEQUENTLY, NO DISALL OWANCES COULD BE MADE TOWARDS INTEREST U/S 36(1)(III) OF THE I.T.ACT , 1961. HOWEVER, FURTHER WENT AHEAD TO RECORD FINDING THAT THE ASSESSEE HAS TO FILE CASH FLOW STATEMENTS EXPLAINING AVAILABILITY OF FUNDS AS ON T HE DATE OF INVESTMENTS, IGNORING THE FACT THAT WHEN A PRESUMPTION IS DRAWN REGARDING OWN FUNDS, THEN THE QUESTION OF FILING CASH FLOW STATEMENT TO PROVE AVAILABILITY OF OWN FUNDS DOES NOT ARISE. THE SAID MISTAKE CONSTITU TES A MISTAKE APPARENT ON RECORD, WHICH NEEDS TO BE RECTIFIED U/S 254(2) OF THE I.T.ACT, 1961. 4. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND SU BMITTED THAT THE ASSESSEE HAS FAILED TO MAKE OUT A CASE OF MISTAKE A PPARENT ON RECORD FROM THE ORDER OF THE TRIBUNAL, BUT WHAT THE LD. AR FOR THE ASSESEE IS ARGUING IS RECONSIDERING THE DECISION OF THE TRIBUN AL, WHICH IS NOT PERMISSIBLE U/S 254(2) OF THE I.T.ACT, 1961. THEREF ORE, MISCELLANEOUS APPLICATION FILED BY THE ASSESEE NEEDS TO BE DISMIS SED. 4 MA 475/MUM/2019 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ISCELLANEOUS APPLICATION FILED BY THE ASSESSEE ALONG WITH ORDER OF THE TRIBUNAL DATED 22/07/2019. WE FIND THAT THE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE FILE OF THE AO, FOR THE LIMITED PURPOSE OF ASCERTAINING THE FACT WITH REGARD TO AVAILABILITY OF OWN FUNDS, IN LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS HDFC BANK LIMITED (SUPR A) AND DIRECTED THE AO, IF OWN FUNDS IS IN EXCESS OF INVESTMENTS MADE I N FIXED ASSETS, THEN, DIRECTED TO DELETE THE ADDITIONS MADE TOWARDS CAPIT ALIZATION OF INTEREST U/S 36(1)(III) R.W EXPLANATION (8) TO SECTION 43(1 ) OF THE I.T.ACT, 1961. WE FIND THAT THE TRIBUNAL HAS RECORDED FINDINGS, IN TH E LIGHT OF THE FACT THAT EVEN IN EARLIER PROCEEDINGS; THE TRIBUNAL HAS SET A SIDE THE ISSUE TO THE FILE OF THE AO AND DIRECT THE ASSESSEE TO FILE NECE SSARY CASH FLOW STATEMENT TO PROVE AVAILABILITY OF OWN FUNDS. EVEN , IN SECOND ROUND OF LITIGATION THE ASSESEE HAS FAILED TO FILE CASH FLOW STATEMENT BEFORE THE AUTHORITIES TO EXPLAIN SOURCE FOR INVESTMENTS IN FI XED ASSETS, BUT HEAVILY RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS HDFC BANK LTD. (SUPRA). NO DOUBT, THE HON BLE BOMBAY HIGH COURT HAS LAID DOWN A RATIO THAT WHEN, MIXED FUNDS ARE AVAILABLE INCLUDING OWN FUNDS AND BORROWED FUNDS, THEN GENERA L PRESUMPTION GOES IN FAVOUR OF THE ASSESEE THAT INVESTMENTS IS O UT OF OWN FUNDS. BUT, FACT REMAINS THAT IT IS FOR THE ASSESSEE TO PROVE A VAILABILITY OF FUNDS AS ON THE DATE OF INVESTMENTS IN ORDER TO COME OUT OF THE PROVISIONS OF SECTION 36(1)(III) R.W. EXPLANATION 8 TO SECTION 43(1) OF THE I.T.ACT, 1961. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN FINDINGS RECORDED BY THE TRIBUNAL AND HENCE, THE MISCELLANEO US APPLICATION FILED BY THE ASSESSEE DOES NOT DESERVES TO BE ENTERTAINED AND ACCORDINGLY, DISMISSED THE MISCELLANEOUS APPLICATION FILED BY TH E ASSESSEE. 5 MA 475/MUM/2019 6. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.12.2019. SD/- SD/- RAM LAL NEGI G MANJUNATHA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 09 .12.2019 THIRUMALESH, SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//