ASST CIT CIR 16(3), V. M.B. POLISHING WORKS,

MA 671/MUM/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0970 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SAKSENA
• Keywords: Business income
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI RAJENDRA SINGH , A M & DR. STM PAVALAN , J M MA NO. 671 /MUM/20 1 2 (ARISING OUT OF MA NO.198/M/201 1 ) ( ASSESSMENT YEAR :20 0 4 - 0 5 ) ACIT, CIR - 16(3), MUMBAI VS. M/S M.B. POLISHING WORKS , 638, PANCHRATNA, OPERA HOUSE,MUMBAI - 400 004 PAN NO. : A A AFM 2579 E ( APP LICANT ) .. ( RESPONDENT ) REVENUE BY : MR. V.SAKSENA ASSESSEE BY : NONE DATE OF HEARING : 16 TH AUGUST , 2013 DATE OF PRONOUNCEMENT : 16 TH AUGUST , 20 13 O R D E R PER SHRI RAJENDRA SINGH , A M : TH IS MISCELLANEOUS APPLICATION HA S BEEN FILED BY THE REVENUE POINTING OUT SOME APPARENT MISTAKE IN THE ORDER DATED 12 - 8 - 2011 PASSED BY THE TRIBUNAL IN MA NO. 198/M/2011, WHICH WAS ARISING FROM THE APPELLATE ORDER PASSED IN ITA NO. 6995/M/2008 . 2 . AT THE TIME OF HEARING OF THIS MISCELLANEOUS APPLICATION, NONE APPEARED ON BEHALF OF THE ASSESSEE, THOUGH THE NOTICE OF HEARING HAD BEEN GIVEN WELL IN ADVANCE. WE, THEREFORE, PROCEED TO DECIDE THIS MISCELLANEOUS APPLICATI ON AFTER HEARING THE LEARNED DR AND AFTER CONSIDERING THE MATERIAL ON RECORD. M.ANO. 671 /201 2 2 3 . BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80HHC IN RESPECT OF INTEREST INCOME ARISING FROM FDRS. THE ASSESSEE HA D TREATED THE INTEREST IN COME AS BUSINESS INCOME ON THE GROUND THAT THE FDRS HA D BEEN USED AS MARGIN MONEY IN CONNECTION WITH THE BUSINESS OF EXPORT. THE CLAIM OF THE ASSESSEE HAD NOT BEEN ALLOWED . H OWEVER, THE TRIBUNAL HELD THAT THE INTEREST INCOME HAD TO BE CONSIDERED AS BUSINES S INCOME AND THE ASSESSEE HAD TO BE ALLOWED NETTING OF F INTEREST. THE ASSESSEE ALSO RECEIVED INTEREST FROM PRIVATE PARTIES ON WHICH THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80HHC OF THE ACT, WHICH ALSO HAD BEEN DISALLOWED BY THE AUTHORITIES BELOW. THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A) HOLDING THE INTEREST AS INCOME FROM OTHER SOURCES AND ALSO REJECTED THE CLAIM OF NETTING OFF. THEREAFTER THE ASSESSEE FILED MISCELLANEOUS APPLICATION, IN WHICH IT WAS POINTED OUT THAT THE ASSESSEE HAD SPECIFICALLY WRITTEN TO CIT(A) THAT THE ASSESSEE HAD SPENT A SUM OF RS. 5,59,051/ - AS INTEREST EXPENDITURE FOR EARNING OF INTEREST INCOME FROM LOANS TO PRIVATE PARTIES, WHICH HAD NOT BEEN CONSIDERED BY THE CIT(A) . THEREFORE, THERE WAS AN ERROR IN THE ORDER OF THE TRIBU NAL IN ACCEPTING THE ORDER OF THE CIT(A). THE TRIBUNAL , THEREFORE, IN THE ORDER DATED 12 - 8 - 2011 IN MA NO. 198/M/2011, HELD THAT THE ASSESSEE HAD TO BE ALLOWED INTEREST EXPENDITURE INCURRED FOR EARNING OF INTEREST INCOME UNDER SECTION 57 OF THE IT ACT. THE T RIBUNAL, THEREFORE, MODIFIED THE ORDER AND DIRECTED THE AO TO ALLOW THE CLAIM IF THE INTEREST EXPENDITURE HAD BEEN WHOLLY AND M.ANO. 671 /201 2 3 EXCLUSIVELY INCURRED FOR THE PURPOSE OF EARNING INTEREST INCOME AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 4 . THE D EPARTMENT HAS NOW FILED THE PRESENT MISCELLANEOUS APPLICATION POINT ING OUT THE APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL IN MA NO. 198/M/2011 ON THE GROUND THAT IN THE ORIGINAL ORDER THE TRIBUNAL HA D DISALLOWED THE CLAIM OF NETTING OFF AND, THEREFORE, A LLOWING THE SAME IN THE MISCELLANEOUS APPLICATION, WAS NOT CORRECT AND IT WAS AN APPARENT MISTAKE . 5 . WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. FIRSTLY, WE FIND THAT THIS MISCELLANEOUS APPLICATION HAS BEEN FILED AGAINST THE ORDER IN MISCELLANEOUS APPLICATION. S UCH APPLICATION IS NOT PERMISSIBLE AGAINST THE ORDER ON MISCELLANEOUS APPLICATION. THEREFORE, THIS MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS NOT MAINTAINABLE. WE ALSO OBSERVE THAT THE TRIBUNAL HAD AMENDED THE ORDER IN M A NO. 198/M/2011 WHEN IT WAS BROUGHT TO THE NOTICE THAT CERTAIN FACTS RELATING TO INCURRING OF EXPENDITURE FOR EARNING THE INTEREST INCOME HA D BEEN OVERLOOKED AT THE TIME OF ORIGINAL APPEAL. THE TRIBUNAL, THEREFORE, RESTORED THE ISSUE AND GAVE DIRECTION TO ALLOW THE INTEREST, IF THE ASSESSEE WAS ABLE TO PROVE THAT SUCH INTEREST EXPENDITURE HA D BEEN EARNED WHOLLY AND EXCLUSIVELY FOR EARNING OF INTEREST INCOME. THEREFORE, ON MERIT ALSO THERE IS NO APPARENT MISTAKE IN THE ORDER. HENCE, WE REJECT THE MISCELLANEO US APPLICATION FILED BY THE REVENUE. M.ANO. 671 /201 2 4 6 . RESULTANTLY , MISCELLANEOUS APPLICATION FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH D AY OF AUG , 2013 . SD/ - SD/ - ( D R .S.T.M.PAVALAN ) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 16 /08/2013 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - X, MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI