KSM SECURITIES & FINANCE P.LTD, MUMBAI V. CIT 1, MUMBAI

MA 673/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 4826 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIYA
• Assessee Lawyers: NEHA PARANJPE A RS
• Keywords: Depreciation; Rule 8D
• Section: 143(3); 14A; 201; 254(2); 68; 263; 11

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE HONBLE SHRI SHAMIM YAHYA , A M AND HONBLE SHRI SANDEEP GOSAIN, J M M .A. NO . 673 /MUM/2018 ARISING OUT OF ITA NO. 2980/MUM/201 5 ASSESSMENT YEAR : 2010 - 11 KSM SECURITIES & FINANCE PVT. LTD. 2 ND FLOOR, NATIONAL INSURANCE BLDG, 204, D. N. ROAD, FORT MUMBAI - 400001. / VS. CIT - 1 3 RD FLOOR, ROOM NO. 387. AAYAKARBHAVAN, M.K. ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. AAACK4080F ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI K. GOPAL & NEHA PARANJPE , ARS / RESPONDENT BY : SHRI CHAITANYA ANJARIYA, DR / DATE OF HEARING : 05/04 /201 9 / DATE OF PRONOUNCEMENT : 23.05.2019 / O R D E R SANDEEP GOSAIN, J UDICIAL MEMBER : THE PRESENT MISCELLANEOUS APPLICATION S HA S BEEN FILED BY THE ASSESSEE FOR RECALLING THE ORDER DATED 07.06 .18 PASSED IN ITA NO. 2980/MUM/201 5 AND FOR DISPOSING OF THE APPEAL ON MERITS. 2 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. 2. LD. A R APP EARING ON BEHALF OF THE ASSESSEE RELI ED UPON THE APPLICATION MOVED BY THE ASSESSEE AND SUBMITTED THAT APPARENT MISTAKE HAS BEEN COMMITTED IN PASSING THE ORDER DATED 07.06 .18 AND REQUIRES RECO NSIDERATION BY THE HONBLE ITAT ON THE GROUNDS MENTIONED HEREIN BELOW: - 4. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPLICANT SUBMITTED BEFORE THE HON 'BLE TRIBUNAL THAT THE LD. CIT IS NOT AT ALL JUSTIFIED IN INVOKING PROVISIONS OF SECTION 263 OF THE ACT ON A DEBATABLE ISSUE PERTAINING TO THE COMPUTATION OF DISALLOWANCE AS PER RULE 8D OF THE INCOME TAX RULES, 1962 [HEREINAFTER REFERRED TO AS 'THE RULES'] BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT TO INCLUDE THE SHARES HELD AS A STOCK - IN - TRADE. - THE APPLICANT RELIED ON THE DECISION OF THE HON'BLE TRIBUNAL IN APPLICANT'S OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09 WHEREIN THE HON'BLE TRIBUNAL FOLLOWI NG THE DECISION OF THE JURISDICTIONAL -HI GH COURT IN THE CASE OF CIT VRS. INDIA ADVANTAGE SECURITIES LTD. [ITXA 1131 OF 2013] HELD THAT THE SHARES HELD AS STOCK - IN - TRADE DO NOT FORM PART OF THE SHARES HELD AS INVESTMENT THE SAME CANNOT BE INCLUDED FOR THE PURPOSE OF COMPUTING DISALLOWANCE UNDER SECTION 14A OF THE ACT R.W.R 8D. THE DECISION OF THE APPELLATE TRIBUNAL IN THE APPLICANT'S OWN CASE CLEARLY ESTABLISHES THAT THE ISSUE INVOLVED IN THE PRESENT CASE IS A DEBATABLE ISSUE. THE HON'BLE BENCH, WHILE DECID ING THIS ISSUE IN THE ORDER DATED 07.06.2018 HAS GIVEN ITS FINDING AT PAGE 17 OF THE ORDER. IN THE LAST PARAGRAPH YOUR HONOUR'S HAVE HELD AS UNDER: 'MOREOVER, NO NEW FACTS OR CONTRARY JUDGEMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US IN ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. COMMISSIONER OF INCOME TAX, THEREFORE, THERE ARE NO REASONS FOR 3 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY LD. CIT(A). HENCE WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT(A) ARE JUDICIOUS AND ARE WELL REASONED. RESULTANTLY, THESE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED.' 5. THE APPLICANT SUBMITS THAT THE HON'BLE TRIBUNAL HAS NOT CONSIDERED THE DECISION FILED BY THE APPLICANT OF THE HON'BLE TRIBUNAL, DATED 11.09. 2018 FOR THE ASSESSMENT YEAR 2008 - 09 IN THE APPLICANT'S OWN CASE. THUS, THE ABOVE OBSERVATIONS MADE BY THE HON'BLE BENCH IS A MISTAKE APPARENT ON RECORD. 6. THE APPLICANT SUBMITS THAT AS FAR AS THE ISSUE OF SHARE PREMIUM IS CONCERNED, THE HON'BLE BENCH HAS GIVEN ITS FINDING FROM PAGE 10 TO 16 OF THE ORDER DATED 07.06.2018. 7. THE HON'BLE BENCH HAS MENTIONED THAT THE LD. A. O. HAS FAILED TO EXAMINE THE NATURE OF THE TRANSACTION OF RECEIPT OF PREMIUM UNDER THE PROVISIONS OF SECTION 68 OF THE ACT AND THIS AMO UNTS TO LACK OF INQUIRY AND NOT INADEQUATE INQUIRY. THE APPLICANT SUBMITS THAT THE OBSERVATIONS AND FINDINGS GIVEN BY THE HON'BLE TRIBUNAL ARE DEHORS OF THE SUBMISSIONS, EXPLANATIONS AND EVIDENCES PLACED ON RECORD. THE APPLICANT DURING THE COURSE OF THE AP PELLATE PROCEEDINGS HAD REFERRED TO THE DOCUMENTS COMPILED AT ITEM NO. 6 OF THE PAPER BOOK CONSISTING OF PAGES 19 TO 51 AND SPECIFICALLY REFERRED TO THE CONFIRMATION LETTERS RECEIVED FROM MR. KALPESH MEHTA WHO IS THE DIRECTOR AND MAJOR SHAREHOLDER OF THE A PPLICANT COMPANY. WHILE POINTING OUT THE NATURE OF THE TRANSACTIONS, IT WAS POINTED OUT THAT THE TWO DIRECTORS HAD GIVEN 4 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. SUBSTANTIAL LOANS TO THE APPLICANT COMPANY IN THE EARLIER YEARS. THE LOAN WAS TAKEN BACK BY THE DIRECTOR SHAREHOLDERS AND INTRODUCED TH E SAME AS SHARE PREMIUM. THESE LOANS WERE GIVEN IN THE EARLIER YEARS AND THE SAME WERE ACCEPTED AS GENUINE IN THESE YEARS. THE APPLICANT COMPANY IS A PRIVATE LIMITED COMPANY AND ALL THE SHAREHOLDERS OF THE COMPANY ARE FAMILY MEMBERS. THE DETAILS OF THE SAM E WERE ALSO PROVIDED AT PAGE 20 OF THE PAPER BOOK. THE SHAREHOLDERS HAD CONVERTED THEIR LOANS INTO SHARE PREMIUM IN THE COMMERCIAL INTEREST OF THE APPLICANT COMPANY. THE LD.A.O. HAD LOOKED INTO THESE DOCUMENTS AND THE ASSESSMENT ORDER DATED 06.03.2013 WAS PASSED UNDER SECTION 143(3) OF THE ACT. THUS, THE FINDING GIVEN BY THE HON'BLE BENCH IS NOT CONSISTENT WITH THE FACTS AND THE EVIDENCE PLACED ON RECORD. THUS THE SAME AMOUNTS TO A MISTAKE APPARENT ON RECORD. 8. THE APPLICANT WANTS TO FURTHER POINT OUT THA T THE HON'BLE BENCH AT PAGE 14 OF THE ORDER DATED 07.06.2018 HAS REFERRED TO THE DECISION OF MUMBAI ITAT IN THE CASE OF GREEN INFRA VS. ITO (2013) 145 ITD 240/38 (MUM) AND MENTIONED THAT THE SAME IS DISTINGUISHABLE ON FACTS. THE APPLICANT SUBMITS THAT IN T HE CASE OF GREEN INFRA, THE HON'BLE TRIBUNAL HAD MENTIONED THAT THE SHARE PREMIUM CANNOT BE EXAMINED UNDER SECTION 68 OF THE ACT AND THIS FINDING OF THE APPELLATE TRIBUNAL WAS CONFIRMED BY THE HON'BLE BOMBAY HIGH COURT IN ITS DECISION CIT VS GREEN INFRA [2 017] 392 ITR 7 (BOM). THE RATIO LAID DOWN BY THE BOMBAY HIGH COURT IS BINDING ON THE TRIBUNAL WHICH IS OPERATING WITHIN THE JURISDICTION OF HON'BLE BOMBAY HIGH COURT. 5 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. 3. LD. A R FURTHER SUBMITTED THAT THE ABOVE MATTER REQUIRES RECONS IDERATION IN THE LIGHT OF ABOVE SAID FACTS WHICH UNAMBIGUOUSLY INDICATE THE EXISTE NCE OF A MANIFEST ERROR THAT HAD INADVERTENTLY CRE PT IN THE ORDER DATED 07.06 . 1 8, THEREFORE IT IS REQUESTED THAT THE ORDER DATED 07.06.18 DESERVE S TO BE RECALLED. 4 ON THE OTHER HAND THE LD. D R A P PEARING ON BEHALF OF THE DEPARTMENT SUBMITTED THAT THE PRESENT MISC. APPLICATION S FILED BY THE ASSESSEE IS MISCONCEIVED AND SINCE THERE IS NO ERROR APPARENT IN THE RECORD, THEREFORE THE PRESENT MISC. AP PLICATION FILED BY THE ASSESSEE IS NOT MAINTAINABLE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE JUDGEMENTS CITED BY THE LEARNED A.R. FROM THE RECORD WE NOTICED THAT THE APPLICANT HAD RELIED UPON THE DECISION OF HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008 - 09, WHEREIN, THE HONBLE TRIBUNAL FOLLOWING THE DECISION OF JUR ISDICTIONAL HIGH COURT HAD DECIDED THE CASE IN FAVOUR OF ASSESSEE. THUS ACCORDING TO ASSESSEE, THE DECISION OF HONBLE TRIBUNAL IN ASSESSEES OWN CASE MERELY ESTABLISHES THAT THE ISSUE INVOLVE D IN THE PRESENT CASE A DEBATABLE ISSUE. 6. SINCE THE DECISION OF THE HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008 - 09 COULD NOT CONSIDERED AND BECAUSE OF OVERSIGHT IT WAS MISSED IN THE ORDER 6 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. WHILE DISMISSING THE APPEAL FILED BY THE ASSESSEE. WE HAV E ALSO CONSIDERED THE JUDGEMENTS CITED BY THE LEARNED A.R. IN THE CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) WHEREIN IT WAS HELD THAT SUB - SECTION (2) OF SECTION 254 THUS COVERS TWO DISTINCT SITUATIONS: - (I) IT ENABLES THE TRIBUNAL AT ANY TIME W ITHIN FOUR YEARS FROM THE DATE OF THE ORDER TO AMEND ANY ORDER PASSED UNDER SUB - SECTION (1) WITH A VIEW TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD; AND (II) IT REQUIRES THE TRIBUNAL TO MAKE SUCH AMENDMENT IF THE MISTAKE IS BOUGHT TO ITS NOTICE BY THE ASSESSEE OR THE ASSESSING OFFICER. THUS THE COURT CONCLUDED AS UNDER: - 'IT IS, OF COURSE, NOT EASY TO DEFINE OR ADEQUATELY DESCRIBE WHAT AN ERROR OF LAW APPARENT ON THE FACE OF THE RECORD MEANS. WHAT CAN BE CORRECTED BY A WRIT HAS TO BE AN ERROR OF LAW ; BUT IT MUST BE SUCH AN ERROR OF LAW AS CAN BE REGARDED AS ONE WHICH IS APPARENT ON THE FACE OF THE RECORD. WHERE IT IS MANIFEST OR CLEAR THAT THE CONCLUSION OF LAW RECORDED BY AN INFERIOR COURT OR TRIBUNAL IS BASED ON AN OBVIOUS MIS - INTERPRETATION OF THE RELEVANT STATUTORY PROVISION, OR SOMETIMES IN IGNORANCE OF IT, OR MAY BE, EVEN IN DISREGARD OF IT, OR IS EXPRESSLY FOUNDED ON REASONS WHICH ARE WRONG IN LAW, THE SAID CONCLUSION CAN BE CORRECTED BY A WRIT OF CERTIORARI. IN ALL THESE CASES, THE IMPUGNED CO NCLUSION SHOULD BE SO PLAINLY INCONSISTENT WITH THE RELEVANT STATUTORY PROVISION THAT NO DIFFICULTY IS EXPERIENCED BY THE HIGH COURT IN HOLDING THAT THE SAID ERROR OF LAW IS APPARENT ON THE FACE OF THE RECORD. IT MAY 7 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. ALSO BE THAT IN SOME CASES, THE IMPUGNE D ERROR OF LAW MAY NOT BE OBVIOUS OR PATENT ON THE FACE OF THE RECORD AS SUCH AND THE COURT MAY NEED AN ARGUMENT TO DISCOVER THE SAID ERROR; BUT THERE CAN BE NO DOUBT THAT WHAT CAN BE CORRECTED BY A WRIT OF CERTIORARI IS AN ERROR OF LAW AND THE SAID ERROR MUST, ON THE WHOLE, BE OF SUCH A CHARACTER AS WOULD SATISFY THE TEST THAT IT IS AN ERROR OF LAW APPARENT ON THE FACE OF THE RECORD. IF A STATUTORY PROVISION IS REASONABLY CAPABLE OF TWO CONSTRUCTIONS AND ONE CONSTRUCTION HAS BEEN ADOPTED BY THE INFERIOR CO URT OR TRIBUNAL, ITS CONCLUSION MAY NOT NECESSARILY OR ALWAYS BE OPEN TO CORRECTION BY A WRIT OF CERTIORARI. IN OUR OPINION, IT IS NEITHER POSSIBLE NOR DESIRABLE TO ATTEMPT EITHER TO DEFINE OR TO DESCRIBE ADEQUATELY ALL CASES OF ERRORS WHICH CAN BE APPROPR IATELY DESCRIBED AS ERRORS OF LAW APPARENT ON THE FACE OF THE RECORD. WHETHER OR NOT AN IMPUGNED ERROR IS AN ERROR OF LAW AND AN ERROR OF LAW WHICH IS APPARENT ON THE FACE OF THE RECORD, MUST ALWAYS DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE AND UPON THE NATURE AND SCOPE OF THE LEGAL PROVISION WHICH IS ALLEGED TO HAVE BEEN MISCONSTRUED OR CONTRAVENED'. 7. IT WAS FURTHER HELD BY THE COURT THAT NON - CONSIDERATION OF A DECISION OF THE JURISDICTIONAL COURT OR OF SUPREME COURT CAN BE SAID TO BE A MIST AKE APPARENT FROM RECORD WHICH CAN BE RECTIFIED UNDER SECTION 254(2) OF THE ACT. 8. APART FROM THAT WE HAVE ALSO CONSIDERED THE JUDGEMENT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD. (SUPRA) WHEREIN IT WAS HELD AS UNDER: - 8 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. APPEAL TO APPELLATE TRIBUNAL POWERS OR TRIBUNAL POWERS TO RECRIFY MISTAKES ON RECORD SCOPE OF FUNDAMENTAL PRINCIPLE NO PARTY APPEARING BEFORE TRIBUNAL SHOULD SUFFER ON ACCOUNT OF MISTAKE COMMITTED BY TRIBUNAL FAILURE TO CONSIDER DECISION OF COORDINATE BENCH CITED BY ASSESSE E IS A MISTAKE INCOME TAX ACT, 1961, SS. 43A, 154, 254. 9. IT WAS FURTHER HELD AS UNDER: - REVERSING THE DECISION OF THE HIGH COURT, HAD IN ALLOWING THE RECTIFICATION APPLICATION THE TRIBUNAL GAVE A FINDING THAT THE EARLIER DECISION OF A CO - ORDINATE BENCH WAS CITED BEFORE IT BUT THROUGH OVERSIGHT IT HAD MISSED THE JUDGEMENT WHILE DISMISSING THE APPEAL FILED BY THE ASSESSEE ON THE QUESTION OF ADMISSIBILITY/ALLOWABILITY OF THE CLAIM OF THE ASSESSEE FOR ENHANCED DEPRECIATION UNDER SECTION 43A. ONE OF THE IMPORTANT REASONS FOR GIVING THE POWER OF RECTIFICATION TO THE TRIBUNAL UNDER SECTION 254(2) WAS TO SEE THAT NO PREJUDICE WAS CAUSED TO EITHER OF THE PARTIES APPEARING BEFORE IT. THE RULE OF PRECEDENT WAS AN IMPORTANT ASPECT OF CERTAINTY IN THE RULE OF LA W, AND PREJUDICE HAD RESULTED TO THE ASSESSEE SINCE THE PRECEDENT HAD NOT BEEN CONSIDERED BY THE TRIBUNAL. THE TRIBUNAL WAS JUSTIFIED IN RECTIFYING THE MISTAKE ON RECORD. 10. KEEPING IN VIEW THE ABOVE FACTUAL AND LEGAL POSITION WE ARE OF THE VIEW THAT EA RLIER DECISION OF THE COORDINATE BENCH OF ITAT , THOUGH WAS CITED BEFORE US, BUT BECAUSE OF OVERSIGHT IT COULD NOT BE CONSIDERED OR DISTINGUISHED IN THE ORDER WHILE 9 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. DECIDING THE APPEAL FILED BY THE ASSESSEE. THEREFORE, WHILE KEEPING IN VIEW THE PRINCIPLE LA ID DOWN BY THE HON'BLE SUPREME COURT IN THE AFOREMENTIONED TWO JUDGEMENTS, WE ARE OF THE VIEW THAT THERE IS MISTAKE APPARENT FROM RECORD, THEREFORE, WE RECALL THE ORDER DATED 07.06 .18 AND DIRECT THE REGISTRY TO FIX THE MATTER FOR RE - HEARING AND AS SUCH T HE APPEAL WILL BE HEARD ON MERITS. 11. BEFORE PARTING WE MAKE IT CLEAR THAT WE HAVE NOT EXPRESSED ANY OPINION IN ONE WAY OR THE OTHER AND NOT STATED ANYTHING ON MERITS OF THE MATTER. THEREFORE THE REGULAR BENCH OF THE TRIBUNAL WILL HEAR THE MATTER AND WILL DECIDE ON ITS OWN MERITS WITHOUT BEING INFLUENCED BY ANY OBSERVATION MADE IN THE ABOVE ORDER. ORDER ACCORDINGLY. 12. IN THE RESULT, THE MA FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MAY , 201 9 SD/ - SD/ - ( SHAMIM YAHYA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 23 /05 / 201 9 SR.PS DHANANJAY. 10 M.A. NO. 673 /MUM/2018 KSM SECUR ITIES & FINANCE PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, / (DY./ASSTT . REGISTRAR) , / ITAT, MUMBAI