Bharti Bhushan Jindal, Ludhiana V. ACIT, Ludhiana

MA 91/CHANDI/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0454 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-06-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 04-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Capital expenditure
• Section: 143(3); 37; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER M.A. NO.91 /CHD/2012 (IN ITA NO.459/CHD/2011) (ASSESSMENT YEAR: 2004-05) BHARTI BHUSHAN JINDAL VS. THE A.C.I.T., PROP.M/S JINDAL ELECTRIC CIRCLE-1, & MACHINERY CORP., LUDHIANA. C-57, FOCAL POINT, LUDHIANA. PAN: ACVPJ3724B (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI J.S.NAGAR, DR DATE OF HEARING : 07.06.2013 DATE OF PRONOUNCEMENT : 12.06.2013 O R D E R PER SUSHMA CHOWLA, JM: THE APPLICANT HAS FILED THIS MISCELLANEOUS APPLICAT ION FOR RECALLING THE ORDER DATED 13.07.2012 IN ITA NO.459/CHD/2011 R ELATING TO THE ASSESSMENT YEAR 2004-05 WHICH WAS DISMISSED. 2. THE MISCELLANEOUS APPLICATION FILED BY THE APPLI CANT READ AS UNDER: BY THE CAPTIONED ORDER PASSED BY THE HON'BLE TRIBUN AL APPEAL WAS DISPOSED OFF AS DISMISSED. COPY OF THE ORDER IS ENCLOSED FOR READY REFERENCE. APPEAL WAS FILED BEFORE THE HON'BLE INCOME TAX APPE LLATE TRIBUNAL AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) SUSTAINING/UPHOLDING DISALLOWANCE OF RS.10,50,000/- CLAIMED AS SET OFF OF LOSS AGAINS T INCOME BY WAY OF INTEREST ON ACCOUNT OF ADVANCES MADE IN THE REGULAR COURSE OF DEALING IN M ARKET FINANCING AGAINST DULY EXECUTED PROMISSORY NOTES (HUNDIS IN TRADE PARLANCE) HAVING BEEN ALLOWED IN THE PECEDING YEARS AND DURING THE CAPTIONED YEAR I.E. A SSESSMENT YEAR 2004-05 IN THE CASES OF APPLICANT'S HUF AND HIS WIF E IN ASSESSMENTS FRAMED UNDER SECTION 143(3) . DURING THE COURSE OF HEARING OF APPEAL WRITTEN SUBM ISSIONS ( COPY ENCLOSED) WERE FILED BESIDE ORAL SUBMISSIONS IN AID/AS SUPPLE MENT TO THE WRITTEN SYNOPSIS . THE 2 2 ATTENTION OF THE HON'BLE TRIBUNAL WAS SPECIFICALLY DRAWN TO THE PROVISIONS OF SECTION 57 (III) READ WITH SECTION 59/37 OF THE INCOME TAX ACT SUPPORTED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF COMMISS IONER OF INCOME TAX V WOODWARD GOVERNOR INDIA P.LTD ( 2009) 312 ITR 254 SETTING AT REST AND CLALRIFYING THE TERM EXPENDITU RE TO EFFECTIVELY CANVASS THAT DEDUCTION/LOSS AS CLAIMED WOULD BE ALLOABLE IN VIEW OF THE HON'BLE APEX COURT HOLDING AS UNDER: 'THE EXPRESSION ~ ANY EXPENDITURE ' HAS BEEN USED IN SECTION 37 OF TH E INCOME TAX ACT. 1961 TO COVER BOTH AS WELL AS AN AMOUNT W HICH IS REALLY A ''LOSS' EVEN THOUGH THE AMOUNT HAS NOT GONE OUT OF THE POCKET OF THE ASSESSEE ' AND FURTHER 'THE WORD 'PROFITS' IMPLIES A COMPARISON BETWEEN TH E TWO STATES OF BUSINESS AT TWO SPECIFIC DATES, USUALLY SEPARATED BY AN INTERVA L OF TWO MONTHS. STOCK IN TRADE IS AN ASSET: IT IS A TRADING ASSET THEREFORE , THE CONCEPT OF PROFIT AND GAINS MADE BY A BUSINESS DURING THE YEAR CAN ONLY MATERIALIZE WHERE A COMPARISON OF THE ASSETS OF THE BUSINESS AT TWO DIFFERENT DATES ARE T AKEN INTO ACCOUNT. ' SINCE SECTION 57 (IN) WAS IDENTICALLY WORDED EXCEPT FOR WORDS ' FOR THE PURPOSE OF BUSINESS OR PROFESSION' WORDS USED ARE 'FOR THE PUR POSE OF MAKING OR EARNING SUCH INCOME ' THAT , IN DECIDING THE APPEAL AGAINST THE ASSESSEE THE HON'BLE BENCH INADVERTENTLY HAS NOT REFERRED TO THE DECISION OF THE HON'BLE SUP REME COURT AS ALSO WRITTEN DISSERTATION. PRAYER SINCE THERE HAS BEEN AN INADVERTENT OMISSION IN NOT CONSIDERING WRITTEN SUBMISSIONS AND THE DECISION OF THE HON'BLE SUPREME COURT WHILE DECIDING THE APPEAL IT IS PRAYED THAT ORDER PASSED B Y THE HON'BLE TRIBUNAL BE RECALLED T O BE DECIDED AFRESH. 3. THE APPEAL IN ITA NO.459/CHD/2011 WAS DECIDED BY THE DETAILED ORDER DATED 13.7.2012. THE PLEADINGS MADE BY THE A PPLICANT BY WAY OF WRITTEN SUBMISSIONS WERE CONSIDERED AND CONTENTS OF THE SAME HAVE BEEN REFERRED TO IN PARA 7 OF THE APPELLATE ORDER AND TH EREAFTER THE ISSUE OF THE CLAIM OF DEDUCTION UNDER SECTION 57(III) OF THE ACT HAD BEEN DECIDED BY HOLDING THAT AGAINST THE INTEREST INCOME ASSESSED U NDER SECTION 56 OF THE ACT, DEDUCTION AS PRESCRIBED UNDER SECTION 57(III) OF THE ACT ARE TO BE ALLOWED. HOWEVER, ANY EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE IS NOT TO BE ALLOWED AS A DEDUCTION. THE APPLICANT HAD CLAIMED THE AMOUNTS ADVANCED AS LOAN TO BE ALLOWED AS A DEDUCTI ON AGAINST THE INTEREST INCOME DECLARED BY THE APPLICANT. THE ALT ERNATE PLEA OF THE APPLICANT WAS THAT THE SAME WAS ALLOWABLE AS BAD DE BTS IN THE HANDS OF THE APPLICANT. THE TRIBUNAL HELD BOTH THE CLAIMS A S NOT MAINTAINABLE AS THE APPLICANT HAD ONLY DECLARED INTEREST INCOME ARI SING ON THE ADVANCES 3 3 MADE BY IT AS ITS INCOME AND THE CAPITAL ADVANCES B Y THE APPLICANT WAS HELD TO BE A CAPITAL OUTFLOW WHICH WAS NOT TO BE AL LOWED AS A DEDUCTION UNDER SECTION 57(III) OF THE ACT. THE APPLICANT VI DE PRESENT MISCELLANEOUS APPLICATION HAD POINTED OUT THAT RELI ANCE WAS PLACED ON CIT VS. WOODWARD GOVERNOR INDIA P. LTD. (SUPRA) WHI CH HAS NOT BEEN CONSIDERED BY THE TRIBUNAL. IN THE PETITION ITSELF , THE APPLICANT HAS CLARIFIED THAT THE HON'BLE APEX COURT HAD ADJUDICAT ED UPON THE ISSUE OF CLAIM OF DEDUCTION OF ANY EXPENDITURE UNDER SECTION 37 OF THE ACT AND THE WORDINGS OF SECTION 57(III) WERE IDENTICAL WORD ED. THE APPEAL OF THE APPLICANT HAD BEEN DECIDED ON ITS MERITS AND RELIAN CE PLACED BY THE APPLICANT ON THE RATIO LAID DOWN BY THE APEX COURT IN CIT VS. WOODWARD GOVERNOR INDIA P. LTD. (SUPRA) IS MISPLACED. IN AN Y CASE, UNDER THE PROVISIONS OF SECTION 254(2) OF THE ACT LIMITED MAN DATE IS AVAILABLE TO THE TRIBUNAL TO RECTIFY ANY APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL. UNDER THE SAID SECTION IT IS NOT OPEN TO THE TRIBUN AL TO REVIEW ITS EARLIER ORDER AND TO RE-DECIDE THE ISSUE. THE PRESENT MISC ELLANEOUS APPLICATION FILED BY THE APPLICANT IS NOT MAINTAINABLE AND THE SAME IS DISMISSED. 4. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE APPLICANT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JUNE, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 12 TH JUNE, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4 4 5 5