The ITO, Ward-5(1),, RAJKOT-GUJARAT v. M/s Jay Enterprises,, RAJKOT-GUJARAT

ITA 1194/RJT/2010 | 2007-2008
Pronouncement Date: 18-10-2013 | Result: Dismissed

Appeal Details

RSA Number 119424914 RSA 2010
Assessee PAN AACFJ6355K
Bench Rajkot
Appeal Number ITA 1194/RJT/2010
Duration Of Justice 3 year(s) 20 day(s)
Appellant The ITO, Ward-5(1),, RAJKOT-GUJARAT
Respondent M/s Jay Enterprises,, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 18-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 18-10-2013
Date Of Final Hearing 17-10-2013
Next Hearing Date 17-10-2013
Assessment Year 2007-2008
Appeal Filed On 28-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH RAJKOT .. .. BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. S RIVASTAVA AM ITA NO. 1194/RJT/2010 / ASSESSMENT YEAR : 2007-08 ITO WARD-5(1) RAJKOT ( / APPELLANT) M/S. JAY ENTERPRISES MINA GALI MANDAVI CHOWK SONI BAZAR RAJKOT PAN : AACFJ 6355 K / RESPONDENT ! '# / REVENUE BY SHRI VILASH V. SHINDE DR $% ! '# / ASSESSEE BY SHRI D. M. RINDANI CA ' & ' %( / DATE OF HEARING 17.10.2013 ) %( / DATE OF PRONOUNCEMENT 18.10.2013 / ORDER .. / T. K. SHARMA J. M. : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER DATED 07.07.2010 OF THE CIT(A)-IV RAJKOT FOR THE ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL RAISED BY THE REVENU E IN ITS APPEAL ARE AS UNDER:- 1. THE LD. CIT(A)-IV RAJKOT HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO REDUCE THE ADDITION OF RS.20 52 928/- BEING LOSS DI SALLOWED IN MCX DIVISION MADE BY THE AO. 2. THE LD. CIT(A)-IV RAJKOT HAS ERRED IN LAW AND O N FACTS IN DIRECTING TO REDUCE THE ADDITION OF RS.30 42 215/- BEING INTERES T ON UNSECURED LOAN MADE BY THE AO. 3. THE LD. CIT(A)-IV RAJKOT HAS ERRED IN LAW AND O N FACTS IN DIRECTING TO REDUCE THE ADDITION OF RS.51 983/- BEING PENALTY EX PENSES MADE BY THE AO. 2. THE FACTS RELATED TO THE CONTROVERSY INVOLVED IN GROUND NO.1 ARE THAT IN THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER U/S 143( 3) OF THE INCOME-TAX ACT ON 14.12.2009 THE ASSESSING OFFICER DISALLOWED THE LO SS OF RS.2052928/- CLAIMED IN MCX TRANSACTION. ACCORDING TO THE ASSESSING OFFICER T HIS LOSS FALLS UNDER THE HEAD SPECULATION LOSS AND THEREFORE THE SAME IS ALLOWED TO BE CARRIED FORWARD TO NEXT YEAR. ON APPEAL IN THE IMPUGNED ORDER THE LD CIT(A) FO LLOWING HIS ORDER IN APPEAL NO.CIT(A)-IV/RJT/0142/07-08 DATED 29.07.2008 DIREC TED THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS.2052928/- MADE BY THE ASSESSING OFFICER UNDER THE HEAD SPECULATION LOSS. AGGRIEVED WITH THE ORDER OF LD CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 1194-RJT-2010 - JAY ENTERPRISES 2 3. AT THE TIME OF HEARING BEFORE US SHRI D. M. RIN DANI CA APPEARED FOR THE ASSESSEE POINTED OUT THAT THE ORDER OF LD CIT(A) FO R THE ASSESSMENT YEAR 2006-07 IS UPHELD BY THE ITAT RAJKOT BENCH IN ITA NO.427/RJT/ 2009 VIDE ORDER DATED 23.09.2010; THEREFORE THE LD COUNSEL OF THE ASSESSEE SUBMITTED THAT FOLLOWING THE ABOVE REFERRED ORDER OF THE TRIBUNAL THE VIEW TAKEN BY THE LD CIT (A) IN THE IMPUGNED ORDER BE UPHELD. THE LD DEPARTMENTAL REPRESENTATIVE COULD NOT CONTRO VERT THIS SUBMISSION MADE BY THE LD COUNSEL OF THE ASSESSEE. 4. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY THE CONTROVERSY INVO LVED IN GROUND NO.1 IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIB UNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07. THE FACTS AND CIRCUMSTANCE S OF DISALLOWANCE OF MCX LOSS ARE SAME AS IN THE ASSESSMENT YEAR 2006-07. SINCE T HE ISSUE IN THIS GROUND IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECIS ION OF THIS TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) WE DECLINE TO INTERFERE. GROUND N O.1 IS REJECTED. 5. FACTS RELATING TO THE CONTROVERSY INVOLVED IN GR OUND NO. 2 ARE THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER MADE ADDITIO N OF RS.30 42 215/- (RS.2987615 PLUS RS.54600) ON ACCOUNT OF INTEREST ON UNSECURED LOAN. ASSESSING OFFICER DISCUSSED THIS ISSUE AT PAGE 3 PARAGRAPH NO.4 OF THE ASSESSME NT ORDER. ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAS DIVERTED AN AMO UNT OF RS.24896798/- FROM HEAD OFFICE TO ITS MCX DIVISION UNDER THE HEAD UNSECURE D LOAN AND IN MCX DIVISION THE ASSESSEE SUFFERED A LOSS OF RS.2052928/-. SINCE THE ASSESSEE HAS NOT CHARGED ANY INTEREST THE MCX DIVISION ON THE UNSECURED LOAN DIV ERTED FROM THE HO WHEREAS THE ASSESSEE HAS ADVANCED RS.455000/- TO SHRI SANDEEP M . KHAKHARA AND NO INTEREST HAS BEEN CHARGED AND PAID INTEREST ON DEPOSIT AMOUN TING TO RS.770897/- INTEREST ON CAPITAL AND LOAN OF THE PARTNERS BANK INTEREST OF RS.42778/- AND INTEREST ON CAR LOAN OF RS.20545/-. THUS THE ASSESSEE HAS DIVERTED THE INT EREST BEARING FUND TO MCX DIVISION FROM WHERE NEITHER THE ASSESSEE HAS EARNED ANY PROF IT NOR CHARGED INTEREST. ON APPEAL IN THE IMPUGNED ORDER THE LD CIT(A) DELETE D THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER FOLLOWING HIS ORDER FOR ASSESSME NT YEAR 2006-07 IN APPEAL NO.CIT(A)-IV/0069/08-09 DTD 27.03.2009. AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE THIS TR IBUNAL. 1194-RJT-2010 - JAY ENTERPRISES 3 6. WE HAVE HEARD BOTH SIDES. THE VIEW TAKEN BY THE LD CIT(A) IN THE ASSESSMENT YEAR 2006-07 IS UPHELD BY THE ITAT RAJKOT BENCH IN ITA NO.427/RJT/2009 VIDE ORDER DATED 23.09.2010. THE FACTS AND CIRCUMSTANCES IN TH E ASSESSMENT YEAR UNDER APPEAL ARE SAME AS IN THE ASSESSMENT YEAR 2006-07; WE THE REFORE FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN THE ASS ESSMENT YEAR 2006-07 INCLINED TO UPHELD THE VIEW TAKEN BY THE LD CIT(A) IN DELETING THE ADDITION OF RS.30 42 215/- (RS.2987615 PLUS RS.54600) ON ACCOUNT OF INTEREST O N UNSECURED LOAN. GROUND NO.2 IS REJECTED. 7. THE LAST GROUND IS AGAINST DELETING THE PENALTY EXPENSES ON SHORTAGE OF RS.51983/-. THE ASSESSING OFFICER DISCUSSED THIS IS SUE AT PARAGRAPH 5 ON PAGE 5 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED RS.51983/- TOWARDS PENALTY EXPENSES ON SHORTAGE. ON APPEAL BEFORE THE LD CIT(A) THE ASSESSEE CONTENDED THAT THE PENALTY EXPENSES IN QUE STION WAS LEVIED ON BUSINESS TRANSACTIONS AND NOT FOR VIOLATION OF STATUTE AND T HEREFORE THE SAME IS NOT HIT BY EXPLANATION TO SECTION 37(1) OF THE INCOME-TAX ACT 1961. AGGRIEVED BY THE ORDER OF LD CIT(A) THE REVENUE IS IN APPEAL BEFORE THIS TRIBUN AL. 8. AT THE TIME OF HEARING THE LD DEPARTMENTAL REPR ESENTATIVE POINTED OUT THAT THIS WAS PENALTY. HOWEVER ON A QUERY FROM THE BENCH TO EXPLAIN THE NATURE OF PENALTY AND HOW IT IS HIT BY EXPLANATION TO SECTION 37(1) OF TH E INCOME-TAX ACT THE LD DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT THE SAME. IN THE ASSESSMENT ORDER ALSO NOWHERE THE ASSESSING OFFICER DISCUSSED THE NATURE OF PENAL TY. WE ARE THEREFORE OF THE VIEW THAT LD CITA) IS LEGALLY AND FACTUALLY CORRECT IN D ELETING RS.51983/- AS THIS PENALTY WAS ON BUSINESS TRANSACTIONS AND NOT FOR VIOLATION OF S TATUTE. GROUND NO.3 IS REJECTED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- SD/- ( *.#. % D. K. SRIVASTAVA ) ( .#. -. / T. K. SHARMA) #( '/ / ACCOUNTANT MEMBER '/ /JUDICIAL MEMBER /#- 0/1/ ORDER DATE 18.10.2013. /RAJKOT *BT 1194-RJT-2010 - JAY ENTERPRISES 4 !'# $%'& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- ITO WARD-5(1) RAJKOT 2. / RESPONDENT- M/S. JAY ENTERPRISES MINA GALI MAN DAVI CHOWK SONI BAZAR RAJKOT 3. '151 % & 6% / CONCERNED CIT-III RAJKOT 4. & 6%- / CIT (A)-IV RAJKOT 4 . 9:; % / DR ITAT RAJKOT 5 . ;* <= / GUARD FILE /#- '# / BY ORDER TRUE COPY PRIVATE SECRETARY ITAT RAJKOT