ACIT 8(1), MUMBAI v. M/S. ATV PROJECTS INDIA LTD, MUMBAI

ITA 1397/MUM/2009 | 2003-2004
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 139719914 RSA 2009
Bench Mumbai
Appeal Number ITA 1397/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 21 day(s)
Appellant ACIT 8(1), MUMBAI
Respondent M/S. ATV PROJECTS INDIA LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Assessment Year 2003-2004
Appeal Filed On 02-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A : MUMBAI BEFORE SHRI D. MANMOHAN HONBLE VICE PRESIDENT AND SHRI J.SUDHAKAR REDDY ACCOUNTANT MEMBER ITA. NO. 1397/MUM/2009 ASSESSMENT YEAR 2003-2004 ITA. NO. 1400/MUM/2009 ASSESSMENT YEAR 2004-2005 ITA. NO. 2092/MUM/2009 ASSESSMENT YEAR 2005-2006 ACIT 8 (1) MUMBAI. VS. M/S. ATV PROJECTS INDIA LTD. MUMBAI 400 093 PAN AAACA-6923-B (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI S.S. RANA FOR ASSESSEE : SHRI RAHUL HAKANI ORDER PER D. MANMOHAN V.P. 1. THESE THREE APPEALS ARE FILED AT THE INSTANCE O F THE REVENUE AND THEY ARE DIRECTED AGAINST THE ORDERS PASSED BY THE CIT(A)-VIII MUMBAI. SINCE ONE ISSUE IS COMMON IN ALL THESE APPE ALS WE PROCEED TO DISPOSE OF THESE APPEALS BY A COMBINED ORDER FOR TH E SAKE OF CONVENIENCE. 2. ASSESSMENT YEAR 2003-2004 : THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING TH E ADDITION MADE BY THE A.O. ON ACCOUNT OF PROPORTIONATE INTEREST ON DEBIT BALANCE OF RS.2 14 34 301/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 3. THE FACTS IN SHORT ARE THAT THE ASSESSEE-COMPAN Y SHOWED DEBIT BALANCE OF DIFFERENT PARTIES IN THE BOOKS OF ACCOUNTS. ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE-COMPANY WAS INDU LGING IN NON- GENUINE TRADING TRANSACTIONS IN ORDER TO BOOST THE FIGURE OF TURN OVER IN THE BOOKS OF ACCOUNTS AND TO ADVANCE MONEY TO ASSOC IATE COMPANIES FOR THE PURPOSE OF FUNDING PROMOTERS BUSINESS ACTIVITIE S. THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO SHOW CAUSE AS T O WHY INTEREST ON SUCH DEBIT BALANCES SHOULD NOT BE ADDED TO THE TOTA L INCOME AS WAS DONE IN THE ASSESSMENT YEAR FOR THE ASSESSMENT YEARS 199 8-99 AND 1999- 2000. IN RESPONSE THERETO THE ASSESSEE SUBMITTED T HAT THE ISSUE STANDS COVERED BY THE DECISION OF APPELLATE AUTHORITY AND THUS ADDITION IS NOT PERMISSIBLE. REJECTING THE CONTENTION OF THE ASSESS EE THE ASSESSING OFFICER MADE A DISALLOWANCE OF RS. 2.14 CRORES BY O BSERVING AS UNDER : 4.4. THE ASSESSEE HAS TAKEN THE STAND SIMILAR TO WHAT I T HAD TAKEN DURING THE A.Y. 1998-99 1999-2000 & 2001-02. HOWEVER IN VIEW OF THE REASONING GIVEN IN THE ASSESSMENT ORDER FOR THE A.Y. 1998-99 & 1999- 2000 I MAKE AN ADDITION ON ACCOUNT OF INTEREST @ 1 8% ON THE DEBIT BALANCE OF SUCH TRADING PARTIES. 4. AGGRIEVED ASSESSEE CONTENDED BEFORE THE CIT(A) THAT IDENTICAL ADDITION MADE BY THE ASSESSING OFFICER IN THE IMMEDIATELY PRECEDING YEARS WAS SET ASIDE BY THE ITAT J BENC H MUMBAI VIDE ITA. NOS. 1877/M/05 3136 & 3137/M/04 DATED 6 TH OCTOBER 2008 BY OBSERVING AS UNDER : WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED RECORD. THE CIT(A) NOTED THAT T HE ASSESSEE HAS CONDUCTED TRADING TRANSACTIONS WITH AL L PARTIES EXCEPT THREE PARTIES NAMELY I) BRISHEN TRAD ING CORPORATION II) MAYURI TRADERS AND III) KALINDI TRA DERS. 3 THESE PARTIES THE CIT(A) DIRECTED TO WORK OUT THE DISALLOWABLE AMOUNT IN RESPECT OF THE SUM OUTSTANDING AGAINST THREE PARTIES LISTED ABOVE AND RESTRICTED THE AMOUNT OF DISALLOWANCE OF INTEREST T O THAT EXTENT ONLY. WE FIND THAT THE CIT(A) HAS RIGHT LY DELETED THE ADDITION IN RESPECT OF THE PARTIES WHER E THE ASSESSEE WAS HAVING TRADING TRANSACTIONS BECAUSE TO THAT EXTENT THE ASSESSEE HAS UTILIZED FUND FOR THE PURPOSE OF BUSINESS. WE THEREFORE DID NOT FIND AN Y INFIRMITY IN THE ORDER OF THE CIT(A). THE ORDER OF CIT(A) IS CONFIRMED ON THIS ISSUE. 5. IN THE LIGHT OF DECISION CITED (SUPRA) THE LEAR NED CIT(A) PARTLY ALLOWED THE GROUND OF THE ASSESSEE BY OBSERVING AS UNDER : KEEPING IN VIEW THESE FACTS THE HONBLE ITAT HAS DECIDED THIS CASE PARTIALLY IN FAVOUR OF THE APPELL ANT COMPANY. THEREFORE THE A.O. IS DIRECTED TO RESTRIC T THE INTEREST DISALLOWED ONLY TO THE EXTENT OF AMOUNTS OUTSTANDING AGAINST THREE CONCERNS VIZ. BRISBEN TRADING CORPORATION MAYURI TRADERS AND KALINDHI TRADERS IN THIS ASSESSMENT YEAR HENCE THE DISALLOWANCE WILL BE MADE ONLY IN RESPECT OF ADVANC ES OUTSTANDING AGAINST THE SAID THREE CONCERNS. ACCORDINGLY A.O. IS DIRECTED TO FOLLOW THE SAME BAS IS AS ADOPTED IN EARLIER YEARS FOR DISALLOWANCE OF INT EREST ON THE BORROWINGS UTILIZED FOR MAKING ADVANCES TO T HE SAID CONCERNS. THEREFORE THE BALANCE AMOUNT OF DISALLOWANCE MADE IN THE ASSESSMENT ORDER IS DELETED. THUS THE GROUND IS PARTIALLY ALLOWED. 4 6. LEARNED DR WAS UNABLE TO CONTRADICT THE FINDING S OF THE ITAT IN THE IMMEDIATELY PRECEDING YEAR. UNDER THESE CIRC UMSTANCES LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMIT TED THAT THE ISSUE STANDS SQUARELY COVERED BY THE AFORECITED DECISION AND THUS THE APPEAL FILED BY THE REVENUE DESERVES TO BE DISMISSED. ON T HE OTHER HAND LEARNED DR MERELY RELIED UPON THE ORDER OF THE ASSESSING OF FICER. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND ACCORDINGLY DISMISS THE APPEAL FILED BY THE REVENUE. 7. ASSESSMENT YEAR 2004-2005 : THE FOLLOWING GROUNDS WERE URGED BY THE REVENUE : 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF BAD DEBTS O F RS.56 15 018/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A.O. OF RS.3 03 63 413/- ON ACCOUNT OF PROPORTIONATE INTEREST ON DEBIT BALANCE WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. BOTH THE PARTIES ADMITTED THAT GROUND NO.2 IS I DENTICAL TO THE GROUND URGED BY THE REVENUE IN THE APPEAL FOR T HE ASSESSMENT YEAR 2003-2004. CONSISTENT WITH THE VIEW TAKEN THEREIN W E REJECT GROUND NO. 2 OF THE REVENUE AND UPHOLD THE ORDER OF THE LEARNE D CIT(A). 9. AS REGARDS GROUND NO.1 THE UNDISPUTED FACTS ARE THAT BAD DEBTS WERE WRITTEN OFF IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND CLAIMED DEDUCTION UNDER SECTION 36(I)(VII) OF THE A CT. THE ASSESSING 5 OFFICER WAS OF THE OPINION THAT IRRECOVERABILITY OF THE LOAN HAS TO BE ESTABLISHED BY THE ASSESSEE AND ACCORDINGLY DISALLO WED THE CLAIM OF DEDUCTION. LEARNED CIT(A) HOWEVER FOLLOWED THE DEC ISION OF THE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF OMAN INTERNATI ONAL BANK 286 ITR 88 TO HOLD THAT IF DEBT IS WRITTEN OFF AS BAD DEBT THE SAME HAS TO BE ALLOWED AS DEDUCTION IF THE CLAIM IS BONAFIDE. 10. AGGRIEVED REVENUE IS IN APPEAL BEFORE US. BO NAFIDES OF THE CLAIM HAS NOT BEEN DISPUTED BY THE LEARNED DR. IN V IEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT VS . OMAN INTERNATIONAL BANK (BOM.) (2009) 313 ITR 128 WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND HE NCE GROUND NO. 1 OF THE REVENUE IS REJECTED. ACCORDINGLY APPEAL FILED BY T HE REVENUE IS DISMISSED. 11. ASSESSMENT YEAR 2005-2006 : THE FOLLOWING GROUNDS WERE URGED BY THE REVENUE 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT(A) ERRED IN DELETING BAD DEBTS OF RS.867.37 LAKHS WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LEARNED CIT(A) ERRED IN PARTLY DELETING RS.1 57 64 885/- ON ACCOUNT OF PROPORTIONATE INTERE ST OF DEBIT BALANCE WITHOUT APPRECIATING THE FACTS OF THE CASE. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND TO BE SET ASIDE AND THAT OF THE ITO/ACIT/DCIT BE RESTORED. 6 12. IT IS NOT IN DISPUTE THAT THE FACTS AND CIRCUM STANCES ARE IDENTICAL TO THE APPEAL FILED BY THE REVENUE IN RES PECT OF ASSESSMENT YEAR 2004-2005. CONSISTENT WITH THE VIEW TAKEN THEREIN W E HEREBY DISMISS THE APPEAL FILED BY THE REVENUE. 13. IN THE RESULT ALL THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 21-05-2 010. SD/- SD/- (J.SUDHAKAR REDDY) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATE 21 ST MAY 2010. VBP/- COPY TO 1. ACIT 8 (1) ROOM NO. 210 2 ND FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 20. 2. M/S. ATV PROJECTS INDIA LTD. D-8 MIDC STREET NO . 16 MAROL ANDHERI (E) MUMBAI 400 093 PAN AAACA-6923-B 3. CIT (A)-VIII MUMBAI. 4. CIT-VIII MUMBAI. 5. D.R. A BENCH 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI. 7 SNO DATE INITIALS 1 DRAFT DICTATED ON 17-05-2010 SR.P.S. 2. DRAFT PLACED BEFORE AUTHOR 18-05-2010 SR.P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 18-05-2010 V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER - 05-2010 A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS -05-201 0 SR.P.S. 6. KEPT FOR PRONOUNCEMENT ON -05-2010 SR.P.S. 7. FILE SENT TO THE BENCH CLERK -05-2010 SR.P.S. 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER