South India Travels Pvt Ltd., CHENNAI v. ACIT, CHENNAI

ITA 1587/CHNY/2014 | 2002-2003
Pronouncement Date: 28-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 158721714 RSA 2014
Assessee PAN AAACS3792E
Bench Chennai
Appeal Number ITA 1587/CHNY/2014
Duration Of Justice 5 month(s) 19 day(s)
Appellant South India Travels Pvt Ltd., CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 28-11-2014
Date Of Final Hearing 25-11-2014
Next Hearing Date 25-11-2014
Assessment Year 2002-2003
Appeal Filed On 09-06-2014
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH CHE NNAI . . ! ! ! ! ' ' ' ' # # # # BEFORE SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER & SHRI V. DURGA RAO JUDICIAL MEMBER I.T.A. NOS. 1587 AND 1588/MDS/2014 ASSESSMENT YEARS: 202-03 AND 2003-04 M/S. SOUTH INDIA TRAVELS PVT. LTD. SPIC HOUSE 88 ANNA SALAI CHENNAI 600 032. [PAN :AAACS3792E] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE VI(3) CHENNAI 600 034. (APPELLANT) (RESPONDENT) $% & ' /APPELLANT BY : SHRI SAROJ KUMAR PARIDA ADVOCATE ()$% & ' /RESPONDENT BY : SHRI ANIRUDH RAI CIT-DR & * /DATE OF HEARING : 25.11.2014 + & * / DATE OF PRONOUNCEMENT : 28.11.2014 - - - - / O R D E R PER V. DURGA RAO JUDICIAL MEMBER : THESE TWO APPEALS FILED SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) VI CHENNAI BOTH DATED 31.03.2014 RELEVANT TO THE ASSESSMENT YEARS 2002-03 AND 2003-04. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF CAR HIRING AND CAR TRADING. THE ASSESSMENT WAS COMP LETED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT ON 31.07.2007. THE REAFTER THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND THE CIT(A) DIRECTE D THE ASSESSING OFFICER TO APPLY RULE 8D OF THE INCOME TAX RULES AND CALCULATE THE EXPENSES RELATING TO I.T.A I.T.A I.T.A I.T.A. .. .NO NONO NOS SS S. .. .1587 & 1588 1587 & 1588 1587 & 1588 1587 & 1588/M/ /M/ /M/ /M/14 1414 14 2 DIVIDEND INCOME. AS PER THE DIRECTIONS OF THE CIT(A ) THE ASSESSING OFFICER CALCULATED THE EXPENDITURE RELATING TO DIVIDEND INC OME AS PER RULE 8D AND PASSED ORDER UNDER SECTION 154 OF THE ACT ON 08.10. 2009. AGAIN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND THE CIT(A) CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER BY OBSERVING THAT T HE ASSESSING OFFICER HAS ONLY FOLLOWED THE DIRECTIONS OF THE CIT(A). 3. AGAINST THE ORDER OF THE CIT(A) THE ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSMENT YEAR UNDER APPEAL IS 2002-03 AND RULE 8D OF THE INCOME T AX RULES HAS NO APPLICATION. THE CIT(A) WITHOUT APPLICATION OF MIN D DIRECTED THE ASSESSING OFFICER TO APPLY RULE 8D. HE HAS SUBMITTED THAT UND ER SIMILAR CIRCUMSTANCES WHERE RULE 8D HAS NO APPLICATION 2% OF THE DIVIDEN D INCOME CAN BE DISALLOWED. 5. THE LD. DR HAS SUPPORTED THE ORDER PASSED BY TH E CIT(A). 6. WE HAVE HEARD BOTH SIDES PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CA SE THE ASSESSING OFFICER HAS ORIGINALLY DISALLOWED 2% OF DIVIDEND INCOME OF .24 71 903/- I.E. 49 438/- UNDER SECTION 14A OF THE ACT BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S SUNDARAM FINANCE LTD. IN I.T.A. NO. 845 846 & 847 /MDS/98 DATED 02.12.2002 AS EXPENDITURE NOT RELATING TO BUSINESS. WE FIND TH AT THE ORDER PASSED BY THE I.T.A I.T.A I.T.A I.T.A. .. .NO NONO NOS SS S. .. .1587 & 1588 1587 & 1588 1587 & 1588 1587 & 1588/M/ /M/ /M/ /M/14 1414 14 3 ASSESSING OFFICER IS MORE APPROPRIATE AND REASONABL E. THE DIRECTION GIVE BY THE CIT(A) WITHOUT CONSIDERING APPLICATION OF RULE 8D I S NOT CORRECT AND NOT IN ACCORDANCE WITH LAW. THEREFORE WE SET ASIDE THE OR DER PASSED BY THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DISALLOW ONLY 2% OF THE DIVIDEND INCOME AS WORKED OUT BY THE ASSESSING OFFICER OF .49 438/- UNDER SECTION 14A OF THE ACT. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE FOR T HE ASSESSMENT YEAR 2002-03 IS PARTLY ALLOWED. I.T.A. NO. 1588/MDS/2014 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS PURCHASED 54 28 500 SHARES OF MCC FINANCE LTD. AT 1% CUMULATIVE CONVERT IBLE SHARE AT .7 59 99 000/-. IN THE ASSESSMENT ORDER THE ASSESS ING OFFICER HAS OBSERVED THAT HE ASSESSEE HAS VALUED THE SHARES AS STOCK IN TRADE AND THE LOSS WAS DUE TO VALUATION OF SHARES SHOWED THAT THE BUSINESS OF PUR CHASE AND SALE OF SHARES WAS CARRIED ON BY THE ASSESSEE COMPANY AND THEREFORE T HE ENTIRE LOSS FROM THE BUSINESS OF TRADING OF SHARES IS TO BE TREATED AS S PECULATION LOSS TO BE ADJUSTED ONLY WITH PROFIT AND GAINS OF SPECULATION BUSINESS OF CURRENT YEAR OR SUBSEQUENT EIGHT YEARS. THE ASSESSING OFFICER HAS FURTHER OBSE RVED THAT IT IS CLEAR ATTEMPT ON THE PART OF THE ASSESSEE TO AVOID TAX BY RESORTING TO CONVERSION OF INVESTMENT INTO STOCK IN TRADE AT THE END OF THE YEAR AND ACCORDING LY HE DISALLOWED THE CLAIM OF THE ASSESSEE. I.T.A I.T.A I.T.A I.T.A. .. .NO NONO NOS SS S. .. .1587 & 1588 1587 & 1588 1587 & 1588 1587 & 1588/M/ /M/ /M/ /M/14 1414 14 4 9. ON APPEAL THE CIT(A) CONFIRMED THE ORDER PASSE D BY THE ASSESSING OFFICER. 10. ON APPEAL BEFORE THE TRIBUNAL THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE SHARES PURCHASED BY THE ASSESSEE WAS ONLY AS AN INVESTMENT AND NOT AS STOCK IN TRADE AND ALSO SUBMITTED THAT B OTH THE AUTHORITIES BELOW WITHOUT EXAMINING THE MATERIALS FILED BY THE ASSESS EE SIMPLY CAME TO A CONCLUSION THAT IT IS STOCK IN TRADE. 11. ON THE OTHER HAND THE LD. DR STRONGLY SUPPORT ED THE ORDER PASSED BY THE CIT(A) AND SUBMITTED THAT THE SHARES PURCHASED BY T HE ASSESSEE IS STOCK IN TRADE AND NOT INVESTMENT. 12. WE HAVE HEARD BOTH SIDES PERUSED THE MATERIAL S AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HA VE CAREFULLY CONSIDERED THE ORDERS PASSED BY THE ASSESSING OFFICER AND ALSO CIT (A). BOTH THE AUTHORITIES BELOW WITHOUT EXAMINING NECESSARY MATERIALS WHETHE R THE SHARES PURCHASED BY THE ASSESSEE ARE AN INVESTMENT OR STOCK IN TRADE C AME TO A CONCLUSION THAT THE SHARES PURCHASED BY THE ASSESSEE ARE STOCK IN TRADE . BEFORE US THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE SHARES WERE PURCHASED WAY BACK 1995- 96 AND NO TRANSACTION HAVE BEEN TAKEN PLACE. SUBSEQ UENT TO THE PURCHASE THE ASSESSEE HAS NOT DONE ANY TRANSACTION AND SUBMITTED THAT IT IS ONLY AN INVESTMENT BUT NO SUPPORTIVE EVIDENCES WERE FILED BY THE ASSESSEE. UNDER THE I.T.A I.T.A I.T.A I.T.A. .. .NO NONO NOS SS S. .. .1587 & 1588 1587 & 1588 1587 & 1588 1587 & 1588/M/ /M/ /M/ /M/14 1414 14 5 ABOVE FACTS AND CIRCUMSTANCES WE FIND THAT IT IS N ECESSARY FOR THE ASSESSING OFFICER TO EXAMINE RELEVANT DOCUMENTS TO DECIDE THE ISSUE. THUS THE ORDER PASSED BY THE CIT(A) IS SET ASIDE AND DIRECT THE AS SESSEE TO FILE ALL THE DETAILS SUCH AS BALANCE SHEET FROM THE ASSESSMENT YEAR 1995 -96 TO 2002-03 ALONG WITH PROFIT AND LOSS ACCOUNT AND AFTER RECEIVING THE ABO VE DETAILS THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE DETAILS AND DECI DE THE ISSUE DE NOVO IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPOR TUNITY OF HEARING TO THE ASSESSEE. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY THE 28 TH OF NOVEMBER 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI DATED THE 28.11.2014 VM/- - & ('*./ 0/ * /COPY TO: 1. $% / APPELLANT 2. ()$% / RESPONDENT 3. 1 ( ) /CIT(A) 4. 1 /CIT 5. /2 ('*' /DR & 6. 3! 4 /GF.