ACIT, Circle - 56, Kolkata, Kolkata v. M/s. Highways Movers, Howrah

ITA 2084/KOL/2010 | 2005-2006
Pronouncement Date: 29-11-2011

Appeal Details

RSA Number 208423514 RSA 2010
Assessee PAN AACFH8680F
Bench Kolkata
Appeal Number ITA 2084/KOL/2010
Duration Of Justice 1 year(s) 9 day(s)
Appellant ACIT, Circle - 56, Kolkata, Kolkata
Respondent M/s. Highways Movers, Howrah
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2011
Appeal Filed By Department
Bench Allotted B
Tribunal Order Date 29-11-2011
Date Of Final Hearing 29-04-2011
Next Hearing Date 29-04-2011
Assessment Year 2005-2006
Appeal Filed On 19-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BEN CH B KOLKATA () BEFORE . .. . ! SHRI N.VIJAYAKUMARAN JUDICIAL MEMBER. ' ' ' ' /AND . .. .#$ #$#$ #$. .. . %& ! SHRI C.D.RAO ACCOUNTANT MEMBER '' '' '' '' / ITA NO . 2084/KOL/2010 () *+/ ASSESSMENT YEAR : 2005-06 (-. / APPELLANT ) A.C.I.T. CIRCLE-56 KOLKATA - - - VERSUS - . (01-./ RESPONDENT ) M/S. HIGHWAYS MOVERS (PAN: AACFH 8680 F) -. 2 3 %/ FOR THE APPELLANT: SHRI S.K.ROY 01-. 2 3 %/ FOR THE RESPONDENT: SHRI SUNIL.SURANA 4 2 $& /DATE OF HEARING : 29.11.2011. 5* 2 $& /DATE OF PRONOUNCEMENT : 29.11.2011. %6 / ORDER ( (( ( . .. . ) )) ) ( ! PER SHRI N.VIJAYAKUMARAN JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 17.08.2010 OF THE CIT(A)-XXXVI KOLKATA PERTAINING TO A.YR. 2005-06 2. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOLLOW ING GROUNDS :- 1. LD. CIT(A) HAS ERRED IN LAW AND FACT WHEN HE DID NOT CONFIRM THE DISALLOWANCE MADE BY AO W.R.T. RENT PAYMENT OF RS. 1 46 340/- ALTHOUGH HE ACCEPTED THAT IN HIS ORDER THAT THE ASSESSEE SPLIT RENTAL PAYMENTS INTO RENT AND MAINTENANCE CHARGES IN ORDER TO ESCAPE/AVOID LEGAL REQUIREMENTS OF THE PROVISIONS OF LAW RELATING TO TDS 2 2. LD. CIT(A) HAS ERRED IN LAW AND FACT WHEN HE DID NOT CONFIRM THE ADDITION OF RS. 4 13 332/- AS DEEMED DIVIDEND AS HE DID NOT CONSIDE R THE FOLLOWING OBSERVATIONS AND REASONING MADE BY THE AO FOR MAKIN G THIS ADDITION IN HIS ASSESSMENT ORDER: (I) SHRI SATISH KR. SHARMA ONE OF THE PARTNERS OF THE APPELLANT FIRM OWNS MORE THAN 10% EQUITY IN MIS KWIK DEL LOGISTICS (P) LTD. (II) SHRI SHARMA IS HAVING BENEFICIAL RIGHT TO MORE THAN 20% PROFIT OF THE APPELLANT FIRM. (III) LOAN TO THE APPELLANT FIRM WAS GIVEN OUT OF A CCUMULATED PROFITS. (IV) AS PER CLAUSE 8 OF (B) OF MEMORANDUM OF ASSOCI ATION OF COMPANY THE MAIN OBJECTIVE OF COMPANY IS NOT LENDING MONEY IN ORDINA RY COURSE. IT CAN ADVANCE LOAN IF THERE IS SURPLUS FUND AND SUCH FUND IS NOT REQUIRED IMMEDIATELY. 3. ANY OTHER GROUNDS MAY BE CRAVED DURING APPELLATE PROCEEDING IF REQUIRED ON THE BASIS OF FACT AND CIRCUMSTANCES OF CASE. 3. AT THE TIME OF HEARING BEFORE US BOTH THE PARTI ES CONCEDED THAT IN THIS CASE THE TAX EFFECT INVOLVED IS LESS THAN RS. 3 LAKHS. SINCE THE TAX EFFECT IN THIS CASE IS BELOW RS.3 LAKHS AS PER CBDT INSTRUCTION NO.3/2011(F.NO. 279/MISE/142/2007-ITJ) DATED 9.2.2011 WHEREIN IT HAS BEEN ENHANCED THE LIMITS FO R FILING OF APPEALS BEFORE THE TRIBUNAL TO RS.3 LAKHS THE REVENUES APPEAL IS LIAB LE TO BE DISMISSED IN LIMINE. IN VIEW OF THE LATEST ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DELHI RACE CLUB IN ITA NO.128/2008 WHEREIN THE HONBLE HI GH COURT OPINED THAT THE CIRCULAR WOULD ALSO APPLY TO THE PENDING CASES. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIAL ON RECORD KEEPING IN VIEW OF THE FACT THAT THE LD. DR COULD N OT GIVE CONTRARY JUDGEMENT TO THE ONE ON WHICH THE LD. COUNSEL FOR THE ASSESSE HAS RE LIED WHEREIN THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DELHI RACE CLUB IN ITA NO.128/2008 DATED 03.03.2011 HAS HELD AS UNDER :- THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS R S.4 65 860/-. AS PER THE RECENT GUIDELINES OF THE CBDT APPEAL IN THOSE CASE S WHERE THE TAX EFFECT IS LESS THAN 10 LACS ARE NOT TO BE ENTERTAINED. THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TA X-III V. M/S. P.S.JAIN AND CO. BEING ITA NO.179/1991 DECIDED ON 2 ND AUGUST 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WOULD ALSO APPLY TO PENDING CASES. 3 4.1. ADMITTEDLY THE TAX PAYABLE IN RESPECT OF GROUN DS OF APPEAL BY THE DEPARTMENT IS LESS THAN RS.3 LAKHS AND AS PER REVISED INSTRUCT ION OF THE CBDT NO.3 DATED 9.2.2011. WHEREIN THE CBDT HAS REVISED THE FILING L IMITS FILED BEFORE THE TRIBUNAL HIGH COURT AND SUPREME COURT AS UNDER :- BEFORE THE INCOME TAX APPELLATE TRIBUNAL : RS. 3 L AKHS APPEALS U/S 260A OF THE IT ACT BEFORE THE HONBLE HIGH COURT : RS.10 LAKHS AND BEFORE THE HONBLE SUPREME COURT : RS.25 LAKHS SINCE IN THE PRESENT CASE THE ABOVE REVISED INSTRUC TION IS WELL APPLICABLE IN VIEW OF THE HONBLE DELHI HIGH COURT (SUPRA) HENCE IN OUR OPINI ON THE REVENUES APPEAL IS NOT MAINTAINABLE IN VIEW OF THE SAID CIRCULAR OF THE CB DT. 4.2. WE FURTHER FIND THAT IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATIO N LTD. REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISI ONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THA T WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUN D BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY T O THE TERMS OF THE STATUTE. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN FILED CONTRA RY TO THE CIRCULAR ISSUED BY THE CBDT INSTRUCTION NO.3 DATED 9.2.2011. 4.3. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF T HE HONBLE DELHI HIGH COURT WE HOLD THAT THE APPEAL FILED BY THE DEPARTMENT AG AINST THE IMPUGNED ORDER OF THE LD. CIT(A) IS CONTRARY TO THE POLICY DECISION OF T HE DEPARTMENT AND AS SUCH THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED IN LIMINE . 4 5. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.11.2011 SD/- SD/- . .. .#$ #$#$ #$. .. . %& %& %& %& ! ! ! ! C.D.RAO ACCOUNTANT MEMBER . .. . ( ( ( ( ! ! ! ! N.VIJAYAKUMARAN JUDICIAL MEMBER ( (( ($& $& $& $&) )) ) DATE: 29.11.2011 %6 2 0(( 7%*8- COPY OF THE ORDER FORWARDED TO: 1. M/S. HIGHWAYS MOVERS VILL.JALADHUGORI DHULOGORI P.S.SANKRAIL HOWRAH-711302. 2 THE A.C.I.T. CIRCLE-56 KOLKATA 3. THE CIT 4. THE CIT(A)-XXXVI KOLKATA 5. DR KOLKATA BENCHES KOLKATA 1 0(/ TRUE COPY %6/ BY ORDER DEPUTY /ASST. REGISTRAR ITAT KOLKATA BENCHES R.G.(.P.S.)