DCIT, New Delhi v. M/s. Ramarein Properties PVt. Ltd., New Delhi

ITA 218/DEL/2011 | 2007-2008
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 21820114 RSA 2011
Bench Delhi
Appeal Number ITA 218/DEL/2011
Duration Of Justice 2 month(s) 11 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Ramarein Properties PVt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 25-03-2011
Date Of Final Hearing 21-03-2011
Next Hearing Date 21-03-2011
Assessment Year 2007-2008
Appeal Filed On 14-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F DELHI BEFORE SHRI I.P. BANSAL AND SHRI K.G. BANSAL I.T.A.NO.218(DEL)/2011 ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME RAMAREIN PR OPERTIES PVT. LTD. TAX CENTRAL CIRCLE-19 VS. E4/ 23 MODEL TOWN-I NEW DELHI. NEW DELHI PAN-AACCR3113L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K. LAL SR. DR RESPONDENT BY : NO NE ORDER PER K.G. BANSAL : AM THE REVENUE HAS TAKEN FIVE GROUNDS IN THE APPE AL THE SUM AND SUBSTANCE OF WHICH IS THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE ADDITION OF RS. 47 28 000/ - MADE BY THE AO IN RESPECT OF UNCLAIMED UNSECURED LOANS AND THAT HE FAILED TO APPRECIATE THAT THE AMOUNT REPRESENTS INCOME U/S 28(IV) OF THE IN COME-TAX ACT 1961. 2. THE FINDING OF THE AO IN THIS REGARD IS THAT T HE ASSESSEE HAS NOT BEEN CARRYING ON ANY BUSINESS ACTIVITY FOR LAST MANY YEARS TILL IT IS SHOWING UNSECURED LOANS PAYABLE AT RS. 47 28 000/-. THES E LOANS HAVE REMAINED OUTSTANDING FOR A NUMBER OF YEARS AND THEREFO RE IT APPEARS THAT THERE IS ITA NO. 218(DEL)/2011 2 NO OBLIGATION ON THE ASSESSEE TO PAY BACK THESE LOANS. THE AMOUNT CONSTITUTES INCOME IN VIEW OF THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF T.V. SUNDARAM IYENGAR & SONS LTD. 222 ITR 344. 3. THE FINDING OF THE LD. CIT(APPEALS) IS THAT THE AO HAS ADDED THIS AMOUNT PRESUMABLY U/S 41(1) OF THE ACT WHICH CO MES INTO OPERATION IF (I) THE ASSESSEE HAD INCURRED A TRADING LIABIL ITY; (II) THE LIABILITY HAS BEEN ALLOWED AS DEDUCTION IN ANY EARLIER YEAR OR THIS Y EAR; (III) IT HAS BEEN RECOVERED IN THE YEAR OR IT HAS CEASED TO EX IST OR HAS BEEN REMITTED. THE CASE OF T.V.SUNDARAM IYENGAR & SONS LTD. (SUPRA) HAS BEEN DISTINGUISHED. SINCE NONE OF THE CONDITIONS MENTIONED ABOVE HAS BEEN SATISFIED THE ADDITION HAS BEEN DELETED. 4. BEFORE US THE LD. DR EXPLAINED THE FINDINGS O F THE AO AND THE LD. CIT(APPEALS). HEAVY RELIANCE HAS BEEN PLACED ON THE ORDER OF THE AO TO ARGUE THAT THE IMPUGNED ORDER MAY BE SET ASIDE A ND THE ORDER OF THE AO MAY BE RESTORED. NO AUTHORIZED PERSON ATTENDED ON BEHALF OF THE ASSESSEE. THEREFORE WE PROCEED ON THE BASIS OF ASSISTANCE GRANTED TO US BY THE LD. DR. ITA NO. 218(DEL)/2011 3 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IN THE CASE OF T.V. IYENGAR & SONS (S UPRA) THE FACTS WERE THAT DEPOSITS WERE RECEIVED FOR SUPPLY OF GOODS. WITH THE EFFLUX OF TIME CREDIT BALANCES IN THESE ACCOUNTS WERE WRITTEN OFF TO THE CREDIT OF PROFIT AND LOSS ACCOUNT. THE HONBLE SUPREME COURT HELD THAT THE ASSESSEE HAS BECOME RICHER BY THE AMOUNT WRITTEN TO PROFIT AND LOSS A CCOUNT ON ACCOUNT OF TRADING TRANSACTIONS. THE FACTS OF THIS CASE ARE CLEARLY DISTINGUISHABLE AS ADMITTEDLY THE AMOUNTS CONSTITUTED LOANS A CAPITAL LIABILITY. FURTHER THE AMOUNTS HAVE NOT BEEN WRITTEN OFF TO THE CREDIT OF PROFIT AND LOSS ACCOUNT. 5.1 COMING TO THE PROVISION CONTAINED IN SECTION 41(1) THE ADMITTED POSITION IS THAT THE LIABILITY IS CAPITAL IN NATURE . IT HAS NOT BEEN YET WRITTEN OFF TO PROFIT AND LOSS ACCOUNT. THE FINDING OF T HE AO THAT THE ASSESSEE HAS NOT BEEN CARRYING ON BUSINESS IS CONTRADICTED BY H IM WHEN BUSINESS LOSS OF RS. 14 242/- WAS ALLOWED. THUS IT IS NOT A T RADING LIABILITY ALLOWED IN PAST. IT HAS NOT BEEN WRITTEN OFF TO THE CREDIT O F PROFIT AND LOSS ACCOUNT WHOLLY OR PARTLY. THEREFORE THERE IS NO REAS ON TO COME TO THE CONCLUSION THAT THE LIABILITY HAS CEASED TO EXIST AND THE A SSESSEE CONSEQUENTIALLY GOT SOME BENEFIT IN RESPECT OF THE LIABILITY ALLOWED IN THE PAST. THEREFORE WE ITA NO. 218(DEL)/2011 4 ARE OF THE VIEW THAT THERE IS NO SUCH ERROR IN THE IMPUGNED ORDER WHICH REQUIRES MODIFICATION FROM US. 6. IN THE RESULT THE APPEAL IS DISMISSED. THE APPEAL WAS PRONOUNCED IN THE OPEN COURT ON 25 MARCH 2011. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 25TH MARCH 2011. SP SATIA COPY OF THE ORDER FORWARDED TO:- RAMAREIN PROPERTIES PVT. LTD. NEW DELHI. DCIT CENTRAL CIRCLE 19 NEW DELHI. CIT(A) CIT THE DR ITAT NEW DELHI. ASSISTANT REGISTRAR.