M/S. ORION TRAVELS PVT.LTD., MUMBAI v. DCIT, CC-31, MUMBAI

ITA 3738/MUM/2009 | 2006-2007
Pronouncement Date: 13-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 373819914 RSA 2009
Assessee PAN AAACO1591K
Bench Mumbai
Appeal Number ITA 3738/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 3 day(s)
Appellant M/S. ORION TRAVELS PVT.LTD., MUMBAI
Respondent DCIT, CC-31, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 13-08-2010
Date Of Final Hearing 03-08-2010
Next Hearing Date 03-08-2010
Assessment Year 2006-2007
Appeal Filed On 09-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI PRAMOD KUM AR (AM) ITA NO.3738/MUM/2009 ASSESSMENT YEAR : 2006-07 M/S. ORION TRAVELS PVT. LTD. 32 MADHULI 3 RD FLOOR DR. ANNIE BESANT ROAD NEHRU CENTRE WORLI MUMBAI-400 018. ..( APPELLANT ) P.A. NO. (AAACO 1591 K) VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-31 MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI DHARMESH SHAH RESPONDENT BY : DR. P. DANIEL O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 6.4.2009 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF TRADING AND INVESTMENT IN SE CURITIES. THE ASSESSEE IS A NOTIFIED PERSON UNDER THE SPECIAL COURT (TRI AL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT 1992. THE A SSESSMENT WAS ITA NO.3738/M/09 A.Y:06-07 2 COMPLETED UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT 1961 (THE ACT) AT AN INCOME OF ` 4 50 990/- INCLUDING THE DISALLOWANCE OF INTEREST CLAIM OF RS.15 33 325/-. APART FROM THIS THE ASSESSING O FFICER ALSO COMPUTED ASSESSEE'S INCOME U/S.115JB OF THE ACT AT A N INCOME OF ` 4 48 491/- VIDE ORDER DATED 22.12.2008 PASSED U/S.143 (3) OF THE ACT. ON APPEAL THE LD. CIT(A) DISMISSED THE ASSESSEE'S AP PEAL ON ALL THE ISSUES. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US. 4. GROUND NO.1 TO 3 ARE AGAINST THE VALIDITY OF THE ORDER PASSED BY THE LD. CIT(A) GROUND NO.5 IS AGAINST THE SUSTENANCE OF DISALLOWANCE OF DEPRECIATION ` 12 595/- AND GROUND NO.6 IS AGAINST THE SUSTENANCE OF DISALLOWANCE OF AUDIT FEE ` 15 000/-. 5. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT HE DOES NOT WANT TO PRESS THE ABOVE GROUNDS THERE FORE THE SAME MAY BE TREATED AS WITHDRAWN WHICH WAS NOT OBJECTED TO B Y THE LD. DR. 6. THAT BEING SO AND IN THE ABSENCE OF ANY SUPPORTING MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE THE ABOVE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE REJECTED BEI NG NOT PRESSED. ITA NO.3738/M/09 A.Y:06-07 3 7. GROUND NO.4 READS AS UNDER :- 4. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS I N CONFIRMING DISALLOWANCE ON ACCOUNT OF INTEREST EXPE NSE AMOUNTING TO RS.15 33 325/-. 8. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS OB SERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED INTEREST ON LOA N FOR TERM DEPOSIT(S) OF ` 15 33 325/- AGAINST THE TERM DEPOSIT INTEREST INCOME OF ` 5 35 100/-. ON BEING ASKED IT WAS INTERALIA EXPLAINED BY THE ASSESSEE VIDE LETTER DATED 5.12.2008 THAT THE ASSESSEE HAS PROVIDED INTEREST ON OUTSTANDING OF M/S. ASHWIN MEHTA M/S. J.H. MEHTA AND INTEREST CHARGED TO M/S. HARSHAD MEHTA. THE A SSESSEE HAS APPORTIONED THE INTEREST ON PRO-RATA BASIS. THE APPOR TIONED AMOUNT OF INTEREST IS CLAIMED AGAINST THE INTEREST ON TERM DEPOSI T BY THE ASSESSEE. FURTHER THE ASSESSEE HAS BEEN PAYING INTEREST ON THE AMOUNT BORROWED BY HIM TO THE LENDERS. THE FUNDS HAV E BEEN BORROWED FOR PURCHASE OF ASSETS BOTH MOVABLE AND IMMOVAB LE. FURTHER THE DEPARTMENT HAS ALLOWED SUCH INTEREST EXPENDITURE FO R THE EARLIER ASSESSMENT YEARS (ASSESSMENT YEAR 1990-91) IN OTHER GROUP E NTITIES AND IS NOW THEREFORE STOPPED FROM DISALLOWING THE SAM E AS IT WOULD BE INCONSISTENT WITH THE STAND ALREADY TAKEN. IT WAS THEREFORE PRAYED TO ALLOW INTEREST EXPENDITURE ` 15 33 325/-. HOWEVER THE ASSESSING OFFICER WHILE DISALLOWING THE SAME INTERALIA OBSERVED THAT ITA NO.3738/M/09 A.Y:06-07 4 THERE IS NO DIRECT NEXUS BETWEEN THE TERM DEPOSITS AND T HE LOANS TAKEN BY THE ASSESSEE FROM THE DIRECTORS AND ACCORDINGLY H E DISALLOWED THE INTEREST CLAIM OF ` 15 33 325/-. ON APPEAL THE LD. CIT(A) WHILE OBSERVING THAT THE AMOUNT OF INTEREST PA YABLE AS WELL AS RECEIVABLE BY THE APPELLANT IS THE SUBJECT MATTER OF DI SPUTE BEFORE THE HONBLE SPECIAL COURT AND THE LIABILITY CAN BE SAID TO ACCRUE ONLY WHEN THE COURT DECIDES THE ISSUE WAS OF THE OPINION THAT TI LL THEN THE LIABILITY IF ANY IS A CONTINGENT LIABILITY WHICH IS NOT ALLOWABLE AS A DEDUCTION. 9. AT THE TIME OF HEARING BOTH PARTIES SUBMIT THAT TH E TRIBUNAL IN ASSESSEE'S OWN CASE IN ORION TRAVELS PVT. LTD. VS. DCIT IN ITA NO.6888 & 6889/M/08 FOR ASSESSMENT YEARS 2004-05 AND 2005-06 VID E ORDER DATED 9.10.2009 HAS SET ASIDE THE ISSUE TO THE FILE OF THE LD. CIT(A) THEREFORE THE ISSUE MAY BE RESTORED BACK TO THE FILE O F THE LD. CIT(A) FOR FRESH CONSIDERATION. 10. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND MERIT IN THE SUBMISSIONS OF THE PARTIES. THE TRIBUNAL IN ASSESSEE'S OWN CASE SUPRA VIDE PARA 21 OF ITS ORDER DATED 9.10.2009 HAS OBSERVED AND HELD AS UNDER :- 21. THE FACTUAL POSITION IN THIS CASE IS ALSO IDEN TICAL WITH THE CASE OF M/S. AATUR HOLDINGS PVT. LTD. (SUPRA). FOLLOWING THE RATIO OF THE DECISION OF THE CO-ORDIN ATE ITA NO.3738/M/09 A.Y:06-07 5 BENCH IN THE CASE OF M/S AATUR HOLDINGS PVT. LTD. UN DER IDENTICAL CIRCUMSTANCES WE DEEM IT FIT TO REMAND T HE CLAIM OF EXPENDITURE BY THE ASSESSEE BY WAY OF INTE REST AUDIT FEES AND DEPRECIATION IN GROUNDS 5 6 7 BACK TO C.I.T (A) FOR FRESH CONSIDERATION. 11. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE PARTIES WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL SUPRA CONSIDER IT FAIR AND REASONABLE THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) AND ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK TH E MATTER TO THE FILE OF THE LD. CIT(A) WHO SHALL DECIDE THE SAME A FRESH IN THE LIGHT OF THE OBSERVATION HEREIN ABOVE AND ACCORDING TO LAW A FTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12. GROUND NO.7 READS AS UNDER : 7. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING CALCULATION OF BOOK PROFIT U/S.115JB AMO UNTING TO RS.4 48 491/-. 13. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE ASS ESSING OFFICER HAS COMPUTED BOOK PROFIT U/S.115JB OF THE ACT AMOUNTING TO ` 4 48 491/- AFTER DISALLOWING INTEREST EXPENSES OF ` 15 33 325/- . BEFORE THE LD. CIT(A) IT WAS SUBMITTED BY THE ASSESSEE TH AT THE ASSESSING OFFICER HAS INCORRECTLY HELD THAT THE INTEREST EXP ENSES TO BE ITA NO.3738/M/09 A.Y:06-07 6 AN UNASCERTAINED LIABILITY. THE CLAIM IS CLAIMED TO BE AN ASCERTAINED ONE AND SUCH AS HAS BEEN QUANTIFIED BEFORE THE HONBLE C OURT. IT WAS THEREFORE SUBMITTED THAT INTEREST CAN NOT BE DISALLOWE D WHILE COMPUTING THE BOOK PROFIT U/S.115JB OF THE ACT. HOWEV ER THE LD. CIT(A) FOR THE REASONS AS STATED EARLIER UPHELD THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER. 14. AT THE TIME OF HEARING BOTH PARTIES SUBMIT THAT T HE TRIBUNAL IN ASSESSEE'S OWN CASE IN ORION TRAVELS PVT. LTD. VS. DCIT IN ITA NO.6888 & 6889/M/08 FOR ASSESSMENT YEARS 2004-05 AND 2005-06 VID E ORDER DATED 9.10.2009 HAS DISMISSED THE APPEAL ON THIS ISSUE AS INFRUCTUOUS WITH CERTAIN DIRECTIONS THEREFORE THE SAME MAY BE APP LIED HERE ALSO. 15. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND MER IT IN THE SUBMISSIONS OF THE PARTIES. THE TRIBUNAL IN ASSESSEE'S OWN CASE SUPRA VIDE PARA 22 OF ITS ORDER DATED 9.10.2009 HAS OBSERVED AND HELD AS UNDER :- 22. AS REGARDS GROUND NO 8 REGARDING COMPUTATION OF BOOK PROFITS U/S 115JB WE FIND THAT THE ASSESSEE H AS BEEN TAXED UNDER THE NORMAL PROVISIONS OF THE ACT A ND NOT ON THE BOOK PROFITS U/S 115JB. IN THE CIRCUMSTA NCES WE ARE NOT CONSIDERING THIS ISSUE AND DISMISS THE A PPEAL ON THIS ISSUE AS INFRUCTUOUS WITH A DIRECTION THAT IN CASE THE ASSESSEE AT A LATER STAGE IS ASSESSED ON THEIR BOOK PROFITS U/S 115JB IT WILL BE OPEN FOR THE ASSESSEE TO RAISE THESE CONTENTIONS AT THAT TIME. ITA NO.3738/M/09 A.Y:06-07 7 16. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE PARTIES WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL SUPRA HOLD AND ORDER ACCORDINGLY. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE REJECTED TO THE EXTENT AS ABOVE. 17. GROUND NO.8 IS AGAINST THE LEVY OF INTEREST U/S.234 A 234B AND 234C. 18. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE TRIBUNAL IN ASSESSEE'S OWN CASE SUPRA WHEREIN THE TRIBUNAL VIDE PARA-2 4 25 AND 26 OBSERVED AND HELD THAT THE SAME IS NOT LEVIABLE. 19. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL ON RECORD WE FIND MERIT THAT THE TRIBUNAL VIDE PARA 24 25 AND 26 HAS OBSERVED AND HELD AS UNDER :- 24. IN THE BACKDROP OF THE ABOVE IT WAS IMPOSSIBL E FOR THE ASSESSEE TO HAVE PAID THE ADVANCE TAX EVEN IF H E HAD WANTED TO. IT IS A WELL KNOWN LEGAL DICTUM LEX NON COGITAD IMOSSIBILIA (LAW CANNOT COMPEL YOU TO DO THE IMPOSSIBLE). ASSESSEE CANNOT THEREFORE BE FOIST ED WITH INTEREST LIABILITY U/S 234A 234B AND 234C. IN TEREST U/S 234B AND 234C ARE DIRECTLY RELATED TO PAYMENT O F ADVANCE TAX AND HENCE IS NOT LEVIABLE ON NOTIFIED P ERSONS. EVEN THOUGH LEVY OF INTEREST U/S 234A IS REALLY ON THE DELAY IN FILING THE RETURN WHICH IS A DEFAULT COMMI TTED BY THE ASSESSEE THE QUANTIFICATION OF THE SAME DEPEND S ON THE ADVANCE TAX PAID WHICH IN THIS CASE IS NOT WI THIN THE ITA NO.3738/M/09 A.Y:06-07 8 CONTROL OF THE ASSESSEE. HENCE INTEREST U/S 234A CAN NOT ALSO BE LEVIED IN THE CASE OF A PERSON A NOTIFIED P ERSON UNDER THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT 1992 AND ALL ITS A SSETS INCLUDING BANK ACCOUNTS WERE ATTACHED AND VESTED IN THE HANDS OF THE CUSTODIAN APPOINTED UNDER THE SAID ACT . 25. THE CO-ORDINATE BENCH IN THE CASE OF DIVINE HOLDINGS PVT. LTD V DCIT IN ITA NO180/M/2000 DT. 26.6.2001 HAS HELD THAT CIT(A) IS RIGHT IN ADMITTIN G THE APPEAL OF A NOTIFIED PERSON EVEN THOUGH THE TAX ON THE RETURNED INCOME HAS NOT BEEN PAID BY HIM. IN COMING TO THIS CONCLUSION THEY HAD RELIED ON THE ABOVE PASSAG E OF THE SPECIAL COURT. 26. IN THE CIRCUMSTANCES WE DIRECT THAT INTEREST U /S 234A 234B AND 234C SHOULD NOT BE LEVIED ON THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER APPEAL. 20. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL HOLD THAT THE INTEREST U/S.234A 234B AND 23 4C IS NOT LEVIABLE AND ACCORDINGLY THE SAME IS DELETED. THE GROUND TAKEN B Y THE ASSESSEE IS THEREFORE ALLOWED. 21. IN THE RESULT ASSESSEE'S APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.8.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI DATED: 13.8.2010. JV. ITA NO.3738/M/09 A.Y:06-07 9 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.