JEWEL ART, MUMBAI v. DCIT CEN CIR 13, MUMBAI

ITA 4908/MUM/2015 | 2010-2011
Pronouncement Date: 07-10-2016 | Result: Allowed

Appeal Details

RSA Number 490819914 RSA 2015
Assessee PAN AACFJ2646R
Bench Mumbai
Appeal Number ITA 4908/MUM/2015
Duration Of Justice 1 year(s) 23 day(s)
Appellant JEWEL ART, MUMBAI
Respondent DCIT CEN CIR 13, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 07-10-2016
Assessment Year 2010-2011
Appeal Filed On 14-09-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH G MUMBAI BEFORE SHRI R.C.SHARMA ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 4908/MUM/2015 (ASSESSMENT YEAR : 2010-11) M/S JEWEL ART GALA NO. 19/22 GEM & JEWELLERY COMPLEX NO. II SEEPZ ANDHERI (E) MUMBAI-400096. PAN: AACFJ2646R VS. DCIT CC-13 [NOW DCIT CC-2(3)] MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RISHABH SHAH (AR) REVENUE BY : SHRI JEEVANLAL LA VEDIA (DR) DATE OF HEARING : 06.10.2016 DATE OF PRONOUNCEMENT : 07.10.2016 O R D E R PER PAWAN SINGH JM: 1. THIS APPEAL U/S 253 OF THE INCOME-TAX ACT IS DIRECT ED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-48 MUMBAI DATED 05.08. 2015 FOR ASSESSMENT YEAR (AY) 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZU RE ACTION U/S 132 AND SURVEY U/S 133A OF THE INCOME-TAX ACT WAS CARRIED O UT IN CASE OF ASIAN STAR GROUP ON 29.10.2010. CONSEQUENT UPON SEARCH T HE NOTICE U/S 153 OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE ASSESSEE FILED RETURN OF INCOME ON 27.09.2011. WHILE FRAMING THE A SSESSMENT U/S 143(3) R.W.S. 153A THE ASSESSING OFFICER (AO) BESIDES THE OTHER ADDITION MADE THE ADDITION OF RS. 44 59 441/- HOLDING THAT THE INCOME FROM OTHER SOURCES WHICH WAS EARNED AS INTEREST ON FDS IS NOT ELIGIBL E FOR EXEMPTION U/S 10A. AGGRIEVED BY THE ORDER OF AO ASSESSEE FILED APPEA L BEFORE THE CIT(A) 2 ITA NO. 4908/M/2015- M/S JEWEL ART WHEREIN THE DISALLOWANCE WAS SUSTAINED. FURTHER AG GRIEVED THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENU E. THE LD. AR OF ASSESSEE ARGUED THAT THE GROUNDS OF APPEAL RAISED I N THE PRESENT APPEAL ARE COVERED IN FAVOR OF ASSESSEE IN HIS OWN CASE FOR AY 2008-09 IN ITA NO. 642/MUM/2013 DATED 30.09.2013. ON THE OTHER HAND LD . DR FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND SEEN THAT THE SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE FOR AY 2 008-09 AND THE CO- ORDINATE BENCH OF THIS TRIBUNAL MADE THE FOLLOWING ORDER: THE DISPUTE AROSE ON THE TREATMENT OF THE SAID INT EREST INCOME. ASSESSEE CONSIDERED THE SAME AS A 'BUSINESS RECEIPT'. ASSESS EE CLAIMED EXEMPTION U/S 10A OF THE ACT IN RESPECT OF THE SAID INTEREST RECEIPTS . PER CONTRA REVENUE AUTHORITIES TREATED THE SAME AS 'INCOME FROM OTHER SOURCES' AND DENIED THE BENEFIT OF DEDUCTION U/S 10A OF THE ACT. AGGRIEVED WITH THE SA ME ASSESSEE IS IN APPEAL BEFORE US. 4. DURING THE PROCEEDINGS BEFORE US LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT MADE FDS WITH THE BANK OUT HIS EXCESS FUNDS OR FOR A LONGER PERIOD WITH AN INTENTION TO EARN INTEREST INCOME. F URTHER ELABORATING THE SAME LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FDS MADE WERE OUT OF THE WORKING CAPITAL AND OUT OF THE BUSINESS FUNDS. IT IS THE BU SINESS REQUIREMENT OF THE ASSESSEE THAT THE FDS ARE TO BE MADE WITH THE DIREC TIONS OF THE BANK. REFERRING TO VARIOUS DOCUMENTS PLACED IN THE PAPER BOOK LD COUN SEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CORRESPONDENCE PLACED AT PAGE 28 ONWARD AND READ OUT THE RELEVANT INSTANCES OF THE BANK INSISTING THE ASSESS EE TO PREPARE TERM DEPOSITS IN THE BANK. FURTHER BRINGING OUR ATTENTION TO VARIOU S DECISIONS OF THE TRIBUNAL WHEREIN ONE OF US (AM) TO THE ORDER IN THE CASE OF ACIT VS. M/S. PRESTRESS WIRE INDUSTRIES IN ITA NO. 8418/M/2010 (AY 2007-2008) AN D ITA NO. 6312/M/2011 (AY 2008-2009) AND OTHERS DATED 31.1.2014 LD COUNS EL FOR THE ASSESSEE MENTIONED THAT THE SAID DECISION IS RELEVANT FOR TH E PROPOSITION THAT UNDER THE IDENTICAL FACTUAL MATRIX THE RECEIPTS WERE TREATED AS 'BUSINESS RECEIPTS' AND DECLARED AS ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. IN THIS REGARD HE BROUGHT OUR ATTENTION TO THE RELEVANT PARAS 14 TO 16 OF THE SAID TRIBUNAL'S ORDER (SUPRA). FURTHER BRINGING OUR ATTENTION TO OTHER DECISIONS OF THE TRIBUNAL LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THEY RELATE TO PRIOR TO THE AMENDMENT TO SECTION 10A(4) OF THE ACT. HE ALSO RELIED ON THE JUDGMENT O F THE APEX COURT IN THE CASE OF CIT VS. KARNAL COOPERATIVE SUGAR MILLS LTD 243 I TR 2 (SC) AND THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. IND O SWISS JEWELLS LTD 284 ITR 389 (BOM) AND ALSO ON VARIOUS PRECEDENTS OF THE HON 'BLE SUPREME COURT AS WELL AS VARIOUS HIGH COURTS COPIES OF WHICH ARE PLACED IN VOLUMINOUS PAPER BOOK AND SUBMITTED THAT THE SAID JUDGMENTS WERE RELIED U PON BY THE TRIBUNAL IN 3 ITA NO. 4908/M/2015- M/S JEWEL ART ADJUDICATING THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE SAID CASE DATED 31.1.2014 (SUPRA). 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL WE FIND THE ISSUE IS COVERED IN FAVOUR OF THE ASSES SEE ON THE FACTS OF THIS CASE. FOR THE SAKE OF COMPLETENESS OF THIS CASE WE EXTRACT T HE SAID PARAS 14 TO 16 OF THE SAID TRIBUNAL'S ORDER IN THE CASE OF M/S. PRESTRESS WIRE INDUSTRIES AND THE SAME READ AS UNDER: 14. REGARDING THE ISSUE OF INTEREST RECEIVED FROM F IXED DEPOSITS KEPT AS MARGIN MONEY FOR BANK GUARANTEES LD COUNSEL FOR TH E ASSESSEE MENTIONED THAT THE TEMPORARY DEPLOYMENT OF FUNDS SHOULD BE AS SESSED AS 'BUSINESS INCOME' AND NOT AS 'INCOME FROM OTHER SOURCES' AS T REATED BY THE ASSESSING OFFICER. IN THIS REGARD LD COUNSEL RELIED ON THE F OLLOWING DECISIONS. I) CIT VS. VIDYUT STEEL LTD. 219 ITR 30 (AP) II) CIT VS. KOSHIKA TELECOM LTD 287 ITR 479 (DEL) III) CIT VS. KARNAL COOPERATIVE SUGAR MILLS LTD 243 ITR 2 (SC) IV) CIT VS. INDO SWISS JEWELLS LTD 284 ITR 389 (8OM ) 15. ON THE OTHER HAND LD OR DUTIFULLY RELIED ON TH E ORDER OF THE AO. 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS CITATIONS QUOTED BY THE LD C OUNSEL ALONG WITH THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF T HE CITED JUDGMENTS OF THE HIGHER JUDICIARY WE FIND THAT THEY ARE RELEVANT FO R THE PROPOSITION THAT THE THERE IS NO QUESTION OF ISOLATING THE INTEREST RECE IVED ON MARGIN MONEY PAID FOR OBTAINING BANK GUARANTEE AND ASSESSING IT AS SE PARATE INCOME UNDER SECTION 56. THEREFORE AGREE WITH THE VIEW OF THE T RIBUNAL THAT THE INCOME DERIVED ON THE MARGIN MONEY FOR OBTAINING BANK GUAR ANTEE CANNOT BE SEPARATELY ASSESSED UNDER SECTION 56. CONSIDERING T HE BINDING JUDGMENTS GIVEN BY THE HON1JLE HIGH COURTS AS WELL AS THE HON 1JLE SUPREME COURT WE ARE OF THE OPINION THAT THE INTEREST DERIVED ON MARGIN MONEY FOR THE PURPOSE OF OBTAINING BANK GUARANTEE SHOULD BE ASSES SED AS 'BUSINESS INCOME' INSTEAD OF 'INCOME FROM OTHER SOURCES; ACCO RDINGLY WE DECIDE THIS PART OF THE GROUND IN FAVOUR OF THE ASSESSEE.' 6. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSU E WE ARE OF THE OPINION THAT THE SAID INTEREST RECEIPTS CONSTITUTE BUSINESS RECE IPTS AND ARE ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT. ACCORDINGLY THE GROU NDS RAISED BY THE ASSESSEE ARE ALLOWED. 5. CONSIDERING THE SIMILARITIES OF THE FACTS OF PRESEN T WE ARE OF THE OPINION THAT THE INTEREST RECEIPT CONSTITUTE THE BUSINESS R ECEIPT AND ARE ELIGIBLE FOR DEDUCTION U/S 10A AS HELD IN ASSESSEES OWN CASE FO R AY-2008-09. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH OCTOBER 2016. /- SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 07/10/2016 S.K.PS 4 ITA NO. 4908/M/2015- M/S JEWEL ART COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT.REGISTRAR) ITAT MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY/