B.D. FIBER ASSOCIATES, MUMBAI v. DCIT CIR 16(2), MUMBAI

ITA 5012/MUM/2009 | 2003-2004
Pronouncement Date: 07-01-2011 | Result: Dismissed

Appeal Details

RSA Number 501219914 RSA 2009
Assessee PAN THJAN2011S
Bench Mumbai
Appeal Number ITA 5012/MUM/2009
Duration Of Justice 1 year(s) 4 month(s) 4 day(s)
Appellant B.D. FIBER ASSOCIATES, MUMBAI
Respondent DCIT CIR 16(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 07-01-2011
Assessment Year 2003-2004
Appeal Filed On 02-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI P.M.JAGTAP ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER MA NO.521/MUM/2010 ITA NO. 5012/MUM/2009 (ASSESSMENT YEARS: 2003-04) M/S B D FIBER ASSOCIATES 32 ASHIANA NEPEAN SEA ROAD MUMBAI-400007 PAN:AAATB1773B APPLICANT V/S DCIT CIRCLE 16(2) MUMBAI RESPONDENT ITA NO. 5012/MUM/2009 (ASSESSMENT YEARS: 2003-04) M/S B D FIBER ASSOCIATES 32 ASHIANA NEPEAN SEA ROAD MUMBAI-400007 PAN:AAATB1773B APPELLANT V/S DCIT CIRCLE 16(2) MUMBAI RESPONDENT ASSESSEE BY : SHRI SUNIL TALATHI REVENUE BY : SHRI SUMIT KUMAR O R D E R PER VIJAY PAL RAO JM MA NO.521/MUM/2010 MA NO.521/ MUM/2010 ITA NO. 5012/MUM/2009 2 THIS MISCELLANEOUS APPLICATION BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18 TH JUNE 2010 OF THIS TRIBUNAL IN ASSESSEES APPEAL BEING ITA NO. 5012/ MUM/2009 FOR THE ASSESSMENT YEAR 2003-04 WHEREBY THE APPEAL OF THE ASSESSEE WAS DISMISSED FOR WANT OF PROSECUTION. 2. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT TH E ASSESSEE DID NOT RECEIVE ANY NOTICE FOR HEARING OF APPEAL FIXED ON 31 ST MAY 2010. HE HAS FURTHER CONTENDED THAT SINCE THE BUILDING IN QUESTION WAS DEMOLISHED FOR RECONSTRUC TION AND THE NOTICE RECEIVED AS PER THE ACKNOWLEDGMENT BY ON E MR. THAKUR IS NONE OF THE EMPLOYEE OR FAMILY MEMBER O F THE ASSESSEE. THUS HE HAS SUBMITTED THAT THE NOTICE M IGHT HAVE BEEN RECEIVED BY SECURITY GUARD OF THE BUILDING BUT WAS NOT FINALLY DELIVERED OR HANDED OVER TO THE ASSESSEE. THE LEARNED AR HAS PLEADED THAT NON-APPEARANCE ON BEHALF OF THE ASSESSEE IS NEITHER INTENTIONAL NOR DELIBERATE ATTE MPT TO AVOID THE PROCEEDINGS BUT DUE TO THESE CIRCUMSTANCES AS E XPLAINED. 3. ON THE OTHER HAND THE LEARNED DR HAS OPPOSED TH E MISCELLANEOUS APPLICATION OF THE ASSESSEE. 4. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEAR NED DR AND CONSIDERED THE RELEVANT RECORD. THE ASSESSEE HA S ALSO FILED AN AFFIDAVIT IN SUPPORT OF MISCELLANEOUS APP LICATION. IT MA NO.521/ MUM/2010 ITA NO. 5012/MUM/2009 3 HAS BEEN STATED IN THE AFFIDAVIT THAT THE ASSESSEE DID NOT RECEIVE THE NOTICE OF HEARING FIXED ON 31.5.2010. IN THE AFFIDAVIT IT HAS BEEN MENTIONED THAT THE BUILDING IN QUESTION VIZ ASHIANA FLATS WERE UNDERGOING TOTAL RENOVATION AND THE NOTICE MUST HAVE SERVED ON THE SECURITY STAFF WHO HAS NOT HANDED OVER THE SAME TO THE ASSESSEE. THEREFORE W E DO NOT FIND ANY REASON TO DISBELIEVE THE EXPLANATION OF T HE ASSESSEE. ACCORDINGLY WE ARE SATISFIED WITH THE REASONS AND EXPLANATION OF THE ASSESSEE FOR NON-APPEARANCE ON 31.5.2010. ACCORDINGLY THE ORDER DATED IS RECALLED AND THE AP PEAL OF THE ASSESSEE IS RESTORED TO ITS ORIGINAL STAGE AND NUMB ER. 5. THE LEARNED AR AND DR ARE AGREED FOR HEARING OF THE APPEAL ON MERITS TODAY ITSELF. ACCORDINGLY THE AP PEAL OF THE ASSESSEE IS ALSO BEING DISPOSED OFF BY SEPARATE ORD ER. 6. IN THE RESULT THE MISCELLANEOUS APPLICATION IS ALLOWED. ITA NO. 5012/MUM/2009 THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 02.06.2009 OF CIT(A)-XVI MUMBAI FOR TH E ASSESSMENT YEAR 2003-04. 7. THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THIS APPEAL HOWEVER THE ONLY ISSUE ARISES FOR OUR CONSIDERATI ON AND ADJUDICATION IS WHETHER IN THE FACT AND CIRCUMSTANC ES OF THE MA NO.521/ MUM/2010 ITA NO. 5012/MUM/2009 4 CASE THE LEARNED CIT(A) IS JUSTIFIED IN TREATING THE INCOME OF THE ASSESSEE TRUST BEING IN THE NATURE OF INTEREST INCOME OF RS.28 69 135 AS INCOME FROM BUSINESS AND PROFESSIO NS. 8. FACTS LEADING TO THE ISSUE ARE THAT THE RETURN O F INCOME WAS PROCESSED U/S 143(1) OF THE ACT CONSIDERING TH E STATUS (CODE NO.08) OF ASSESSEE AS AOP TRUST AND DETERMIN ED TAX AND INTEREST AGGREGATING TO RS.9 36 197. THEREAFTE R U/S 154 IT WAS CHANGED AND TREATED AS AOP(CODE NO.7) AND THE TOTAL INCOME WAS TAKEN AT RS.NIL. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS DECLARED INCOME UNDE R THE HEAD INCOME FROM OTHER SOURCES CONSISTING OF INTE REST ON DEPOSITS OF RS.30 20 142/- AND AFTER DEDUCTING EXPE NSES OF RS.466 AND CLAIMING DEDUCTION U/S 80G AMOUNTING TO RS.151 007/- THE BALANCE INCOME OF RS.28 69 135/- HAS BEEN DISTRIBUTED EQUALLY TO THE BENEFICIARIES AND HENCE TOTAL INCOME DECLARED AT NIL. 9. THE AO ISSUED NOTICE U/S 148 TO THE ASSESSEE CAL LING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE INCOM E OF RS.28 69 135 SHOULD NOT BE TREATED AS INCOME FROM BUSINESS AND PROFESSION. IN REPLY TO THE SAID NOTICE THE ASSESSEE VIDE ITS REPLY STATED THAT THE RETURN FILED ORIGINALLY M AY BE TREATED TO HAVE BEEN FILED IN COMPLIANCE TO THE NOTICE U/S 148 . THEREAFTER THE NOTICES U/SS 142(1) AND 143(2) WER E RECEIVED MA NO.521/ MUM/2010 ITA NO. 5012/MUM/2009 5 AND IN RESPONSE TO THE SAID NOTICES THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE DESIGNATED AUTHORITY. 10. THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND F OLLOWING THE VIEW OF THIS TRIBUNAL HELD THAT THE TRUST IS LIABLE TO BE TAXED AT THE MAXIMUM RATE OF TAX UNDER THE HEAD BUSINESS INCOME AND ACCORDINGLY THE AO TREATED THE SUM OF RS.28 69 135/- AS INCOME FROM BUSINESS ACTIVITY OF THE ASSESSEE. 11. ON APPEAL THE LEARNED CIT(A) UPHELD THE ACTION OF THE AO BY FOLLOWING THE DECISION OF THIS TRIBUNAL IN IT A NO.3598/MUM/2003 (AY 1998-99) IN WHICH THE TRIBUNAL HELD THAT THE PROVISIONS OF SECTION 161(1A) ARE ATTRACTE D AND HENCE THE INCOME DRAWN BY THE ASSESSEE IS INCOME FROM BUS INESS. 12. BEFORE US THE LEARNED AR SUBMITTED THAT THE AS SESSEE TRUST IS NOT CARRYING OUT ANY BUSINESS ACTIVITIES S INCE 1.4.1996 AND HAS EARNED ONLY INTEREST INCOME SINCE THEN. TH EREFORE THE INCOME EARNED BY THE ASSESSEE BE TREATED AS INC OME FROM OTHERS SOURCES. 13. THE LEARNED DR REITERATED THE SUBMISSIONS AS NA RRATED BEFORE THE CIT(A) AND RELIED UPON THE ORDERS OF AUT HORITIES MA NO.521/ MUM/2010 ITA NO. 5012/MUM/2009 6 BELOW INCLUDING THE DECISION OF THIS TRIBUNAL IN AS SESSEES OWN CASES I.T.A. NO. 4428 & 4429/MUM/2009 (ASSESSM ENT YEARS: 2005-06 AND 2006-07) ORDER DATED 4.06.2010. 14. AFTER HEARING BOTH THE PARTIES ON PERUSAL OF T HE RECORD AND THE DECISION RELIED UPON BY THE LEARNED DR WE A RE OF THE CONSIDERED OPINION THAT THE ISSUE RAISED BY THE ASS ESSEE IN THIS APPEAL SQUARELY COVERED AGAINST THE ASSESSEE B Y THE DECISION OF THIS TRIBUNAL IN I.T.A. NO. 4428 & 442 9/MUM/2009 (ASSESSMENT YEARS: 2005-06 AND 2006-07) DATED 4.0 6.2010. FOR THE SALE OF CONVENIENCE THE RELEVANT DISCUSSIO N AND FINDINGS ARE REPRODUCED BELOW : 8. ADMITTEDLY THE ISSUE AS TO WHETHER THE INTEREST INCOME EARNED BY THIS ASSESSEE TRUST SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS OR SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES WAS CONSIDERED BY THE E-BENCH OF TH E TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1998-99. AT PARA 10 OF THAT ORDER A T PAGES 5 6 AND 7 THE DECISION IN THE CASE OF J.K. HOLDINGS 77 TTJ (MUM) 649 HAS BEEN DISTINGUISHED AND IT IS CONCLUDED AS FOLLOWS : WE ALSO FIND THAT AS PER CLAUSE 5(5) OF THE TRUST DEED THE TRUST IS ENTITLED TO DEPOSIT MONIES IN CU RRENT OR OTHER ACCOUNT OR ACCOUNT WITH ANY BANK OR ANY PRESENT FIRM OR COMPANY HENCE THE ASSESSEE IS ENTITLED TO CARRY ON BORROWING OF MONEY AND ADVANCI NG OF LOAN AS BUSINESS ACTIVITY. AS STATED EARLIER THE RE IS NO BUSINESS ACTIVITY OTHER THAN THIS ACTIVITY FOR T WO YEARS INCLUDING THIS YEAR HENCE IT IS LOGICAL TO D RAW AN INFERENCE THAT THE ASSESSEE HAS CARRIED ON THIS ACTIVITY AS ORGANIZED BUSINESS ACTIVITY IN TERMS OF ITS OBJECTS AND THEREFORE INTEREST INCOME IS LIABLE T O BE TREATED AS BUSINESS INCOME. ACCORDINGLY THE PROVISIONS OF SECTION 161 (1A) ARE ATTRACTED. IN VI EW MA NO.521/ MUM/2010 ITA NO. 5012/MUM/2009 7 OF THE FOREGOING WE HOLD THAT THERE IS NO INFIRMIT Y IN THE ORDER OF THE LD. CIT(A). THUS GROUND NO. 3 OF THE ASSESSEE STANDS REJECTED. 9. MR. TALATI HAS LAID GREAT EMPHASIS ON HIS VIEW T HAT THE ORDER OF THE TRIBUNAL IS ERRONEOUS. IT IS NOT W ITHIN OUR JURISDICTION TO COMMENT ON THESE SUBMISSIONS. SUFFICE TO SAY THAT WE RESPECTFULLY FOLLOW THE ORDE R OF OUR COORDINATE BENCH AND APPLY THE PROPOSITIONS LAI D DOWN THERE IN TO THE FACTS OF YEARS. MR. TALATI HA S NOT DEMONSTRATED AS TO HOW THE FACTS OF THESE TWO YEARS ARE DIFFERENT FROM THE FACTS CONSIDERED BY THE TRIB UNAL FOR THE ASSESSMENT YEAR 1998-99. THE FIRST APPELLAT E AUTHORITY AT PARA 6 OF HIS ORDER RECORDED THAT THE ASSESSEE HAD WITHDRAWN ADVANCE FROM SOME PARTIES AND IN TURN INCREASED ITS ADVANCES TO SOME OTHER EXISTING DEBTORS. HE FURTHER OBSERVED THAT THE BALA NCE SHEET SHOWS THE REDUCTION IN THE BALANCES OF SUNDR Y CREDITORS AND AT THE SAME TIME THERE IS AN INCREASE IN THE BENEFICIARIES ACCOUNT DEMONSTRATING THAT THE PROFIT EARNED BY THE ASSESSEE IN THE PREVIOUS YEARS HAD NOT BEEN DISTURBED TO THE BENEFICIARIES BUT WER E RETAINED IN THE BUSINESS. WE UPHOLD THESE FINDINGS AND DISMISS THE ASSESSEES APPEALS BY FOLLOWING THE COORDINATE BENCH ORDER IN THE EARLIER YEAR. 10. IN THE RESULT THE ASSESSEES APPEALS ARE DISMISSED. 15. BEFORE US THE LEARNED AR OF THE ASSESSEE DID N OT BRING ANY MATERIAL TO CONTROVERT THE FINDINGS OF THIS TRI BUNAL IN ASSESSEES OWN CASE. WE ALSO FIND THAT THE FACTS OF THE CASE IN HAND AND THE FACTS OF THE CASES DECIDED BY THIS TRI BUNAL IN ASSESSEES OWN CASE ARE IDENTICAL. THEREFORE RESP ECTIVELY FOLLOWING THE DECISION OF A CO-ORDINATE BENCH OF TH IS TRIBUNAL IN ASSESSEES OWN CASE WE DISMISS THE APPEAL OF TH E ASSESSEE. MA NO.521/ MUM/2010 ITA NO. 5012/MUM/2009 8 16. IN THE RESULT THE MISCELLANEOUS APPLICATION FI LED BY THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY ASSESSE E STANDS DISMISSED. ORDER PRONOUNCED ON THIS 7 TH DAY OF JAN 2011. SD SD (P.M.JAGTAP) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI DATED 7 TH JAN 2011 SRL:4111 COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. DR CONCERNED BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI