M/S. NILKAMAL BUILDERS P.LTD., MUMBAI v. THE INCOME TAX OFFICER WARD 1(2)(3), MUMBAI

ITA 5633/MUM/2007 | 2003-2004
Pronouncement Date: 20-07-2011 | Result: Dismissed

Appeal Details

RSA Number 563319914 RSA 2007
Assessee PAN AAACN5016E
Bench Mumbai
Appeal Number ITA 5633/MUM/2007
Duration Of Justice 3 year(s) 10 month(s) 23 day(s)
Appellant M/S. NILKAMAL BUILDERS P.LTD., MUMBAI
Respondent THE INCOME TAX OFFICER WARD 1(2)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 20-07-2011
Date Of Final Hearing 14-07-2011
Next Hearing Date 14-07-2011
Assessment Year 2003-2004
Appeal Filed On 27-08-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI V.DURGA RAO JM ITA NO.5633/MUM/2007 : ASST.YEAR 2003-2004 M/S.NILKAMAL BUILDERS PRIVATE LIMITED 77/78 NILKAMAL HOUSE ROAD NO.13/14 MIDC ANDHERI (EAST) MUMBAI 400 093. PAN : AAACN5016E. VS. THE INCOME TAX OFFICER WARD 1(2)(3) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIPUL JOSHI RESPONDENT BY : SHRI P.C.MAURYA O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 04.07.2007 IN RELATI ON TO THE ASSESSMENT YEAR 2003-2004. 2. THE ONLY GROUND RAISED IN THIS APPE AL IS AGAINST NOT ALLOWING SET OFF OF BROUGHT FORWARD UNABSORBED BUSINESS LOSS OF RS.2 68 483. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE AN IN VESTMENT COMPANY SET OFF UNABSORBED BUSINESS LOSS OF RS.2 68 483 AGAINST THE DIVIDEND INCOME OF RS.37 12 500 RECEIVED BY IT IN THE CURRENT YEAR FROM M/S.NILK AMAL PLASTICS LIMITED (AN ASSOCIATE COMPANY) AGAINST THE INVESTMENT OF RS.55 15 62 500 IN 20 62 500 SHARES. THE ASSESSING OFFICER NOTED THAT THE ASSES SEE HAD ONLY DIVIDEND INCOME WHICH WAS DERIVED FROM THE SHARES OF NILKAMAL PLAS TICS LIMITED BEING NON-TRADE INVESTMENT MADE BY IT. IT WAS OBSERVED THAT THO UGH THE NAME OF THE ASSESSEE-COMPANY SUGGESTED SOME HINT OF IT CARRYING ON THE BUSINESS AS BUILDER BUT IN FACT NO SUCH BUSINESS WAS CARRIED OUT IN TH E PRESENT YEAR OR PAST. IT WAS SEEN THAT THE ASSESSEE HAD CLAIMED SET OFF OF LOSSES OF RS .2.68 LAKHS AS BROUGHT FORWARD LOSS FROM ASSESSMENT YEAR 1998-99 1999-2000 AN D 2002-2003. THE ASSESSING OFFICER ITA NO.5633/MUM/2007 M/S.NILKAMAL BUILDERS PRIVATE LIMITED. 2 OBSERVED THAT THE ASSESSMENT FOR ASSESSME NT YEAR 1998-99 WAS DONE U/S.143(3) AND THEREAFTER NO SCRUTINY ASSESSME NT WAS MADE. CONSIDERING CER TAIN DECISIONS HE HELD THAT THE LOSS OF RS.2.68 LAKHS WAS LIABLE TO BE CONSID ERED AS NON-BUSINESS LOSS. IN PARA 8 ON LAST PAGE OF THE ASSESSMENT OR DER THE ASSESSING OFFICER HELD SUCH DIVIDEND INCOME DERIVED BY IT DURING THE YEAR WAS INCLUDIBLE UNDER THE HEAD `INCOME FROM OTHER SOURCES. HE THEREFORE REFUSED TO ALLOW SET OFF OF THE BROUGHT FORWARD LOSS. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE UNDISPUTED FACT IN THE CASE IS THAT THE ASSESSEE RECEIVED DIVIDEND INCOME OF RS.37.12 LAKHS ON TH E SHARES OF NILKAMAL PLAS TICS LIMITED WHICH IS AN ASSOCIATE CONCERN OF THE ASSESSEE. ON A SPECIFIC QUES TION THE LEARNED A.R. SUBMITTED THAT THE ASSESSEE-CO MPANY IS A PROMOTER OF NILKAMAL PLASTICS LIMITED WHICH WAS BROUGHT INTO EXIS TENCE SOMEWHERE IN 1990. IT WAS ALSO ADMITTED THAT THE ASSESSEE COMPANY CONTINUED TO HOLD SHARES IN THIS COMPANY. APART FROM THAT THE ASSESSEE ALSO HELD SHARES IN OTHER TW O COMPANIES WHICH ARE AGAIN THE RELATED COMPANIES OF THE ASS ESSEE. THESE FACTS INDICATE THAT INSOFAR AS SHARES IN NILKAMAL PLASTICS LIMITED ARE CONCERNED THESE WERE HELD BY THE ASSESSEE AS `INVESTMENT AND THE SAME WERE ALSO DEPICTED ACCORDINGLY. THE LEARNED A.R. ARGUED THAT THE DIVIDEND INCOME THOUGH FALLS UNDER THE HEAD `INCOME FROM OTHER SOURCES BUT REALLY IT WOULD BE THE `BUSINESS INCOME FOR THE PURPOSES OF SET OFF OF BROUGHT FORWARD BUSINESS LOSSES. 4. WE ARE UNABLE TO ACCEPT TH IS CONTENTION FOR THE REASON THAT PRIMARILY DIVIDEND INCOME FALLS UNDER THE HEAD `IN COME FROM OTHER SOURCES. THERE ARE CERTAIN JUDGMENTS IN WHICH IT HAS BEEN LA ID DOWN THAT EVEN TH OUGH DIVIDEND INCOME FALLS UNDER THE RESIDUARY HEAD OF INCOME STILL IT COULD BE CONSIDERED AS `BUSINESS INCOME IF THE SHARES ARE HELD AS STOCK-IN-T RADE. THERE CANNOT BE ANY DISPUTE ON THIS LEGAL POSITION THAT IF THE SHARES ARE HELD AS STOCK-IN-TRADE THE DIVIDEND INCOME MAY ITA NO.5633/MUM/2007 M/S.NILKAMAL BUILDERS PRIVATE LIMITED. 3 BE CONSIDERED AS `BUSINESS INCOME. IF HO WEVER THE SHARES ARE HELD AS INVESTMENT OBVIOUSLY THERE CANNOT BE ANY QUESTION OF TREATING DIVIDEND INCOME THEREFROM AS BUSINESS INCOME. IT IS BUT NATURAL THAT TH E DIVIDEND INCOME RESULTING FROM SHARES HELD AS INVESTMENT WOULD FALL UNDER THE H EAD `INCOME FROM OTHER SOURCES. AS THE ASSESSEE-COMPANY IS PROMOTER OF NILKAM AL PLASTICS LIMITED AND IS HOLDING ITS SHARES SINCE 1990 AND WE ARE IN ASSESSMEN T YEAR 2003-2004 THERE CANNOT BE ANY PRESUMPTION WHATSOEVER THAT THESE SHARES WERE ACQUIRED OR HELD AS STOCK-IN-TRADE. VIVIDLY SUCH SHARES ARE `I NVESTMENT AND THE DIVIDEND INCOME RESULTING THEREFROM SHALL BE CONSIDERED UNDER THE H EAD `INCOME FROM OTHER SOURCES. 5. THE SECOND LIMB OF THIS CONTROVERS Y IS TO DETERMINE AS TO WHETHER THE BROUGHT FORWARD LOSS OF RS.2.68 LAKHS RESULTING FROM ASSESS MENT YEARS 1998-99 1999-2000 AND 2002-2003 SHOUL D BE HELD AS `BUSINESS LO SS OR ARISING UNDER THE HEAD `INCOME FROM OTHER SOURCES. WE REA LLY DO NOT NEED TO GO INTO SUCH QUESTION FOR THE OBVIOUS REASON THAT THE DIVIDEND INCOME FALLI NG UNDER THE HEAD `INCOME FROM OTHER SOURCES IN THE CURRENT YEAR IS NOT AVAILABLE FOR SET OFF AGAINST THE BROUGHT FORWARD LOSSES WHETHE R CONSIDERED UNDER THE HEAD `PROFITS AND GAINS OF BUSINESS OR PROFESSION OR OTHERWISE. EVEN IF FOR A MOMENT WE PRESUME TO ACCEPT THE CONTENTION OF THE LEARNED A.R. WHICH WE ARE IN FACT NOT ACCEPTING THAT THE SUM OF RS.2.68 LAKHS REPRESENTED BROUGHT FOR WARD BUSINESS LOSS STILL ITS SET OFF CANNOT BE ALLOWED AGAINST THE CURRENT INCOME U NDER THE HEAD `INCOME FROM OTHER SOURCES IN TERMS OF SECTION 72 WHICH IN TURN PERMITS SET OFF AGAINS T THE INCOME ARISING UNDER THE HEAD `PROFITS AND GAINS OF BUSIN ESS OR PROFESSION AND NOT OTHERWISE. AS IN THE INSTANT YEAR THERE IS NO INCOME UNDER THE HEAD `PROFITS AND GAINS OF BUSINESS OR PROFESSION AGAINST WHICH SET OFF OF THE BROUGHT FORWARD LOSSES IS CLAIMED BY THE ASSESSEE IN OUR CONSIDERED OPINION THE AUTHORITIES BELOW WERE JUSTIFIED IN REJECTING THE ASSESSEES CLAIM ON THIS ISSUE. ITA NO.5633/MUM/2007 M/S.NILKAMAL BUILDERS PRIVATE LIMITED. 4 6. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JULY 2011. SD/- SD/- ( V.DURGA RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 20 TH JULY 2011. DEVDAS*` COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - I MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.