THE DCIT RG 3(3), MUMBAI v. M/S. SURAJ DIAMONDS & JEWELLERY LTD, MUMBAI

ITA 5737/MUM/2008 | 2002-2003
Pronouncement Date: 25-02-2011 | Result: Dismissed

Appeal Details

RSA Number 573719914 RSA 2008
Assessee PAN AAACS5516N
Bench Mumbai
Appeal Number ITA 5737/MUM/2008
Duration Of Justice 2 year(s) 5 month(s) 14 day(s)
Appellant THE DCIT RG 3(3), MUMBAI
Respondent M/S. SURAJ DIAMONDS & JEWELLERY LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 25-02-2011
Date Of Final Hearing 17-02-2011
Next Hearing Date 17-02-2011
Assessment Year 2002-2003
Appeal Filed On 11-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER. AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO.5737/MUM./2008 (ASSESSMENT YEAR : 2002 03 ) DATE OF HEARING: 17.2.2011 DY. COMMISSIONER OF INCOME TAX CIRCLE 3(3) ROOM NO.609 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 .. APPELLANT V/S SURAJ DIAMONDS & JEWELLERY LTD. 151/152/153 MITTAL COURT NARIMAN POINT MUMBAI 400 021 PAN AAACS5516N .... RESPONDENT ASSESSEE BY : SHRI D.J. THAKKAR A/W SHRI RAJESH P. SHAH REVENUE BY : SHRI HEMANT LAL O R D E R PER S.V. MEHROTRA A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 30 TH APRIL 2008 PASSED BY THE LEARNED CIT(A) XXXII MUMBAI FOR ASSESSMENT YEAR 2002 03. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F ` 52 29 392 UNDER SECTION 80HHC AND RESTORING THE ORIGINAL FIGURE OF ` 5 40 74 644. 2. BRIEF FACTS APROPOS THE AFORESAID ISSUE ARE THAT T HE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCO ME AT ` 1 82 49 222 WHICH SURAJ DIAMONDS & JEWELLERY LTD. ITA NO.5737/MUM./2009 2 WAS ASSESSED AT ` 2 69 25 540 VIDE ORDER DATED 18 TH MARCH 2005 UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (FOR SHO RT THE ACT ). THE ASSESSMENT WAS THEREAFTER REOPENED UNDER SECTION 14 7 OF THE ACT TO BRING TO TAX WRONG ALLOWANCE OF DEDUCTION UNDER SECTION 8 0HHC OF THE ACT VIDE NOTICE DATED 30 TH MARCH 2007 ISSUED UNDER SECTION 148 OF THE ACT. ASSESSEES EXPLANATION WAS REQUIRED REGARDING RESTR ICTING OF DEDUCTION UNDER SECTION 80HHC TO THE EXTENT OF INCOME FROM PROFIT / GAIN OF BUSINESS AND ALSO ON THE GROUND THAT AS TO WHY DEDUCTION ALLOWED ON I NCOME FROM OTHER SOURCES BE NOT WITHDRAWN. AFTER CONSIDERING THE ASS ESSEES SUBMISSIONS THE ASSESSING OFFICER OBSERVED IN PARA-5 WHICH READS A S UNDER:- 5. THE SUBMISSIONS MADE BY THE ASSESSEE HAS BEEN CO NSIDERED CAREFULLY. AS REGARDS SUBMISSION MADE IN RESPECT OF QUERY NO.1 IT IS NOT ACCEPTABLE AS THE PROVISIONS ARE VERY CLEAR THA T DEDUCTION U/S 80HHC OF THE I.T. ACT WOULD BE RESTRICTED TO THE N ATURE OF INCOME INCLUDED IN GROSS TOTAL INCOME AND HENCE THE EXCESS DEDUCTION ALLOWED U/S 80HHC OF THE I.T. ACT OF ` 52 29 390 IS DISALLOWED AND BROUGHT TO TAX. 3. THE ASSESSEE BEING AGGRIEVED BY THE ORDER SO PASSE D BY THE ASSESSING OFFICER CARRIED THE MATTER IN FIRST APPEAL WHEREI N THE LEARNED CIT(A) DELETED THE ADDITION INTER-ALIA OBSERVING AS UNDER:- 3.4 I HAVE GONE THROUGH THE FACTS OF THIS GROUND. T HE A.O. WHILE PASSING THE ORIGINAL ORDER UNDER SECTION 143(3) ON PAGE6 OF HIS ORDRE HAS MENTIONED ABOUT VARIOUS DECISIONS INCLUDING THA T OF V.T. JOSEPH WHEREIN HE HAS MENTIONED ABOUT THE DEDUCTION UNDER SECTION 80HHC TO BE ALLOWED ONLY TO THE EXTENT OF INCOME FROM EXP ORT BUSINESS INCLUDED IN GROSS TOTAL INCOME AND HE ALSO MENTIONE D THAT DEDUCTION UNDER SECTION 80HHC CANNOT BE ALLOWED ON PROCESSING / LABOUR CHARGES. IT IS THUS EVIDENT THAT ITEMS OF OTHER SOU RCES INCOME WERE ALREADY EXCLUDED IN THE ORIGINAL ASSESSMENT PROCEED INGS AND ORIGINAL DEDUCTION CLAIMED UNDER SECTION 80HHC AT ` 6 23 94 923 WAS REDUCED TO ` 5 40 74 644. HOWEVER DURING PROCEEDINGS UNDER SEC TION 147 IT IS SEEN THAT THE A.O. HAS FURTHER REDUCED THE DEDUCTIO N UNDER SECTION 80HHC AND GRANTED DEDUCTION ONLY ON PROFITS FROM EX PORT OF MANUFACTURED GOODS AND EXPORT INCENTIVES. NO DEDUCT ION UNDER SECTION 80HHC HAS BEEN ALLOWED ON PROFIT FROM EXPORT OF TRA DING GOODS AS PER SECTION 80HHC(3)(B). THE A.O. HAS COMPLETELY IGNORE D THE APPELLANTS BUSINESS PROFITS FROM EXPORT OF TRADING GOODS WITHO UT ANY LOGIC. IT MAY BE MENTIONED THAT IN THE ORIGINAL ASSESSMENT ORDER UNDER SECTION 143(3) DEDUCTION HAD RIGHTLY BEEN COMPUTED ON EXPO RTS OF BOTH MANUFACTURED AS WELL AS TRADING GOODS AFTER EXCLUDI NG ITEMS OF OTHER SURAJ DIAMONDS & JEWELLERY LTD. ITA NO.5737/MUM./2009 3 SOURCES INCOME. IT IS NOT UNDERSTOOD AS TO WHY AND HOW THE A.O. HAS IGNORED THE ACTIVITY OF EXPORT OF TRADING GOODS OF THE APPELLANT DURING REASSESSMENT PROCEEDINGS SPECIALLY WHEN EXPORT TU RNOVER OF TRADING GOODS AT ` 2 03 61 52 260 AS WELL AS THE PROFIT OF THE BUSINE SS AT ` 632 80 055 HAS BEEN RIGHTLY MENTIONED BY THE A.O. [EMPHASIS ADDED ] THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE T HE TRIBUNAL. 4. DURING THE COURSE OF HEARING LEARNED DEPARTMENTAL REPRESENTATIVE WAS CONFRONTED WITH THE FINDINGS OF THE LEARNED CIT (A). HOWEVER NO EVIDENCE COULD BE BROUGHT ON RECORD TO CONTROVERT T HE ABOVE FINDINGS OF THE LEARNED CIT(A) QUOTED ABOVE WITH UNDERLINE AS EMPHASIS ADDED . SINCE THERE WAS NO INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES THEREFORE THE ASSESSING OFFICER WRONGLY MADE THE D ISALLOWANCE UNDER SECTION 80HHC OF ` 52 29 390. CONSEQUENTLY WE CONFIRM THE FINDINGS O F THE LEARNED CIT(A). 5. GROUND NO.2 READS AS UNDER: 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F INTEREST ON CALL MONEY IN ARREARS AMOUNTING TO ` 1 49 13 577. 6. BRIEF FACTS APROPOS THE AFORESAID ISSUE ARE THAT F ROM THE TAX AUDIT REPORT THE ASSESSING OFFICER NOTICED THAT THERE WA S INTEREST ON UNPAID COST OF ALLOTMENT MONEYS OF ` 1 49 13 577 WHICH HAD NOT BEEN CREDITED TO THE PROFIT & LOSS A/C. HE OBSERVED THAT THIS AMOUNT FAL LS WITHIN THE SCOPE OF SECTION 28 AND REQUIRED THE ASSESSEE TO SUBSTANTIAT E ITS CLAIM. IN ITS SUBMISSIONS THE ASSESSEE INTER ALIA POINTED OUT THAT ASSESSEES STAND HAS BEEN CONFIRMED BY THE DECISION OF THIS TRIBUNAL MU MBAI BENCH IN ASSESSEES OWN CASE IN ITA NO.142/MUM./1996 VIDE ORDER DATED 29 TH JULY 2004. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE ASSE SSEES CONTENTION INTER ALIA OBSERVING THAT THE DEPARTMENT HAS NOT ACCEPTE D THE AFORESAID DECISION OF THE TRIBUNAL AGAINST WHICH AN APPEAL HAS BEEN PR EFERRED BEFORE THE BOMBAY HIGH COURT. SURAJ DIAMONDS & JEWELLERY LTD. ITA NO.5737/MUM./2009 4 7. ON APPEAL THE LEARNED CIT(A) FOLLOWING THE DECISI ON OF THE TRIBUNAL CITED SUPRA HELD THAT INTEREST ON UNPAID CALL MONE Y COULD NOT BE SAID TO HAVE ACCRUED WHEN THE DUE DATE FOR PAYMENT OF CALL MONEY HAD EXPIRED. HE FURTHER OBSERVED THAT IN SUCH CASES EVEN THE PRINC IPAL MONEY OF CALL MONEY IS DOUBTFUL. THE REVENUE IS AGGRIEVED BY THE ORDER PASSED BY THE LEARNED CIT(A) AND IS IN APPEAL BEFORE THE TRIBUNAL. 8. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING PERUS ED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIALS AVAILABLE O N RECORD WE FIND THAT THE ISSUE FOR OUR ADJUDICATION IS COVERED AGAINST THE R EVENUE AND IN FAVOUR OF THE ASSESSEE BY THE DECISION OF A CO ORDINATE BENCH OF THIS TRIBUNAL MUMBAI IN ASSESSEES OWN CASE VIDE ORDER DATED 29 TH JULY 2004 FOR ASSESSMENT YEAR 1991 92 WHEREIN THE TRIBUNAL HAS CONFIRMED THE LEARNED CIT(A)S ACTION BY OBSERVING AS FOLLOWS: 2. THE FIRST GROUND IN THIS CASE IS DIRECTED AGAINS T THE LEARNED CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST ACCRUED ON CALL MONEYS. ACCORDING TO TH E ASSESSEE THE INTEREST CHARGEABLE ON BELATED PAYMENTS OF CALL MON EY WAS ACCOUNTED FOR ONLY WHEN SUCH INTEREST WAS RECEIVED ALONG WITH CALL MONEY. ON CONSIDERATION WE HOLD THAT INTEREST ON UNPAID CALL MONEY CANNOT BE SAID TO HAVE ACCRUED AS SOON AS THE TIME LIMIT TO P AY CALL MONEY HAS EXPIRED. AN APPLICANT FOR ALLOTMENT OF SHARES MAY O R MAY NOT PAY THE REMAINING INSTALLMENTS OF THE CONSIDERATION FOR SHA RES. IT CANNOT THEREFORE BE SAID THAT INTEREST ACCRUES AS SOON AS TIME LIMIT TO MAKE PAYMENT OF AN INSTALLMENT FOR PURCHASE OF SHARES EX PIRED. IN THIS VIEW OF THE MATTER WE HOLD THAT THE ADDITION HAD BEEN R IGHTLY DELETED BY THE LEARNED CIT(A). 9. KEEPING IN VIEW THE AFORESAID DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE WE DECLINE TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) AND UPHOLD HIS FINDINGS THEREOF. 10. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.2.2011. SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- S.V. MEHROTRA ACCOUNTANT MEMBER MUMBAI DATED: 25.2.2011 SURAJ DIAMONDS & JEWELLERY LTD. ITA NO.5737/MUM./2009 5 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A) MUMBAI CONCERNED (4) THE CIT MUMBAI CITY CONCERNED (5) THE DR E BENCH ITAT MUMBAI TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT MUMBAI BENCHES MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 22.2.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 22.2.2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 22.2.2011 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 22.2.2011 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 22.2.2011 SR.PS/PS 6. DATE OF PRONOUNCEMENT 25.2.2011 SR.PS 7. FILE SENT TO THE BENCH CLERK 25.2.2011 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER