INCOME TAX OFFICER-3(2)(1), MUMBAI v. M/S. POSITIVE PACKAGING INDUSTRIES PVT. LTD., MUMBAI

ITA 6671/MUM/2008 | 2002-2003
Pronouncement Date: 11-01-2011 | Result: Allowed

Appeal Details

RSA Number 667119914 RSA 2008
Assessee PAN AAACP2836Q
Bench Mumbai
Appeal Number ITA 6671/MUM/2008
Duration Of Justice 2 year(s) 1 month(s) 23 day(s)
Appellant INCOME TAX OFFICER-3(2)(1), MUMBAI
Respondent M/S. POSITIVE PACKAGING INDUSTRIES PVT. LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 11-01-2011
Date Of Final Hearing 29-12-2010
Next Hearing Date 29-12-2010
Assessment Year 2002-2003
Appeal Filed On 18-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 6671/MUM/2008 (ASSESSMENT YEAR: 2002-03) INCOME TAX OFFICER - 3(2)(1) M/S. POSITIVE PACKAGIN G INDUSTRIES ROOM NO. 673 6TH FLOOR PVT. LTD. 89 JULLY MAKER C HAMBERS-2 AAYAKAR BHAVAN M.K. ROAD VS. NARIMAN POINT MUMBAI 400021 MUMBAI 400020 PAN - AAACP 2836 Q APPELLANT RESPONDENT APPELLANT BY: SHRI D. SONGATE RESPONDENT BY: SHRI K. SHIVRAM O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) III MUMBAI DATED 22.08.2008. 2. REVENUE HAS RAISED THE FOLLOWING THREE GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE LOSS ON CANCELLATI ON OF PROPERTY RIGHTS OF RS.72 03 083/- AS CAPITAL LOSS INCURRED I N THE COURSE OF APPELLANTS BUSINESS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN RELYING UPON THE DECISION OF HO N'BLE BOMBAY HIGH COURT IN THE CASE OF IBM WORLD TRADE CORPORATI ON (186 ITR 412) WHERE THE FACTS AND CIRCUMSTANCES OF THE MATTE R AT HAND ARE ENTIRELY DIFFERENT. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 3. BRIEFLY STATED THE ASSESSEE IS ENGAGED IN THE MANUF ACTURING OF FLEXIBLE PACKAGING ITEMS AND DURING THE YEAR CLAIMED LOSS OF ` 72 03 083/- ARISING FROM CANCELLATION OF PROPERTY RIGHTS. AS PER THE FA CTS ON RECORD ASSESSEE ENTERED INTO AGREEMENT FOR PURCHASE OF A FLAT BY PA YING AN ADVANCE OF ` 3 60 20 385/- TO MAHINDRA INFRASTRUCTURAL PROJECTS LTD. SINCE THE PROJECT WAS DELAYED ASSESSEE COMPANY DECIDED TO CANCEL THE FLATS BOOKED IN 1994 AND AFTER NEGOTIATIONS SETTLED FOR A LESSER AMOUNT THAN THE AMOUNT ITA NO. 6671/MUM/2008 M/S. POSITIVE PACKAGING INDUSTRIES PVT. LTD. 2 ADVANCED. THE DIFFERENCE OF AMOUNT WAS CLAIMED AS B USINESS LOSS STATING THAT THE FLATS WERE BOOKED FOR ITS EXECUTIVES AND E MPLOYEES AND ACCORDINGLY THE LOSS WAS A BUSINESS LOSS. THE A.O. DID NOT AGRE E WITH THE CONTENTION AND FINDING THE FACT THAT ASSESSEES FACTORY WAS FAR AW AY FROM THE SO CALLED LOCATION OF FLATS HE WAS OF THE OPINION THAT ASSESS EE HAS MADE INVESTMENT IN THE SAID FLATS AND THE LOSS ARRIVED AT WILL BE A CA PITAL LOSS WHICH CANNOT BE ALLOWED AS BUSINESS LOSS. ACCORDINGLY HE DISALLOWED THE AMOUNT. 4. THE CIT(A) CONSIDERED THE ARGUMENTS OF THE A.O. AND ALSO THE AFFIDAVIT FILED BY THE ASSESSEE COMPANY AND ALLOWED THE LOSS AS BUSINESS LOSS APPLYING THE PRINCIPLES ESTABLISHED BY THE HON'BLE BOMBAY HIGH COURT JUDGEMENT IN THE CASE OF IBM WORLD CORPORATION 186 ITR 412. REVENUE IS AGGRIEVED. 5. THE LEARNED D.R. REFERRED TO VARIOUS REASONS OF THE A.O. IN DISALLOWING THE LOSS AND SUBMITTED THAT THE ASSESSEE HAS NOT PL ACED ON RECORD ANY EVIDENCE WITH REFERENCE TO ACQUISITION OF APARTMENT S FOR THE PURPOSE OF EMPLOYEES AND MANAGERIAL PERSONS WHEREAS THE LEARNE D COUNSEL SUBMITTED THAT ALL THE AGREEMENTS WERE PLACED ON RECORD AND S UPPORTED THE ORDER OF THE A.O. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND EXAMIN ED THE PAPER BOOK PLACED ON RECORD. AS SEEN FROM THE ORDER OF TH E CIT(A) THE AFFIDAVIT FILED IN SUPPORT OF THE CONTENTION WAS DATED 10.07.2008 I.E. AFTER THE ASSESSMENT ORDER HAS BEEN PASSED ON 31.03.2005. THERE SEEMS TO BE NO MENTION ABOUT THE ADMISSION OF THE AFFIDAVIT AS AN ADDITIONAL EVI DENCE BY THE CIT(A) IN HIS ORDER BUT HE RELIED ON THE FACTS AS SUPPORTED IN TH E AFFIDAVIT. MOREOVER AS SEEN FROM THE DEED OF CANCELLATION PLACED ON RECORD THE DEED OF CANCELLATION WAS DATED THE 5 TH DAY OF MARCH 2001 WHICH INCIDENTALLY PERTAINS TO THE YEAR 2000-01 RELEVANT TO A.Y. 2001-02 WHEREAS THE LOSS H AS BEEN CLAIMED IN A.Y. 2002-03. SINCE THIS ASPECT WAS NOT EXAMINED BY ANY OF THE AUTHORITIES AS TO HOW THE LOSS HAS BEEN CLAIMED IN THIS ASSESSMENT YE AR WE ARE OF THE VIEW THAT THE ISSUE REQUIRES RE-EXAMINATION BY THE A.O. BOTH ON FACTS AS WELL AS ON LAW. ACCORDINGLY THE ORDERS OF THE A.O. AND CIT (A) ON THIS ISSUE ARE SET ITA NO. 6671/MUM/2008 M/S. POSITIVE PACKAGING INDUSTRIES PVT. LTD. 3 ASIDE WITH THE DIRECTION TO RECONSIDER THE CLAIM OF LOSS AFTER EXAMINATION OF FACTS AS WELL AS LAW ON THE ISSUE. REVENUES GROUND S ARE CONSIDERED ALLOWED. 7. IN THE RESULT APPEAL IS ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY 2011. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 11 TH JANUARY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) III MUMBAI 4. THE CIT III MUMBAI CITY 5. THE DR C BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.