THE BOMBAY OIL P.LTD, MUMBAI v. DCIT 9(2), MUMBAI

ITA 6873/MUM/2014 | 2010-2011
Pronouncement Date: 29-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 687319914 RSA 2014
Assessee PAN AAACT1392D
Bench Mumbai
Appeal Number ITA 6873/MUM/2014
Duration Of Justice 3 year(s) 16 day(s)
Appellant THE BOMBAY OIL P.LTD, MUMBAI
Respondent DCIT 9(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 29-11-2017
Assessment Year 2010-2011
Appeal Filed On 12-11-2014
Judgment Text
INCOME-TAX APPELLATE TRIBUNAL -BBENCH MUMBAI . . BEFORE S/SHRI B.R. BASKARAN ACCOUNTANT MEMBER AN D RAMLAL NEGI JUDICIAL MEMBER ./I.T.A./6873/MUM/2014 /ASSESSMENT YEAR: 2010-11 THE BOMBAY OIL PRIVATE LIMITED 411 SHAH AND NAHAR INDL. ESTATE DR. E. MOSES ROAD WORLI NAKA MUMBAI-400 018. PAN:AAACT 1392 D VS. DCIT-9(2) AAYAKAR BHAVAN M.K. MARG MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI T.A. KHAN-SR. DR ASSESSEE BY: SHRI NITESH JOSHI / DATE OF HEARING: 29/11/2017 / DATE OF PRONOUNCEMENT: 29/11/2017 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) . . / PER B.R. BASKARAN AM - THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 20-08- 2014 PASSED BY LD CIT(A)-20 MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2010-11. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN UPHOLDING THE ASSESSMENT OF INTEREST RECEIPTS UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST THE CLAIM OF THE ASSESSEE TO ASS ESS THE SAME UNDER THE HEAD INCOME FROM BUSINESS. THE ASSESSEE IS ALSO AG GRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING DISALLOWANCE OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT INTO FINANCIAL INSTRU MENTS MUTUAL FUNDS ETC. THE ASSESSEE RECEIVED INTEREST INCOME AND MISCELLAN EOUS INCOME AS DETAILED BELOW DURING THE YEAR UNDER CONSIDERATION:- INTEREST ON INCOME TAX REFUND - 18 87 297 INTEREST ON DEPOSITS WITH BANK - 7 47 260 6873/M/14 THE BOMBAY OIL PVT.LTD. 2 INTEREST ON DEPOSITS/ICD WITH CORPORATE - 33 97 8 92 INTEREST RECEIVED FROM A CONCERN - 10 421 ------------------ 60 42 870 ========== THE ASSESSEE OFFERED THE ABOVE SAID INTEREST INCOME UNDER THE HEAD BUSINESS. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEES A PPLICATION FOR GETTING STATUS OF NON-BANKING FINANCIAL COMPANY (NBFC) WAS REJEC TED BY RBI. FURTHER THE ASSESSEES OBJECTIVE WAS TO MAKE INVESTMENTS IN FIN ANCING/MUTUAL FUNDS. ACCORDINGLY HE HELD THAT THE DEPOSITS MADE WITH BAN KS/CORPORATE CANNOT BE TREATED AS BUSINESS ACTIVITY OF THE ASSESSEE. ACCO RDINGLY HE ASSESSED THE ABOVE SAID INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE HAD CLAIMED VARIOUS EXPENSES IN ITS PROFIT AND LOSS ACCOUNT. THE AO REJECTED THEM SINCE THERE WAS NO BUSINESS INCOME ASSESABLE IN THE HANDS OF THE ASSESSEE AS THE AO HAD ASSESSED THE INTEREST INCOM E UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL. 3. THE LD A.R SUBMITTED THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF INVESTING IN FINANCIAL INSTRUMENTS AND THE DEPOSITS WERE MADE IN THE COURSE OF CARRYING ON THE BUSINESS. HE SUBMITTED THAT THE AS SESSING OFFICER HAS ACCEPTED THE IDENTICAL BUSINESS ACTIVITIES CARRIED ON BY THE ASSESSEE IN THE PAST I.E. IN THE 143(3) ASSESSMENTS COMPLETED FOR ASSESSMENT YEARS 2005-06 TO 2009-10. ACCORDINGLY HE SUBMITTED THAT THERE IS NO NECESSITY FOR THE AO TO TAKE A DIFFERENT VIEW IN THIS YEAR ALONE AND THE SA ME HAS VIOLATED THE PRINCIPLES OF CONSISTENCY. IN THIS REGARD THE LD A.R PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF RADHOSWAMY SATSANG (198 ITR 321) THE DECISION RENDERED BY HON BLE BOMBAY HIGH COURT IN THE CASE OF GOPAL PUROHIT (336 ITR 287) AND ALSO OTHER DECISIONS. 4. THE LD A.R SUBMITTED THAT THE REJECTION OF T HE APPLICATION FOR SECURING NBFC STATUS WOULD NOT RENDER THE ASSESSEE BUSINESS LESS AND THE INCOME 6873/M/14 THE BOMBAY OIL PVT.LTD. 3 DERIVED BY THE ASSESSEE WOULD NOT LOSE BUSINESS CHA RACTER. IN THIS REGARD HE PLACED RELIANCE ON THE DECISION RENDERED BY THE CO- ORDINATE BENCH IN THE CASE OF PREIMUS INVESTMENT AND FINANCE LTD (ITA NO.4879/ MUM/2012 DATED 13- 05-2015) WHEREIN THE TRIBUNAL HAS EXPRESSED THE VI EW THAT THE DENIAL OF REGISTRATION BY RBI AS NBFC DOES NOT DECIDE THE ISS UE OF CARRYING ON BUSINESS. ACCORDINGLY THE LD A.R PLEADED THAT THE ORDER PASSE D BY THE TAX AUTHORITIES SHOULD BE REVERSED. 5. ON THE CONTRARY THE LD D.R PLACED STRONG RE LIANCE ON THE ORDER PASSED BY LD CIT(A). 6. HAVING HEARD RIVAL SUBMISSIONS WE ARE OF TH E VIEW THAT THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE. WE NOTICE THAT TH E ASSESSEE HAS BEEN EARNING INCOME OF IDENTICAL NATURE IN THE PAST AND THE ASSESSING OFFICER HAS ASSESSED THE SAME UNDER THE HEAD INCOME FROM BUSINE SS. EVEN THOUGH THE PRINCIPLE OF RESJUDICATA IS NOT APPLICABLE TO THE I NCOME TAX PROCEEDINGS YET WE NOTICE THAT THE TAX AUTHORITIES HAVE NOT GIVEN ANY REASON AS TO WHY THE DECISION TAKEN ON IDENTICAL ISSUE IN THE EARLIER YE ARS SHOULD NOT BE FOLLOWED. HENCE WE ARE OF THE VIEW THAT THE LD A.R WAS JUSTIF IED IN CONTENDING THAT THE PRINCIPLE OF CONSISTENCY SHOULD BE FOLLOWED IN THE YEAR UNDER CONSIDERATION. THE DEPOSITS MADE WITH THE BANKS AND CORPORATE IN OUR VIEW CAN BE CONSIDERED AS PART OF BUSINESS ACTIVITIES OF THE AS SESSEE AS IT IS ENGAGED IN THE BUSINESS OF INVESTING IN FINANCIAL INSTRUMENTS. 6.1. IT IS A FACT THAT THE RBI HAS REJECTED ITS APPLICATION FOR NBFC STATUS. IN THIS REGARD WE MAY NOTICE THAT THE CO-ORDINATE BEN CH HAS ALREADY TAKEN A VIEW IN THE CASE OF PREIMUS INVESTMENT AND FINANCE LTD (SUPRA) THAT THE SAID FACT DOES NOT DETERMINE THE NATURE OF INCOME. ACCO RDINGLY THE SAID REASON GIVEN BY THE TAX AUTHORITIES ALSO FAILS. 6873/M/14 THE BOMBAY OIL PVT.LTD. 4 7. AT THE TIME OF HEARING THE LD A.R FAIRLY A DMITTED THAT THE INTEREST ON INCOME TAX REFUND IS ASSESSABLE UNDER THE HEAD INCO ME FROM OTHER SOURCES. ACCORDINGLY WE UPHOLD THE VIEW TAKEN BY THE LD CIT( A) IN RESPECT OF INTEREST FROM INCOME TAX REFUND. 8. IN RESPECT OF REMAINING INTEREST INCOME WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO ASSESS THE SAME U NDER THE HEAD INCOME FROM BUSINESS. 9. WE NOTICE THAT THE AO HAS REJECTED THE CLAIM OF EXPENSES SINCE HE ASSESSED THE INTEREST INCOME UNDER THE HEAD INCOME FROM BUSINESS. THERE WAS ALSO NO OCCASION FOR HIM TO EXAMINE THE VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. IN THE PRECEDING PARAGRAPHS WE HAVE HEL D THAT THE INTEREST INCOME FROM DEPOSITS MADE WITH BANKS AND OTHER PART IES IS ASSESSABLE AS BUSINESS INCOME. IN THIS VIEW OF THE MATTER THE V ARIOUS EXPENSES CLAIMED BY THE ASSESSEE REQUIRE EXAMINATION AT THE END OF THE AO. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) IN RESPECT OF E XPENSES AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING THE SAME. 10. IN THE RESULT THE APPEAL FILED BY THE ASSE SSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER 2017. 29 2017 SD/- SD/- ( / RAM LAL NEGI ) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED :29.11.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 4. THE CONCERNED CIT / 6873/M/14 THE BOMBAY OIL PVT.LTD. 5 5. DR B BENCH ITAT MUMBAI / . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER / DY./ASST. REGISTRAR /ITAT MUMBAI.