METMIN INVESTMENT AND TRADING P. LTD, MUMBAI v. ITO WD 3(2)(2),

ITA 7222/MUM/2008 | 1999-2000
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 722219914 RSA 2008
Assessee PAN AACCM2480P
Bench Mumbai
Appeal Number ITA 7222/MUM/2008
Duration Of Justice 1 year(s) 4 month(s) 8 day(s)
Appellant METMIN INVESTMENT AND TRADING P. LTD, MUMBAI
Respondent ITO WD 3(2)(2),
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 30-04-2010
Date Of Final Hearing 13-04-2010
Next Hearing Date 13-04-2010
Assessment Year 1999-2000
Appeal Filed On 22-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI F BENCH MUMBAI BEFORE SHRI N.V. VASUDEVAN (JUDICIAL MEMBER) AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) I.T.A NO.7222/MUM./2008 ASSESSMENT YEAR : 1999-2000 DATE OF HEARING 13.4.2010 METMIN INVESTMENT AND TRADING P. LTD. 161/162 MITTAL COURT A WING NARIMAN POINT MUMBAI 400 021 AACCM2480P .. APPELLANT VS INCOME TAX OFFICER WARD 3(2)(2) MUMBAI RESPONDENT APPELLANT BY : SHRI F.V. IRANI RESPONDENT BY : SHRI VIRENDRA OJHA O R D E R PER PRAMOD KUMAR A.M. 1. THIS IS AN APPEAL BY THE ASSESSEE AND IS DIRECTE D AGAINST LD. COMMISSIONER (APPEAL)S ORDER DATED 10 TH OCTOBER 2008 FOR THE ASSESSMENT YEAR 1999-2000. ITA NO.7222/MUM./2008 METMIN INVESTMENT AND TRADING P. LT.D [2] 2. IN THE FIRST SET OF GRIEVANCES RAISED BY THE ASSESS EE FOLLOWING GROUNDS OF APPEAL ARE RAISED:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ITO 3( 2)(2) MUMBAI IN REOPENING THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT 1961 AND HOLDING THAT THE SAME IS JUSTIFIED. 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O. IN COMPUTING BOOK PROFIT U/S 115JA WITHOUT ADJUSTING T HE BROUGHT FORWARD BUSINESS LOSS ON THE ALLEGED GROUND THAT SINCE THE APPELLANT DOES NOT HAVE ANY BROUGHT FORWARD DEPRECIATION NO ADJUSTMENT IS PERMISSIBLE DISREGARDING THE FACT THAT IN THE ABSENCE OF ANY FI XED ASSET THE QUESTION OF EXISTENCE OF ANY BROUGHT FORWARD DEPRECIATION WO ULD NOT ARISE. 3. THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALL OWANCE OF RS.1 99 939 BEING EXPENDITURE ON INCREASE IN PAID U P CAPITAL ON THE ALLEGED GROUND THAT IT IS CAPITAL EXPENDITURE DISR EGARDING THE FACT THAT THE SAID EXPENDITURE WAS INCURRED TO MEET THE WORKI NG CAPITAL REQUIREMENTS OF THE APPELLANT AND ALSO HELPED THE A PPELLANT IN MAKING PROFITS. 4. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O. OF MAKING VARIOUS ADDITIONS WHICH WERE NOT THE SUBJECT MATTER OF RE- ASSESSMENT DISREGARDING THAT RE-ASSESSMENT PROCEED INGS HAVE TO BE CONFINED TO AREAS FOR WHICH ASSESSMENT WAS REOPENED . 5. THE ITO ERRED IN LEVYING INTEREST U/S 234D OF TH E ACT DISREGARDING THE FACT THAT SECTION 234D IS APPLICABLE FROM JUNE 01 2003. 3. THE ONLY GRIEVANCE PRESSED BY THE ASSESSEE BEFORE U S IS THAT THERE IS NO FRESH MATERIAL WHICH HAS COME ON RECORD AFTER INTIMATION U/S 143(1)(A) IS ISSUED AND THEREFORE IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAD AN Y REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. RELIANCE IS PLACED ON TRIBUNAL S ORDER IN THE CASE OF AIPITA MARKETING P. LTD. VS ITO 21 SOT 302 IN SUPPORT OF THE PROPO SITION THAT EVEN IN THE CASES REOPENED WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT YE AR SOUGHT TO BE REOPENED AND EVEN IF THE ORIGINAL ASSESSMENT IS COMPLETED U/S 143(1)(A) UNLESS SOME FRESH MATERIAL COMES INTO ITA NO.7222/MUM./2008 METMIN INVESTMENT AND TRADING P. LT.D [3] EXISTENCE WHICH INDICATES ESCAPEMENT OF INCOME THE ASSESSMENT CANNOT BE REOPENED. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND CONTENDS THAT IN VIEW OF HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF ACIT VS RAJ ESH JHAVERI STOCK BROKERS P. LTD. 291 ITR 500 IT IS NOT REALLY NECESSARY THAT ONLY WHEN ADDITIONAL FACTS COME TO LIGHT THE ASSESSING OFFICER CAN REOPEN THE ASSESSMENT IN A CA SE NOT COVERED BY THE PROVISO TO SECTION 147 I.E. IN THE CASE OF RE-OPENING WITHIN FOUR YEA RS. THE EXPRESSION USED BY THE HON'BLE SUPREME COURT AS POINTED OUT BY THE LEARNED DEPART MENTAL REPRESENTATIVE IS IF THE ASSESSING OFFICER FOR WHATEVER REASONS HAS REASON S TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT IT CONFERS HIM JURISDICTION TO REOPEN T HE ASSESSMENT. LEARNED COUNSEL FOR THE ASSESSEE POINTS OUT THAT THE SAID JUDGMENT HAS BEEN DULY CONSIDERED BY THE TRIBUNAL AND YET THE PRINCIPLE WAS SO LAID DOWN BY THE TRIBUNAL. 4. WE ARE UNABLE TO SEE ANY MERITS IN ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS AN ADMITTED POSITION THAT THE CASE IS NOT COVERED BY PROVISO TO SECTION 147. THEREFORE IN VIEW OF HON'BLE SUPREME COURTS JUDGM ENT IN RAJESH JHAVERIS CASE (SUPRA) IF THE ASSESSING OFFICER FOR WHATEVER REASONS HAS RE ASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS HIM THE JURISDICTION TO RE-O PEN THE ASSESSMENT . IN THE CASE OF PARIDHAN EXPORTS VS ACIT 215 CTR 541 HONBLE MADRAS HIGH C OURT HAS FOLLOWING THE AFORESAID SUPREME COURT JUDGMENT HELD THAT AS LONG AS ASSESS ING OFFICER HAS CAUSE OR JUSTIFICATION TO SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT HE CANN OT RE-OPEN THE ASSESSMENT. THERE IS NO MENTION ABOUT THE FRESH MATERIAL BEING REQUIRED BEFORE ASSESSEE CAN DO SO. LEARNED COUNSEL FOR THE ASSESSEE HAS THEN REFERRED TO TRIBU NALS ORDER IN THE CASE OF N.C. GUPTA VS ACIT 90 ITD 768 IN SUPPORT OF THE PROPOSITION THA T WHERE TWO VIEWS ARE POSSIBLE AND ONE OF THE VIEWS IS ACCEPTED IN THE COURSE OF ASSESSMEN T U/S 143(1) ASSESSMENT CANNOT BE RE- OPENED. THIS ARGUMENT HOWEVER PROCEEDS ON THE ASS UMPTION THAT ASSESSING OFFICER CAN BE DEEMED TO HAVE FORMED AN OPINION ON MERITS EVEN IN THE COURSE OF ASSESSMENT U/S 143(1)(A) AN ASSUMPTION WHICH NO LONGER HOLDS GOO D IN LAW. THE ASSESSEE THUS DERIVES NO ADVANTAGE FROM THIS JUDICIAL PRECEDENT EITHER. LEAR NED COUNSEL FOR THE ASSESSEE HAD ALSO RAISED AN ARGUMENT THAT THE APPROVAL OF THE JT. COM MISSIONER OF INCOME TAX AS REQUIRED U/S 151(2) BEFORE ASSESSMENT CAN BE RE-OPENED WAS NOT OBTAINED BY THE ASSESSING OFFICER. HOWEVER WHEN THE LEARNED DEPARTMENTAL REPRESENTATI VE CONFRONTED HIM WITH THE ITA NO.7222/MUM./2008 METMIN INVESTMENT AND TRADING P. LT.D [4] EVIDENCE OF SUCH APPROVAL HAVING BEEN OBTAINED IN T IME LEARNED COUNSEL FOR THE ASSESSEE ABANDONED THAT ARGUMENT. IN VIEW OF THESE DISCUSSIO NS WE SEE NO MERIT IN ASSESSEES GRIEVANCE AGAINST RE-OPENING OF ASSESSMENT WE REJE CT THE SAME. 5. GROUND NO.I IS THUS DISMISSED. 6. IN GROUND NO.II THE ASSESSEE HAS RAISED FOLLOWING GRIEVANCES:- 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O. IN COMPUTING BOOK PROFIT U/S 115JA WITHOUT ADJUSTING T HE BROUGHT FORWARD BUSINESS LOSS ON THE ALLEGED GROUND THAT SINCE THE APPELLANT DOES NOT HAVE ANY BROUGHT FORWARD DEPRECIATION NO ADJUSTMENT IS PERMISSIBLE DISREGARDING THE FACT THAT IN THE ABSENCE OF ANY FI XED ASSET THE QUESTION OF EXISTENCE OF ANY BROUGHT FORWARD DEPRECIATION WO ULD NOT ARISE. 7. WE FIND THAT THE ABOVE ISSUE IS COVERED AGAINST THE ASSESSEE BY TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 . WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY A CO-O RDINATE BENCH. RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE ORDERS OF THE AUTHORITIES BELOW AND DECLINE TO INTERFERE IN THE MATTER. 8. GROUND NO.II IS THUS DISMISSED. 9. IN GROUND NO.III THE ASSESSEE HAS RAISED THE FOLLO WING GRIEVANCES:- 3. THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALL OWANCE OF RS.1 99 939 BEING EXPENDITURE ON INCREASE IN PAID U P CAPITAL ON THE ALLEGED GROUND THAT IT IS CAPITAL EXPENDITURE DISR EGARDING THE FACT THAT THE SAID EXPENDITURE WAS INCURRED TO MEET THE WORKI NG CAPITAL REQUIREMENTS OF THE APPELLANT AND ALSO HELPED THE A PPELLANT IN MAKING PROFITS. ITA NO.7222/MUM./2008 METMIN INVESTMENT AND TRADING P. LT.D [5] 10. WHILE LEARNED COUNSEL DOES NOT DISPUTE THAT HONBL E SUPREME COURT HAS IN THE CASE OF BROOKE BOND INDIA LTD VS CIT (225 ITR 798) HAS HELD THAT EXPENDITURE INCURRED ON INCREASE OF CAPITAL IS A CAPITAL EXPENDITURE IN NAT URE HE SEEKS TO DISTINGUISH THE SAID JUDGMENT ON THE GROUND THAT THE ASSESSEE IS AN INVE STMENT COMPANY AND ITS ENTIRE BUSINESS IS DEALING IN MONEY AND THEREFORE THE RATIO OF T HIS DECISION WILL NOT APPLY ON THE ASSESSEES CASE. OUR ATTENTION IS INVITED TO THE FACT THAT IN THE SAID CASE THERE WAS NO FINDING BY THE TRIBUNAL THAT EXPANSION OF CAPITAL WAS UNDERTAKEN B Y THE ASSESSEE FOR THE PURPOSES OF MEETING THE NEED OF WORKING FUNDS OF THE COMPANY FO R CARRYING ON BUSINESS. 11. WE ARE UNABLE TO SEE ANY MERITS ANY LEARNED COUNSEL S PLEA. IN THE CASE OF BROOKE BOND (SUPRA) THEIR LORDSHIPS HAD HAVING NOTED LAC K OF THE FINDINGS AS POINTED OUT BY THE LEARNED COUNSEL ALSO OBSERVED THAT IN ANY EVENT THEOBSERVATIONS OF THIS COURT IN PUNJAB STATE DEVELOPMENT CORPORATION VS CIT ( 140 C TR 94) CLEARLY INDICATE THAT THOUGH THE INCREASE IN CAPITAL RESULTS IN EXPANSION OF CAP ITAL BASE OF THE COMPANY AND MAY ALSO HELP IN PROFIT MAKING THE EXPENSES INCURRED IN THAT CON NECTION STILL RETAIN THE CHARACTER OF CAPITAL EXPENDITURE SINCE THE EXPENDITURE IS DIRECT LY RELATED TO EXPANSION OF CAPITAL BASE OF THE COMPANY. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF THE HONBLE SUPREME COURT WE APPROVE THE ORDER OF THE AUTHORITIES BELOW AND D ECLINE TO INTERFERE IN THE MATTER. 12. GROUND NO III IS THUS DISMISSED. 13. GROUND NO. IV IS NOT PRESSED AND IS DISMISSED AS S UCH. 14. IN GROUND NO. V THE ONLY GRIEVANCE RAISED BY THE A SSESSEE IS AGAINST LEVY OF INTEREST UNDER SECTION 234 D WHICH IS APPLICABLE ONLY FROM 1 ST JUNE 2003. 15. LEARNED REPRESENTATIVES AGREE THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY SPECIAL BENCH DECISION IN THE CASE OF ITO VS EKTA PROMOTORS PVT LTD ( 113 ITD ITA NO.7222/MUM./2008 METMIN INVESTMENT AND TRADING P. LT.D [6] SB 719). RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO GIVE RELIEF ACCORDI NGLY. 16. GROUND NO. V IS THUS ALLOWED. 17. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 30 TH DAY OF APRIL 2010. 18. SD/- (N V VASUDEVAN) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI; 30 TH DAY OF APRIL 2010 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT MUMBAI (4) CIT(A) MUMBAI (5) DR F BENCH (6) GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PRADEEP J. CHOWDHURY MUMBAI BENCHES SR. PRIVATE SECRETARY ITA NO.7222/MUM./2008 METMIN INVESTMENT AND TRADING P. LT.D [7] DATE INITIAL 1. DRAFT DICTATED ON 23.4.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26.4.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26.4.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 26.4.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26.4.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 30.4.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 30.4.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER