YASH SHARES & STOCK P. LTD, MUMBAI v. DCIT RG 8(3), MUMBAI

ITA 980/MUM/2009 | 2005-2006
Pronouncement Date: 23-12-2010 | Result: Allowed

Appeal Details

RSA Number 98019914 RSA 2009
Assessee PAN AAACY2000K
Bench Mumbai
Appeal Number ITA 980/MUM/2009
Duration Of Justice 1 year(s) 10 month(s) 11 day(s)
Appellant YASH SHARES & STOCK P. LTD, MUMBAI
Respondent DCIT RG 8(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 23-12-2010
Date Of Final Hearing 21-12-2010
Next Hearing Date 21-12-2010
Assessment Year 2005-2006
Appeal Filed On 12-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G MUMBAI BEFORE SHRI J SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 980/MUM/2009 (ASSESSMENT YEARS: 2005-06) YASH SHARES AND STOCK P LTD OFFICE NO.10 5 TH FLOOR SHAMIYA ENCLAVE VALLABHABHAI ROAD VILE PARLE (W)_ MUMBAI-400056 PAN:AAACY2000K .. APPELLANT VS DCIT RANGE 8(3) AAYAKAR BHAVAN M K ROAD MUMBAI-400020 RESPONDENT APPELLANT BY : SHRI PRADIP KEDIA RESPONDENT BY : SHRI VIJAY SHANKAR O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 4.12.2008 OF CIT(A)-XXIX ARISING FROM T HE PENALTY ORDER DATED 28.05.2008 PASSED UNDER SECTION 271(1)( C ) OF THE ACT FOR THE ASSESSMENT YEAR 2005-06. 2. ONLY GROUND RAISED BY THE ASSESSEE IN THIS APPEA L READS AS UNDER : ITA NO. 980/MUM/2009 (ASSESSMENT YEARS: 2005-06) 2 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN SUSTAINING THE PENALTY IMPOSED ON ESTIMATED DISALLOWANCE MADE U/S 14A OF RS.29 10 255/- BY THE AO 3. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARIN G LOSS OF RS.29 62 840/-. THE ASSESSMENT U/S 143(3) WAS COMP LETED AT A TOTAL LOSS OF RS.52 584/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS PAID AN INTEREST OF RS.29 10 255/-. THE ASSESSEE HAD MADE AN INVESTMENT IN SHARES FOR RS.4.50 CRORES APPROXIMA TELY. THE AO DISALLOWED THE INTEREST OF RS.29 10 255/- BY AP PLYING THE PROVISIONS OF SECTION 14A ON THE GROUND THAT THE IN COME ON THE INVESTMENT WAS NOT TAXABLE. SUBSEQUENTLY THE PEN ALTY U/S 271(1)( C ) WERE INITIATED AND A PENALTY OF RS.10 44 050/- WAS IMPOSED VIDE ORDER DATED 28.05.2008. THE ASSESSEE CHALLENGED THE PENALTY BEFORE THE CIT(A) WHO CONF IRMED THE ACTION OF THE AO. 4. BEFORE US THE LEARNED AR OF THE ASSESSEE SUBMIT TED THAT THE DISALLOWANCE WAS MADE BY THE AO BY APPLYI NG THE PROVISIONS OF SECTION 14A WHEREBY THE INTEREST EXP ENDITURE WAS DISALLOWED BY THE AO. THE ASSESSEE FILED RETU RN OF LOSS AND BY DISALLOWANCE THE INTEREST EXPENDITURE THE L OSS WAS REDUCED. HE FURTHER CONTENDED THAT THE ASSESSEE COU LD NOT CARRY FORWARD THE LOSS BECAUSE OF THE TIME LIMIT AN D THEREFORE ITA NO. 980/MUM/2009 (ASSESSMENT YEARS: 2005-06) 3 THERE CAN BE NO EFFECT ON THE REVENUE EVEN IN THE F UTURE ASSESSMENT YEARS. THE LEARNED AR HAS FURTHER CONTE NDED THAT THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS A ND PARTICULARS OF INCOME WHILE COMPUTING THE TOTAL INC OME AND THEREFORE THERE WAS NO SUPPRESSION OF ANY FACTS WHI CH MAY LEAD TO INITIATION OF PENALTY. HE HAS FURTHER CON TENDED THAT THE DISALLOWANCE OF THE INTEREST WAS MADE BY APPLY ING DEEMING PROVISIONS OF SECTION 14A. THE ASSESSEE D ID NOT RECEIVE ANY DIVIDEND DURING THE YEAR UNDER CONSIDER ATION. THERE WAS NO OTHER BUSINESS INCOME DURING THE YEAR THEREFORE THERE WAS NO EFFECT OF ANY REVENUE LOSS OR AVOIDANC E OF ANY TAX BY DEBITING THE INTEREST IN THE PROFIT AND LOSS ACCOUNT. HE HAS REFERRED THE PROFIT AND LOSS ACCOUNT BALANCE S HEET AS ON 31.3.2005. HE HAS ALSO RELIED UPON THE DECISION O F THE HON.SUPREME COURT IN THE CASE OF CIT V/S RELIANCE PETROPRODUCTS PVT.LTD REPORTED IN 322 ITR 158(SC ). 5. ON THE OTHER HAND THE LEARNED DR SUBMITTED THAT THE DECISION OF THE HON.SUPREME COURT IN THE CASE OF CIT V/S RELIANCE PETROPRODUCTS PVT.LTD (SUPRA) IS DISTINGU ISHABLE ON FACTS. HE HAS SUBMITTED THAT THE ISSUE IN THE SAID CASE WAS DISALLOWANCE OF INTEREST EXPENDITURE U/S 36(1)(III) HENCE ONLY ADDITIONAL ISSUE WAS RAISED U/S 14A. HE HAS REFERR ED THE PROVISIONS OF SECTION 14A(2) AND SUBMITTED THAT IT IS ITA NO. 980/MUM/2009 (ASSESSMENT YEARS: 2005-06) 4 MANDATORY ON THE PART OF THE AO TO DETERMINE THE AM OUNT OF EXPENDITURE INCURRED IN THE RELATION TO INCOME WHI CH DOES NOT FORM PART OF THE TOTAL INCOME OF THE ASSESSEE. UN DER THE SAID PROVISIONS WHEN THE ADDITIONS ARE MADE TO THE RET URNED INCOME OF THE ASSESSEE WHICH IS NOT DISPUTED AS NO APPEAL HAS BEEN FILED BY THE ASSESSEE THIS AMOUNTS TO FUR NISHING OF INCORRECT PARTICULARS OF INCOME. THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT WHICH IS NOT ALLOWABLE. THEREFORE THE PENALTY IS JUSTIFIED. HE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. FROM THE PROFIT AND LOSS ACCOUNT AND WELL AS BALANCE SHEET AS ON 31.3.2005 IT IS SEEN THAT THE ASSESSEE HAS SHOWN THE INVESTMENT OF RS.4.50 CORES AND NO OTHER FIXED ASSETS ARE SHOWN IN THE BALANCE SHEET. SINCE THERE WAS NO OT HER BUSINESS INCOME DURING THE YEAR THEREFORE THE IN TEREST EXPENDITURE WAS ON THE LOAN AND ADVANCES WHICH WERE USED BY THE ASSESSEE FOR INVESTMENT PURPOSE. IT IS NOT THE CASE OF BOGUS CLAIM OF INTEREST EXPENDITURE BUT THE INTERE ST WAS DISALLOWED BY THE AO BY INVOKING THE PROVISIONS O F SECTION 14A BECAUSE THE ASSESSEE USED THE BORROWED FUNDS FOR INVESTMENT PURPOSES AND THE INCOME FROM THE INVESTM ENT IS NOT TAXABLE UNDER THE PROVISIONS OF THE INCOME TAX ACT . THUS THE INTEREST EXPENDITURE ITSELF IS NOT IN DISPUTE B UT THE ITA NO. 980/MUM/2009 (ASSESSMENT YEARS: 2005-06) 5 DISALLOWANCE IS MADE ONLY BECAUSE OF THE DEEMING PR OVISIONS OF SECTION 14A. THEREFORE THE CLAIM OF THE ASSES SEE OF THE INTEREST EXPENDITURE HAS BEEN DISALLOWED AS THE SA ME WAS NOT ALLOWABLE UNDER THE PROVISIONS OF SECTION 14A. HOWE VER THE PROVISIONS OF SUB-SECTION (2) OF SECTION 14A ARE NO T APPLICABLE FOR THIS ASSESSMENT YEAR AS THE SAME ARE APPLICABLE W.E.F 1.4.2007. WHEN THERE IS NO CASE OF ANY BOGUS CLAIM AND THE CLAIM OF THE ASSESSEE IS NOT ALLOWED AS THE SAME I S HIT BY THE PROVISIONS OF ACT IT DOES NOT AMOUNT TO FURNISHIN G OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE ASSESSEE HAD DISCLOSED ALL PRELIMINARY FACTS AND RELEVANT RECORD THEREBY THE LOANS AND ADVANCE AND INVESTMENT IN SHARES AND THE INTEREST EXPENDITURE O N LOAN AND ADVANCES WERE DULY EXPLAINED IN THE RECORD FILED AL ONG WITH THE RETURN. THE HON. SUPREME COURT IN THE CASE OF CIT V/S RELIANCE PETROPRODUCTS PVT.LTD HAS HELD THAT MERE DISALLOWANCE OF CLAIM OF THE ASSESSEE BY APPLICATI ON OF PROVISIONS OF LAW DOES NOT ATTRACTS THE PENALTY U/S 271(1)( C) WHEN THE PRIMARY FACTS ARE DISCLOSED BY THE ASSESS EE BECAUSE THE SAME DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 7. IN VIEW OF THE ABOVE DISCUSSION THIS IS A FIT C ASE WHERE PENALTY LEVIED BY THE AO IS NOT JUSTIFIED. ACCORD INGLY WE DELETE THE PENALTY. ITA NO. 980/MUM/2009 (ASSESSMENT YEARS: 2005-06) 6 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON 23.12.2010 SD SD (J.SUDHAKAR REDDY) (V IJAY PAL RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI ON THIS 23 RD DAY OF DEC 2010 SRL:221210 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI