INSTANT HOLDINGS LTD, v. ASSTT CIT RG 8(1),

MA 531/MUM/2011 | 2003-2004
Pronouncement Date: 24-02-2012 | Result: Allowed

Appeal Details

RSA Number 53119924 RSA 2011
Assessee PAN AACCK5600M
Bench Mumbai
Appeal Number MA 531/MUM/2011
Duration Of Justice 3 month(s) 13 day(s)
Appellant INSTANT HOLDINGS LTD,
Respondent ASSTT CIT RG 8(1),
Appeal Type Miscellaneous Application
Pronouncement Date 24-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 24-02-2012
Assessment Year 2003-2004
Appeal Filed On 11-11-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI R.K.PANDA (A .M) M.A.NO.531/MUM/2011 (ARISING OUT OF ITA NO.3734/MUM/2009 A.Y. 2003-04) M/S. INSTANT HOLDINGS LIMITED FORMERLY KNOWN AS M/S. KEC HOLDINGS LIMITED 1 ST FLOOR CEAT MAHAL 463 DR. ANNIE BESANT ROAD WORLI MUMBAI 400 030. PAN: AACCK 5600M (APPLICANT) VS. THE ASSTT. COMMISSIONER OF INCOME TAX RANGE 8(1) MUMBAI. (RESPONDENT) APPELLANT BY : SHRI RONAK G. DOSHI RESPONDENT BY : SHRI C.G.K.NAIR DATE OF HEARING : 24/02/2012 DATE OF PRONOUNCEMENT : 24/0 2/2012 ORDER PER N.V.VASUDEVAN J.M THIS IS AN APPLICATION FILED BY THE ASSESSEE PRAY ING FOR RECTIFICATION OF CERTAIN APPARENT ERRORS IN THE ORDER OF THE TRIBUNA L DATED 22/7/2011. 2. GROUND NO.II & III RAISED BY THE ASSESSEE IN THE AFORESAID APPEAL WAS WITH REGARD TO DISALLOWANCE OF CLAIM FOR DEDUCTION MADE BY THE ASSESSEE ON ACCOUNT OF BAD DEBTS WRITTEN OFF AMOUNTING TO RS. 1 .75 CRORES WHICH WAS NOT ALLOWED BY THE REVENUE AUTHORITIES. THE AO AND THE CIT(A) HAD DISMISSED THE ASSESSEES CLAIM OF BAD DEBTS U/S. 36(1)(VII) O N THE GROUND THAT APPLICANT COULD NEITHER PROVE THAT DEBTS WRITTEN OFF AS BAD D EBTS HAD BECOME BAD NOR THE INCOME THEREON WAS OFFERED TO TAX IN EARLIER YE AR. FURTHER THE CIT(A) DISMISSED THE APPEAL FILED BY THE APPLICANT ON THE GROUND THAT NO EVIDENCE M.A.NO.531/MUM/2011 2 WAS SUBMITTED BEFORE THE AO AND THERE WAS NO REASON TO ADMIT ADDITIONAL EVIDENCE. THESE FACTS ARE NOTED IN PARAS 3 AND 4 OF THE ORDER. 3. IT IS THE PLEA OF THE ASSESSEE IN THIS MISCELLA NEOUS APPLICATION THAT AT THE TIME OF HEARING OF THE APPEAL THE AUTHORISED REPRE SENTATIVE (AR) OF THE ASSESSEE HAD SUBMITTED THAT SINCE ASSESSEE WAS IN T HE MONEY LENDING BUSINESS THERE WAS NO REQUIREMENT OF PROVING THAT THE DEBTS WRITTEN OFF AS BAD WAS OFFERED TO TAX AS INCOME IN EARLIER YEARS I N VIEW OF SECTION 36(L)(VII) READ WITH SECTION 36(2) OF THE ACT. THIS SUBMISSION OF THE ASSESSEE IS ALSO RECORDED AT PARA 5 OF THE ORDER. IT HAS FURTHER BE EN STATED IN THE MA THAT AT THE HEARING THE AR THUS URGED THE BENCH TO ALLOW T HE APPEAL EVEN WITHOUT CONSIDERING THE ADDITIONAL EVIDENCES (WHICH WERE TH E LEDGER ACCOUNTS OF PARTIES ETC). HOWEVER THE HONBLE BENCH EXPRESSED THE VIEW THAT THE MATTER SHOULD BE RESTORED BACK TO THE AO TO CONSIDER THE S AID EVIDENCES AND DECIDE THE ISSUE AFRESH. HOWEVER IN THE ULTIMATE ORDER P ASSED BY THE TRIBUNAL THE TRIBUNAL HAS DISMISSED THE ASSESSEES GROUND NO. II & III ON THE GROUND THAT SUMS GIVEN AS INTER CORPORATE DEPOSITS BY THE ASSES SEE CANNOT BE CONSIDERED AS MONEY LENT IN ORDINARY COURSE OF BUSI NESS OF MONEY LENDING AND IT CONSTITUTED A CAPITAL LOSS WHICH CANNOT BE A LLOWED AS A DEDUCTION U/S. 36(L)(VII) OF THE ACT. 4. IT IS THE PLEA OF THE ASSESSEE THAT THE BASIS O F DISMISSING THE ASSESSEES GROUND OF APPEAL WAS NOT THE SAME AS GIVEN BY AO AN D CONFIRMED BY THE CIT(A). IT IS FURTHER THE PLEA THAT THE TRIBUNAL D ID NOT CONFRONT THE ASSESSEE ABOUT ITS INTENTION TO DISALLOW THE CLAIM OF THE AS SESSEE ON THE GROUND THAT THE CLAIM FOR DEDUCTION AMOUNTED TO ALLOWING A CAPI TAL LOSS WHICH WAS NOT PERMITTED IN LAW. IT IS THE PLEA OF THE ASSESSEE T HAT HAD THE HONBLE TRIBUNAL CONFRONTED THE AR WITH THE VIEW WHICH THE HONBLE T RIBUNAL HAS TAKEN AND WHICH WAS NEITHER THE VIEW TAKEN BY LOWER AUTHORI TIES AND NOT WHAT WAS DISCUSSED AT THE TIME OF HEARING THE AR WOULD HAVE SUBSTANTIATED HIS CLAIM AND EVEN SUBMITTED THE DECISIONS IN SUPPORT OF THE CLAIM WHICH COULD NOT BE M.A.NO.531/MUM/2011 3 HANDED OVER SINCE THE BENCH HAD EXPRESSED THEIR VI EW TO RESTORE THE MATTER TO THE AO FOR CONSIDERING THE ADDITIONAL EVIDENCE. THE ASSESSEE HAS THUS SUBMITTED THAT IT WAS NOT GIVEN OPPORTUNITY TO GIVE SUBMISSIONS REGARDING THE SAME AT THE TIME OF THE APPELLATE HEARING WHIC H VIOLATES PRINCIPLES OF NATURAL JUSTICE AND HENCE THE ORDER IN SO FAR AS I T RELATES TO GROUND NO.11 AND III SHOULD BE RECALLED AND THOSE GROUNDS SHOUL D BE HEARD AFRESH. 5. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COU NSEL FOR THE ASSESSEE WHO REITERATED THE STAND OF THE ASSESSEE A S CONTAINED IN THE MISCELLANEOUS APPLICATION. THE LEARNED DR RELIED O N THE ORDER OF THE TRIBUNAL. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO THE GRIEVANCE PROJECTED IN THE MISCELLANEOUS APPLICATION. WE HAV E ALSO PERUSED OUR LOG BOOK FOR THE HEARING ON 18/7/2011. WE FIND THAT THE ARGUMENTS THAT HAVE BEEN NOTED BY THE TRIBUNAL VIS--VIS GROUND NO.II & III OF THE ASSESSEE OF THE ASSESSEES APPEAL WAS ONLY WITH REGARD TO THE F ACT THAT THE SUM IN QUESTION WAS MONEY LENT IN THE ORDINARY COURSE OF B USINESS OF MONEY LENDING AND THAT THE INTEREST INCOME ON SUCH MONEY LENDING HAD BEEN OFFERED TO TAX. REFERENCE HAD BEEN MADE TO THE ADDI TIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE CIT(A). THE D.RS SUBMISSIONS WAS THAT THE ISSUE AT BEST CAN ONLY BE REMANDED TO THE AO FOR EXAMINATIO N OF THE CLAIM MADE BY THE ASSESSEE. THE QUESTION AS TO WHETHER THE LOSS IN QUESTION CAN BE CONSIDERED TO BE A CAPITAL LOSS AND THEREFORE DISAL LOWANCE CAN BE UPHELD ON THAT GROUND WAS NEVER ARGUED OR CONFRONTED TO THE P ARTIES AT THE TIME OF HEARING. WE ARE OF THE VIEW THAT THE DISALLOWANCE MADE BY THE REVENUE AUTHORITIES CAN BE CONSIDERED EVEN FROM THIS ANGLE AND IF THE LOSS IS FOUND TO BE CAPITAL LOSS THEN THE DISALLOWANCE MADE BY THE R EVENUE AUTHORITIES CAN BE SUSTAINED ON THAT GROUND ALSO. BUT THE ASSESSEE SH OULD BE GIVEN OPPORTUNITY OF BEING HEARD IF SUCH A COURSE OF ACTI ON IS PROPOSED TO BE M.A.NO.531/MUM/2011 4 ADOPTED. WE ARE OF THE VIEW THAT NO SUCH OPPORTUNI TY HAD BEEN GIVEN TO THE ASSESSEE. IN THE ABOVE CIRCUMSTANCES WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE ORDER OF THE TRIBUNAL IN SO FAR AS I T RELATES TO GROUND NO.II & III RAISED BY THE ASSESSEE SHOULD BE RECALLED AND THE A SSESSEE SHOULD BE AFFORDED OPPORTUNITY OF BEING HEARD ON THOSE TWO GR OUNDS TO THE LIMITED EXTENT AS TO WHETHER LOSS IN QUESTION WAS A CAPITA L LOSS AND THEREFORE NOT ALLOWABLE AS A DEDUCTION. THE QUESTION WHETHER THE DEDUCTION CAN BE ALLOWED U/S. 36(1)(VII) OF THE INCOME TAX ACT 1961 ALSO NEEDS TO BE EXAMINED IF THE TRIBUNAL COMES TO THE CONCLUSION T HAT THE LOSS IN QUESTION IS NOT A CAPITAL LOSS. ACCORDINGLY WE DIRECT THE R EGISTRY TO FIX THE APPEAL BEING ITA NO.3734/MUM/2009 FOR FRESH HEARING ONLY W ITH REGARD TO GROUND NO.II & III OF THE SAID APPEAL AS PER THE DIRECTION S GIVEN ABOVE. 7. IN THE RESULT THE MISCELLANEOUS APPLICATION IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 24 TH DAY OF FEB.2012 SD/- SD/- (R.K.PANDA ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED. 24 TH FEB.2012 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RA BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR I TAT MUMBAI BENCHES MUMBAI. VM. M.A.NO.531/MUM/2011 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 24/02/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 24/02/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER