BNP PARIBAS SECURITIES INDIA P.LTD,MUMBAI vs. ITO 1(1)(4), MUMBAI

In not considering June 1, 2008 as the date of set-up and the date of commencement of the business of the Appellant, and taxing the income of Rs.12,25,71,917 earned by the Appellant during the period June 1, 2008 to December 31, 2008 under section 56 of the Act as ‘Income from Other Sources’ and not under section 28 of the Act as ‘Business Income’.

In confirming that expenses in the nature of (a) operating and other costs, (b) personnel cost and (c) registration fees, aggregating to Rs.20,80,75,902 fall within the ambit of section 35D of the Act.

In not allowing a deduction for (a) operating and other coats, (b) personnel cost and (c) registration fees, aggregating to Rs.20,80,75,902 under section 37(1) of the Act.

Without prejudice to Grounds 7 to 9 above, in not allowing (a) operating and other costs, and (b) personnel cost as a deduction under section 57(iii) of the Act from the income of Rs.12,25,71,917 earned by the Appellant during the period June 1, 2008 to December 31, 2008.

In not deleting interest levied under section 234B of the Act amounting to Rs.39,65,445.

In not deleting interest levied under section 234D of the Act amounting to Rs.7,99,840”.

Before us, the Ld. Counsel Shri Ajit Kumar Jain, submitted that the major additions challenged by the assessee relates to firstly, disallowance of delayed payment of employee’s contribution to Provident Fund; secondly, cessation of tax liability under section 21(1) and lastly, disallowance of pre-commencement expenses on the ground that the same are not qualified for deduction under section 35D. At the outset he pointed out that, before the ld. CIT(A), the assessee had represented its case, however, on the date of बीएनपी प�रबास से�यू�रट�स इं�डया �ाइवेट �ल�मटेड 4 BNP Paribas Securities India P Ltd 6th January, 2014, the assessee was made to understand or was under the impression that further hearing would be provided by the ld. CIT(A) to clarify and make further submissions. In fact, assessee vide letter dated 10th January, 2014 (filed on 13th January, 2014) in the office of CIT(A), the assessee had specifically requested the Ld. CIT(A) to give opportunity for further hearing and to make additional submissions in support of the issues raised in the appeal before him. However, the Ld. CIT(A) thereafter, did not give any opportunity to the assessee and passed the appellate order on 21.01.2014. Thus, due and proper opportunity of hearing was not given by the First Appellate Authority to give proper rebuttal with respect to each and every addition made by the AO. He further submitted that, the assessee has also filed a petition for admission of additional evidences on 9th August, 2016 before this Tribunal, wherein, it has filed certain documents in support of its case which goes to the root of the issue involved. The reasons for admission have been elaborated in detail in the said petition. Thus, he requested that not only the additional evidences should be admitted but the appeal of the assessee should be heard on merits. By way of an alternative submission, he submitted that the entire matter can be restored back to the file of the CIT(A) or AO so that proper representation/submissions can be made by the assessee, because, at the stage of the first appellate authority adequate opportunity to the assessee was not given to represent its case.

On the other hand, Ld. CIT-DR, Mr. N P Singh submitted that, nothing is borne out from the order of the CIT(A) that he) had required the assessee to furnish any बीएनपी प�रबास से�यू�रट�स इं�डया �ाइवेट �ल�मटेड 5 BNP Paribas Securities India P Ltd additional information or submission for which any further date was required to be given to the assessee. The assessee on its own volition has presumed that further date was to be given for the hearing and, therefore, assessee cannot plead that there is lack of providing proper or adequate opportunity of hearing by the First Appellate Authority. In any case, he submitted that if the additional evidences are to be admitted then the entire matter should be restored back to the file of the AO for fresh adjudication on the entire issues raised before the Tribunal.

We have heard the rival contentions and also perused the relevant material placed before us on the preliminary ground as raised in 1st ground. In this regard the main contention of the Ld. Counsel Mr. Ajit Jain before us is that, there has been lack of proper opportunity of hearing by the First Appellate Authority. In support, he had drew our attention to letter filed before the CIT(A) which has been placed at paper book at page 169, the contents of which reads as under:- “January 10, 2014 The Commissioner of income-tax (Appeals)- I, 4th Floor, Piramal Chambers, Lalbaug, Parel, Mumbai -400 012 Dear Sir, Re: BNP Paribas Securities India Pvt Ltd (‘BNP Securities) PAN – AADCB 4690 F Assessment Year (‘AY’) 2009-10 Appeal No: IT-148/11-12 Appeal filed under section 246A(1)(a) of the Income-tax Act, 1961 We refer to the appeal submitted by our client, BNP Securities in respect of the AY 2009-10. In this respect and further to our meeting on January 6, 2014 in connection with this appeal, we understand that a further hearing will be scheduled to discuss certain aspects of the appeal prior to your office passing an order disposing the appeal.