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Income Tax Appellate Tribunal, “ C ” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI SANJAY ARORA, AM
अपीलाथ� ओर से / Revenue by Dr.P.Danial, Standing Counsel ��यथ� क� ओर से/Assessee by None सुनवाई क� तार�ख /Date of Hearing : 04/07/2016 घोषणा क� तार�ख /Date of Pronouncement : 03/08/2016 आदेश / O R D E R PER BENCH:
This is department’s appeal challenging the order dated 09.1.2012 passed by the ld.CIT(A)-37, wherein the assessee has raised the following grounds of appeal: “On the facts and in the circumstances of the case and in law, learned CIT (A) has erred in allowing business expenses of Rs.8,85,385/- even though there was no business in existence during the year as the assessee was debarred by SEBI to carryout business activities vide order dated 11.4.2001;
2. On the facts and in the circumstances of the case and in law, learned CIT (A) has erred in holding interest of Rs.38,27,605/- from fixed deposits and miscellaneous income of Rs.10,800/- as business income instead of “income from other sources” without considering the 2 fact that there was no business in existence during the year and the assessee had himself shown them as “other income”.
None appeared on behalf of the assessee despite service of notice.
However, finding that the matter can be proceeded with in the absence of the assessee, we are doing so.
Grievances of the revenue are that the learned CIT (A) allowed the business expenses of Rs.8,85,385/- even though there was no business in existence during the year as the assessee was debarred by SEBI to carryout the business activities and also erred in holding interest of Rs.38,27,605/- from fixed deposits and miscellaneous income of Rs.10,800/- as business income instead of “income from other sources” without considering the fact that there was no business in existence during the year and the assessee had himself shown them as “income from other income”.
Ld. DR submitted that the order of SEBI has attained finality when the Hon’ble Supreme Court dismissed the civil appeal preferred by the assessee in Civil Appeal No.4164 of 2006 along with other appeals vide order dated 18.5.2007 and it shall be held that there was no conduct of business by the assessee and the assessee’s group of companies pursuing to the SEBI’s order. He has fairly brought to our knowledge that the order dated 29.5.2009 passed in and 5009/Mum/2007 (AYs-2003-04 and 2004-05), the Tribunal has set aside the order of ld.CIT(A) and remitted the matter for the file of AO for examination of admissibility of the allowances and allowable
3 deduction. He placed reliance on a decision of Tribunal in the case of ACIT V/s Classic Shares and Stock Broking P Ltd in (AY-2007-08) dated 26.9.2012, wherein it has been held
’...., the decision in the case of KNP Services (P) Ltd. (supra) was rendered by the Tribunal relying on the decision of Hon’ble Madras High Court in the case of CIT vs. Vellore Electric Corporation Ltd. 243 ITR 529 and the same has been followed by the Tribunal in various cases belonging to the same group to decide a similar issue in favour of the assessee. ”
In this matter, the order of SEBI had attained finality on 18.5.2007 and it is a question of fact to be decided whether there was business in existence till such date and any expenses are allowable as deduction till such date.
Since the AO had not examined the said aspect, it has become imperative to examine the question of allowability of various expenses incurred by the assessee till 18.5.2007, in the context of conduct of any business by the assessee till such date. It is a question of fact whether or not the business was carried out till 18.5.2007 and if so various expenses if incurred by the assessee is allowable as deduction and also the question of depreciation and interest relating to the particular period. We therefore, set aside the impugned order and remand the matter to AO to examine the above matter of fact to reach a right conclusion on the issue of liability of the assessee.
In the result, the appeal of the Revenue is allowed for statistical purposes.
4 Order pronounced in the open court on 03rd August, 2016 Sd/- Sd/- (SANJAY ARORA) (MAHAVIR SINGH ) लेखा सद�य / Accountant Member �या�यक सद�य / Judicial Member मुंबई Mumbai; �दनांक Dated : 03rd August,2016 PS:AG (On Tour) आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. आयकर आयु�त(अपील) / The CIT(A) 3. आयकर आयु�त / CIT – concerned 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6. आदेशानुसार/ BY ORDER,