Income Tax Appellate Tribunal - Mumbai
Positive Packaging Industries Pvt. ... vs Department Of Income Tax on 22 August, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" Bench, Mumbai
Before Shri D. Manmohan, Vice President
and Shri B. Ramakotaiah, Accountant Member
ITA No. 6671/Mum/2008
(Assessment Year: 2002-03)
Income Tax Officer - 3(2)(1) M/s. Positive Packaging Industries
Room No. 673, 6th Floor Vs. Pvt. Ltd., 89 Jully Maker Chambers-2
Aayakar Bhavan, M.K. Road Nariman Point, Mumbai 400021
Mumbai 400020 PAN - AAACP 2836 Q
Appellant Respondent
Appellant by: Shri D. Songate
Respondent by: Shri K. Shivram
ORDER
Per B. Ramakotaiah, A.M.
This appeal by the Revenue is against the order of the CIT(A) III, Mumbai dated 22.08.2008.
2. Revenue has raised the following three grounds: -
"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the loss on cancellation of property rights of Rs.72,03,083/- as capital loss incurred in the course of appellants business.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying upon the decision of Hon'ble Bombay High Court in the case of IBM World Trade Corporation (186 ITR
412) where the facts and circumstances of the matter at hand are entirely different.
3. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored."
3. Briefly stated the assessee is engaged in the manufacturing of flexible packaging items and during the year claimed loss of `72,03,083/- arising from cancellation of property rights. As per the facts on record assessee entered into agreement for purchase of a flat by paying an advance of `3,60,20,385/- to Mahindra Infrastructural Projects Ltd. Since the project was delayed assessee company decided to cancel the flats booked in 1994 and after negotiations settled for a lesser amount than the amount 2 ITA No. 6671/Mum/2008 M/s. Positive Packaging Industries Pvt. Ltd.
advanced. The difference of amount was claimed as business loss stating that the flats were booked for its Executives and employees and accordingly the loss was a business loss. The A.O. did not agree with the contention and finding the fact that assessee's factory was far away from the so called location of flats he was of the opinion that assessee has made investment in the said flats and the loss arrived at will be a capital loss which cannot be allowed as business loss. Accordingly he disallowed the amount.
4. The CIT(A) considered the arguments of the A.O. and also the affidavit filed by the assessee company and allowed the loss as business loss applying the principles established by the Hon'ble Bombay High Court judgement in the case of IBM World Corporation 186 ITR 412. Revenue is aggrieved.
5. The learned D.R. referred to various reasons of the A.O. in disallowing the loss and submitted that the assessee has not placed on record any evidence with reference to acquisition of apartments for the purpose of employees and managerial persons whereas the learned Counsel submitted that all the agreements were placed on record and supported the order of the A.O.
6. We have considered the rival submissions and examined the paper book placed on record. As seen from the order of the CIT(A) the affidavit filed in support of the contention was dated 10.07.2008, i.e. after the assessment order has been passed on 31.03.2005. There seems to be no mention about the admission of the affidavit as an additional evidence by the CIT(A) in his order but he relied on the facts as supported in the affidavit. Moreover, as seen from the deed of cancellation placed on record the deed of cancellation was dated the 5th day of March 2001, which incidentally pertains to the year 2000-01 relevant to A.Y. 2001-02 whereas the loss has been claimed in A.Y. 2002-03. Since this aspect was not examined by any of the authorities as to how the loss has been claimed in this assessment year, we are of the view that the issue requires re-examination by the A.O. both on facts as well as on law. Accordingly, the orders of the A.O. and CIT(A) on this issue are set 3 ITA No. 6671/Mum/2008 M/s. Positive Packaging Industries Pvt. Ltd.
aside with the direction to reconsider the claim of loss after examination of facts as well as law on the issue. Revenue's grounds are considered allowed.
7. In the result, appeal is allowed for statistical purposes.
Order pronounced in the open court on 11th January 2011.
Sd/- Sd/-
(D. Manmohan) (B. Ramakotaiah)
Vice President Accountant Member
Mumbai, Dated: 11th January 2011
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) - III, Mumbai
4. The CIT- III, Mumbai City
5. The DR, "C" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.