The ACIT, Circle-1(1), Baroda v. Camphor & Allied Products Ltd.,, Baroda

ITA 4562/AHD/2007 | 2004-2005
Pronouncement Date: 18-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 456220514 RSA 2007
Assessee PAN AAACC9211E
Bench Ahmedabad
Appeal Number ITA 4562/AHD/2007
Duration Of Justice 2 year(s) 1 month(s) 22 day(s)
Appellant The ACIT, Circle-1(1), Baroda
Respondent Camphor & Allied Products Ltd.,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 18-02-2010
Date Of Final Hearing 02-02-2010
Next Hearing Date 02-02-2010
Assessment Year 2004-2005
Appeal Filed On 27-12-2007
Judgment Text
1 ITA NO. 4562/AHD/2007 IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) I.T.A. NO. 4562/AHD./2007 ASSESSMENT YEAR : 2004-2005 ASSISTANT COMMISSIONER OF INCOME TAX -VS.- CAM PHOR & ALLIED PRODUCTS LTD. BARODA CIRCLE-1(1) BARODA (PAN : AAACC 9211 E) (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI C.K. MISHRA SR . D.R. RESPONDENT BY : SHRI C.N. SHAH O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE DEPARTMENT IS AGAINST THE ORDER DATED 28.09.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I BARODA FOR T HE ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS :- 1(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A) ERRED IN DELETING THE DISALLOWANCE O F RS 2 R 46 961/- U/S. 14A TOWARDS INTEREST AND OTHER EXPENSES INCURRED IN RELATION TO EXEMPTED INCOME OF DIVIDEND WITHOUT TAKING NOTE OF THE LANDMARK DECISION IN THE CASE OF CIT(A) VS ABHISHAK INDUSTRI ES LTD. 28GITR 01 (P&H) LAYING DOWN THAT THE FACTS BEING IN THE SPE CIAL KNOWLEDGE OF THE ASSESSEE IN VIEW OF SECTION 106 OF THE INDIAN EVIDENCE ACT IT WAS UP TO HIM TO ADDUCE EVIDENCE THAT ALL THE BORROWING S WERE USED FOR THE PURPOSES OF THE BUSINESS AND IT IS THE ASSESSEE'S O WN SURPLUS FUNDS THAT WERE INVESTED IN THE SHARES EARNING EXEMPTED INCOME AND EVEN IN CASE OF INVESTMENT OUT OF MIXED FUNDS THE DISALLOWANCE OF INTEREST HAD TO BE MADE. (B) THE ID. CIT(A) FAILED TO APPRECIATE THAT T HE ASSESSEE'S OWN FUNDS ALREADY STOOD INVESTED IN FIXED ASSETS OR AS WORKIN G CAPITAL WHEN THE BORROWINGS WERE MADE; OTHERWISE THERE WAS NO NEED FOR SUCH BORROWINGS AND HENCE IT IS THESE BORROWINGS WHICH WERE UTILISED TO MAKE INVESTMENT IN SHARES AND THE CO-RELATION BETWE EN THE BORROWINGS AND UTILIZATION CAN NOT BE DETERMINED FROM THE BALA NCE SHEET PREPARED ON A PARTICULAR DATE. (C) THE ID CIT(A) FAILED TO APPRECIATE THAT W HEN THE ASSESSING OFFICER SHOW-CAUSED THE ASSESSEE FOR PROPOSED DISAL LOWANCE IT WAS UP TO HIM TO PROVE BY FURNISHING DAY-TODAY CASH FLOW T HAT NO INTEREST- BEARING FUNDS WERE DEPLOYED TO EARN EXEMPTED INCOME AND IN THE 2 ITA NO. 4562/AHD/2007 ABSENCE OF THE SAME THE ASSESSING OFFICER WAS JUST IFIED IN DRAWING INFERENCE AS HE DID AS PER THE RATIO SETTLED IN THE CASE OF CIT VS MOTOR GENERAL FINANCE LID. 254 ITR 449 (DEL)SINCE CONFIRM ED IN PRINCIPAL BY THE SUPREME COURT IN THE CASE OF MOTOR GENERAL FINA NCE VS CIT 267 ITR 381 (SC). 2(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A) ERRED IN ALLOWING SET OFF OF MODVAT CRED IT OF RS. 7 37 213/- AVAILABLE ON PURCHASE OF CAPITAL GOODS I.E. PLANT AND MACHINERY AGAINST THE EXCISE DUTY COLLECTED ON THE SALE OF FI NISHED GOODS IN STOCK SO AS NOT TO OFFER THE SAME AS REVENUE RECEIPT. (B) THE ID. C1T(A) ERRED IN DECIDING THE MATTER AGA INST REVENUE WITHOUT GIVING ANY REASONS OR BASIS BY SOLELY RELYING ON T HE ORDERS FOR EARLIER YEARS AND BY DISREGARDING THE MANDATE OF SECTION 1 45A INSERTED W.E.F. 1-4-1999 PROVIDING FOR INCLUSION OF ANY TAX DUTY CESS OR FEE IN THE SALE OF GOODS. 3. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CLT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 10 .165/- U/S 40A(9) BEING THE CONTRIBUTION BY THE ASSESSEE AS AN EMPLOY ER TO CAMPHOR CLUB AN INSTITUTION OF THE ASSESSEE'S EMPLOYEES W ITHOUT APPRECIATING THAT THE ALLOWANCE OF SUCH CONTRIBUTION TO ANY EMPL OYEES' BODY FOR ANY PURPOSE EXCEPT AS PROVIDED IN SECTION 36(1 )(IV) & (V) IS SPECIFICALLY PROHIBITED IN SECTION 40A{9) AND THE PRESENT CONTRI BUTION WAS ADMITTEDLY NOT U/S 36(1)(IV)(V). 4. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A) ERRED IN ALLOWING THE PAYMENT OF RS. 3 345/- TO CRICKET CLUB OF INDIA AND RS. 7 T 564/- TO WILLINGTON SPORTS CLUB WHEN THE PAYMENTS HAD NO NEXUS WITH THE ASSESSEE'S BUSINESS AND THE TAX AUDITORS THEMSELVES HAD TREATED THE PAYMENTS AS DISALLOWABLE CLEARLY EVIDENCING THAT THEY WERE ENTIRELY GRATIS AND THE A SSESSEE HAD NOT AT ALL DISCHARGED ITS ONUS OF PROVING THAT THEY WERE INCUR RED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS IN TERM S OF SECTION 37(1). 5(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE ID.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 2 92 468/- BEING ALLEGED LOSS DUE LO FLUCTUATION IN THE RATE OF FORE IGN EXCHANGE ON THE BASIS OF THE RATES ON THE DATE OF BALANCE-SHEET DE SPITE THE SAME BEING PURELY NOTIONAL AND HENCE CONTINGENT IN VIEW OF THE RE BEING NO PAYMENT MADE/ RECEIVED AND THE ALLOWANCE WAS IN CONTRAVENT ION OF THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS. S.G. CHEMICALS AND PHARMACEUTICAL LTD. 258 ITR 109 (GUJ) AND SYNBIOFICS LTD. VS. CIT 259 ITR L22(GUJ}. 3 ITA NO. 4562/AHD/2007 (B) THE ID. CIT(A) ERRED IN NOT FOLLOWING THE RA TIO OF INDIAN OVERSEAS BANK LTD. VS CIT 151 ITR 446 (MAD) WHICH WAS IN CO NFORMITY WITH THE PRINCIPLE LAID DOWN BY THE SUPREME COURT IN THE CAS E OF INDIAN MOLASSES PVT. LTD. VS. CIT 37 ITR 66 75-76 (SC) RULING AGAINST THE ALLOWANCE OF SUCH LIABILITY DE FUTORO AND NOT IN PR AESENTI IN INCOME TAX PROCEEDINGS. (C) THE ID. CIT(A) ERRED IN GOING BY THE ACCOUNTING STANDARD-11(AS- 11) WHEN THE SAME IS IN CONFLICT WITH THE SETTLED P RINCIPLES OF LAW AS AFORESAID AND HENCE CAN NOT BE FOLLOWED IN VIEW OF THE SUPREME COURT DECISION IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS. CIT 227ITR 172 (SC). 6(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE ID. CIT(A) ERRED IN ALLOWING SHORT TERM CAPITAL LOS S OF RS. 9 82 510/- WITHOUT APPRECIATING THAT THE TRANSACTIONS IN RESPE CT OF THE UNITS OF MUTUAL FUND WERE RESORTED TO SOLELY AS A DESIGN TO MANUFACTURE LOSSES WHILE EARNING EXEMPTED DIVIDEND INCOME AND HENCE TH E LOSS SO MANUFACTURED WAS NOT ALLOWABLE AS PER RATIO SETTLED BY THE CONSTITUTION BENCH OF THE SUPREME COURT IN THE CASE OF MACDOWELL AND CO. VS. CTO 154 ITR 148 171 (SC). (B) THE ID. CIT(A) FAILED TO APPRECIATE THAT TH E AMENDMENT IN SECTION 94(7)(B) BY THE FINANCE (NO.2) ACT 2004 WAS ONLY C URATIVE CODIFYING THE SETTLED LEGAL PRINCIPLE IN RELATION TO TAX AVOI DANCE THROUGH DIVIDEND-STRIPPING TRANSACTIONS. 2. GROUND NO. 1 IS AGAINST DELETING THE DISALLOWANC E OF RS.2 46 961/- MADE BY THE A.O. UNDER SECTION 14A TOWARDS INTEREST AND OTHER EXPENS ES INCURRED IN RELATION TO EXEMPTED INCOME OF DIVIDEND. 3. AT THE TIME OF HEARING BOTH SIDES CONCEDED THAT NOW DISALLOWANCE UNDER SECTION 14A IS REQUIRED TO BE CALCULATED AS PER RULE 8(D) WHICH P ROVIDES METHOD OF DETERMINING AMOUNT OF EXPENDITURE IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME. THIS RULE IS INSERTED BY INCOME TAX (5 TH AMENDMENT) RULES 2008 WITH EFFECT FROM 24 TH MARCH 2008. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) PASSED THE IMPU GNED ORDER ON 29.09.2007. IN VIEW OF THIS WE RESTORE THIS ISSUE TO THE FILE OF A.O. WIT H THE DIRECTION THAT HE WILL RE-COMPUTE THE DISALLOWANCE UNDER SECTION 14A IN ACCORDANCE WITH T HE METHOD LAID DOWN IN RULE 8(D) OF THE INCOME TAX RULES 1962. THIS GROUND OF APPEAL IS AC CORDINGLY ALLOWED. 4 ITA NO. 4562/AHD/2007 4. WITH REGARD TO GROUND NO. 2 OF THIS APPEAL WE H AVE HEARD BOTH THE SIDES. AT THE TIME OF HEARING BOTH THE SIDES CONCEDED THAT THE CONTROVER SY INVOLVED IN GROUND NO. 2 IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION DATED 16.05. 2008 OF THE HON'BLE ITAT C BENCH AHMEDABAD IN ASSESSEES OWN CASE IN ITA NOS. 1731-1 735/AHD/2001 FOR THE ASSESSMENT YEARS 1992-93 TO 1997-98 & ITA NOS. 3740-3741/AHD/2003 FO R THE ASSESSMENT YEAR 2000-01 AND 2001-02. THE DECISION OF HON'BLE ITAT DATED 16.05.2 008 ON PAGE 16-17 ON THIS ISSUE IS AS UNDER :- 45 THE ISSUE OF MODVAT ON CAPITAL GOODS IS AS REGA RDS TO REDUCTION OF EXCISE DUTY FROM THE COST OF MACHINERY WHILE CLA IMING DEPRECIATION. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF MODVA T ON CAPITAL GOODS. THE CIT(A) ALLOWED THE SAME HOLDING THAT THE ASSESSEE HAS REDUCED THE AMOUNT OF EXCISE DUTY FROM THE COST OF MACHINERY WHILE CLAIMING THE DEPRECIATION. THE CIT(A) HAS GIVEN THE FOLLOWING FINDING IN THE ASSESSMENT YEAR 1996-97 AND FACTS BEING IDEN TICAL WE APPLY THE SAME FINDING IN ALL THE YEARS. THE FINDINGS READ AS UNDER- '25. THE NEXT GROUND OF APPEAL RELATES TO THE DISAL LOWANCE OF RS.1 72 693/-BEING MODVAT ON CAPITAL GOODS. DURING THE COURSE OF HEARING THE LD. REPRESENTATIVE FOR THE APPELLANT PLEADED THAT AT THE TIME OF PURCHASE OF MACHINERY FOR THE AMOUNT OF EXC ISE DUTY WAS INCLUDED IN THE COST OF MACHINERY AND THE SAME WAS REDUCED FROM THE COST OF MACHINERY WHILE CLAIMING THE DEPRECIATION O N THAT BECAUSE THE APPELLANT CANNOT CLAIM BOTH MODVAT#S WELL AS DE PRECIATION ON THAT AMOUNT. HOWEVER THE LD. ASSESSING OFFICER DISA LLOWED THE MODVAT AMOUNT OF RS.1 72.693/- WHICH IS NOT JUSTIFI ED AND THE SAME SHOULD BE DELETED. 251. AFTER HEARING THE APPELLANTS REPRESENTATIVE AND AFTER GOING THROUGH THE CASE I HOLD THAT THE ACTION OF THE ASS ESSING OFFICER IS NOT JUSTIFIED BECAUSE THE ASSESSEE HAS REDUCED THE AMOU NT OF EXCISE DUTY FROM THE COST OF MACHINERY WHILE CLAIMING THE DEPRE CIATION. ACCORDINGLY THE ADDITION MADE STANDS DELETED. IN VIEW OF THE ABOVE FACTS AND THE DECISION OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WE ARE OF THE VIEW THAT THE ASSESSEE HAS REDUCED THE AMOUNT OF EXCISE DUTY FROM THE COST OF MACHINERY WHILE CLAIMING DEPRECIATION ACCORDINGLY WE FIND NO INFI RMITY IN THE ORDERS OF C.I.T.(A) ALLOWING THE CLAIM OF THE ASSESSEE AND AC CORDINGLY THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 5 ITA NO. 4562/AHD/2007 IN VIEW OF THIS WE DECLINE TO INTERFERE WITH THE O RDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 5. GROUND NO. 3 RELATES TO CONTRIBUTION OF RS.10 16 5/- UNDER SECTION 40A(9) TO CAMPHOR CLUB. WE HAVE HEARD BOTH THE SIDES. AT THE TIME OF HEARING OF THIS APPEAL BOTH SIDES CONCEDED THAT THE CONTROVERSY INVOLVED IN THIS GROUND OF APP EAL IS WELL COVERED IN FAVOUR OF ASSESSEE BY THE DECISION DATED 16.05.2008 OF THE HON'BLE ITAT C BENCH AHMEDABAD IN ASSESSEES OWN CASE IN ITA NOS. 1731-1735/AHD/2001 FOR THE ASSESSM ENT YEARS 1992-93 TO 1997-98 & ITA NOS. 3740-3741/AHD/2003 FOR THE ASSESSMENT YEAR 200 0-01 AND 2001-02. WE THEREFORE RESPECTFULLY FOLLOWING THE SAME REJECT THIS GROUND OF APPEAL OF REVENUE. 6. GROUND NO. 4 RELATES TO PAYMENT OF RS.3 345/- TO CRICKET CLUB OF INDIA AND RS.7 564/- TO WILLINGTON SPORTS CLUB. WE HAVE HEARD BOTH THE SIDE S ON THIS ISSUE. AT THE TIME OF HEARING OF THIS APPEAL BOTH SIDES CONCEDED THAT THE CONTROVERSY IN VOLVED IN THIS GROUND OF APPEAL IS WELL COVERED IN FAVOUR OF ASSESSEE BY THE DECISION DATED 16.05.2008 OF THE HON'BLE ITAT C BENCH AHMEDABAD IN ASSESSEES OWN CASE IN ITA NOS. 1731-1 735/AHD/2001 FOR THE ASSESSMENT YEARS 1992-93 TO 1997-98 & ITA NOS. 3740-3741/AHD/2003 FO R THE ASSESSMENT YEAR 2000-01 AND 2001-02. WE THEREFORE RESPECTFULLY FOLLOWING THE SAME REJECT THIS GROUND OF APPEAL OF REVENUE. 7. GROUND NO. 5 OF THIS APPEAL RELATES TO DISALLOWA NCE OF RS.2 92 468/- BEING LOSS DUE TO FLUCTUATION IN THE RATE OF EXCHANGE ON THE DATE OF BALANCE-SHEET. 8. AT THE TIME OF HEARING THE LD. DEPARTMENTAL REP RESENTATIVE RELIED ON THE ORDER OF A.O. WHEREAS THE LD. COUNSEL OF THE ASSESSEE RELIED ON T HE ORDER OF AUTHORITIES BELOW AS WELL AS THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS.- WOODWARD GOVERNOR INDIA P. LTD. REPORTED IN [2009] 312 ITR 254 (SC). 9. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AS WEL L AS THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF WOODWARD GOVERNOR INDIA P. LTD . (SUPRA). WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE APEX COURT I N THE CASE OF WOODWARD GOVERNOR INDIA P. 6 ITA NO. 4562/AHD/2007 LTD. WHEREIN THE HON'BLE SUPREME COURT HELD THAT LOSS SUFFERED BY THE ASSESSEE ON ACCOUNT OF FLUCTUATION IN THE RATE OF FOREIGN EXCHANGE AS ON T HE DATE OF BALANCE-SHEET IS AN ITEM OF EXPENDITURE UNDER SECTION 37(1) OF THE INCOME TAX A CT 1961. WE THEREFORE RESPECTFULLY FOLLOWING THE SAME REJECT THIS GROUND OF APPEAL OF THE REVENUE. 10. THE GROUND NO.6(A) & 6(B) OF THIS APPEAL RELATE S TO ALLOWANCE OF SHORT-TERM CAPITAL LOSS OF RS.9 82 510/- FOR TRANSACTIONS IN RESPECT OF THE UNITS OF MUTUAL FUND AS RESTORED TO SOLELY AS A DESIGN TO MANUFACTURE LOSSES WHILE EARNING EXEMPTED DIVIDEND INCOME AND LOSS SO INCURRED WAS NOT ALLOWABLE AS PER THE RATIO OF HON'BLE SUPREME C OURT IN THE CASE OF MCDOWELL & CO. VS.- CTO 154 ITR 148 171 (SC). IT IS MENTIONED IN THE G ROUND OF APPEAL THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FAILED TO APPRE CIATE THAT THE AMENDMENT IN SECTION 94(7)(B) BY THE FINANCE (NO. 2) ACT 2004 WAS ONLY CURATIVE CODIFYING THE SETTLED LEGAL PRINCIPLES IN RELATION TO TAX AVOIDANCE THROUGH DIVIDEND STR IPPING TRANSACTIONS. 11. WE HAVE HEARD BOTH THE SIDES. AT THE TIME OF HE ARING THE LD. D.R. ARGUED THAT THE ASSESSEE HAS PURCHASED UNITS OF VARIOUS MUTUAL FUNDS MENTION ED ON PAGE 10 OF THE ASSESSMENT ORDER ON VARIOUS DATES BEFORE THE RECORD DATES OF DIVIDEND A ND THE SAME HAVE BEEN SOLD ON VARIOUS DATES AFTER THE RECORD DATE WHICH IS WITHIN THE TIME LIMI TS AS MENTIONED UNDER THE PROVISIONS OF SECTION 94(7) OF THE INCOME TAX ACT 1961. THE SOLE DESIGN OF THE ENTIRE TRANSACTION WAS TO MANUFACTURE LOSSES WHILE EARNING EXEMPTED DIVIDEND INCOME AND L OSS SO INCURRED IS NOT ALLOWABLE IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CA SE OF MCDOWELL & CO. (SUPRA). THE LD. D.R. ALSO SUBMITTED THAT THE AMENDMENT IN SECTION 94(7)( B) IS CURATIVE CODIFYING THE SETTLED LEGAL PRINCIPLES IN RELATION TO TAX AVOIDANCE THROUGH DIV IDEND- STRIPPING TRANSACTIONS AND IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN HOLDING THAT IT IS NOT RETROSPECTIVE. 12. ON THE OTHER HAND SHRI C.N. SHAH APPEARING ON BEHALF OF THE ASSESSEE CONTENDED THAT THE CONTROVERSY INVOLVED IN GROUND NO. 6(A) & 6(B) IS S QUARELY COVERED BY THE DECISION OF ITAT SPECIAL BENCH MUMBAI IN THE CASE OF WALLFORT SHARE S & STOCK BROKERS LTD. VS.- INCOME TAX OFFICER WARD -4(2)(1) REPORTED IN [2005] 96 ITD 1 (SB). IN THIS DECISION ON IDENTICAL FACTS IT WAS HELD THAT PROVISIONS CONTAINED IN SECTION 94(7) HAVE NOT TO BE GIVEN RETROSPECTIVE EFFECT. 7 ITA NO. 4562/AHD/2007 FURTHER THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MCDOWELL & CO. (SUPRA) WAS ALSO DULY CONSIDERED. THE LD. COUNSEL OF THE ASSESS EE FURTHER SUBMITTED THAT THERE WAS NO SCHEME OR COLLUSION BECAUSE ASSESSEE AND MUTUAL FUNDS WERE NOT KNOWN TO EACH OTHER THEY NEVER MET AND TRANSACTIONS WERE ENTIRELY IN ORDINARY COURSE A T ARMS LENGTH THE ASSESSEE CLAIMED FOR SET OFF OF LOSS FROM THESE TRANSACTIONS AGAINST ITS OTHER I NCOME CHARGEABLE TO TAX COULD NOT BE DISALLOWED ON THE GROUND THAT IT WAS A COLOURABLE DEVICE IN NA ME OF TAX PLANNING AND AVOIDANCE. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE VIEW TAKEN BY THE HON'BLE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF WALLFORT SHARES & STOC K BROKERS LTD. (SUPRA) IS UPHELD BY THE HON'BLE MUMBAI HIGH COURT. 13. WE FOUND CONSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE. IT IS PERTINENT TO NOTE THAT BOTH THE PLEA TAKEN BY THE REVENUE IN THE GROUND OF APPEAL WERE DULY CONSIDERED BY THE HON'BLE ITAT SPECIAL BENCH MUMB AI IN THE CASE OF WALLFORT SHARES & STOCK BROKERS LTD. (SUPRA). IN THE IMPUGNED ORDER THE VI EW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS IN CONFORMITY WITH THE DECIS ION OF THE HON'BLE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF WALLFORT SHARES & STOCK BROKE RS LTD. (SUPRA) AND THE APPEAL OF THE REVENUE AGAINST THIS DECISION OF ITAT SPECIAL BENC H MUMBAI IN THE CASE OF WALLFORT SHARES & STOCK BROKERS LTD. IS ALSO DISMISSED. WE THEREFORE FOLLOWING THE DECISION OF ITAT SPECIAL BENCH MUMBAI IN THE CASE OF WALLFORT SHARES & STOC K BROKERS LTD. (SUPRA) INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ). THIS GROUND OF APPEAL IS REJECTED. 14. IN THE RESULT THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18.02.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18/ 02 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER LAHA/SR.P.S. DEPUTY REGISTRAR ITAT AHMEDA BAD