M/S. MID-DAY RADIO NORTH (INDIA)LTD, MUMBAI v. THE ITO 6(3)(4), MUMBAI

ITA 5721/MUM/2008 | 1968-1969
Pronouncement Date: 26-02-2010 | Result: Allowed

Appeal Details

RSA Number 572119914 RSA 2008
Assessee PAN AACCM2756Q
Bench Mumbai
Appeal Number ITA 5721/MUM/2008
Duration Of Justice 1 year(s) 5 month(s) 15 day(s)
Appellant M/S. MID-DAY RADIO NORTH (INDIA)LTD, MUMBAI
Respondent THE ITO 6(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 26-02-2010
Assessment Year 1968-1969
Appeal Filed On 10-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SHRI R.S. PADVEKAR (JUDICIAL MEMBER) ITA NO.5721/MUM/2008 ASSESSMENT YEAR : 2004-05 DATE OF HEARING: 10.2.2010 MID-DAY RADIO NORTH (INDIA) LTD 156 D J DADAJEE ROAD TARDEO MUMBAI 400 034 PAN AACCM 2756 Q .. APPELLANT VS INCOME TAX OFFICER 6(3)(4) MUMBAI 400 020 RESPONDENT APPELLANT BY : SHRI PARAS SAVLA / RAHUL K HAKANI RESPONDENT BY : SHRI S.S. RANA O R D E R PER PRAMOD KUMAR A.M. 1. THE SHORT ISSUE THAT WE REQUIRED TO ADJUDICATE W HETHER OR NOT THE LEARNED CIT WAS JUSTIFIED IN HOLD THAT RS.13 56 469 /- EARNED BY THE ASSESSEE ON MARGIN MONEY AGAINST BANK GUARANTEE IS TO BE TAX AS INDEPENDENT INCOME OUGHT NOT TO BE ADJUSTED AGAINST OTHER PRE-COMMENCE MENT EXPENSES. MID-DAY RADIO NORTH (INDIA) LTD ITA NO.5721/MUM./2008 2 2. THE ASSESSMENT YEAR IS 2004-05 AND THE IMPUGNED ASS ESSMENT IS FRAMED U/S 143(3) R/W SECTION 147. 3. BRIEF FACTS OF THE CASE ARE LIKE THIS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRIVATE F.M. RADIO CHANNEL. DURING THE RELEVANT ASSESSMENT PERIOD THE ASSESSEE WAS ENGAGED IN THE IMPLEMENTAT ION OF THE PROJECT AND THE ACTUAL BUSINESS ACTIVITY HAD NOT REALLY COMMENC ED. IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS EARNED INTE REST INCOME OF RS.13 56 469/- ON FD WITH THE BANK WHICH WAS PLACED AS MARGIN MONEY WITH THE MINISTRY OF INFORMATION AND BROADCASTING. IT WA S EXPLAINED BY THE ASSESSEE THAT THE ASSESSEE WAS FORCED TO KEEP THIS MARGIN MONEY DEPOSITS AS IT HAS TO GIVE A BANK GUARANTEE OF RS.712.50 LAKHS TO THE MINISTRY OF INFORMATION AND BROADCASTING AND THEREFORE THE IN TEREST INCOME ON THE SAME CANNOT BE CONSIDERED IN ISOLATION WITH EXPENDI TURE INCURRED BY THE ASSESSEE. THE CASE OF THE ASSESSEE WAS THAT THIS IN TEREST INCOME WAS AN INTEGRAL PART OF ITS BUSINESS INCOME AND SINCE THE BUSINESS HAS NOT ACTUALLY COMMENCED THE EXPENDITURE ON THIS INCOME WAS REQUI RED TO BE CAPITALIZE. THIS PLEA WAS REJECTED BY THE ASSESSING OFFICER. 4. AGGRIEVED BY THE STAND SO TAKEN THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SU CCESS. WHILE DOING SO THE LEARNED CIT(A) OBSERVED AS FOLLOWS:- MID-DAY RADIO NORTH (INDIA) LTD ITA NO.5721/MUM./2008 3 2.3 I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE A.R. AND I FIND THAT THE A.O. IS JUSTIFIED IN TAXING THE INTER EST INCOME FROM FIXED DEPOSITS AS TAXABLE INCOME OF THE ASSESSEE. HE HAS RIGHTLY RELIED ON THE DECISION OF CIT VS BANGAIGAON REFINER Y & PETROCHEMICALS LTD (245 ITR 708) AND TUTICORIN ALKA LI VS CIT (227 ITR 172). I DO NOT FIND ANY FORCE IN THE ARGU MENT OF THE A.R. THAT THE CASE OF CIT VS. KARNATAKA POWER CORPO RATION (247 ITR 268)(SC) IS APPLICABLE TO THE FACTS OF THE CASE . EVEN WHEN SOME SURPLUS FUND IS LYING AND THE SAME IS PUT IN F IXED DEPOSIT THE INCOME IS TO BE TAXED IN THE HANDS OF THE ASSES SEE AND IT CANNOT BE TREATED AS CAPITAL RECEIPT. HENCE THE A DDITION MADE BY THE A.O. IS CONFIRMED AND APPEAL ON THIS GROUND IS DISMISSED.. 5. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE U S. 6. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MA TERIAL ON RECORD AND DULY CONSIDERED THE APPLICABLE LEGAL POSITION A S ALSO THE FACTUAL MATRIX OF THE CASE. WE FIND THAT THE HON'BLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS LOK HOLDS 308 ITR 356 HAVE OBSERVED THAT EVEN IN A SITUATION WHERE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF PROPERTIES INVESTS THE SURPLUS AMOUNT WITH THE BANK INTEREST EARNED ON SU CH DEPOSIT IS BUSINESS INCOME. WE HAVE ALSO NOTED THAT IN THE CASE OF THIS VERY ASSESSEE FOR A.Y. 2001-02 THE ASSESSING OFFICER ACCEPTED THE SAME TR EATMENT GIVEN BY THE ASSESSEE TO INTEREST EARNED ON FD I.E. REDUCING TH E SAME FROM EXPENDITURE INCURRED AND NOT AS INDEPENDENT SOURCE OF INCOME. A S OBSERVED BY THE HON'BLE SUPREME COURT IN THE CASE REPORTED AS 193 I TR 321 STRICTLY SPEAKING RESJUDICETA DOES NOT APPLY BUT WHEN THE F UNDAMENTAL ASPECT PERMEATING THROUGH DIFFERENT ASSESSMENT YEARS HAS B EEN FOUND AS A FACT ONE WAY OR THE OTHER. IN VIEW OF THESE DISCUSSIONS WE ARE OF THE CONSIDERED VIEW MID-DAY RADIO NORTH (INDIA) LTD ITA NO.5721/MUM./2008 4 THAT THERE WAS NO GOOD REASON TO DISTURB THE ACCEPT ED PAST HISTORY IN THE CASE OF TREATING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. CONSEQUENTLY WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO RECOMPUTED THE CLAIMS SO MADE BY THE ASSESSEE IN THE LIGHT OF THE DIRECTION GIVEN BY US IN THE AFORESAID PARA. 7. IN THE RESULT ASSESSEE APPEAL STANDS ALLOWED IN TE RMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 26TH DAY OF F EBRUARY 2010. SD/- (R.S. PADVEKAR) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI; 26TH DAY OF FEBRUARY 2010 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (A)-VI MUMBAI (4) CIT CITY -6 MUMBAI (5) DR B BENCH (6) GUARD FILE TRUE COPY BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY MID-DAY RADIO NORTH (INDIA) LTD ITA NO.5721/MUM./2008 5 DATE INITIAL 1. DRAFT DICTATED ON 26.2.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26.2.2010 SR.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. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER