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2017 (1) TMI 397 - ITAT MUMBAI

2017 (1) TMI 397 - ITAT MUMBAI - TMI - Addition on account of dividend income - AO made the addition on the basis of letter dated 12.01.1999 allegedly received by auditors from Mazda Industries and leasing ltd. as observed that Mazda Industries and Leasing Ltd declared dividend for the year ending 31 March 1992 - Held that:- The said dividend income was received in the subsequent year. We have noticed that the letter written by Special Auditor was not confronted to the assessee. The date of decl .....

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this Ground of appeal is allowed for statistical purpose. - ITA No.4977/Mum/2013 - Dated:- 9-11-2016 - SH. B.R. BASKARAN, ACCOUNTANT MEMBER AND SH. PAWAN SINGH, JUDICIAL MEMBER For The Assessee : Sh. Dharmesh Shah - Advocate For The Revenue : Dr. P. Daniel- Advocate (Standing Counsel) Order under section 254(1) of Income Tax Act PER PAWAN SINGH JUDICIAL MEMBER: 1. This appeal under section 253 of the Income Tax Act ( Act ) is directed by assessee against the order of Commissioner of income tax .....

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ness. (v) Ld CIT(A) erred in not granting deduction on account of interest expenses. (vi) Ld CIT(A) erred in charging interest under section 233A,234B and 234C of the Act. (vii) Ld CIT(A) erred in charging interest under section 220(2) of the Act. 2. The briefs facts of the case are that assessee Company engaged in the business activity of hiring motorcar and dealing in shares and securities. The assessee belongs to Harshad Mehta group. The assessee is a notified person under Special Courts (TOR .....

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section 148 assessee filed its return of Income on 27 June 2001 declaring total loss of ₹ 3,83,548/-. The AO while framing re-assessment order u/s 143(3) rws 147 dated 5th March 2003 made various addition and disallowance. Aggrieved by the order of AO, assessee filed appeal before Commissioner (Appeals) but without any success. Thus, further appeal was preferred before Tribunal. The Tribunal remanded the matter to the file of AO for de-novo assessment vide order dated 28 April 2006 in ITA .....

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peals) but no relief was granted on this addition, thus the assessee filed this second appeal before this Tribunal. 3. We have heard Shri Dharmesh Shah Advocate ( ld AR ) for assessee and Dr. Daniel Special Standing Counsel ( ld DR ) of the revenue and perused the material available on record. At the outset the ld AR of the assessee submitted that he is not pressing Ground No 1, 2 and 4. Thus, in view of the statement of the ld AR for the assessee the Ground No. 1, 2 and 4 are dismissed. 4. The .....

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n appointed by Special Court relating to the trial of offence relating to transactions in Securities Act 1992(TORT). Due to the attachment of Bank accounts of Mazda Industries and Leasing Ltd could not paid dividend to its shareholder. Mazda industries and Leasing Ltd filed an application before the Special Court for seeking permission for allowing it to open and operate their Bank accounts for payment of interest and dividend for the financial year ended on 30 June 1992. The Court vide order da .....

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ssee in this year. The dividend warrant was issued vide dividend warrant dated 27 August 1993 under folio No. NZO-1673. It was further argued that the assessee made all these submission before the AO as well as before First Appellate Authority but despite furnishing all the information and making submission in writing the lower authorities, the dividend income was added in the income of assessee in the year under consideration, though it has been offered and taxed in subsequent year. The AO made .....

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i Mills Co Ltd (33ITR 681) and decision of Hon ble Apex Court in case of CIT Vs Excel Industries Ltd (358 ITR 295). On the other hand the ld DR for the revenue vehemently argued that that assessee Company was following Mercantile System of Accounting. It was further argued that income must be taxed when it became due and cannot be offered as per the choice of the assessee. The learned DR for revenue further argued that if the contention of the assessee is accepted everybody will manipulate the d .....

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ividend of ₹ 11,02,448/- on shares held by assessee. The AO during the assessment asked the assessee as to why the dividend income should not be taxed in this year. The assessee filed its reply and contended that the dividend income was received during the Assessment Year 1994- 95 and the same was duly accounted and offered to tax during the said year. The assessee further contended that the dividend warrant itself issued on 27th of August 1993. The contention of assessee was not accepted .....

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assessee. We have notice that the lower authorities have failed to bring on record any evidence as to when the dividend was declared by Mazda Industries and leasing ltd, when it was communicated or when the income was credited to the assessee. The copy of communication received from Mazda industries and Leasing was not confronted with the assessee. The assessee throughout the proceedings contending that dividend income was received in the subsequent year and the same was offered and taxed in sub .....

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ith their Bank accounts. Mazda industries and leasing Ltd filed an application for seeking necessary permission for payment of dividend income, the said permission was granted vide order dated 31 May 1993 for the payment of dividend for the financial year ended on 30 June 1992. We have further notice that neither the AO nor ld CIT (A) referred as to when the dividend was declared or when the income was credited in the accounts of assessee. The Hon ble Allahabad High Court in CIT versus Jay Dei D .....

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ces, the dividend declared by the company could not be said to have been accrued to the assessee because neither could the company pay the same to the assessee nor could the assessee recover it till the restrained order was vacated. The Hon ble jurisdictional High Court in CIT Vs Nagri Mills Co Ltd (supra) while dealing with the ratio with regard to the year of taxability of income held as under: The question as to the year in which a deduction is allowable may be material when the rate of tax c .....

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of this kind. But, obviously, judging from the references that comes up is very now and then, the Department appears to be delight in raisng points of character which do not affect the taxability of the assessee or tax that the Department is likely to collect from him whether in one year or in the other. Further the Hon ble Apex Court in CIT Vs Excel industries Ltd (supra) while dealing with the dispute of year of taxing held as under; The real question concerning us is the year in which assess .....

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have a minor tax effect. There, was therefore, no need for revenue to continue with this litigation when it is quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. Now turning to the facts of the case in hand the assessee categorically asserted before the lower authorities that the said dividend income was received in the subsequent year. We have noticed that the letter written by Special Auditor was not confronted to th .....

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