COMMISSIONER OF INCOME TAX Vs. ASHOK MITTAL

JUDGEMENT

(1.) This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (Act, for short) relates to assessment year 2000-01. By order dated 8th April, 2013, notice limited to the question of addition of Rs.31.5 lacs was issued. The contention of the Revenue is that the respondent-assessee had earned income of Rs.31.5 lacs as "Investment Manager" from Fareast Corporation Pvt. Ltd. and M/s European Investment Ltd. but this income should be taxed under the head "income from other sources". Tribunal, it is submitted has erred in holding it as "business income".

(2.) The respondent-assessee, an individual, was carrying on six different types of business activities as per paragraph 3.1 of the assessment order. For the purpose of the said activities, the assessee had also setup six different sole proprietorship concerns. The details of the sole proprietorships and the activities carried on are as under:- <FRM>JUDGEMENT_3445_ILRDLH23_2013_1.html</FRM>

(3.) The first/original assessment order records that the concerns mentioned from serial number 2 to 6 during the assessment year in question had virtually carried out no business activity. The entire business activity was carried out by M/s Ashok Mittal & Co. The assessment order records that all the six concerns were situated at one premises and M/s Carrara Marble & Granite Industries had a factory at Daman. The assessee has stated that they had maintained a common centralised expenditure account for the six sole proprietorship concerns. The expenditure relating to each concern was apportioned. The stand of the respondent-assessee was that income of the each sole proprietorship concern was ultimately to be taxed in one hand i.e. the individual and all income and expenditure would have therefore be clubbed. The Assessing Officer in the assessment order has recorded that prima facie the contention of the respondent-assessee appeared to be logical and acceptable, but the assessee had debited huge expenses in the profit and loss account of M/s Litolier and this should not be accepted. He further observed that the claims were too high when compared to the business carried out by the each proprietary concern. He accordingly disallowed on ad-hoc basis some portion of the expenditure incurred by M/s Litolier. First appellate authority agreed with the Assessing Officer. On further appeal before the tribunal, an order of remand was passed for fresh decision after examining the veracity of claim by the assessee.