The Assistant Commissioner of Income Tax, Jammu V. M/s. Srinagar Holding Pvt. Ltd, Jammu

CO 1/ASR/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1845 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 17-12-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Keywords: Tax effect
• Section: 14A; 148; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO. 04(ASR)/2014 ASSESSMENT YEAR: 1999-2000 THE ACIT, CIRCLE,-2, JAMMU. VS. M/S SRINAGAR HOLDINGS PVT. LTD., 127, 1 ST FLOOR, MOHALLA AFGANA, UPPER BAZAR, JAMMU. PAN:AACCS5596A (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.01(ASR)/2014 (ARISING OUT OF ITA NO.04(ASR)/2014) ASSESSMENT YEAR: 1999-2000 M/S SRINAGAR HOLDINGS PVT. LTD., 127, 1 ST FLOOR, MOHALLA AFGANA, UPPER BAZAR, JAMMU. PAN:AACCS5596A VS. THE ACIT, CIRCLE,-2, JAMMU. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SH. R.K.SHARDA (DR) RESPONDENT BY: SH. TARUN BANSAL (ADV.) DATE OF HEARING: 22.12. 2015 DATE OF PRONOUNCEMENT: 14.01.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT, JAMMU, DATED 09.10.2013 FOR THE ASST. YEAR 199 9-2000. ITA NO. 04 & C.O. NO.01 (ASR)/2014 ASST. YEAR 1999-2000 2 2. THE GROUNDS OF APPEAL RAISED BY REVENUE ARE REPR ODUCED BELOW. 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF INTEREST PAID U/S 57 (III) ON BORROWED CAPITAL. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN ALLOWING THE RELIEF ON ACCOUNT OF INTEREST PAID AS PER THE RATIO LAID DOWN BY THE SUPREME COURT IN THE CASE OF CIT VS. RA JENDRA PRASAD MOODY (1978) 115 (SC). THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION TO THE APPEAL WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING AMENDED GROUNDS. 1.THAT THE LD. AO HAS ERRED IN LAW IN RE-OPENING T HE ASSESSMENT U/S 148 BEING DEBARRED BY THE NEW PROVISO INSERTED IN SECTION 14A W.E.F 04.01.2001 COVERING ALL THE SECTIONS FROM 15 TO 59 FOR QUALIFYING THE TOTAL INCOME CHARGEABLE TO TAX AS PE R CIT VS. WALFORT SHARE & STOCK BROKERS PVT. LTD. (2010) 326 ITR 1 (S C) U/S 14A. 2. THAT THE LD. CIT(A) RIGHTLY ALLOWED INTEREST ON BORROWED CAPITAL FOR PURCHASE OF SHARES VALUING RS.80 LACS, KEEPING IN VIEW CIT VS. RAJENDRA PRASAD MODDY (1978) 115 519 (SC) U/S 57(3) OF INCOME TAX ACT. 3. THAT INTEREST IN QUESTION MAY BE ALLOWED U/S 36( 1)(III) OF INCOME TAX ACT BEING THE APPELLANT IS AN INVESTMENT CO. AN D TRADING IN SHARES BY WAY OF INVESTMENT, AS WELL AS, STOCK-IN T RADE. 3. AT THE OUTSET OF HEARING, THE LEARNED AR ARGUED THE CROSS OBJECTION AND SUBMITTED THAT ASSESSING OFFICER WAS NOT EMPOWE RED TO REOPEN THE CASE OF ASSESSEE AS THE PROVISO TO SECTION 14A DEBARS THE ASSESSING OFFICER TO REOPEN THE CASE FOR MAKING DISALLOWANCE U/S 14A PRIOR TO ASST. YEAR 2001- 02. THE LEARNED AR SUBMITTED THAT AS PER THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. WALFORT SHARE & STOCK BROKERS PVT. LTD. (2010) 326 ITR 1 (SC) U/S 14A WAS APPLICABLE TO ALL SECTIONS F ROM 15 TO 59 AND IN THIS RESPECT INVITED OUR ATTENTION TO DECISION OF THE HO NBLE COURT PLACED IN PAPER BOOK. SINCE THE ASSESSEE HAS RAISED A LEGAL ISSUE THEREFORE, IT WAS DECIDED THAT ITA NO. 04 & C.O. NO.01 (ASR)/2014 ASST. YEAR 1999-2000 3 THIS GROUND SHOULD BE ADJUDICATED FIRST, THEREFORE, LEARNED DR WAS DIRECTED TO REPLY TO THE ARGUMENTS OF LEARNED AR. 4. THE LEARNED DR, HEAVILY RELIED UPON THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT ADDITIONS WERE NOT MADE BY ASSES SING OFFICER U/S 14 THEREFORE, THE CASE LAW RELIED BY THE LEARNED AR WA S NOT APPLICABLE. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE HAD BORROWE D CERTAIN FUNDS AND HAD INVESTED SUCH FUNDS FOR PURCHASE OF CERTAIN SHARES AND HAD CLAIMED INTEREST ON SUCH BORROWED FUNDS AS EXPENDITURE WHICH THE LEA RNED ASSESSING OFFICER DID NOT ALLOW AS PER HIS OPINION THE PAYMENT OF INT EREST WAS NOT MADE FOR THE PURPOSE OF MAKING OR EARNING ANY DIVIDEND THEREFORE , ASSESSING OFFICER HAD DENIED THE CLAIM OF EXPENDITURE U/S 57(III) OF THE ACT. THE ASSESSING OFFICER HAS NOT INVOKED THE PROVISIONS OF SECTION 14A FOR M AKING THIS DISALLOWANCE THEREFORE, GROUND NO.1RAISED BY ASSESSEE IN ITS CRO SS OBJECTIONS IS MISCONCEIVED AND THEREFORE, DISMISSED. 6. GROUND NOS. 2 & 3 OF CROSS OBJECTION WERE N OT HEARD AND THEREFORE, CANNOT BE ADJUDICATED. 7. WE FURTHER FIND THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS LESS THA N RS.10,00,000/-. HENCE, AS PER CBDT INSTRUCTION NO. 21 OF 2015, DATED 10 TH DEC., 2015, WHICH IS BINDING ON THE DEPARTMENT, TH E DEPARTMENT WAS PRECLUDED FROM FILING THE PRESENT APPEAL, AS TH IS INSTRUCTION IS ITA NO. 04 & C.O. NO.01 (ASR)/2014 ASST. YEAR 1999-2000 4 APPLICABLE RETROSPECTIVELY. THEREFORE, IN OUR CONSI DERED OPINION, THE SAID INSTRUCTION OF CBDT IS BINDING UPON THE DEPARTMENT AND THE PRESENT APPEAL HAS BEEN FILED CONTRARY TO THE SAID INSTRUCT ION ISSUED BY THE CBDT. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED, AS NOT MAINTAINABLE. 8. IN VIEW OF THE ABOVE, OTHER CROSS OBJECTIO NS FILED BY THE ASSESSEE ARE DISMISSED, AS THE CROSS OBJECTIONS WAS FILED BY ASS ESSEE AGAINST THE APPEAL FILED BY REVENUE WHICH HAS ITSELF BEEN DISMISSED, T HEREFORE, THE CROSS OBJECTION HAS BECOME INFRUCTOUS AND THEREFORE, DISM ISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A S WELL AS CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:14.01.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.