AML Steel & Power Ltd., CHENNAI V. DCIT, CHENNAI

CO 32/CHNY/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0981 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-03-2015
• Court: TRIBUNAL
• Department Lawyers: R VIJAYARAGHAVAN
• Assessee Lawyers: SANKARALINGAMCITD R
• Keywords: Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , ! , ' #$ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.141 /MDS./2015 ( / ASSESSMENT YEAR :2009-10) & C.O.NO.32/MDS./2015 DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1) CHENNAI 600 034. VS. M/S.AML STEEL & POWER LTD ., AML TOWERS, NO.9,6 TH STREET, GOPALAPURAM, CHENNAI-86. PAN AAECA 6090 P ( () / APPELLANT ) ( %*() / RESPONDENT/ CROSS OBJECTOR ) / APPELLANT BY : MR.SANKARALINGAM,CIT,D.R / RESPONDENT BY : MR.R.VIJAYARAGHAVAN,ADVOCATE / DATE OF HEARING : 16. 07.2015 ! /DATE OF PRONOUNCEMENT : 22.07.2015 + / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE AND THE CROSS O BJECTIONS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ITA NO.504141 /MDS/2015 CO NO.32/MDS./15 2 (A)-I, CHENNAI DATED 30.09.2014 IN ITA NO.541/2011- 12/A1 PASSED UNDER SEC.143(3) READ WITH SECTION SEC. 250 OF THE ACT. 2.1 THE REVENUE HAS RAISED THREE GROUNDS IN ITS AP PEAL, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIE VED BY THE ORDER OF THE LD. CIT (A) WHO HAD DIRECTED THE LD. ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF ` 10.63/- CRORES OUT OF THE TOTAL INTEREST ON TERM LOAN AMOUNTING TO ` 12.01 CRORES BY ACCEPTING THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE WITHOUT OBTAINING REMAND REPORT FROM THE LD. ASSESSING OFFICER WHICH IS IN VIOLATION OF RULE -46A OF RULES. 2.2 CROSS OBJECTIONS THE ASSESSEE HAS RAISED THREE GROUNDS IN ITS C.O. GROUND NO.2 & 3 ARE GENERAL IN NATURE, AND THE RELEVANT GROUND NO .1 IS REPRODUCED HEREIN BELOW:- 1. THE LD.DCIT FAILED TO NOTE THAT THE VALUATION OF THE STOCK IS MADE IN LINE WITH THE ACCOUNTING STANDARD-2. ALSO, THE LEARNED DCIT FAILED TO APPRECIATE THE FACT THAT THERE HAD B EEN AN ACUTE FALL IN THE PRICE OF SPONGE IRON IN THE MONTH OF MA RCH, 2009. CONSEQUENTLY, THE LD.DCIT ERRED IN DISALLOWING AN A MOUNT OF ITA NO.504141 /MDS/2015 CO NO.32/MDS./15 3 RS.42,28,531/- ATTRIBUTING TO UNDERVALUATION OF CLO SING STOCK BY TAKING INTO ACCOUNT THE AVERAGE RATE (AVERAGE OF RA TE AT THE BEGINNING OF THE YEAR & END OF THE YEAR) WITHOUT AP PRECIATING THE FACTS OF THE PRESENT CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A COMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING OF SPONGE IRON, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 29.09.2009 ADMITTING LOSS OF RS.4,10,51,401/-. SUBSEQUENTLY T HE CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS AND ORDER WAS PASSED U/S .143(3) OF THE ACT ON 11.11.2011 WHEREIN THE LD. ASSESSING OFFICER MADE DISALLOWANCE OF INTEREST U/S.43B OF THE ACT FOR RS. 12,38,31,810/- AND DISALLOWANCE ON ACCOUNT OF UNDER-VALUATION OF CLOSI NG STOCK FOR RS 42,28,531/-. ON APPEAL, THE LD. CIT (A) DELETED TH E DISALLOWANCE TOWARDS INTEREST U/S.43B OF THE ACT FOR RS.10,63,00 ,000/- AND CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER WI TH RESPECT TO DISALLOWANCE ON ACCOUNT OF UNDER VALUATION OF CLOSI NG STOCK FOR RS 42,28,531/-. 4. AT THE OUTSET THE LD. D.R SUBMITTED THAT THE MA TTER MAY BE REMITTED BACK TO THE FILE OF LD. CIT (A) BECAUSE TH E LD. CIT (A) HAD ITA NO.504141 /MDS/2015 CO NO.32/MDS./15 4 DELETED THE DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER BY ACCEPTING ADDITIONAL EVIDENCE. LD. A.R STRONGLY OBJ ECTED TO THE SUBMISSIONS OF THE LD. D.R AND POINTED OUT THAT ONL Y ANNUAL REPORT WAS SUBMITTED BEFORE THE LD. CIT (A) WHICH WAS ALRE ADY PLACED BEFORE THE LD. ASSESSING OFFICER, HENCE NO ADDITION AL EVIDENCE WERE PLACED BEFORE THE LD. CIT (A). THE LD. A.R. FURTHE R REQUESTED THAT IF THE BENCH DECIDES TO REMIT THE MATTER BACK THEN THE APPEAL OF THE REVENUE AS WELL AS THE ASSESSEE MAY BE REMITTED BAC K TO THE FILE OF LD. ASSESSING OFFICER SO THAT BOTH THE MATTERS MAY BE DECIDED AFRESH FOR WHICH LD. D.R DID NOT HAVE ANY OBJECTION. 5. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE RE IS NO DETAILED DISCUSSION BY THE REVENUE IN REGARD TO INTEREST EXP ENDITURE WHICH IS TREATED AS ATTRIBUTABLE TO CAPITAL WORKING PROGRESS WITH BREAK UP. FURTHER, THE CLOSING STOCK OF THE ASSESSEE HAS TO B E VALUED AS PER THE COST OF THE STOCK OR MARKET VALUE WHICHEVER IS LESS . IT APPEARS THAT THE ASSESSEE HAS NOT CONVINCED THE REVENUE IN REGARD TO THE MARKET PRICE OF THE CLOSING STOCK AS ON THE END OF THE PRE VIOUS YEAR. IN THIS SITUATION WE ARE OF THE CONSIDERED VIEW THAT THE AP PEAL OF THE REVENUE AND THE C.O OF THE ASSESSEE HAS TO BE REMIT TED BACK TO THE ITA NO.504141 /MDS/2015 CO NO.32/MDS./15 5 FILE OF THE LD. ASSESSING OFFICER FOR FRESH CONSIDE RATION. ACCORDINGLY WE HEREBY REMIT BACK BOTH THE APPEALS TO THE FILE O F THE LD. ASSESSING OFFICER FOR DENOVO CONSIDERATION AND TO PASS APPROP RIATE SPEAKING ORDER AS PER LAW AND MERIT. 6. IN THE RESULT, THE APPEAL OF REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE ARE ALLOWED FOR STA TISTICAL PURPOSES ORDER PRONOUNCED ON 22 ND JULY, 2015 AT CHENNAI. SD/- SD/- ( ' #$ % ) ((CHALLA NAGENDRA PRASAD) ( . ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 22 ND JULY, 2015. K S SUNDARAM. '#$$ %&$'& /COPY TO: $ 1. /APPELLANT 2. /RESPONDENT 3. $ ($)* /CIT(A) 4. $ ( /CIT 5. &+,$ - /DR 6. ,.$/ /GF