M/s Venkata Satyanarayana Trading Corporation, Vijayawada V. THE ITO, WARD - 1(1), Vijayawada

CO 64/VIZ/2013

• Counselvise Citation: [2014] 123 COUNSELVISE.COM (IT) 0187 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 16-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Assessee Lawyers: A C GANGAIAH
• Keywords: Notional interest

Judgement Text

ITA NO.104/VIZAG/2013 VENKATA SATYANARAYANA TRADING CORPORATION, VIJAYAWA DA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO.104/VIZAG/2013 ASSESSMENT YEAR : 2007 - 08 ITO WARD-1(1) VIJAYAWADA VS. VENKATA SATYANARAYANA TRADING CORPORATION, VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.AADFV9361N C.O. NO.64/VIZAG/2013 (ARISING OUT OF ITA NO.104/VIZAG/2013) ASSESSMENT YEAR : 2007-08 VENKATA SATYANARAYANA TRADING CORPORATION, VIJAYAWADA VS. ITO WARD-1(1) VIJAYAWADA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.C. GANGAIAH, AR REVENUE BY: SMT. D. KOMALI KRISHNA, DR DATE OF HEARING : 04.12.2014 DATE OF PRONOUNCEMENT : 04.12.2014 ORDER PER D. MANMOHAN, VICE PRESIDENT:- THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) DATED 28.12.2012. ISSUE IN SHORT IS THAT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE OBTAINED INTEREST BEARING LOANS A ND ADVANCED THE SAME FOR NON-BUSINESS PURPOSES. THE CASE OF THE ASSESSEE ON THE OTHER HAND WAS THAT THE ADVANCES WERE GIVEN DURING THE COURSE OF BUSINE SS. THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE AND PROCEEDED TO CHA RGE INTEREST @ 12% ON THE ADVANCES GIVEN BY THE ASSESSEE. 2. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE ADVANCES WERE MADE FOR BUSINESS PURPOSES AND ALSO CONTENDED THAT NOTIONAL INTEREST CANNOT BE CHARGED. LD. CIT(A) ACCEPTED THE CONTENT ION OF THE ASSESSEE ON BOTH THE ISSUES. AGGRIEVED, REVENUE IS IN APPEAL B EFORE US. ITA NO.104/VIZAG/2013 VENKATA SATYANARAYANA TRADING CORPORATION, VIJAYAWA DA 2 3. ASSESSEE ON THE OTHER HAND FILED A CROSS OBJECTI ON SUPPORTING THE VIEW TAKEN BY THE LD. CIT(A). IT IS NOT IN DISPUTE THAT THE LAW DOES NOT PERMIT CHARGING OF NOTIONAL INTEREST UNDER THE INCOME-TAX ACT, AS HELD BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF HIGHWAYS CONSTRUCTION CO. PVT. LTD. VS. CIT 199 ITR 702. THE AO IN FACT DID NOT CHOSE TO DISALLOW THE INTEREST COMPONENT ON THE AMOUNT BORROWED BY THE ASSESSEE AN D ALLEGED TO HAVE BEEN USED FOR NON-BUSINESS PURPOSES. ON THE OTHER HAND, THE AO MERELY SOUGHT TO MAKE AN ADDITION REFERABLE TO NOTIONAL IN TEREST CHARGEABLE BY THE ASSESSEE ON THE AMOUNT ADVANCED. SINCE THERE IS NO PROVISION UNDER THE ACT TO CHARGE SUCH NOTIONAL INTEREST, CONSISTENT WITH T HE VIEW TAKEN BY THE HONBLE GAUHATI HIGH COURT (SUPRA), WE ARE OF THE V IEW THAT THE ORDER PASSED BY THE LD. CIT(A) DOES NOT CALL FOR ANY INTERFERENC E. WE THEREFORE DISMISS THE APPEAL FILED BY THE REVENUE. UNDER THE CIRCUMS TANCES, CROSS OBJECTIONS FILED BY THE ASSESSEE ARE TREATED AS INFRUCTUOUS. PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER14 SD/- SD/- (J. SUDHAKAR REDDY) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT VG/SPS VISAKHAPATNAM, DATED 4 TH DECEMBER, 2014 COPY TO 1 THE ITO, WARD-1(1), VIJAYAWADA 2 M/S. VENKATA SATYANARAYANA TRADING COMPANY, D.NO. 11-62-101, CANAL ROAD, 1 TOWN, VIJAYAWADA 3 THE CIT, VIJAYAWADA 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM