DEPUTY COMMISSIONER OF INCOME TAX, DELHI V. MIDEAST INTEGRATED STEELS LIMITED, NEW DELHI

ITA 3414/DEL/2023

AI Insights

The case involves M/s Mideast Integrated Steels Ltd., which filed multiple appeals concerning disallowances made in the assessment years 2019-20 and 2020-21. The appeals addressed disallowances related to interest expenditure and ESI/PF contributions. The tribunal's decision was influenced by the assessee's participation in the Direct Tax Vivad se Vishwas Scheme, leading to the withdrawal of one appeal, and the application of a CBDT circular regarding the tax effect for another appeal, which was below the prescribed threshold, leading to its dismissal. The tribunal also addressed the substantive issues of interest expenditure and ESI/PF disallowances, applying relevant case law and statutory provisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38271 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2020-2021
• Other Referred Cases: CIT Vs. Reliance Utility & Power (2009) 313 ITR 340 (Bom.), Checkmate Services P. Ltd. vs. Commissioner Of Income Tax-I (2022) 448 ITR 518 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND KUMAR TRIVEDI
• Assessee Lawyers: MADHUR AGGARWAL
• Keywords: Retrospective amendment; Tax effect
• Section: 143(3); 143(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Sh. Satbeer Singh Godara, Judicial Member & Sh. S. Rifaur Rahman, Accountant Member ITA No. 1999/Del/2022 : Asstt. Year: 2019-20 ITA No. 3031/Del/2023 : Asstt. Year: 2020-21 M/s Mideast Integrated Steels Ltd., H-1, Zamrudur Community Centre, Kailash Colony, New Delhi-110048 Vs ACIT, Central Circle-2, New Delhi (APPELLANT) (RESPONDENT) PAN No. AAACM0846P ITA No. 3414/Del/2023 : Asstt. Year: 2020-21 DCIT, Room No. 332, 3rd Floor, ARA Centre, Khandewalan Extn., New Delhi-110055 Vs M/s Mideast Integrated Steels Ltd., H-1, Zamrudur Community Centre, Kailash Colony, New Delhi-110048 (APPELLANT) (RESPONDENT) PAN No. AAACM0846P Assessee by : Sh. Madhur Aggarwal, Adv. Revenue by : Sh. Arvind Kumar Trivedi, Sr. DR Date of Hearing: 29.01.2025 Date of Pronouncement: 31.01.2025 ORDER The instant batch of three cases pertains to the single assessee herein M/s Mideast Integrated Steels Ltd. It has filed it’s appeal ITA No. 1999/Del/2022 for the assessment year 2019-20 arises against the CIT(A)-23, New Delhi’s order dated 30.06.2022 in case No. CIT(A), Delhi-23/10521/2018-19. Next assessment year 2020-21 on the other hand involves the assessee’s and Revenue cross appeals ITA No. 3031 & ITA No. 1999/Del/2022 & ITA No. 3031 & 3414/Del/2023 Mideast Integrated Steels Ltd. 2 3414/Del/2023 arises against the CIT(A)-23, New Delhi’s order dated 18.09.2023 in case No. CIT(A), Delhi-23/10409/2019-20. Relevant proceedings are u/s 143(1) and 143(3) of the Income Tax Act, 1961 (in short “the Act”); assessment year wise, respectively. 2. Heard both the parties at length. Case files perused. 3. Learned counsel states at the outset that the assessee has already opted for settlement by filing it’s Form 1 (copy placed on record) under the Direct Tax Vivad se Vishwas Scheme (DTVSV), 2024 and, therefore, it no more press for the instant appeal ITA No. 1999/Del/2022. Dismissed as withdrawn accordingly subject to all just exceptions. 4. Next comes the assessee’s latter appeal ITA No. 3031/Del/2023 raising it’s former substantive grounds inter alia challenging correctness of both the learned lower authorities’ action disallowing u/s 36(1)(iii) interest expenditure of Rs.1,57,70,000/-, in the course of assessment framed on 30.09.2022 as upheld in the lower appellate discussion. Our attention is invited at page 2 para 4 of the Assessment order that it had given interest free advances to related parties amounting to Rs.9,00,00,000/- as against interest free funds ITA No. 1999/Del/2022 & ITA No. 3031 & 3414/Del/2023 Mideast Integrated Steels Ltd. 3 available of Rs.250,00,00,000/- which has gone un-rebutted from the Revenue’s side. That being the case, we quote CIT Vs. CIT Vs. Reliance Utility & Power (2009) 313 ITR 340 (Bom.) that the necessary presumption in such an instance would be that of the assessee having used interest free funds for making interest free advances. We thus delete the impugned section 36(1)(iii) disallowance in very terms subject to the learned assessing authority for necessary factual verifications. 5. Learned counsel next submits very fairly that the second issue herein raised at the assessee’s behest of section 36(1)(va) ESI/PF disallowance stands covered in the Revenue’s favour as per Checkmate Services P. Ltd. vs. Commissioner Of Income Tax-I (2022) 448 ITR 518 (SC). We thus reject the assessee’s instant latter substantive ground in very terms. This assessee’s appeal ITA No. 3031/Del/2023 is partly allowed in the foregoing paras. 6. The Revenue’s cross appeal ITA No. 3414/Del/2023 is found to be involving tax effect of Rs.59,87,030/- which is less than the minimum tax effect prescribed of Rs.60 lakhs in the CBDT latest Circular No. 9/2024, dated 17.09.2024. ITA No. 1999/Del/2022 & ITA No. 3031 & 3414/Del/2023 Mideast Integrated Steels Ltd. 4 7. Learned Departmental Representative is indeed very fair in not disputing the fact that the CBDT's foregoing tax effect circular has been made applicable with retrospective effect on all pending appeals as well. We thus reject the Revenue's instant appeal ITA No. 3414/Del/2023 for this precise reason subject to all just exceptions. Ordered accordingly. 8. No other ground or arguments has been pressed before us. 9. To sum up, the assessee’s first and foremost appeal ITA No. 1999/Del/2022 is dismissed as withdrawn. It’s latter appeal ITA No. 3031/Del/2023 is partly allowed and the Revenue’s cross appeal ITA No. 3414/Del/2023 is dismissed in above terms. A copy of this common order be placed in respective case files. Order Pronounced in the Open Court on 31/01/2025. Sd/- Sd/- (S. Rifaur Rahman) (Satbeer Singh Godara) Accountant Member Judicial Member Dated: 31/01/2025 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR "