Sakthi Sugars Limited, CHENNAI V. DCIT, Coimbatore

ITA 1070/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73729 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 12-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2013
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: R VIJAYARAGHAVAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !' , # $! % BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 1070/MDS/2013 / ASSESSMENT YEAR : 2008-09 M/S.SAKTHI SUGARS LIMITED, NO.180, RACE COURSE, COIMBATORE 641 018 [PAN: AADCS 0651 B] ( '& /APPELLANT) VS THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(1), COIMBATORE-641 018 ( '('& /RESPONDENT) / APPELLANT BY : SHRI R.VIJAYARAGHAVAN, ADV. / RESPONDENT BY : SHRI GURU BHASHYAM, JCIT / DATE OF HEARING : 12-02-2014 ! / DATE OF PRONOUNCEMENT : 12-03-2014 $) / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-I, COIMBATORE DATED 22-0 3-2013 PASSED U/S.263 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). I.T.A. NO. 1070/MDS/2013 2 2. THE ASSESSMENT ORDER U/S.143(3) OF THE ACT FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION I.E., 2008-09 W AS PASSED IN THE CASE OF THE ASSESSEE ON 31-12-2010. THE COMMIS SIONER OF INCOME TAX OBSERVED THAT THE ASSESSMENT ORDER CONTA INS CERTAIN ERRORS WHICH ARE PRIMA-FACIE PREJUDICIAL TO THE INT EREST OF THE REVENUE. ACCORDINGLY, SHOW CAUSE NOTICE DATED 27-0 2-2013 U/S.263 OF THE ACT, WAS SERVED ON THE ASSESSEE. THE COMMISSIONER OF INCOME TAX OBSERVED: I. THE ASSESSEE HAS MADE DOUBLE CLAIM OF INTEREST O N TERM LOAN OF ` 34,25,59,653/- ; II. DEBITED FUNDED INTEREST ON TERM LOAN ON ACCRUAL BASIS IN THE RELEVANT P&L A/C PREPARED ACCORDING TO THE PROV ISIONS OF THE COMPANIES ACT, 1956, WHILE COMPUTING BOOK-PROFI T U/S.115JB FOR THE AY.2008-09. 3. THE COMMISSIONER OF INCOME TAX SET ASIDE THE ASS ESSMENT ORDER DATED 31-12-2010 AND DIRECTED THE ASSESSING O FFICER TO RE-DO THE ASSESSMENT ON THE BASIS OF THE OBSERVATIO NS MADE BY HIM IN THE IMPUGNED ORDER. I.T.A. NO. 1070/MDS/2013 3 AGGRIEVED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX PASSED U/S.263, THE ASSESSEE HAS COME IN APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS RAISED FOLLOWING GROUND S IN APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX IS C ONTRARY TO LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX ERRED IN ASSUMING JURISDICTION U/S.263 AND HOLDING THAT THE ASSESSMEN T ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E MERELY BECAUSE THE DECISION OF THE ASSESSING OFFICER IS NO T INCONSONANCE WITH THE VIEW OF THE CIT. 2.1 THE COMMISSIONER OF INCOME TAX FAILED TO APPREC IATE THAT THE SCRUTINY ASSESSMENT WAS COMPLETED U/S.143( 3) AFTER EXAMINING THE BOOKS OF ACCOUNT AND CONSIDERIN G THE VARIOUS DETAILS FILED BEFORE THE ASSESSING OFFI CER. 2.2 THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE APPRECIATED THAT IF THE ASSESSING OFFICER HAS TAKEN ONE OF THE TWO POSSIBLE VIEW IT CANNOT BE TERMED AS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. [MALABA R INDUSTRIAL CO. (VS) CIT 243 ITR 83 (SC)] 3. THE COMMISSIONER OF INCOME TAX ERRED IN DIRECTIN G THE ASSESSING OFFICER TO SCRUTINIZE THE CTIS OF THE ASS ESSMENT YEARS 2007-08 AND 2008-09 TO ASCERTAIN THAT THE FUN DED INTEREST ON TERM LOAN HAS BEEN CORRECTLY DEBITED AN D DIRECTED TO VERIFY THE P&L A/C TO ENSURE THAT NO DEBITING OF THE FUNDED INTEREST ON TERM-LOAN HAS BEEN DONE BY THE ASSESSEE . I.T.A. NO. 1070/MDS/2013 4 4. THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE APP RECIATED THAT AS ON 31.03.2008 THERE HAS BEEN NO SUCH DEBIT OF ` 34,25,59,653/- IN THE PROFIT AND LOSS ACCOUNT. THE APPELLANT HAS NOT CLAIMED THE ABOVE AMOUNT IN ITS TOTAL INCOM E STATEMENT RELEVANT TO THE ASSESSMENT YEAR 2008-09. 5. THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE APP RECIATED THAT THE ABOVE AMOUNT IS DEBITED IN THE FINANCIAL Y EAR ENDED 31.03.2007 ONLY. THE APPELLANT HAS DISALLOWED THE SAME IN THE TOTAL INCOME COMPUTATION STATEMENT AND SUBMITTE D THE SAME DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSE SSMENT YEAR 2007-08. 6. THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE APP RECIATED THAT THE APPELLANT HAS NOT DEBITED ANY AMOUNT TOWAR DS FUNDED INTEREST IN THE PROFIT AND LOSS ACCOUNT BY THE YEAR ENDED 31.03.2008. THE APPELLANT HAS NOT SHOWN ANY SUCH E XPENSES THEN THE QUESTION OF TREATING THE SAME AS PRIOR PER IOD EXPENSES DOES NOT ARISE. 7. THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL GROUNDS AT THE TIME OF HEARING. 4. SHRI R.VIJAYARAGHAVAN, APPEARING ON BEHALF OF TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HAS WRITTEN OFF INTERES T IN THE FINANCIAL YEAR (FY) ENDING ON 31-03-2007 I.E., IN THE AY.2007 -08 AND NOT IN THE AY.2008-09. THE LD.COUNSEL PLACED ON RECORD TH E COPY OF THE I.T.A. NO. 1070/MDS/2013 5 BALANCE SHEET OF THE ASSESSEE FOR THE FY ENDING 31- 03-2008 IN SUPPORT OF HIS CONTENTIONS. THE LD.COUNSEL FURTHER SUBMITTED THAT THE OBSERVATIONS OF CIT THAT ASSESSEE HAS NOT ACTUA LLY DISCHARGED ITS LOAN AND INTEREST LIABILITY IS WITHOUT ANY BASI S. A PERUSAL OF AUDITED ACCOUNTS WOULD MAKE IT AMPLY CLEAR THAT NO BORROWINGS WERE MADE TO PAY THE TERM-LOAN AMOUNT. THE LD.COUN SEL REITERATING THE GROUNDS OF APPEAL PRAYED FOR SETTIN G ASIDE OF THE IMPUGNED ORDER. 5. ON THE OTHER HAND, SHRI GURU BHASHYAM, APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDE R OF THE COMMISSIONER OF INCOME TAX AND PRAYED FOR THE DISMI SSAL OF THE APPEAL OF THE ASSESSEE. 6. BOTH SIDES HEARD. THE ISSUE IN APPEAL RELATES T O THE ADDITION MADE BY THE COMMISSIONER OF INCOME TAX U/S.263 WITH RESPECT TO THE ALLEGED DOUBLE CLAIM OF INTEREST ON TERM LOAN A ND DEBITING OF INTEREST ON TERM LOAN. THE LD.COUNSEL FOR THE ASSE SSEE HAS PLACED ON RECORD THE AUDITED BALANCE SHEET OF THE ASSESSEE -COMPANY FOR THE FINANCIAL YEAR ENDING 31-03-2008 RELEVANT TO TH E AY.2008-09. A PERUSAL OF SCHEDULE-22 TO THE P&L A/C SHOWS THAT THE ASSESSEE HAS WRITTEN-OFF FUNDED INTEREST TO THE TUNE OF ` 342,559,653/- IN THE I.T.A. NO. 1070/MDS/2013 6 FINANCIAL YEAR ENDED ON 31-03-2007 I.E., RELEVANT T O THE AY.2007- 08 AND NOT IN THE FINANCIAL YEAR RELEVANT TO THE AY .2008-09. THUS, THE OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX WITH REGARD TO CLAIM OF THE ASSESSEE ON THIS ISSUE IS UN-FOUNDE D. AS FAR AS SECOND ADDITION IS CONCERNED, THE LD.COUN SEL FOR THE ASSESSEE HAS POINTED OUT THAT THE ASSESSEE-COMP ANY HAS NOT DEBITED ANY SUM TOWARDS FUNDED INTEREST IN THE P&L A/C FOR THE PERIOD RELEVANT TO THE AY UNDER CONSIDERATION. THE REFORE, THE QUESTION OF TREATING THE SAME AS PRIOR PERIOD EXPEN SES DOES NOT ARISE. FROM THE DOCUMENTS ON RECORD, THE LD.DR HAS NOT BEEN ABLE TO SHOW THAT THE ASSESSEE HAS DEBITED FUNDED INTERE ST ON TERM LOAN IN THE RELEVANT AY. WE FIND MERIT IN THE APPE AL OF THE ASSESSEE. THE IMPUGNED ORDER PASSED U/S.263 IS SET ASIDE. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 12 TH MARCH, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 12 TH MARCH, 2014 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR