M/s. Hariom Silk Mills, Surat V. The ACIT.,Circle-9, Surat

ITA 1076/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1740 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Non passing of speaking order
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, A HMEDABAD , (BEFORE SHRI RAJPAL YADAV, J.M. & SHRI ANIL CHATURV EDI, A.M.) ( ! ' #$ # %& ) ITA NO. 1076/AHD/2012 (ASSESSM ENT YEAR: 2007-08) M/S. HARIOM SILK MILLS GANDHI COLONY, A. K. ROAD, SURAT 395003 VS. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-9, SURAT PAN NO. AABFH5100M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M. K. PATEL, A.R. RESPONDENT BY : SHRI DINESH SINGH , SR. D .R. DATE OF HEARING : 13 -04-2 016 DATE OF PRONOUNCEMENT : 26 -04-2016 ( # )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-V, SURAT, DATED 05.03.2012 FOR THE ASSESSMENT YEAR 2005-06 . 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. THE ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF GREY CLOTH. ASSESSEE FILED ITS RETURN O F INCOME FOR A.Y. 2007-08 ON 31.07.2007DECLARING NET LOSS OF RS.79,87,950/-. TH E CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER, ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT VIDE ORDER DATED 11.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT R S.4,88,330/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) WHO VIDE ORDER ITA NO.1076/AHD/12 A.Y. 2007-08 (M/S. HARI OM SILK MILLS VS. ACIT) 2 DATED 05.03.2012 (IN APPEAL NO. CAS-V/262/2009-10) UPHELD THE ADDITION MADE BY A.O. AGGRIEVED BY THE ORDER OF LD. CIT(A) , ASS ESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUND: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.84,7 6,281/- ON ACCOUNT OF DISALLOWANCE ON INTEREST EXPENSES U/S.43B OF THE INCOME TAX ACT, 19 61. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O . NOTICED THAT ASSESSEE HAS CLAIMED INTEREST EXPENSES OF RS.84,76,281/-. THE A SSESSEE WAS ASKED TO PRODUCE EVIDENCES OF PAYMENT OF INTEREST ON LOAN, WHICH AO NOTED THAT ASSESSEE FAILED TO DO SO. A.O. ACCORDINGLY DISALLOWED THE INTEREST EX PENSES OF RS.84,76,281/- U/S.43B OF THE ACT. 5. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO UPHELD THE ADDITION MADE BY A.O. BY HOLD ING AS UNDER: 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER. THE A.O. HAS RIGHTLY MADE ADDITION AS THE ASSESSEE FAILED TO PROVE HIS CLAIM OF INTEREST PAYMENT IN QUESTION. SECONDLY, DURING THE APPELLATE PROCEEDINGS ALSO, THE APPELLANT NEITH ER ATTENDED NOR MADE ANY SUBMISSIONS IN THIS REGARD. HENCE, THE ADDITION MADE ON THIS A CCOUNT IS HEREBY CONFIRMED AND THE GROUND OF APPEAL IS DISMISSED. 6. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US. 6.1 BEFORE US, LD. A.R. SUBMITTED THAT THE ORDER O F LD. CIT(A) IS AN EX PARTE ORDER AND A NON SPEAKING ORDER . ON THE MERITS OF THE ADDITION, HE SUBMITTED THAT A.O. HAS DISALLOWED THE EXPENSES U/S.43B OF THE ACT . HE SUBMITTED THAT THE INTEREST WAS PAID ON THE LOANS AVAILED BY THE ASSESSEE FROM CO-OPERATIVE BANK AND THEREFORE, THE INTEREST CANNOT BE DISALLOWED U/S.43 B(A) OF THE ACT AS THE CO- OPERATIVE BANK CANNOT BE CONSIDERED TO BE A SCHEDUL ED BANK. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDERS OF A.O. AND LD. CIT (A) AND SUBMITTED THAT THOUGH VARIOUS OPPORTUNITIES WERE GRANTED BY THE LD. CIT(A ), ASSESSEE DID NOT APPEAR BEFORE THE LD. CIT(A) AND IN SUCH A SITUATION, LD. CIT(A) HAD NO OTHER OPTION BUT TO ITA NO.1076/AHD/12 A.Y. 2007-08 (M/S. HARI OM SILK MILLS VS. ACIT) 3 CONFIRM THE DISALLOWANCE. ON THE ARS SUBMISSION OF INTEREST BEING PAID TO CO- OPERATIVE BANKS, HE SUBMITTED THAT THE ASSESSEES CASE FALLS UNDER CLAUSE (D) OF S.43B. BEFORE US, HOWEVER BOTH THE PARTIES SUBMITT ED THAT THERE IS NO FINDING OF LOWER AUTHORITIES AS TO WHETHER THE ASSESSEES CASE IS COVERED UNDER (D) OR (E) OF SECTION 43B OF THE ACT AND, THEREFORE, MATTER MAY B E REMITTED TO THE FILE OF AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DI SALLOWANCE OF INTEREST EXPENSES U/S.43B OF THE ACT. FROM THE PERUSAL OF THE ORDER OF A.O, IT IS SEEN THAT AO HAS CONSIDERED THE DISALLOWANCE OF INTEREST U/S.43B OF THE ACT. WE, HOWEVER, FIND THAT THERE IS NO FINDING ABOUT THE NATURE OF INTEREST PA YMENT AND WHETHER THE INTEREST IS PAID TO BANK OR FINANCIAL INSTITUTION AND WHETHER T HE INTEREST PAYMENT IS COVERED BY CLAUSE (D) OR (E) OF SECTION 43B OF THE ACT AND IS THEREFORE LIABLE FOR DISALLOWANCE U/S.43B OF THE ACT. BEFORE US, IT IS LD. A.RS. CONTENTION THAT THE EXPENSES CANNOT BE DISALLOWED U/S.43B OF THE ACT A S THE PAYMENT IS TO BE CO- OPERATIVE BANK AND NOT A SCHEDULED BANK AND, THERE FORE, THE INTEREST PAYMENT COULD NOT BE DISALLOWED U/S.43B(E) OF THE ACT. ON THE OTHER HAND, IT IS LD.DRS CONTENTION THAT THE INTEREST PAYMENT IS TO A PUBLIC FINANCIAL INSTITUTION AND IS THEREFORE TO BE DISALLOWED U/S.43B(D) OF THE ACT. WE FIND THAT THERE IS NO FINDING BY EITHER OF THE LOWER AUTHORITIES ABOUT THE INSTI TUTION TO WHOM THE INTEREST IS PAID/PAYABLE BY THE ASSESSEE IS A SCHEDULED BANK, C O-OPERATIVE BANK OF FINANCIAL INSTITUTION AND THE ASSESSEES CASE FALLS UNDER W HICH CLAUSE OF SECTION 43B OF THE ACT. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE MATTER NEEDS TO BE RESTORED BACK TO THE FILE OF A.O . TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE SUBMISSION OF ASSESSEE AND BY GIVIN G A CLEAR FINDING. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE BY PROMPT LY FURNISHING ALL THE REQUIRED DETAILS CALLED FOR BY THE AUTHORITIES. WE, THEREF ORE, WITHOUT EXPRESSING ANY VIEW ITA NO.1076/AHD/12 A.Y. 2007-08 (M/S. HARI OM SILK MILLS VS. ACIT) 4 ON MERITS OF THE CASE, RESTORE THE ISSUE TO THE FIL E OF AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 26 - 04 - 201 6. SD/- SD/- ( RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT M EMBER AHMEDABAD: DATED 26/04/2016 S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) V, SURAT 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER //TRUE COPY// DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 13.04.2016/20.4.16