M/s. Parinay Organisers Pvt.Ltd., Surat V. The ACIT.,Cent.Circle-4, Surat

ITA 1137/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76783 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 19-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2011
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Section: 43B

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , !'# !$ !'# !$ !'# !$ !'# !$0 00 0! !! !0 00 0 %$ %$ %$ %$, , , , &' ( &' ( &' ( &' ( & & & & BEFORE SHRI G.C. GUPTA, VICE-PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 1137/AHD/2011 ASSESSMENT YEAR 2007-08 PARINAY ORGANISERS PVT. LTD. C/O MUKESH N. DESAI U-1, JOLLY SQUARE, GHOD DOD ROAD, SURAT. PAN: AACCP3640G VS ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, SURAT. )*/ APPELLANT ,-)* / RESPONDENT REVENUE BY : SHRI P.L. KUREEL, SR. DR ASSESSEE(S) BY : SHRI MEHUL SHAH, AR $'. / 0'/ // / DATE OF HEARING : 22/05/2014 123 / 0' / DATE OF PRONOUNCEMENT : 30 /05/2014 &4 &4 &4 &4/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, AHMEDABAD D ATED 17.02.2011. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IN THIS APPEAL READS AS FOLLOWS: IN THE FACTS AND CIRCUMSTANCE OF CASE, THE DISALLOW ANCE OF INTEREST OF RS 44,19,194/- BEING CONSTRUCTION EXPENSES MAY BE D ELETED OR SUBSTANTIALLY REDUCED. ITA NO. 1137/AHD/2011 M/S PARINAY ORGANISERS PVT. LTD. FOR A.Y. 2007-08 - 2 - 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE ASSESSEE DEBITED RS 44,19,194/- AS INTEREST EXPENSES IN ITS PROFIT AND LOSS ACCOUNT . THE AFORESAID INTEREST RELATES TO THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2 004-05 OF RS 21,10,019/- AND RS 23,09,175/- RELEVANT TO THE ASSESSMENT YEAR 2005 -06. THE ASSESSEE IS A COMPANY AND THE REGULAR SYSTEM OF ACCOUNTING FOLLOW ED BY IT IS MERCANTILE. THE ASSESSING OFFICER, OBSERVING THAT THE AFORESAID INT EREST OF RS 44,19,194/- IS NOT THE EXPENDITURE OF THE YEAR UNDER CONSIDERATION IN VIEW OF THE SYSTEM OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE NOR THE SAME IS COVERED BY THE PROVISIONS OF SECTION 43B OF THE ACT, DISALLOWED THE SAME. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX(APPEALS) ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT ONLY R S 8,63,435/- WAS EFFECTIVELY CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION AS BALANCE AMOUNT OF RS 35,55,759/- FORMED PART OF THE CLOSING STOCK ON THE GROUND THAT THE ENTIRE AMOUNT OF RS 44,19,194/- WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE YEAR UNDER CONSIDERATION AND THE VALUE OF CLOSING STOCK OF THE YEAR UNDER CONSIDERATION FORMED VALUE OF OPENING STOCK OF THE SUBSEQUENT YEA R AND FOR WHICH DEDUCTION IS ALLOWED TO THE ASSESSEE IN THE SUBSEQUENT YEAR. 5. BEFORE US, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE MADE SIMILAR ARGUMENTS AS WERE MADE BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). WE FIND THAT NO MATERIAL WAS BROUGHT BEFORE US TO SHOW THAT INTEREST EXPENSES OF RS 44,19,194/- WERE ACTUALLY CRYSTALLIZED DURING THE Y EAR UNDER CONSIDERATION. THE CONTENTION OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT AS THE PAYMENT OF INTEREST OF RS 44,19,194/- WAS MADE DURING THE YEAR AND THEREFORE THE INTEREST WAS CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION CA NNOT BE ACCEPTED IN ABSENCE OF ANY MATERIAL BROUGHT BEFORE US TO SHOW THAT THERE W AS ANY DISPUTE IN RESPECT OF INTEREST IN EARLIER YEARS AND THAT DISPUTE WAS SETT LED DURING THE YEAR UNDER CONSIDERATION. IN ABSENCE OF ANY MATERIAL BROUGHT BEFORE US TO SHOW THAT THE LIABILITY OF INTEREST WAS CRYSTALLIZED DURING THE Y EAR UNDER CONSIDERATION, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS O F THE LOWER AUTHORITIES IN THIS RESPECT. ITA NO. 1137/AHD/2011 M/S PARINAY ORGANISERS PVT. LTD. FOR A.Y. 2007-08 - 3 - 6. THE ALTERNATIVE CONTENTION OF THE AUTHORIZED RE PRESENTATIVE OF THE ASSESSEE WAS THAT AS THE INTEREST EXPENDITURE FORMS PART OF CONSTRUCTION EXPENSES AND AS ONLY PART OF CONSTRUCTION WHICH WAS PROPORTI ONATE TO THE INTEREST EXPENSES OF RS 8,63,435/- WAS SOLD DURING THE YEAR UNDER CON SIDERATION AND THE BALANCE CONSTRUCTION REMAINED AS CLOSING STOCK OF THE YEAR UNDER CONSIDERATION, IT IMPLIES THAT THE ASSESSEE IN FACT CLAIMED ONLY RS 8,63,435/ - AS DEDUCTION DURING THE YEAR OUT OF THE AFORESAID INTEREST OF RS 44,19,194/- AND CONSEQUENTLY, THE DISALLOWANCE SHOULD HAVE BEEN RESTRICTED TO RS 8,63,435/- ONLY. 7. WE FIND THAT IT IS NOT IN DISPUTE THAT ENTIRE I NTEREST EXPENDITURE OF RS 44,19,194/- WAS DEBITED TO THE PROFIT AND LOSS ACCO UNT IN THE YEAR UNDER CONSIDERATION. FURTHER, NO MATERIAL WAS BROUGHT BE FORE US TO SHOW THAT THE OPENING STOCK IN THE SUBSEQUENT YEAR WAS TAKEN AT A N AMOUNT REDUCED BY RS 35,55,759/- FOR COMPUTING TOTAL INCOME OF THE SUBS EQUENT YEAR OR YEARS. IN ABSENCE OF ANY SUCH MATERIAL BROUGHT BEFORE US, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I N REJECTING THE ALTERNATIVE CONTENTION OF THE ASSESSEE. THEREFORE, WE CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF THIS GROUND O F APPEAL. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 30 TH OF MAY, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 30/05/2014 GHANSHYAM MAURYA, SR. P.S.