Veekay and Company, Gurgaon V. ITO, Gurgaon

ITA 116/DEL/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0233 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 15-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KR CHOPRA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-2, NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A. NO.116 /DEL/2015 ASSESSMENT YEAR : 2010-11 VEEKAY AND COMPANY, VS. ITO, WARD 11(3), 463/8, OUTER ROAD, GURGAON KRISHNA COLONY, OPP. TANEJA HOSPITAL, GURGAON GIR / PAN:AAFFV8724P (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI MANOJ KR. CHOPRA, SR. DR DATE OF HEARING : 15.07.2015 DATE OF PRONOUNCEMENT : 21.07.2015 ORDER THIS IS AN APPEAL FILED BY ASSESSEE DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) II, FARIDABAD, DATED 31.10.2014 FOR THE ASSE SSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS: 1) THAT THE ORDER PASSED BY THE CIT(APPEALS) U/S 25 0(6) OF THE INCOME TAX ACT,1961 IS ILLEGAL, ARBITRARY, BASELESS AND AGAINST THE FACTS OF THE CASE. 2) THAT THE ORDER OF CIT(APPEALS) /ITO, GURGAON IS CRYPTIC IN NATURE AND THEREFORE, UNJUST, IMPROPER, BAD IN LAW. 3) THAT THE DISALLOWANCE / ADDITION OF INCOME OF RS .1,03,674 IS NOT HIT BY THE PROVISIONS OF SECTION 40A(2) OF THE INCO ME TAX ACT,1961. 4) THAT THE FARE OPPORTUNITY OF BEING HEARD HAS NOT BEEN GIVEN TO THE APPELLANT. 2. NONE APPEARED ON BEHALF OF ASSESSEE IN SPITE OF ISSUE OF NOTICE THROUGH RPAD WELL IN ADVANCE. UNDER THESE CIRCUMST ANCES, I DISPOSE OF THE CASE OF ASSESSEE EX-PARTE QUA ASSESSEE ON MERITS. ITA NO.116/DEL/2015 2 3. I HAVE HEARD LD. D.R. AND PERUSED THE MATERIAL O N RECORD. THE SOLE ISSUE FOR ADJUDICATION BEFORE ME IS DISALLOWANCE U/ S 40A(2) BEING INTEREST PAID TO RELATED PARTIES. THE ASSESSEE HAD PAID INT EREST @ 18%. THE A.O. WAS OF THE OPINION THAT THE MARKET RATE OF INTEREST SHO ULD BE @ 12% AND THE EXCESS INTEREST @ 6% WAS DISALLOWED. ON APPEAL THE FIRST APPELLATE AUTHORITY DISMISSED THE CASE OF THE ASSESSEE. AGGRIEVED THE ASSESSEE IS BEFORE US. 4. HEARD LD. D.R. AND AFTER PERUSING THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE PAYMENT OF INTER EST @ 18% P.A. ON LOAN BORROWED CAN BE CONSIDERED AS THE MARKET RATE. THU S THE DISALLOWANCE U/S 40A(2)(B) IS UNCALLED FOR WHEN THE BANK CHARGES INT EREST @ 18.25%P.A. THE FIRST APPELLATE AUTHORITY WAS WRONG IN COMING TO TH E CONCLUSION THAT THE MARKET RATE OF BORROWING SHOULD BE TAKEN @ 12% P.A. AND INTEREST PAYMENT ABOVE SUCH RATE SHOULD BE DISALLOWED. THE JUDGEMEN T OF HONBLE KERALA HIGH CURT IN THE CASE OF ANANDJI SHAH VS ACIT, 181 ITR 171 RELIED UPON BY LD. A.O. IS DISTINGUISHABLE ON FACTS AS IN THAT CASE, THE INTEREST PAID TO THE SON AND WIFE, THE PARTNERS WAS @ 24% WHEREAS INTERE ST PAID TO NON RELATED PARTIES WAS ONLY 12% - 15%. PAYMENT OF INTEREST @ 18% CANNOT IN MY VIEW BE TERMED AS EXCESSIVE OR UNREASONABLE. 5. IN VIEW OF ABOVE APPEAL FILED BY ASSESSEE IS ALL OWED. 6. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JULY, 2015. SD./- (J. S. REDDY) ACCOUNTANT MEMBER DATE:21 ST JULY, 2015 SP COPY FORWARDED TO:- ITA NO.116/DEL/2015 3 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 15/7 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 17,20,21 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 21/7/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 21/7 SR. PS/PS 7 FILE SENT TO BENCH CLERK 21/7 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER