SRC Projects (P) Ltd., Salem V. DCIT, Salem

ITA 1225/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90601 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 09-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2014
• Court: TRIBUNAL
• Department Lawyers: KRISHNAMURTHY
• Assessee Lawyers: T VASUDEVAN
• Keywords: Business expenditure
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHE NNAI , . ! ! ! ! , ' ' ' ' #$ #$ #$ #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A.NO.1225/MDS/2014 ' ! %! / ASSESSMENT YEAR :2009-10 SRC PROJECTS (P) LTD., NO.4-B, LAKSHMIPURAM, GANDHI ROAD, SALEM 636 007. [PAN: AAGCS3528N] VS. THE COMMISSIONER OF INCOME TAX, SALEM. ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) &' * + / APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE ()&' * + / RESPONDENT BY : SHRI KRISHNAMURTHY, CIT * , / DATE OF HEARING : 09.06.2015 -.% * , /DATE OF PRONOUNCEMENT : 30.06.2015 / / / / / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX, SALEM, DATED 31.03. 2014 RELEVANT TO THE ASSESSMENT YEAR 2009-10 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S IN THE BUSINESS OF HEAVY CIVIL CONTRACTORS, PETROLEUM PRODUCTS DEALERS FOR INDIAN OIL CORPORATION LTD. THE ASSESSEE HAS FILED ITS RETURN ADMITTING AN INCOME OF .8,54,39,150/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER DUE PROCESS, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .1225 1225 1225 1225/M/ /M/ /M/ /M/14 1414 14 2 THE ASSESSMENT WAS COMPLETED. THEREAFTER, THE LD. C IT, WHILE EXERCISING POWER UNDER SECTION 263 OF THE ACT ISSUED A SHOW CA USE NOTICE ON 27.02.2014 BY OBSERVING THAT THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE FOLL OWING REASONS: IN THE SCHEDULE 5 TO THE INCOME & EXPENDITURE ACCO UNT, THE ASSESSEE HAS DEBITED A SUM OF .17,29,819/- TOWARDS INTEREST ON SERVICE TAX AND TDS. THE INTEREST PAID U/S. 201(IA) TOWARDS LATE PAYMENT OF TAX DEDUCTED AT SOURCE AMOUNTING TO .3,71,671/- DOES NOT QUALIFY FOR DEDUCTION BEING SPECIFICALLY PROHIBITED BY SEC. 40A . THIS VIEW FINDS SUPPORT BY THE DECISION OF THE HONBLE MADRAS HIGH COURT IN CASE OF CIT V. CHENNAI PROPERTIES AND INVESTMENT LTD. 239 I TR 435. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE, ON 17.03. 2014, THE AR OF THE ASSESSEE APPEARED BEFORE THE LD. CIT. THE LD. CIT, AFTER DISCUSSING WITH THE AR OF THE ASSESSEE AND ALSO CONSIDERING THE FACTS O F THE CASE, HAS OBSERVED THAT THE IN THE INTEREST ON TDS AND SERVICE TAX, HE HAS REITERATED THAT THE INTEREST ON THE LATE PAYMENT IS ONLY COMPENSATORY A ND IS THEREFORE, BUSINESS EXPENDITURE WHICH SHOULD BE ALLOWED. THE LD. CIT FI NDS NO SUBSTANCE IN THE ARGUMENT OF THE ASSESSEES AR AND SET ASIDE THE MAT TER TO THE FILE OF THE ASSESSING OFFICER TO REDO THE ASSESSMENT. 4. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MA TTER IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT TWO VIEWS ARE POSSIBLE AND THEREFORE, THE VIEW WHICH WAS TAKEN BY THE ASSESSING OFFICER IS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .1225 1225 1225 1225/M/ /M/ /M/ /M/14 1414 14 3 REASONABLE ONE AND IT CANNOT BE SUBJECTED TO 263 OR DER PASSED BY THE LD. CIT AND IT CANNOT BE SUSTAINED. 6. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THERE IS NO TWO VIEWS AND ONLY ONE VIEW IS POSSIBLE AND SUPPORTED THE ORD ER PASSED BY THE LD. CIT. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE LD. CI T, WHILE EXERCISING POWER UNDER SECTION 263 OF THE ACT CAME TO A CONCLUSION T HAT THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE A CT DATED 29.08.2011 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E FOR THE REASON THAT AS PER SCHEDULE 5 TO THE INCOME & EXPENDITURE ACCOUNT, THE ASSESSEE HAS DEBITED A SUM OF .17,29,819/- TOWARDS INTEREST ON SERVICE TAX AND TD S. THE INTEREST PAID UNDER SECTION 201(IA) TOWARDS THE LAT E PAYMENT OF TAX DEDUCTED AT SOURCE AMOUNTING TO .3,71,671/- DOES NOT QUALIFY FOR DEDUCTION BEING SPECIFICALLY PROHIBITED BY SECTION 40(A) OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT AFRESH. THE CASE OF THE ASSESSEE IS THAT THE INTEREST ON LATE PAYMENT OF TAX DEDUCTED AT SOURCE COMPENSATORY IN NATURE AND IT IS A BUSINESS EXPENDITURE. WE FIND THAT THE ASSESSING OFFICER IN THE ASSESSMENT HAS NOT DISCUSSED THIS ISSUE AND NOT APP LIED HIS MIND. THE ASSESSMENT ORDER IS COMPLETELY SILENT ON THIS ASPEC T. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE. THE LD. CIT RIGHTLY EXERCISED HIS POWER UNDER SECTION 263 AND I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .1225 1225 1225 1225/M/ /M/ /M/ /M/14 1414 14 4 DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSME NT. THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF CIT V. MAX INDIA LTD. 295 ITR 282 (SC) HAS NO APPLICATION TO THE FACTS OF THE PRESENT. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT. THUS, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 30 TH OF JUNE, 2015 AT CHENNAI. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 30.06.2015 VM/- / * (',01 21%, /COPY TO: 1. &' / APPELLANT, 2. ()&' / RESPONDENT, 3. 3 ( ) /CIT(A), 4. 3 /CIT, 5. 14 (',' /DR & 6. 5! 6 /GF.