The Abhiramapuram Fund Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1272/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81228 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-10-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2014
• Court: TRIBUNAL
• Department Lawyers: N RENGARAJ
• Assessee Lawyers: V SWAMINATHAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHE NNAI . . . , !' , # $! % BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 1272/MDS/2014 / ASSESSMENT YEAR : 2006-07 M/S.THE ABIRAMAPURAM FUND LTD., NO.97, (OLD NO.65), DR.RANGA ROAD, ABHIRAMAPURAM, CHENNAI 600 018 [PAN: AAACT 2879 F] ( '& /APPELLANT) VS ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-III(2), CHENNAI ( '('& /RESPONDENT) / APPELLANT BY : SHRI V.SWAMINATHAN, CA., / RESPONDENT BY : SHRI N.RENGARAJ, CIT / DATE OF HEARING : 16-10-2014 ! / DATE OF PRONOUNCEMENT : 27-10-2014 $) / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-III, CHENNAI DATED 19-03-2014 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 6-07. I.T.A. NO. 1272/MDS/2014 2 2. THE ASSESSEE IS A NIDHI COMPANY AND IS ACCEPTING DEPOSITS FROM AND GIVING LOANS TO ITS MEMBERS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY UNDER CONSIDERATION ON 23-11-2006 DECLARING NIL INCOME. THE CASE OF ASSESSEE WAS SE LECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE INCOME TAX A CT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE A SSESSEE ON 08-10-2007. DURING THE COURSE OF ASSESSMENT, THE AS SESSING OFFICER MADE CERTAIN ADDITIONS/DIS-ALLOWANCES INCLU DING DIS- ALLOWANCE ON PROVISION FOR INTEREST ON NON-PERFORMI NG ASSETS (NPA). AGGRIEVED BY THE ASSESSMENT ORDER DATED 05-12-2008 , THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) REMITTED THE ISSUE BACK TO ASSESSING OFFICER TO EXA MINE THE SAME IN THE LIGHT OF THE DECISION RENDERED IN THE CASE O F CIT VS. SAKTHI FINANCE LTD., (352 ITR 102), BY THE HON'BLE MADRAS HIGH COURT. STILL AGGRIEVED, THE ASSESSEE HAS COME IN SECOND AP PEAL BEFORE THE TRIBUNAL. 3. SHRI V.SWAMINATHAN, APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS CREATED PROVISION FOR INTEREST ON NPAS. IT IS ACTUALLY THE INTEREST CHARGED ON LOAN ACCOUNT WHICH ARE I.T.A. NO. 1272/MDS/2014 3 TREATED AS DOUBTFUL. THE ASSESSEE IS GIVING LOANS AGAINST SECURITY. WHERE THE ASSESSEE FEELS THAT IT IS NOT POSSIBLE TO RECOVER INTEREST, THE SAME IS WAIVED OFF. SUBSEQUENTLY, IN SOME OF T HE CASES, INTEREST ON NPA WAS RECOVERED AND REVERSE ENTRIES W ERE MADE. THE LD.AR CONTENDED THAT THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THE SUBMISSIONS AND THE EVIDENCE FILED B Y THE ASSESSEE ON THIS ISSUE. 4. ON THE OTHER HAND, SHRI N.RENGARAJ, APPEARING ON BEHALF OF THE REVENUE SUPPORTED THE FINDINGS OF THE CIT(APPEA LS) AND PRAYED FOR DISMISSING APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE IN APPEAL IS WHETHER THE UN-RECOVERED INTEREST ON NPA IS AN ALLOWABLE DE DUCTION? A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSE SSING OFFICER WITHOUT GOING INTO THE DETAILS OF THE ISSUE HAVE DI S-ALLOWED THE EXPENDITURE OF ` 23,73,879/- CLAIMED TOWARDS INTEREST ON NPA. THE ASSESSING OFFICER HAS TERMED THE EXPENDITURE AS PRO VISION FOR INTEREST ON NPA, WHEREAS, THE CONTENTION OF THE ASS ESSEE IS THAT IT IS NOT A PROVISION BUT INTEREST ON LOANS WHICH ARE DOUBTFUL. THE I.T.A. NO. 1272/MDS/2014 4 ORDER OF CIT(APPEALS) IS ALSO SILENT ON THIS ISSUE. THE FIRST APPELLATE AUTHORITY PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SAKTHI FINANCE LTD., (SUPRA) AND PARTLY ALLOWED THIS GROUND OF APPEALS O F THE ASSESSEE. THE FACTS IN THE CASE ARE HAZY AND CANNO T BE CULLED OUT FROM THE FINDINGS OF THE AUTHORITIES BELOW. IN OU R CONSIDERED VIEW, THE ISSUE NEEDS A RE-VISIT TO THE ASSESSING OFFICER . THE ASSESSING OFFICER SHALL DECIDE THE ISSUE DENOVO AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 27 TH OCTOBER, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( !' ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) '#$ / VICE PRESIDENT % &' / JUDICIAL MEMBER (% /CHENNAI, )& /DATED: 27 TH OCTOBER, 2014 TNMM &* +,-, /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ./0 /CIT(A) 4. . /CIT 5. ,12 3 /DR 6. 245 /GF