ACIT, Ernakulam V. M/s Bhageeratha Engineering Ltd, Cochin

ITA 1277/COCH/2005

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61438 (ITAT-COCHIN)
• Duration Of Justice: 6 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 1999-2000
• Appeal Filed On: 19-12-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: P C VERGHESE
• Keywords: Business expenditure; Difference of opinion
• Section: 234B; 37; 154

Judgement Text

1 ITA NOS.494 TO 499/COCH/2009 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.TA NO. 1204 & 1277/COCH/2005 (ASSESSMENT YEARS 1996-97 & 1999-2000) A.C.I.T., CIR.1(1) VS M/S BHAGEERATHA ENGG LTD ERNAKULAM MR K.K. NAIR ROAD, VAZHAKKALA KAKKANAD PO, KOCHI 682 030 PAN : NOT AVAILABLE (APPELLANT) (RESPONDENT) C.O. NOS 11 & 12/COCH/2006 (ARISING OUT OF I.TA NO. 1204 & 1277/COCH/2005) (ASSESSMENT YEARS 1996-97 & 1999-2000) M/S BHAGEERATHA ENGG LTD VS A.C.I.T., CIR.1(1) KAKKANAD PO, KOCHI-682 030 ERNAKULAM (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI S.R. SENAPATI ASSESSEE BY : SHRI P.C. VERGHESE DATE OF HEARING : 27-04-2012 DATE OF PRONOUNCEMENT : 27-04-2012 O R D E R PER N.R.S. GANESAN (JM) ON A DIFFERENCE OF OPINION BETWEEN THE MEMBERS, WH O CONSTITUTED THE BENCH ORIGINALLY THE MATTER WAS REFERRED TO THE LEARNED V ICE PRESIDENT AS THIRD MEMBER. 2. THE LEARNED VICE PRESIDENT, AFTER CONSIDERING TH E ARGUMENTS ADVANCED ON BOTH SIDES FOUND THAT THE LOAN GIVEN TO THE SUBSIDIARY C OMPANY TO THE EXTENT OF 2 ITA NOS.494 TO 499/COCH/2009 RS.1,80,28,280 WAS FOR BUSINESS NECESSITY AND ACCOR DINGLY SUCH LOAN HAS TO BE ALLOWED AS BUSINESS EXPENDITURE U/S 37 OF THE INCOME-TAX AC T. ACCORDINGLY THE LEARNED VICE PRESIDENT CONCURRED WITH THE VIEW EXPRESSED BY THE LEARNED JUDICIAL MEMBER. 3. IN RESPECT OF THE SECOND ISSUE RELATING TO AN OR DER U/S 154, THE LEARNED VICE PRESIDENT CONCURRED WITH THE VIEW EXPRESSED BY THE LEARNED ACCOUNTANT MEMBER. IN RESPECT OF OTHER ISSUES THAT AROSE FOR CONSIDERATIO N IN THE APPEALS THERE WAS NO DIFFERENCE BETWEEN THE ORIGINAL MEMBERS WHO CONSTIT UTED THE BENCH. ACCORDINGLY, THE APPEALS OF THE ASSESSEE ARE DISPOSED OF AS FOLLOWS: (1) THE WRITING OFF OF THE LOAN TO THE EXTENT OF RS.1,8 0,28,280 IS ON ACCOUNT OF BUSINESS NECESSITY, THEREFORE, IT HAS TO BE ALLOWED U/S 37 OF THE INCOME-TAX ACT. (2) THE DISALLOWANCE OF LOAN DOES NOT ARISE OUT OF THE ORDER PASSED U/S 154 OF THE INCOME-TAX ACT. WITH REGARD TO THE ISSUE IN RE SPECT OF AMORTIZATION OF PUBLIC ISSUE EXPENSES U/S 35(2) OF THE ACT, THE ORD ER OF THE COMMISSIONER OF INCOME-TAX(A) IS CONFIRMED. (3) THE NEXT ISSUE IS WITH REGARD TO INTEREST ON BANK D EPOSIT AND RBI BONDS. BOTH THE MEMBERS, WHO ORIGINALLY CONSTITUTED THE BENCH F OUND THAT IT HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES. ACCORDING LY, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS ALLOWED. 4. NOW COMING TO THE CROSS OBJECTION FILED BY THE A SSESSEE, THE ONLY ISSUE IS WITH REGARD TO THE LEVY OF INTEREST U/S 234B OF THE ACT. AS PER THE DECISION OF BOTH THE MEMBERS, WHO CONSTITUTED THE BENCH ORIGINALLY HAS S ET ASIDE THIS ISSUE TO THE FILE OF THE COMMISSIONER OF INCOME-TAX(A) TO DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER AFFORDING AN OPPORTUNITY OF HEARING TO BOTH THE PAR TIES. 3 ITA NOS.494 TO 499/COCH/2009 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A ND THE CROSS OBJECTIONS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 27 TH DAY OF APRIL, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 27 TH APRIL, 2012 PK/- COPY TO: 1. A.C.I.T., CIR.1(1), ERNAKULAM 2. M/S BHAGEERATHA ENGG LTD, MR. K.K.NAIR ROAD, VAZHAK KALA, KAKKANAD PO, KOCHI682 030 3. THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH