DCIT, Circle-3(2), Hyd, Hyderabad V. Sri Vasavi Industries Ltd., Srikakulam, Srikakulam

ITA 1312/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2312 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-11-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S NARASAMMA
• Keywords: Opportunity of being heard; Corroborative evidences
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1312/HYD/2016 ASSESSMENT YEAR: 2009-10 DY. COMMISSIONER OF INCOME- TAX, CIRCLE 3(2), HYDERABAD. VS. SRI VASAVI INDUSTRIES LTD., SRIKAKULAM. PAN AADCS 1262 L (APPELLANT) (RESPONDENT) REVENUE BY : SMT. S. NARASAMMA ASSESSEE BY : NONE DATE OF HEARING : 28-11-2017 DATE OF PRONOUNCEMENT : 30-11-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (A) - 3, HYD ERABAD, DATED 08-07-2016 RELATING TO AY 2009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE, ASSESSEE IS E NGAGED IN MANUFACTURE AND TRADING OF IRON & STEEL. IT FILED I TS LOSS RETURN OF RS. 11,07,83,535/- ON 25/09/2009. IN REGULAR ASSESSMENT U/S 143(3) OF THE ACT, INCOME WAS DETERMINED AT RS. 97,49,023/-. AGAINST THIS ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) AND CIT(A)_ GRANTED RELIEF AS SOUGHT BY THE ASSESSEE. 3. AGGRIEVED WITH THE ABOVE ORDER, REVENUE FILED IT S APPEAL CHALLENGING THE ACTION OF THE CIT(A) IN DELETING TH E DISALLOWANCE OF RS. 9,84,12,468/- MADE U/S 40(A)(IA) OF THE ACT AND GRANTING RELIEF OF 2 ITA NO. 1312/H/16 SRI VASAVI INDUSTRIES LTD., SRIKAKULAM RS. 1,23,31,863/- OUT OF DISALLOWANCE MADE OF RS. 1 ,41,65,811/- U/S 43B. 4. THE FACTS RELATING TO THE DISALLOWANCE OF RS. 9, 84,12,468/- U/S 40(A)(IA) ARE THAT THE AO DISALLOWED THE SAID AMOUN T BEING THE PAYMENT MADE TO THE PROJECTS & EQUIPMENT CORPORATIO N OF INDIA LTD. (PEC LTD.) ON THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTED TDS. CIT(A) HAS DELETED THIS ADDITION BY RELYING ON THE ANNUAL REPORT OF 2012-13 FILED BY THE ASSESSEE, AS PER WHICH, PEC LT D. IS 100% CENTRAL GOVERNMENT OWNED COMPANY AND ALL THE SHARES ARE HELD IN THE NAME OF PRESIDENT OF INDIA. HE FURTHER RELIED O N THE NOTIFICATION S.O. 3489, DATED 22/10/1970, AS PER WHICH, A COMPAN Y WHERE ALL THE SHARES HELD BY THE GOVERNMENT IS NOT LIABLE TO TDS AND THE SAME IS EXEMPT U/S 194A(3)(III)(F) OF THE ACT. 5. AS REGARDS THE DISALLOWANCE RELATING TO SECTION 43B, THE ASSESSEE HAD CLAIMED INTEREST PAYMENT TO THE EXTENT OF RS. 1,41,65,811/- IN THE P&L A/C, THOUGH, IT HAD NOT PA ID SUCH INTEREST BEFORE 30/09/2009 IN ORDER TO CLAIM BENEFIT U/S 43B . ACCORDINGLY, AO DISALLOWED SUCH EXPENDITURE. CIT(A) DISALLOWED A PO RTION OF SUCH EXPENDITURE TO THE EXTENT OF RS. 18,33,948/-, WHICH IS RELATING TO THE PAYMENT MADE TO COMPANY IREDA AS THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS. 5.1 WITH REGARD TO REMAINING BALANCE AMOUNT OF RS. 1,23,31,863/-, THE PAYMENT OF WHICH WAS PAID TO PEC LTD., THE CIT( A) HAS DELETED THE ADDITION OBSERVING THAT PEC LTD. IS NEITHER A B ANK NOR DOES IT FIT INTO THE DEFINITION OF PUBLIC FINANCIAL INSTITUTION AS PER THE COMPANIES ACT, 1956 AS WELL AS IT IS NOT NOTIFIED AS PUBLIC F INANCIAL INSTITUTION AND, THEREFORE, PROVISIONS OF SECTION 43AB ARE NOT APPLICABLE. 6. LD. DR SUBMITTED THAT ASSESSEE HAS NOT FILED ANY SUPPORTING EVIDENCE IN SUPPORT OF ITS CLAIM AND CIT(A) HAS MER ELY RELIED ON THE 3 ITA NO. 1312/H/16 SRI VASAVI INDUSTRIES LTD., SRIKAKULAM ANNUAL REPORT OF PEC LTD. AND ALSO HAS NOT GIVEN PR OPER OPPORTUNITY TO AO BEFORE DELETING THIS ADDITION. WITH REGARD TO DISALLOWANCE U/S 43B, SHE SUBMITTED THAT CIT(A) HAS DELETED THE ADDI TION ON ACCOUNT OF INTEREST EXPENDITURE WITHOUT PROPER EVIDENCE SUBMIT TED BY THE ASSESSEE AND MOREOVER, ASSESSEE HAS NOT FILED ANY E VIDENCE FOR PAYMENT OF SUCH EXPENDITURE BEFORE FILING OF RETURN OF INCOME, FOR WHICH, SHE MADE A SUBMISSION THAT IT MAY BE SENT BA CK TO AO FOR PROPER VERIFICATION. 7. NONE APPEARED ON BEHALF OF THE RESPONDENT-ASSESS EE, EVEN THOUGH, THE CASE WAS POSTED FOR HEARING ON SO MANY OCCASIONS I.E. ON 10/08/2017 AND ON 21/11/2017. AT THE REQUEST OF THE ASSESSEE ONLY THE CASE WAS POSTED FOR HEARING TODAY I.E. 28/11/20 17, BUT, THERE WAS NO COMPLIANCE FROM ASSESSEE. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. BASED ON THE INFORMATION AND ARGUMENTS P UT FORTH BY THE LD. DR, IT IS EVIDENT THAT ASSESSEE HAS NOT FILED A NY PROPER EVIDENCE BEFORE CIT(A) AND CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY INTERPRETING ANNUAL REPORTS OF PEC LTD. TO HOLD T HAT IT IS A GOVT. OWNED COMPANY. WE ARE IN AGREEMENT WITH THE SUBMIS SION OF THE LD. DR THAT THE ISSUE SHOULD BE VERIFIED BY THE AO WITH PROPER EVIDENCE FROM THE ASSESSEE. WITH REGARD TO INTEREST EXPENDIT URE, IT IS EVIDENT THAT ASSESSEE HAS NOT MADE THIS PAYMENT BEFORE FILI NG OF RETURN OF INCOME. WHEN THE PAYMENT IS NOT MADE BEFORE FILING OF RETURN OF INCOME, SUCH EXPENDITURE CANNOT BE CLAIMED AS EXPEN DITURE IN FIRST PLACE, EVEN THOUGH, SUCH INSTITUTION MAY NOT BE NOT IFIED AS A PUBLIC FINANCIAL INSTITUTION. ACCORDINGLY, WE REMIT BOTH T HESE ISSUES TO THE FILE OF THE AO FOR PROPER VERIFICATION AND WHEN IT IS FO UND TO BE PROPER AS PER THE FINDINGS OF CIT(A), THE EXPENDITURE MAY BE ALLOWED AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE IN THE MATTER. 4 ITA NO. 1312/H/16 SRI VASAVI INDUSTRIES LTD., SRIKAKULAM 9. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 30 TH NOVEMBER, 2017. KV COPY TO:- 1) DCIT, CIRCLE 3(2), 7 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD. 2) M/S SRI VASAVI INDUSTRIES LTD., 51M, VR AGRAHARA M, PONDUR ROAD, RAJAM, SRIKAKULAM. 3) CIT(A) 3, HYDERABAD 4 PR. CIT 3, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE