Saltee Infotex (India) Pvt. Ltd., Kolkata V. DCIT, Central Circle - VII, Kolkata, Kolkata

ITA 1561/KOL/2011

• Counselvise Citation: 156123514 RSA 2011
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2012
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 15-11-2011
• Court: TRIBUNAL
• Department Lawyers: D ROY
• Assessee Lawyers: M SATNALIWALA
• Keywords: Search and seizure; Proportionate interest; Commercial expediency

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 1561/KOL/2011 %& '(/ ASSESSMENT YEAR : 2009-10 (*+ / APPELLANT ) SALTEE INFOTEX (INDIA)PVT.LTD., KOLKATA (PAN:AACCA 8202 F) VS (,-*+/ RESPONDENT ) D.C.I.T.-CENTRAL CIRCLE- VII, KOLKATA *+ . / '/ FOR THE APPELLANT: SHRI M.SATNALIWALA ,-*+ . / '/ FOR THE RESPONDENT: SHRI D.ROY 0%1 . !# /DATE OF HEARING : 12.03.2012. 2' . !# /DATE OF PRONOUNCEMENT : 12.03.2012. '3 / ORDER . .. . ! ! ! !. .. . , '# PER SHRI C.D.RAO, AM THIS APPEAL BY THE ASSESSEE IS ARISI NG OUT OF THE ORDER OF CIT(A)-CENTRAL-I, KOLKATA IN APPEAL NO.201/CC-VII/CIT(A),C-I/10-11 OR DER DATED 08.08.2011. 2. AT THE OUTSET, THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ASSUMPTION OF JURISDICTION BY THE DEPARTMENT. FOR THIS ASSESSE E HAS RAISED THE FOLLOWING GROUND:- 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) , CENTRAL-I, KOLKATA, WAS ERRED IN CONFIRMING THAT THE ASSESSMENT PASSED U/S 153A/1 43(3) IS NOT BAD IN LAW AS THERE WAS NO SEARCH AND SEIZURE IN THE CASE OF THE APPELL ANT. 3. HOWEVER, AT THE TIME OF HEARING, THE LD. COUNSEL OF THE ASSESSEE STATED THAT HE HAS INSTRUCTION FROM ASSESSEE NOT TO PRESS THIS JUR ISDICTIONAL ISSUE. HENCE THERE IS NO PRESSING OF THIS ISSUE AND WE DISMISS THE SAME ACCO RDINGLY. 2 4. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN DISALLOWING THE AMOUNT OF INTEREST. FOR THIS ASSESS EE HAS RAISED THE FOLLOWING GROUND: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) , CENTRAL-I, KOLKATA WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.23,5 3,489/- OUT OF INTEREST ACCOUNT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS PERUSED BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND COMPUTATION OF INCOME OF ASSESSEE AND NOTICED THAT IT HAD CLAIMED DEDUCTI ON ON ACCOUNT OF INTEREST PAYABLE OF RS.79,55,418/- U/S 24(B) OF THE ACT FROM INCOME UND ER THE HEAD INCOME FROM HOUSE PROPERTY. WHEN DETAILS WERE VERIFIED BY AO HE FOUN D THAT THE ASSESSEE HAS TAKEN LOAN FROM AXIS BANK LTD. DURING THE MONTH OF SEPTEMBER, 2007 AMOUNTING TO RS.6,54,47,163/- TO REPAY THE EXISTING LOAN. THE AS SESEE PAID THE EXISTING LOAN AS WELL AS UTILISED THE BORROWED MONEY FOR PURCHASE OF FDR AS WELL AS TO LEND TO THE SISTER CONCERN. THE AO BY TAKING PROPORTIONATE FIGURES, MA DE DISALLOWANCE OF INTEREST PAID AT RS.23,53,489/- OUT OF INTEREST PAYMENT OF RS.79, 85,105/- BY GIVING THE FOLLOWING COMPUTATION:- RS.4,59,14,285/-(INVESTMENT IN HOUSE PROPERTY) X RS.79,85,105/- RS.6,54,47,163/- (TOTAL LOAN TAKEN) = RS.56,01,929/- OUT OF RS.79,55,418/- THE BALANCE OF RS.23,53,489/- IS NOT ALLOWABLE. 6. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A). BEFORE CIT(A)THE UNDISPUTED FACT, EVEN NOW BEFORE US, WERE THAT ASSE SSEE HAD UTILIZED AN AMOUNT OF RS.1,95,32,878/- IN PURCHASE OF FDR, INVESTMENT IN SHARES AND GIVING UNSECURED ADVANCES TO THE SISTER CONCERN IN THE RATIO OF RS.2 0 LAKHS, RS.57 LAKHS, RS.1.17 CRORES RESPECTIVELY. THE ASSESSEE BEFORE US HAD NOT DISPUT ED THIS FACT. THE ASSESEE HAS DISCLOSED INTEREST INCOME OF RS.2,97,956/-. IT WAS ARGUED BY THE LD. COUNSEL OF ASSESSEE QUA DISCLOSURE OF INTEREST, ASSESSEE SHOUL D BE ALLOWED INTEREST EXPENSES. FOR UNSECURED ADVANCES TO SISTER CONCERN AND INVESTMENT OF EQUITY SHARES IT WAS CONTENDED THAT IT WAS COMMERCIAL EXPEDIENCY IN VIEW OF THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. VS CIT (APPEALS) & ANR. 288 ITR PAGE 1 (SC) BE ALLOWED. WE FIND THAT THE ASSESSEE DESPITE OUR QUER Y FROM THE BENCH HE COULD NOT 3 REPLY WHAT WAS THE EXPEDIENCY IN VIEW OF THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS (SUPRA). SO FAR AS INTERE ST ON FDRS, WE ARE OF THE VIEW THAT INTEREST TO THAT EXTENT CAN BE ALLOWED U/S 57 OF TH E ACT REASON BEING THE ASSESSEE HAS EARNED INCOME AND HENCE AO IS DIRECTED TO ALLOW THE PROPORTIONATE INTEREST ON UTILIZATION OF FUNDS FOR EARNING INTEREST OF RS.2,9 7,956/-. HOWEVER, FOR THE BALANCE, ASSESSEE IS UNABLE TO STATE ANY COMMERCIAL EXPEDIEN CY QUA THE INVESTMENT IN EQUITY SHARES AND UNSECURED ADVANCES TO SISTER CONCERN. I F THIS IS THE POSITION, WE ARE UNABLE TO ALLOW ANY CLAIM OF ASSESSEE ON THIS ACCOUNT. THE AO IS DIRECTED TO COMPUTE THE DISALLOWANCE IN VIEW OF THE ABOVE OBSERVATIONS AND THIS APPEAL OF ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT THE APPEAL OF ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- , ,, , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 12.03.2012. R.G.(P.S.) '3 . ,4 5'4'6- COPY OF THE ORDER FORWARDED TO: 1. SALTEE INFOTEX (INDIA)PVT. LTD., DN-9, SECTOR-V, SA LT LAKE CITY, KOLKATA-700091. 2 D.C.I.T., CENTRAL CIRCLE-VII, KOLKATA. 3. THE C.I.T. 4. CIT(A)-CENTRAL-I, KOLKATA. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA -4 ,/ TRUE COPY, '3%0/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES