M/S. TECHNOLOGY FRONTIERS INDIA PVT. LTD., CHENNAI V. PCIT-3, CHENNAI, CHENNAI

ITA 1840/CHNY/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6579 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 17-06-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJAN
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1840/CHNY/2019 ' ' / ASSESSMENT YEAR : 2014-15 M/S TECHNOLOGY FRONTIERS INDIA PVT. LTD., NO.38, DEVELOPED PLOTS INDUSTRIAL ESTATE, PERUNGUDI, CHENNAI - 600 096. PAN : AABCT 2176 Q V. THE INCOME TAX OFFICER, CORPORATE WARD -21(4), CHENNAI - 600 034. (+/ APPELLANT) (,-+/ RESPONDENT) + . / APPELLANT BY : NONE ,-+ . / RESPONDENT BY : SHRI A. SUNDARARAJAN, JCIT . / DATE OF HEARING : 23.09.2019 . / DATE OF PRONOUNCEMENT : 25.10.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX -3, CHENNAI, D ATED 27.03.2019, PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 196 1 (IN SHORT 'THE ACT'). 2. THERE WAS A DELAY OF 9 DAYS IN FILING THIS APPEA L BY THE ASSESSEE. THE ASSESSEE HAS FILED A PETITION FOR CONDONATION O F DELAY. WE HAVE 2 I.T.A. NO.1840/CHNY/19 GONE THROUGH THE PETITION AND FIND THAT THERE WAS S UFFICIENT CAUSE FOR NOT FILING THE APPEAL BEFORE THE STIPULATED TIME. THER EFORE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. NO ONE APPEARED FOR THE ASSESSEE EVEN THOUGH THE NOTICE OF HEARING WAS SERVED BY RPAD. THE REGISTRY HAS PLACE D ON RECORD THE POSTAL ACKNOWLEDGEMENT AS PROOF OF SERVICE OF NOTIC E. THERE MAY BE VARIOUS REASONS FOR THE ASSESSEE NOT TO APPEAR BEFO RE THIS TRIBUNAL WHEN THE APPEAL WAS TAKEN UP FOR HEARING EVEN AFTER THE SERVICE OF NOTICE OF HEARING BY RPAD. ONE OF THE REASONS, PRESUMABLY, T HE ASSESSEE MAY NOT BE INTERESTED IN PROSECUTING THE APPEAL FURTHER . WHATEVER MAY BE THE REASON FOR NON-APPEARANCE OF THE ASSESSEE, THIS TRI BUNAL IS EXPECTED TO DISPOSE THE APPEAL ON MERIT. ACCORDINGLY, WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PROCEEDED TO DISPOS E THE APPEAL ON MERIT. 4. SHRI A. SUNDARARAJAN, THE LD. D.R. SUBMITTED THA T THE ASSESSEE CLAIMS INTEREST PAID TO THE INCOME-TAX DEPARTMENT F OR DELAY IN PAYMENT OF TAX DEDUCTED AT SOURCE AS AN ALLOWANCE / EXPENDITUR E. THIS WAS ALLOWED BY THE ASSESSING OFFICER WITHOUT ANY DISCUSSION. T HEREFORE, ACCORDING TO THE LD. D.R., THE PRINCIPAL COMMISSIONER FOUND THAT THERE WAS AN ERROR IN THE ORDER OF THE ASSESSING OFFICER WHICH IS PREJUDI CIAL TO THE INTERESTS OF REVENUE. ACCORDING TO THE LD. D.R., THE INTEREST O N THE DELAYED PAYMENT 3 I.T.A. NO.1840/CHNY/19 OF TAX DEDUCTED AT SOURCE IS NOT AN EXPENDITURE FOR BUSINESS. IT PARTAKES THE CHARACTER OF PAYMENT OF TAX, THEREFORE, SUCH AN EXPENDITURE TO THE EXTENT OF 61.58 LAKHS CANNOT BE ALLOWED. HENCE, ACCORDING TO THE LD. D.R., THE PRINCIPAL COMMISSIONER HAS RIGHTLY DIRECT ED THE ASSESSING OFFICER TO DISALLOW 61.58 LAKHS AND ADD BACK THE SAME TO THE TOTAL INCOME. 5. WE HAVE CONSIDERED THE SUBMISSION OF THE LD. D.R . AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THERE I S NO DISCUSSION IN THE ASSESSMENT ORDER REGARDING CLAIM OF INTEREST SAID T O BE PAID TO THE EXTENT OF 61.58 LAKHS DUE TO DELAY IN PAYMENT OF TAX DEDUCTED AT SOURCE. HOWEVER, THE PRINCIPAL COMMISSIONER ON EXAMINATION OF RECORD, FOUND THAT INTEREST WAS CLAIMED TO THE EXTENT OF 61.58 LAKHS WHICH WAS PAID DUE TO DELAY IN PAYMENT OF TAX DEDUCTED AT SOURCE. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE- EXAMINED BY THE ASSESSING OFFICER AND BRING ON RECO RD THE NATURE OF INTEREST SAID TO BE PAID BY THE ASSESSEE TO THE EXT ENT OF 61.58 LAKHS WHETHER THE ASSESSEE HAS PAID INTEREST DUE TO DELAY IN PAYMENT OF TAX DEDUCTED AT SOURCE AS OBSERVED BY THE PRINCIPAL COM MISSIONER IN THE IMPUGNED ORDER OR OTHERWISE. IN CASE, THE INTEREST WAS PAID BY THE ASSESSEE DUE TO DELAY IN PAYMENT OF TAX DEDUCTED AT SOURCE, IT WOULD PARTAKE THE CHARACTER OF INCOME-TAX. THIS TRIBUNAL IS OF THE CONSIDERED 4 I.T.A. NO.1840/CHNY/19 OPINION THAT THE INTEREST FOR DELAY IN THE PAYMENT OF TAX DEDUCTED AT SOURCE IS NOTHING BUT A COMPENSATION FOR DELAYED PA YMENT OF TAX DEDUCTED BY THE ASSESSEE. THEREFORE, IT WOULD DEFI NITELY PARTAKE THE CHARACTER OF INCOME-TAX. 6. THE INCOME-TAX PAID BY THE ASSESSEE OR THE INTER EST ON THE DELAYED PAYMENT OF TAX DEDUCTED AT SOURCE CANNOT BE AN EXPENDITURE FOR EARNING THE TAXABLE INCOME. PAYMENT OF INCOME-TAX AND INTEREST ON THE DELAYED PAYMENT OF TAX DEDUCTED AT SOURCE WOULD COM E INTO THE PICTURE AFTER THE BUSINESS TRANSACTIONS OR COMPUTATION OF T AXABLE PROFIT. THEREFORE, IT CANNOT BE AN ALLOWABLE EXPENDITURE. HOWEVER, THE FACTS NEED TO BE EXAMINED BY THE ASSESSING OFFICER AND BR ING ON RECORD. THEREFORE, THE PRINCIPAL COMMISSIONER HAS RIGHTLY F OUND THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. HOWEVER, THE PRINCIPAL COMMISSIONER HAS D IRECTED THE ASSESSING OFFICER TO DISALLOW 61.58 LAKHS WITHOUT ANY ACTUAL VERIFICATION BY THE ASSESSING OFFICER. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHETHER THE ASSESSEE HAS CLAIMED 61.58 LAKHS AS EXPENDITURE OR NOT NEEDS TO BE EXAMINED / VERIFIED BY THE ASSESSING OF FICER. ACCORDINGLY, THE IMPUGNED ORDER OF THE PRINCIPAL COMMISSIONER IS MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO VERIFY WHETHER THE ASSESSEE HAS CLAIMED THE PAYMENT OF INTEREST TO THE EXTENT OF 61.58 LAKHS AS DEDUCTION WHILE 5 I.T.A. NO.1840/CHNY/19 COMPUTING THE TAXABLE INCOME. IT IS ALSO NECESSARY TO BRING ON RECORD WHETHER THIS PAYMENT OF 61.58 LAKHS IS FOR DELAY IN PAYMENT OF TAX DEDUCTED AT SOURCE AND THEREAFTER THE ASSESSING OFF ICER SHALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 25 TH OCTOBER, 2019 AT CHENNAI. SD/- SD/- (. ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 25 TH OCTOBER, 2019. KRI. . ,67 87 /COPY TO: 1. +/ APPELLANT 2. ,-+/ RESPONDENT 3. PRINCIPAL CIT-3, CHENNAI 4. 7 , /DR 5. ' /GF.