M/s. Nagaraj and Company Pvt Limited, CHENNAI V. ACIT, CHENNAI

ITA 199/CHNY/2012

• Counselvise Citation: 19921714 RSA 2012
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-10-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 01-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: R VIJAY RAGHAVAN
• Keywords: Revised return
• Section: 43B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D B ENCH C HENN AI BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI S.S.GODARA , JUDICIAL MEMBER .. ITA NO. 199 & 200 /MDS./ 20 12 ASSESSMENT YEAR S : 200 3 - 04 & 2004 - 05 M/S.NAGARAJ AND COMPANY PVT. LTD ., 156,DEVELOPED INDL. ESTATE, PERUNGUDI, CHENNAI - 96. VS. ASSISTANT COMMISSIONR, COMPANY CIRCLE IV(4), CHENNAI 600 034. PAN AAACN 2265 K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.VIJAY RAGHAVAN, ADVOCATE RESPONDENT BY : SHRI ANIRUDH RAI, CIT DR DATE OF HEARING : 11 . 1 0.12 DATE OF PRONOUNCEMENT : 11 . 1 0.12 O R D E R PER ABRAHAM P GEORGE ACCOUNTANT MEMBER : THESE ARE APPEALS OF ASSESSEE DIRECTED AGAINST ORDERS DATED 2 8.11.2011 OF CIT(A) - VI, CHENNAI , WH E REBY HE REJECTED THE CONTENTION OF ASSESSEE THAT ITS CLAIM FOR ALLOWING OUTSTANDING INTEREST PAID TO IDBI ON LOAN S RELYING ON SEC.43 B OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) WAS A RECTIFIABLE ISSUE COMING WITH IN PURVIEW OF SEC.154 OF THE ACT. ITA NOS. . 199 & 200 /MDS/ 12 2 2. SHORT FACTS APROPOS AR E THAT ASSESSEE WHILE FILING ITS RETURN S FOR IMPUGNED ASSESSMENT YEARS, DID NOT CLAIM INTEREST PAID BY IT TO M/S. IDBI ON LOANS TAKEN BY IT. SUCH INTEREST PAID PERTAINED TO THE PRECEDING PREVIOU S YEARS. ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS MOVED APPLICATION BEFORE THE ASSESSING AUTHORITY SEEKING A RECTIFICATION OF THE MISTAKE IN COMPUTATION , SO AS TO CLAIM THE INTEREST PAID TO IDBI RELYING ON SECTION 43B OF THE ACT. AS PER ASSE SSEE, SUCH INTEREST THOUGH RELATABLE TO THE IMMEDIATELY PRECEDING YEARS , WERE NOT CLAIMED IN SUCH YEARS, SIN CE PAYMENTS WERE NOT EFFECTED IN SUCH YEARS . H AVING BEEN PAID IT DURING THE RELEVANT PREVIOUS YEARS , AS PER THE ASSESSEE IT WAS ENTITLED FOR ALLOWANCE THEREOF UNDER SECTION 43B OF THE ACT IN THE IMPUGNED ASSESSMENT YEARS . A SSESSEE ALSO FILED REVISED STATEMENT S OF TOTAL INCOME ALONG WITH SUCH RECTIFICATION PETITION BEFORE THE ASSESSING OFFICER. 3. HOWEVER, ASSESSING OFFICER REFUSED TO ACCEP T THE CLAIM OF ASSESSEE MADE UNDER SECTION 154 OF THE ACT. ACCORDING TO HIM, RECORDS DID NOT REVEAL ANY SUCH ERROR WHICH REQUIRED A RECTIFICATION. R ELYING ON THE DECISION OF HON BLE APEX COURT IN ITA NOS. . 199 & 200 /MDS/ 12 3 THE CASE OF T.S.BALRAM, ITO VS. VOLKART BROTHERS 82 ITR 50, ASSESSING OFFICER REJECTED THE RECTIFICATION PETITION. 4 . ASSESSEE MOVED IN APPEAL BEFORE THE CIT(A) FOR BOTH THE ASSESSMENT YEARS . AS PER ASSESSEE, THERE WAS A ONE TIME SETTLEMENT WITH M/S.IDBI AND DETAILS OF SUCH ONE TIME SETTLEMENT WAS FILED BE FORE THE DEBT RECOVERY TRIBUNAL. BY VIRTUE OF THIS SETTLEMENT, NOTHING REMA INED PAYABLE TO M/S.IDBI AND IT WAS REQUIRED TO REVERSE THE BALANCE S IN THEIR ACCOUNT . WHEN THE WHOLE OF THE AMOUNT WAS PAID TO IDB I, THE CLAIM OF INTEREST BECAME ELIGIBLE FOR DE DUCTION UNDER INCOME TAX ACT BY VIRTUE OF SEC 43B OF THE ACT. ACCORDING TO THE ASSESSEE, SUCH INTERESTS WERE NOT ALLOWED IN THE PRECEDING YEAR S AND THEREFORE, IT HAD TO BE ALLOWED ON PAYMENT BASIS VIDE SEC.43B OF THE ACT. HOWEVER, THE CIT(A) DID NOT APPR ECIATE THE CONTENTION OF ASSESSEE. ACCORDING TO HIM, TOTAL AMOUNT THAT COULD BE ALLOWED UNDER SECTION 43B OF THE ACT BASED ON A ONE TIME SETTLEMENT, WAS SOM ETHING WHICH COULD BE ARRIVED ONLY BASED A N THE EXAMINATION OF THE RECORDS AND A DETAILED STUDY WAS REQUIRED . PARTICULAR S PERTAINING TO THE ONE TIME SETTLEMENT AMOUNT HAD TO BE ANALYZED BEFORE COMING TO A CONCLUSION AS TO WHAT WAS THE AMOUNT PAID AS INTEREST . ACCORDING TO HIM, LEDGER EXTRACT FOR PAYMENT S ITA NOS. . 199 & 200 /MDS/ 12 4 APPENDED ALONG WITH THE PETITION UNDER SE CTION 154 COULD NOT BE CONSIDERED AS SUFFICIENT COMPLIANCE . LD. CIT(A) WAS OF THE OPINION NEITHER CBDT CIRCULAR NO.669 DATED 25.10.1993 , NOR THE DECISION OF JAIPUR BENCH OF THIS TRIBUNAL IN THE CASE OF LUSTER TILES LTD. VS. ACIT 291 ITR (AT) 152 (JAIPUR) WOULD COME TO THE HELP OF ASSESSEE. H E THUS, DISMISSED THE APPEALS FILED BY THE ASSESSEE. 5 . NOW BEFORE US, LD. A.R. STRONGLY ASSAILING THE ORDER OF CIT(A) SUBMITTED THAT THE ERRORS WERE RECTIFIABLE BY VIRTUE OF CBDT CIRCULAR NO.669 DATED 25.10.1993. A CCORDING TO HIM , SAID CIRCULAR CLEARLY MENTIONED THAT WHERE SUMS REFERRED TO IN FIRST PROVISO UNDER SECTION 43B WERE PAID ON OR BEFORE THE DUE DATES MENTIONED THEREIN, BUT THE EVIDENCE THERE O F HAD BEEN OMITTED TO BE FURNISHED, EVEN IF THESE WERE FILED THROUGH A RECTIFICATION PETITION UNDER SECTION 154 OF THE ACT , IT HAD TO BE CONSIDERED ON MERITS. AS PER THE LD. A.R. WHETHER THE ORIGINAL PROCEEDINGS WERE COMPLETED UNDER SECTION 143(1)( A) OR UNDER SECTION 143(3), ERRORS WERE RECTIFIABLE UNDER SECTION 154 OF THE ACT. ACCORDINGLY, LOWER AUTHORITIES ERRED IN NOT CONSIDERING THE RECTIFICATION PETITION FILED BY THE ASSESSEE. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF CIT(A). ITA NOS. . 199 & 200 /MDS/ 12 5 6 . WE HAVE HEARD THE COUNSEL AND ALSO CAREFU LLY GONE THROUGH THE ORDER S OF AUTHORITIES BELOW. A SSESSEE HAS PLACED RELIANCE ON CBDT CIRCULAR NO.669 DATED 25.10.1993 , WHICH READS AS UNDER: - ATTENTION IS INVITED TO BOARD S CIRCULAR NO. 581, DATED 28 TH SEPTEMBER, 1990, (F.NO.244/18/90 - ITA.II)[PU BLISHED AT (1990) 88 CTR (ST) 5 ] WHEREIN IT WAS, INTER ALIA , STATED THAT WHERE A DEDUCTION CLAIMED IS DISALLOWED AS PRIMA FACIE , INADMISSIBLE FOR WANT OF EVIDENCE IN SUPPORT THEREOF UNDER SECTION 143(1)( A ), IT CANNOT BE SUBSEQUENTLY ALLOWED BY A RECTIFICA TION ORDER UNDER SECTION 154 EVEN IF THE ASSESSEE LATER ON FURNISHES EVIDENCE IN SUPPORT THEREOF. THIS CLARIFICATION WAS MADE ESPECIALLY WITH REFERENCE TO THE REQUIREMENT OF FURNISHING OF EVIDENCE OF PAYMENT OF TAX DUTY, ETC., ALONG WITH THE RETURN, CONTAI NED IN SECTION 43B. 2. THE BOARD HAVE RECONSIDERED THE MATTER AND ARE OF THE OPINION THAT WHERE THE SUMS REFERRED TO IN THE FIRST PROVISO UNDER SECTION 43B HAD IN FACT BEEN PAID ON OR BEFORE THE DUE DATES MENTIONED THEREIN, BUT THE EVIDENCE THEREFOR HAD BE EN OMITTED TO BE FURNISHED ALONG WITH THE RETURN, THE ASSESSING OFFICERS CAN ENTERTAIN APPLICATIONS UNDER SECTION 154 FOR RECTIFICATION OF THE INTIMATIONS UNDER SECTION 143(1)( A ) OR ORDERS UNDER SECTION 143(3), AS THE CASE MAY BE, AND DECIDE THE SAME ON ME RITS. 3. CIRCULAR NO. 581, DATED 28 - 9 - 1990 STANDS MODIFIED TO THE ABOVE EXTENT. F IRST SENTENCE OF THE CIRCULAR MENTIONS THAT IT WOULD COME INTO PLAY ONLY WHERE DEDUCTION CLAIMED WAS DISALLOWED AS PRIMA FACIE ITA NOS. . 199 & 200 /MDS/ 12 6 INADMISSIBLE , FOR WANT OF EVIDENCE. PETITION S FILED BY THE ASSESSEE BEFORE ASSESSING OFFICER FOR THE RESPECTIVE ASSESSMENT YEARS CLEARLY MENTIONS THAT ASSESSEE HAD OMITTED TO CLAIM INTEREST PAID TO IDBI. WHEN THERE IS AN OMISSION BY THE ASSESSEE TO MAKE A CLAIM, WE CANNOT SAY THAT THERE HAS BEEN AN Y DISALLOWANCE MADE BY THE ASSESSING OFFICER. WHEN A SSESSING OFFICER HAD PROCEEDED BASED ON THE RETURN S FILED BY THE ASSESSEE AND COMPLETED THE ASSESSMENT S, IT CAN NOT BE STATED THAT SUCH ASSESSMENT S SUFFERED F R OM ANY MISTAKE APPARENT FROM RECORD , ON AN ITEM OF EXPENDITURE NEVER CLAIMED BY THE ASSESSEE FOR ALLOWANCE. FOR ASSESSMENT YEAR 2004 - 05, ASSESSEE HAD FILED REVISED RETURN ALSO , BUT STILL DID NOT PREFER ANY CLAIM FOR PAYMENT OF INTEREST , UNDER SECTION 43B OF THE ACT. WHEN ASSESSMENTS ARE COMPLETE D BASED ON THE COMPUTATION FILED BY THE ASSESSEE ALONG WITH ITS RETURN , WE CANNOT SAY THAT THERE IS A MISTAKE IN SUCH ASSESSMENT . IN ANY CASE AS NOTED BY THE ASSESSIN G OFFICER, LD. CIT(A) S REVERSALS WERE MADE IN ACCOUNT S BASED ON A ONE TIME SETTLEMENT WITH M/S.IDBI AND IT REQUIRE D A DETAILED ANALYSIS TO FIND THE EXACT AMOUNT OF INTEREST AND LOANS , WHICH WERE WAIVED OR THE EXACT AMOUNT OF REPAYMENT OF LOAN OR INTEREST , MADE PURSUANT TO SUCH SETTLEMENT. AS HELD BY HON BLE APEX COURT IN THE CASE OF CIT V S. KESARI METAL PVT LTD. ITA NOS. . 199 & 200 /MDS/ 12 7 237 ITR 165 A LOOK AT THE RECORD MUST SHOW THAT THERE IS AN ERROR, WHICH CAN BE RECTIFIED UNDER SECTION 154 OF THE ACT. RESORT TO DOCUMENTS OUTSIDE THE RECORDS IS IMPERMISSIBLE IN THE RECTIFICATION PROCEEDINGS . WE ARE THEREFOR E, OF THE OPINION THAT CIT(A) WAS JUSTIFIED IN REJECTING THE APPEALS OF THE ASSESSEE. NO INTERFERENCE IS REQUIRED. 7 . IN THE RESULT, APPEALS OF ASSESSEE FOR BOTH THE YEARS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AF TER CONCLUS ION OF HEARING ON THURSDAY, THE 11 TH OCTOBER , 2012. SD/ - SD/ - ( S.S.GODARA ) (ABRAHAM P.GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI , DATED 11 TH OCTOBER , 2012 . K S SUNDARAM COPY TO: ASSESSEE / AO / CIT (A) / CIT / D.R. / GUARD FILE ITA NOS. . 199 & 200 /MDS/ 12 8