THE DCIT, CIRCLE - 2(1), Vijayawada V. Sri Nadella Madhava Rao, Vijayawada

ITA 208/VIZ/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8861 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S R S NARAYAN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER ITA NO. 208 / VIZ /201 3 (ASST. YEAR : 20 09 - 1 0 ) DCIT, CIRCLE - 2(1), VIJAYAWADA VS. NADELLA MADHAVA RAO, 40 - 15 - 9/10, BRINDAVAN COLONY, LABBIPET, VIJAYAWADA PAN NO. AARPN 3713 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI S.R.S. NARAYAN SR. DR DATE OF HEARING : 19 / 0 6 /201 7 . DATE OF PRONOUNCEMENT : 23 / 0 6 /201 7 . O R D E R THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VIJAYAWADA , DATED 28 /0 1 /2013 FOR THE ASSESSMENT YEAR 2009 - 10 . 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN SHARE S AND VENTURES, FILED A RETURN OF INCOME BY DECLARING NIL INCOME . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT'). SUBSEQUENTLY, AFTER DUE PROCESS , ASSESSMENT IS COMPLETED UNDER SECTION 143(3) OF THE ACT. IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESS EE HAS CLAIMED AN AMOUNT OF 66,29,468/ - TOWARDS THE INTEREST ON U NSECURED LOANS FOR THE BUSINESS. 2 ITA NO. 208 / VIZ /201 3 (NADELLA MADHAVA RAO) O UT OF THESE PAYMENTS, THE ASSESSEE HAS NOT DEDUCT E D TAX ON INTEREST PAYMENT TO THE EXTENT OF 58,06,643/ - . THOUGH, EACH OF THESE INTEREST PAYMENT IS EXCEEDING PRESCRIBED MONETARY LIMIT OF 5,000/ - , THE AMOUNT OF 58,06,643/ - IS LIABLE TO BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. ON FAILURE TO DEDUCT TDS UNDER SECTION 194A , THE ASSESSING OFFICER DISALLOWED THE SAME. 3. BEFORE LD. CIT(A), THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS NOT MAINTAINING BOOKS OF ACCOUNT AND THE INTEREST AMOUNT IS NOT CREDITED TO PROFIT & LOSS ACCOUNT AND ALSO SUBMITTED THAT THE AMOUNT OF 51,19,021/ - RELATING TO INTEREST PAYMENT WAS MADE IN THE SUBSEQUENT YEARS AND NO DISALLOW ANCE IS CALLED FOR DURING THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE OBSERVED TH A T TOTAL INTEREST AMOUNT PAYABLE TO UNSECURED LOAN CREDITORS IS 58,15,781/ - , FROM WHICH THE ASSESSEE PAID AN AMOUNT OF 6,96,760/ - , ON WHICH NO TDS WAS DEDUCTED AND THE AMOUNT OF INTEREST OF 51,19,021/ - PAID IN SUBSEQUENT YEAR AND NO DISALLOW ANCE IS CALLED FOR . ACCORDINGLY, LD. CIT(A) RESTRICTED THE DISALLOWANCE TO THE TUNE OF 6,96,760/ - . 4 . ON APPEAL BEFORE THE TRIBUNAL, THE DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE HAS CREDITED AN AMOUNT OF 66,29,468/ - AND SUBMITTED THAT ONCE THE INTEREST IS CREDITED TO THE PROFIT & LOSS ACCOUNT, SECTION 194A WILL ATTRACT AND THEREF O RE SUBMITTED 3 ITA NO. 208 / VIZ /201 3 (NADELLA MADHAVA RAO) THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS IN ACCORDANCE WITH LAW. 5 . ON THE OTHER HAND , L EARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS NOT MAIN TAINING BOOKS OF ACCOUNT AND HAS NOT CREDITED ANY INTEREST AMOUNT TO THE PROFIT & LOSS ACCOUNT , T HEREFORE, SECTION 194A HAS NO APPLICATION. ALTERNATIVELY , HE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE OF MAINTENANCE OF BOOKS OF ACCOUNT, HENCE REQUEST ED TO REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION AFRESH. 6 . I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 7 . THE ISSUES INVOLVED IN THIS APPEAL ARE THAT ; WHETHER ASSESSEE IS MAINTAINING THE BOOKS OF ACCOUNT OR NOT? WHETHER ASSESSEE IS CREDITED AN AMOUNT OF 66,29,468/ - TO THE PROFIT & LOSS ACCOUNT OR NOT? A ND WHETHER THE INTEREST AMOUNT CLAIMED BY THE ASSESSEE IS BELONGS TO THIS YEAR OR SUBSEQUENT YEAR ? IN THE ASSESSMEN T ORDER , THE ASSESSING OFFICER HAS SIMPLY OBSERVED THAT THE ASSESSEE HAS NOT DEDUCTED TDS, THEREFORE, SECTION 194A WILL ATTRACT. ACCORDINGLY, HE DISALLOWED THE ENTIRE INTEREST PAYMENT MADE BY THE ASSESSEE . IN APPEAL, LD. CIT(A) GAVE A CATEGORICAL FINDING THAT THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT. I FIND NO BASIS FOR TH IS FI N DING OF LD. CIT(A). THE LD. CIT(A) GAVE A FURTHER FINDING THAT AN AMOUNT OF 51,19,021/ - IS NOT RELATING TO TH IS YEAR AND IT RELATES TO THE SUB SEQUENT YEAR. I FIND NO BASIS FOR THIS 4 ITA NO. 208 / VIZ /201 3 (NADELLA MADHAVA RAO) FINDING OF THE LD. CIT(A) ALSO. W HEN THERE IS NO MATERIAL PLACED BEFORE THE TRIBUNAL TO SATISFY THAT THE ABOVE AMOUNT IS BELONGING TO THE SUBSEQUENT YEAR, IN MY OPINION, THE ENTIRE ISSUE HAS TO BE EXAMINED AFRESH. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY THE LD.CIT(A) AND SEND IT BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ENTIRE ISSUE DENOVO IN ACCORDANCE WITH LAW. 8 . IN T HE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF JUNE , 201 7 . SD/ - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 23 RD JUNE , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE - NADELLA MADHAVA RAO, 40 - 15 - 9/10, BRINDAVAN COLONY, LABBIPET, VIJAYAWADA . 2. THE REVENUE DCIT, CIRCLE - 2(1), VIJAYAWADA . 3. THE CIT, VIJAYAWADA. 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SENIOR PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.