KS Holdings Private Ltd, Chennai V. ITO, Corporate Ward 4(3), Chennai

ITA 2112/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1816 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 16-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJITH KUMAR CHORADIA
• Keywords: Business expenditure; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , ! ' # , % #& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.2112/CHNY/2019 ) *) / ASSESSMENT YEAR : 2015-16 M/S KS HOLDINGS PVT. LTD., ARIHANT PLAZA, 3 RD FLOOR, NEW NO.193/232, WALL TAX ROAD, CHENNAI - 600 003. PAN : AAFCK 1594 D V. THE INCOME TAX OFFICER, CORPORATE WARD 4(3), CHENNAI - 600 034. (,-/ APPELLANT) (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SHRI AJITH KUMAR CHORADIA, CA ./,- 0 1 / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 2 0 3% / DATE OF HEARING : 24.10.2019 45* 0 3% / DATE OF PRONOUNCEMENT : 04.12.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -8, CHENNA I, DATED 21.02.2019 AND PERTAINS TO ASSESSMENT YEAR 2015-16. 2. THERE WAS A DELAY OF 56 DAYS IN FILING THIS APPE AL BY THE ASSESSEE. THE ASSESSEE HAS FILED A PETITION FOR CO NDONATION OF DELAY. WE HAVE HEARD THE LD. REPRESENTATIVE FOR TH E ASSESSEE AND 2 I.T.A. NO.2112/CHNY/19 THE LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAU SE FOR NOT FILING THE APPEAL BEFORE THE STIPULATED TIME. THEREFORE, WE C ONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF INTEREST UNDER SECTION 36(1)(III) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. DURING THE COURSE OF HEARING, IT WAS BROUGHT TO THE NOTICE OF THE BENCH BY BOTH THE LD. REPRESENTATIVE FOR THE AS SESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE THAT AN IDENTICAL I SSUE IN THE ASSESSEE'S OWN CASE WAS CONSIDERED FOR ASSESSMENT Y EAR 2014-15 BY THIS TRIBUNAL IN I.T.A. NO.65/CHNY/2018. THIS T RIBUNAL VIDE ORDER DATED 12 TH DECEMBER, 2018, FOUND THAT A SIMILAR PAYMENT WAS T O BE ALLOWED AS BUSINESS EXPENDITURE FOR THE ASSESSMENT YEAR 2014-15. IN FACT, THE TRIBUNAL HAS OBSERVED AS FOLLOWS:- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECO RD. ADMITTEDLY, THE ASSESSEE IS AN INVESTMENT COMPANY. THE ASSESSE E BORROWED FUNDS TO INVEST IN A SUBSIDIARY COMPANY OUTSIDE THE COUNTRY AT MAURITIUS. IT IS ALSO NOT IN DISPUTE THAT THE ASSE SSEES SUBSIDIARY COMPANY AT MAURITIUS HAS NOT DECLARED ANY DIVIDEND OR DISTRIBUTED ANY DIVIDEND. IN THOSE FACTUAL CIRCUMSTANCES, THE ASSESSING OFFICER FOUND THAT SINCE NO INCOME WAS EARNED BY TH E ASSESSEE, THE INTEREST PAYMENT CANNOT BE ALLOWED. THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE INCURRED EXPENDITURE, 3 I.T.A. NO.2112/CHNY/19 IRRESPECTIVE OF THE FACT WHETHER THE ASSESSEE EARNE D INCOME OR NOT, SO LONG AS THE EXPENDITURE IS FOR BUSINESS PUR POSE, IT IS TO BE ALLOWED. 5. IT IS NOT THE CASE OF THE REVENUE THAT THE INTERE ST PAYMENT IS NOT FOR BUSINESS. THE ASSESSING OFFICER HAS DISALL OWED THE INTEREST PAYMENT ONLY ON THE GROUND THAT NO DIVIDEN D INCOME WAS RECEIVED FROM SUBSIDIARY COMPANY AT MAURITIUS. THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT IRRESPECTIVE OF THE FAC T WHETHER THE ASSESSEE RECEIVED DIVIDEND INCOME FROM THE SUBSIDIA RY COMPANY AT MAURITIUS OR NOT, THE PAYMENT OF INTEREST HAS TO BE ALLOWED AS BUSINESS EXPENDITURE. THEREFORE, WE ARE UNABLE TO U PHOLD THE ORDERS OF THE AUTHORITIES BELOW. ACCORDINGLY, ORDE RS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO ALLOW THE INTEREST PAYMENT ON THE BORRO WED FUNDS. 5. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF BOTH THE AUTHORITIES BELOW. ACCORDINGLY, FOR THE REASON STATED BY THIS TRIBUNAL FOR ASSESSMENT YEAR 2014-15 IN I.T.A. NO.65/CHNY/2018, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLO W INTEREST ON THE BORROWED FUNDS. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 4 TH DECEMBER, 2019 AT CHENNAI. SD/- SD/- ( ! ' # ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER 4 I.T.A. NO.2112/CHNY/19 /CHENNAI, 7 /DATED, THE 4 TH DECEMBER, 2019. KRI. 0 .389 :9*3 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. 2 ;3 () /CIT(A)-8, CHENNAI 4. PRINCIPAL CIT- 4, CHENNAI 5. 9< .3 /DR 6. =) > /GF.