M/s. Tambraparani Containers P. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 231/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7837 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-12-2016
• Assessment Year: 1996-1997
• Appeal Filed On: 27-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V NANDA KUMAR
• Assessee Lawyers: S SRIDHAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO. 231/MDS/2014 / ASSESSMENT YEAR : 1996-97 M/S. TAMBRAPARANI CONTAINERS P LTD, 25, MAHALAKSHMI, KASTURIRANGAN ROAD, CHENNAI 600 018. PAN : AAACT2856Q V. THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III (1), CHENNAI - 600 034. ( /APPELLANT) ( !' /RESPONDENT) # /APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE !' # /RESPONDENT BY : SHRI V. NANDAKUMAR, JCIT # /DATE OF HEARING : 27.12.2016 # /DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENNAI D ATED 17.10.2013 AND PERTAINS TO THE ASSESSMENT YEAR 1996-97 . 2 I.T.A. NO. 231/MDS/2014 2. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ONLY ISSUES FOR CONSIDERATION IS EXPENDITURE CL AIMED BY THE ASSESSEE FOR EARNING INTEREST. THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT IN THE FIRST ROUND OF LITIGATION, THIS TRIBUNAL BY AN ORDER DATED 11.01.2008 IN ITA NO.1640/MDS/2006 REMITTED BACK THE MATTER TO TH E FILE OF THE ASSESSING OFFICER TO ASCERTAIN THE ACTUAL EXPENDITU RE INCURRED BY THE ASSESSEE. CONSEQUENT TO THE DIRECTION OF THIS TRI BUNAL, THE ASSESSING OFFICER FOUND THAT INTEREST INCOME OF 18,20,406/- PERTAINS TO THE ASSESSMENT YEAR 1996-97 ON ACCOUNT OF SURPLUS MONEY BORROWED BY THE ASSESSEE AND LENDED TO M/S. TAMBRAPARANI DIAMOND DI ES AND TOOLS LTD., WAS NOT CREDITED TO THE PROFIT & LOSS ACCOUNT . ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS CLAIMED EXPENDITURE FOR E ARNING THE INTEREST INCOME. THE ASSESSING OFFICER DISALLOWED THE CLAI M OF THE ASSESSEE STATING THAT NO RECORDS WERE FURNISHED BEFORE HIM. THE CIT (APPEALS) ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFICER O N THE GROUND THAT NO MATERIAL WAS FILED BEFORE HIM TO SUBSTANTIATE THE C LAIM OF ACTUAL EXPENDITURE. ACCORDING TO THE LD. COUNSEL, A REASO NABLE EXPENDITURE MAY BE ALLOWED FOR EARNING INTEREST INCOME ON ESTIM ATE BASIS. 3. WE HEARD SHRI V. NANDAKUMAR, THE LD. DEPARTMENTA L REPRESENTATIVE ALSO. 3 I.T.A. NO. 231/MDS/2014 4. FROM THE MATERIAL AVAILABLE ON RECORD, IT APPEAR S THAT THE ASSESSEE HAD BORROWED MONEY AND LENDED TO M/S. TAMB RAPARANI DIAMOND DIES AND TOOLS LTD. IN FACT THE ASSESSEE CREDITED 18,20,406/- AS INTEREST FROM M/S. TAMBRAPARANI DIAMOND DIES AND TOOLS LTD. THE ASSESSEE CLAIMS THE EXPENDITURE FOR EARNING THE INT EREST INCOME. IF THE ASSESSEE BORROWED MONEY AND PAID INTEREST, THE INTE REST PAID ON THE BORROWED MONEY HAS TO BE ALLOWED WHILE COMPUTING IN TEREST INCOME ON DEPOSIT OF SUCH BORROWED FUNDS. IN FACT, THIS TRI BUNAL IN THE EARLIER ROUND OF LITIGATION RESTORED BACK THE FILE TO THE ASSESSI NG OFFICER TO FIND OUT THE ACTUAL EXPENDITURE. THE ASSESSEE COULD NOT FILE A NY DETAILS OF MONEY BORROWABLE AND RATE OF INTEREST PAID BY THE ASSESSE E. THEREFORE, THE ASSESSING OFFICER COULD NOT ALLOW ANY EXPENDITURE. ON FURTHER APPEAL BEFORE THE CIT (APPEALS), THE LD. COUNSEL VERY CLEA RLY SUBMITTED BEFORE THE CIT (APPEALS) THAT DUE TO EFFLUX OF TIME THEY A RE NEITHER ABLE TO GET ANY FACTUAL INFORMATION NOR FURNISH EVIDENCE TO SUB STANTIATE THE CLAIM OF ACTUAL EXPENDITURE. WHEN THE ASSESSEE CLAIMS THE E XPENDITURE FOR EARNING THE INTEREST INCOME, IT IS FOR THE ASSESSEE TO FURNISH THE DETAILS OF THE LOAN BORROWER AND THE PAYMENT OF INTEREST. IN THE ABSENCE OF ANY DETAILS OF PAYMENT OF INTEREST, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CLAIM OF INTEREST PAYMENT ON THE BORROWED FUNDS CANNOT BE ALLOWED. IN THE NORMAL CIRCUMSTANCES, THIS TRIBUNA L WOULD HAVE REMITTED BACK THE FILE TO THE ASSESSING OFFICER FOR RECONSID ERATION. HOWEVER, WE ARE NOT DOING SO, SINCE THE ASSESSEE EXPLAINED BEFO RE THE CIT (APPEALS), 4 I.T.A. NO. 231/MDS/2014 ITS INABILITY TO FURNISH ANY FURTHER INFORMATION OR TO FILE THE DETAILS OF THE ACTUAL EXPENDITURE. MOREOVER, BY REMITTING BACK TH E MATTER TO THE ASSESSING OFFICER, NO PURPOSE WOULD BE SERVED, WHEN THE ASSESSEE CLAIMS THAT THERE IS NO INFORMATION OR MATERIAL AVA ILABLE WITH THEM. IN THE ABSENCE OF ANY DETAILS OF BORROWED FUNDS AND PAYMEN T OF INTEREST, THIS TRIBUNAL IS OF THE CONSIDERED OPINION, THE CLAIM OF EXPENDITURE FOR EARNING THE INTEREST INCOME CANNOT BE ALLOWED. THEREFORE, THIS TRIBUNAL DID NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON 31 ST JANUARY 2017AT CHENNAI. SD/- SD/- ( . . ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, /DATED, THE 31 ST JANUARY, 2017. JR. # ! $ % $ /COPY TO: 1. /APPELLANT 2. !' /RESPONDENT 3. &' ( )/CIT(A)-III, CHENNAI 4. &' /CIT 5. ! $ /DR 6. () /GF.