JANAK HOLDINGS P.LTD, MUMBAI V. ASST CIT CEN NCIR 36, MUMBAI

ITA 2413/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3856 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2015
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Section: 234B

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ./ ITA NO. 2413 / MUM/20 1 5 ( / ASSESSMENT YEAR : 20 11 - 20 12 JANAK HOLDINGS P VT. 220, COMMERCE HOUSE, 140, N.M.ROAD, FORT, MUMBAI - 400023 VS. THE ACIT - CC - 36, MUMBAI ./ ./ PAN/GIR NO. : A A ACJ 1074 A ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI VIMAL PUNMIYA /REVENUE BY : SHRI K.MOHANDAS / DATE OF HEARING : 0 2 /08 /2016 / DATE OF PRONOUNCEMENT 0 2 / 0 8 /201 6 / O R D E R THIS IS AN APPEAL FILED B Y THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASSESSMENT YEAR 20 10 - 2011. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR ADDITION MADE U/S.40(A)(IA) ON ACCOUNT OF INTEREST PAID ON BORROWED FUNDS OBTAINED FROM FINANCIAL INSTITUTION. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. DURING THE C OURSE OF ASSESSMENT THE AO FOUND THAT ASSESSEE HAS DEBITED INTEREST ON SECURED LOANS, SINCE NO TAX WAS DEDUCTED ON THE PAYMENT OF SUCH INTEREST THE AO DISALLOWED THE SAME U/S.40(A)(IA). 4. THE CONTENTION OF ASSESSEE WAS THAT THE INTEREST HAS ALREADY BEEN P AID DURING THE YEAR AND IT IS NOT OUTSTANDING, IN VIEW OF THE DECISION OF SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORT, 136 ITD 23, NO DISALLOWANCE SHOULD BE MADE. HOWEVER, THE CIT(A) DID NOT AGREE WITH ITA NO. 2413 /1 5 2 THE ASSESSEES CONTENTION AND CONFIRMED THE SAME , AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. I HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ASSESSEE HAS OBTAINED SECURED LOAN OF RS.6 CR FROM SREI INFRASTRUCTURE FINANCE LIMITED WHICH IS A NBFC COMPANY FOR ACQUIRI NG WINDMILL FROM M/S SUZLON ENERGY LTD IN A.Y. 2008 - 09. DURING THE YEAR ASSESSEE PAID INTEREST OF RS.44,85,221/ - WITHOUT DEDUCTION OF TDS. HOWEVER, THE RECIPIENT OF INTEREST HAD ALREADY OFFERED THE SOME IN ITS RETURN OF INCOME. HOWEVER, THE LD. AO DISALLOW ED THE INTEREST EXPENDITURE U/S 40 (A)(IA) ON GROUND THAT ASSESSEE FAILED TO DEDUCT THE TDS. 6. LD. AR PLACED ON RECORD DECISION OF DCS BPO (P) LTD., 63 TAXMANN.COM 288, WHEREIN IT WAS HELD THAT AMOUNT ACTUALLY PAID DURING THE YEAR AND NOT OUTSTANDING, NO DISALLOWANCE CAN BE MADE U/S.40(A)(IA). FURTHER RELIANCE WAS PLACED ON THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF JITENDRA MANSUKHLAL SHAH, ITA NO.2293&2294/2013, ORDER DATED 4 - 3 - 2015, WHEREIN THE TRIBUNAL HELD AS UNDER : - 5. WE HAVE HEARD BOTH THE PA RTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. RECENTLY, MUMBAI TRIBUNAL HAS DECIDED SUCH ISSUE IN FAVOUR OF THE ASSESSEE BY CONSIDERING THE EARLIER DECISIONS. JUDICIAL MEMBER IS ONE OF THE PARTY TO THE SAID DECISION THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. AFTER CAREFUL CONSIDERATION, RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH IN THE CASE OF M/S. VIVIL EXPORTS P. LTD. VS. ITO (SUPRA), WE DELETE THE DISALLOWANCE. FOR THE SAKE OF COMPLETENESS RELEVANT OBSERVATION OF THE TRIBUNAL FROM THE SAID DECISION ARE REPRODUCED BELOW: 4. THOUGH NUMBER OF GROUNDS WERE URGED BEFORE US IN THE GROUNDS OF APPEAL ANNEXED TO FORM NO. 36, AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ITA NO. 2413 /1 5 3 THE ASSESSEE HAVING MADE THE PAYMENT, SECTION 40(A)(IA) CANNOT BE ATTRACTED BECAUSE IT SPEAKS OF THE AMOUNT PAYABLE AND IT DOES NOT COVER THE AMOUNT ALREADY PAID. IN THIS REGARD HE RELIE D UPON THE FOLLOWING DECISIONS OF THE ITAT CHENNAI BENCHES WHEREIN THE BENCH HAD TAKEN INTO CONSIDERATION THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORT, THE ORDER OF WHICH WAS SUSPENDED BY THE HIGH COURT BUT AT THE SAME TIME THERE WAS A SUBSEQUENT JUDGEMENT OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF M/S. VECTOR SHIPPING SERVICES (P) LTD. WHEREIN IT WAS HELD THAT SECTION 40(A)(IA) APPLIES ONLY TO THOSE AMOUNT WHICH REMAINS PAYABLE BY THE END OF THE PREVIOUS YEAR. IN OTHER WORDS, IN RESPECT OF PAYMENTS ALREADY MADE SECTION 40(A) (IA) IS NOT ATTRACTED: - I. ACIT VS. M/S. ESKAY DESIGNS - ITA NO. 1951/MDS/2012 DATED 09.12.2013. II. ITO VS. THEEKATHIR PRESS ITA NO. 2076/MDS/2012 & CO NO. 155/MDS/2013 DATED 18.09.2013. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THOUGH THERE ARE CONTRARY DECISIONS OF THE OTHER HON'BLE HIGH COURTS, I.E. HON'BLE CALCUTTA HIGH COURT AND HON'BLE GUJARAT HIGH COURT, IN THE LIGHT OF THE DECISION OF THE HON'BLE ALLABAHAD HIGH COUR T IT CAN BE SAID THE THERE CAN BE TWO VIEWS POSSIBLE IN THIS MATTER IN WHICH EVENT THE ONE WHICH IS IN FAVOUR OF THE ASSESSEE HAS TO BE FOLLOWED IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS LTD. 88 ITR 192. AC CORDINGLY THE CHENNAI BENCH HELD THAT SECTION 40(A)(IA) IS NOT ATTRACTED IN RESPECT OF THE AMOUNT ALREADY PAID BY THE ASSESSEE. 5. THE LEARNED D.R., ON THE OTHER HAND, COULD NOT PLACE BEFORE US ANY CONTRARY JUDGEMENT ON THIS ISSUE. THOUGH THE LEARNED D.R. PROMISED TO FILE WRITTEN SUBMISSIONS WITHIN ONE DAY, IT WAS NOT FILED. IN OTHER WORDS, THERE IS NO CONTRARY DECISION ON THIS ISSUE. 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WITHOUT GOING INTO THE OTHER ASPECTS, WHICH WERE IN FACT NOT ARGUED EITHE R BY THE ASSESSEE OR BY THE REVENUE, WE HOLD THAT SECTION 40(A)(IA) IS NOT ATTRACTED IN RESPECT OF PAYMENT ALREADY MADE BY THE END OF THE PREVIOUS YEAR. THE AO IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE AND IF IT IS IN LINE WITH THE VIEW TAKEN HEREIN THE SAME MAY BE CONSIDERED ACCORDINGLY. AS REGARDS LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT, THE SAME IS CONSEQUENTIAL IN NATURE AND NEED NOT TO BE CONSIDERED INDEPENDENTLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS AL LOWED FOR STATISTICAL PURPOSES 5.1 MOREOVER, HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICES (P) LTD.(SUPRA) HAS HELD THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSION ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, AM OUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY END OF THE YEAR. THE SAID DECISION OF HONBLE ALLAHABAD HIGH COURT WAS MADE SUBJECT TO SPECIAL LEAVE PETITION FILED BEFORE HONBLE SUPREME COURT AND THEIR LORDSHIPS ITA NO. 2413 /1 5 4 VIDE THEIR ORDER DATED 02/07/2014 IN CC NO.8068/2014 HAVE DISMISSED THE SLP AND COPY OF THIS ORDER IS FILED BY THE ASSESSEE AT PAGE 31 OF THE PAPER BOOK AND THE SAID ORDER READ AS UNDER: SUPREME COURT OF INDIA RECORD OF PROCEEDINGS PETITION(S) FOR SPECIAL LEAVE TO APPEAL (C).. CC NO.(S) 8 068/2014 (ARISING OUT OF IMPUGNED FINAL JUDTMENT AND ORDER DATED 09/07/2013 IN ITA 122/2013 PASSED BY THE HIGH COURT OF JUDICATURE AT ALLAHABAD) COMMISSIONER OF INCOME TAX - MUZAFFAR NGR.PETITIONER(S) VERSUS M/S. VECTOR SHIPPING SERVICES (P) LTD. RESPONDEN TS(S) WITH APPLN.(S) FOR C/DELAY IN FILING SLP AND OFFICE REPORT) DATE:02/07/2014 THIS PETITION WAS CALLED ON FOR HEARING TODAY. CORAM: HONBLE THE CHIEF JUSTICE HONBLE MR. JUSTICE MADAN B LOKUR HONBLE MR. KURIAN JOSEPH FOR PETITIONER(S) MR. MUKUL R OHATGI, ATTORNEY GENERAL MR. RUPESH KUMAR, ADV. MR. SAHIL TAGOTRA, ADV. MRS. ANIL KATIYA, ADV. FOR RESPONDENT(S) UPON HEARING THE COUNSEL THE COURT MADE THE FOLLOWING ORDER HEARD MR.MUKUL ROHATGI, LEARNED ATTORNEY GENERAL, OR THE PETITION. DELAY IN FILING AND REFILLING SPECIAL LEAVE PETITION IS CONDONED. SPECIAL LEAVE PETITION IS DISMISSED. DIGITALLY SIGNED BY RAJESH DHAM DATE: 2014.07.02 5.2 IN VIEW OF ABOVE DISCUSSION, THE DECISION RELIED UPON BY LD. DR WOULD HAVE NO APPLICATION AND WE HAVE TO ACCEPT THE CLAIM OF THE ASSESSEE TO THE EXTENT OF LABOUR PAYMENTS ARE MADE DURING THE YEAR UNDER CONSIDERATION AND TO THAT EXTENT NO DISALLOWANCE SHOULD BE MADE. FURTHER THE FIGURE GIVEN BY THE ASSESSEE IN THE AFOREMENTIONED CHART MAY BE VERIFIED BY THE AO AND TO THE EXTENT PAYMENTS ARE MADE DURING THE RESPECTIVE YEARS UNDER CONSIDERATION NO DISALLOWANCE SHOULD BE MADE AND ONLY REST OF THE ITA NO. 2413 /1 5 5 AMOUNT SHOULD BE DISALLOWED. WITH THESE DIRECTIONS WE PARTLY ALLOW THE APPEALS FILED BY THE ASSESSEE. 7 . IN THE IN STANT CASE, THE AMOUNT OF INTEREST HAS DULY BEEN PAID DURING THE YEAR AND IT WAS NOT OUTSTANDING AS AT THE END OF YEAR , THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF TRIBUNAL CITED ABOVE, WE DO NOT FIND ANY JUSTIFICATION FOR THE DISALLOWANCE SO MADE BY TH E AO. 8 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 0 2 /08 / 201 6 . SD/ - ( R.C.SHARMA ) / ACCOUNTANT MEMBER MUMBAI ; DATED 0 2 /08 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//