The DCIT, Circle-1, Ahmedabad V. Abhishek Engineers Pvt.Ltd., Ahmedabad

ITA 2452/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85717 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 28-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: R C SHAH
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHRI SHAILENDRA KR. YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER DY. CIT, CIR. 1, A WING, ROOM NO. 309, 3 RD FLOOR, PRATYAKHA KAR BHAVAN, AMBAWADI, AHMEDABAD-380015 (APPELLANT) VS M/S. ABHISHEK ENGINEERS PVT. LTD, ABHISHEK HOUSE, 5, SHRIMALI SOCIETY, NAVRANGPURA, AHMEDABAD (RESPONDENT) REVENUE BY: SHRI M.K. SINGH, SR. D.R. ASSESSEE BY: SHRI R.C. SHAH, A.R. DATE OF HEARING : 23-02-2015 DATE OF PRONOUNCEMENT : 26-02- 2015 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS IS THE ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-VI, AHMEDABAD DATED 05-07-2011 FOR A.Y. 2005-06. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN TH E BUSINESS OF PROJECT CONSULTANTS, CONSTRUCTION CONTRACTORS, AND SOFTWARE DEVELOPER. ITA NO. 2452/AHD/2011 ASSESSMENT YEAR 2005-06 I.T.A NO. 2452/AHD/2011 A.Y. 2005-06 PAGE NO DCIT VS. M/S. ABHISHEK ENGINEERS PVT. LTD 2 ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2005-0 6 ON 30-10-2005 DECLARING TOTAL INCOME OF RS. 7,79,010/-. THEREAFT ER ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 31-12-2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 82,84,950/-. SUBSEQUENTLY, PURSUA NT TO THE ORDER PASSED BY THE COMMISSIONER U/S. 263 OF THE ACT AND TO GIVE DIRECTIONS CONTAINED IN THE ORDER OF CIT, ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 263 OF THE ACT VIDE ORDER DATED 31/12/2010 AND THE TOTAL INCOME WA S DETERMINED AT RS. 1,25,92,804/-. AGGRIEVED BY THE ORDER OF AO, ASSES SEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 05-02-2011 A LLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWIN G GROUND:- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 43,07,854/- ON ACCOUNT OF DISALLOWA NCE OF INTEREST EXPENSES U/S. 40(A)(IA) OF THE ACT. 4. ON THE BASIS OF DETAILS AVAILABLE ON RECORD, IT WAS NOTED THAT ASSESSEE HAD PAID INTEREST TO ANUBHOTI COMMERCIAL C OMPLEX CO-OPERATIVE SOCIETY LTD AND GARDENIA COMMERCIAL HOUSING PVT LTD AND GARDENER APARTMENT PVT LTD BUT NO TDS WAS DEDUCTED U/S. 194A BEFORE MAKING THE INTEREST PAYMENT. AO WAS OF THE VIEW THAT AS PER T HE PROVISIONS OF SECTION 194A OF THE ACT, THE ASSESSEE WAS REQUIRED TO DEDUC T TAX ON THE AMOUNT CREDITED TO THE AFORESAID PARTIES AND SINCE ASSESSE E HAD FAILED TO DEDUCT TDS, THE INTEREST EXPENSE AGGREGATING TO RS. 43,07, 854/- WAS DISALLOWED U/S. 40(A)(IA) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSES SMENT ORDER AND APPELLANT SUBMISSION. ASSESSING OFFICER DISALLOWED INTEREST CREDITED IN THE ACCOUNTS OF TWO PARTIES' NAMELY- ANUBHOOTI C OMMERCIAL COMPLEX CO-OPERATIVE SOCIETY LTD AND GARDENIA APART MENTS PRIVATE LTD , IT IS NOT IN DISPUTE THAT APPELLANT RECEIVED INTER EST FROM BOTH THE PARTIES AND APPELLANT HAS NOT PAID OR CLAIMED ANY I NTEREST IN THE I.T.A NO. 2452/AHD/2011 A.Y. 2005-06 PAGE NO DCIT VS. M/S. ABHISHEK ENGINEERS PVT. LTD 3 NAME OF THESE TWO PARTIES. IT IS ONLY THE ACCOUNTS OF THESE TWO PARTIES, THERE ARE TWO ENTRIES OF INTEREST- ONE ENT RY FOR INTEREST CREDIT AND OTHER ENTRY FOR INTEREST DEBIT ON THE AMOUNTS O UTSTANDING IN THE RUNNING ACCOUNTS OF THESE TWO PARTIES. THESE ENTRIE S ARE IN RESPECT OF CALCULATION OF INTEREST ON OUTSTANDING FUNDS. TH E PAYMENT OF INTEREST OR CREDIT OF INTEREST INCOME IN THE PARTIE S' ACCOUNTS IS ONLY IN RESPECT OF INTEREST PAYABLE BY THESE PARTIES. AS DI SCUSSED IN THE APPELLANT'S SUBMISSION, APPELLANT RECEIVED INTEREST FROM THESE PARTIES AND DID NOT PAY ANY INTEREST OR INTEREST IN COME TO THESE PARTIES THEREFORE THERE WAS NO LIABILITY TO DEDUCT TAX UNDER SECTION 194A. I HAVE REFERRED THE P&L ACCOUNT OF THE APPELL ANT AND AS PER THAT APPELLANT HAD RECEIVED INTEREST FROM THESE TWO PARTIES THEREFORE THERE IS NO CLAIM OF INTEREST EXPENSES IN RESPECT O F THESE TWO PARTIES. IN THE ABSENCE OF ANY CLAIM OF INTEREST, THERE CANN OT BE ANY DISALLOWANCE UNDER SECTION 40 (A)(IA) OF IT ACT. ACCORDINGLY, DISALLOWANCE OF INTEREST MADE BY THE A SSESSING OFFICER CANNOT SURVIVE AND HENCE THE SAME IS DELETED. 5. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), REVE NUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD. DR SUPPORTED THE ORDER OF AO. ON THE OTHER HAND, LD AR REITERATED THE SUBMISSIONS MADE BEFORE AO AND CI T(A) AND SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT CIT(A) WHILE DEL ETING THE ADDITION MADE U/S. 40(A)(IA) AND AFTER PERUSING THE PROFITS AND L OSS ACCOUNT OF THE ASSESSEE HAS GIVEN A FINDING THAT ASSESSEE HAD RECE IVED INTEREST FROM THESE PARTIES BUT HAD NOT PAID ANY INTEREST TO THEM AND THEREFORE THERE WAS NO LIABILITY TO DEDUCT TAX U/S. 194A AND THAT THERE WAS NO CLAIM OF INTEREST EXPENDITURE IN RESPECT OF THE AFORESAID PARTIES. B EFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT TH E FINDINGS OF CIT(A). IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO I NTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND IS DISMISSED. I.T.A NO. 2452/AHD/2011 A.Y. 2005-06 PAGE NO DCIT VS. M/S. ABHISHEK ENGINEERS PVT. LTD 4 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 26/02/2015 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,