ROCKCASTLE PROPERTY P LTD, MUMBAI V. PR CIT 5, MUMBAI

ITA 2818/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6764 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 19-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Section: 143(3); 263

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -DBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./2818/MUM/2017, /ASSESSMENT YEAR: 2012-13 M/S. ROCKCASTLE PROPERTY PRIVATE LIMITED 3 RD FLOOR, SUNAMA HOUSE, OPP. SHALIMAR HOTEL, KEMPS CORNER, MUMBAI 400 036. PAN : AABCR 9466 M VS. THE PR. CIT-5, ROOM NO.515, 5 TH FLOOR, AAYAKAR BHAVAN MUMBAI 400 020. ( /APPELLANT ) ( / RESPONDENT ) / REVENUE BY: SHRI B. SRINIVAS-CIT-DR /ASSESSEE BY: NONE / DATE OF HEARING: 11/06/2018 / DATE OF PRONOUNCEMENT: 27/06/2018 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER, DATED 29/03/2017 OF PR.CIT-5 , MUMBAI, PASSED UNDER SECTION 263 OF THE ACT, THE ASSESSEE HAS FILED THE PRESENT APPEAL. ASSESSEE - COMPANY DERIVES INCOME FROM HOUSE PROPERTY.LT FILED RETURN OF INCOME ON 29/09/2 012, DECLARING INCOME AT RS.16.72 LAKHS. THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 19/09 /2014 DETERMINING THE INCOME OF THE ASSESSEE AT (-) RS.12.88 LAKHS U/S. 143(3) OF THE A CT. 2. THE SOLITARY GROUND RAISED BY THE ASSESSEE IS WITH REGARD TO THE DIRECTION GIVEN BY THE PCIT IN PASSING ORDER U/S.263.VIDE HIS SHOWCAUSE NOTICE DTD. 15/3/2017, THE PCIT ASKED THE ASSESSEE TO EXPLAIN AS TO WHY REVISIONARY PROCEEDIN GS SHOULD NOT BE INITIATED FOR THE YEAR UNDER CONSIDERATION. HE WAS OF THE OPINION THAT ORD ER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN HIS NOTICE HE OBSERVED THAT THE ASSESSEE HAS BEEN ALLOWED DEDUCTION U/S. 24(B) ON ACCOUNT OF INTEREST PAID TO M/S. BAJAJ FINANCE LTD. OF RS. 67. 11 LAKHS.AS PER THE PCIT THE ASSESSEE FILED EXPLANA TION VIDE ITS LETTER DATED 27/3/2017. AFTER CONSIDERING AVAILABLE MATERIAL, THE PCIT OBSERVED T HAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO DID NOT CONSIDER THE ALLOWABILIT Y OF INTEREST U/S. 24(B) OF THE ACT IN THE PROPER PROSPECTIVE, THAT HE HAD ALLOWED THE CLAIM O F THE ASSESSEE WITHOUT PROPER VERIFICATION.ACCORDINGLY HE SET ASIDE THE ORDER OF THE AO AND RESTORED BACK THE ISSUE OF ALLOWABILITY OF INTEREST EXPENDITURE TO THE FILE OF THE AO. 3. NONE APPEARED BEFORE US, AS STATED EARLIER.IN THE W RITTEN STATEMENT THE ASSESSEE HAD CLAIMED THAT THE AO HAD MADE DETAILED ENQUIRY ABOUT THE DISPUTED TRANSACTION,THAT THE ASSESSEE HAD FILED ALL NECESSARY DETAILS ABOUT LOAN AND INT EREST PAYMENTS, THAT AO HAD APPLIED HIS 2818/M/17 M/S. ROCKCASTLE PROPERTY PVT.LTD. 2 MIND WHILE ALLOWING THE CLAIM MADE BY THE ASSESSEE, THAT THE PCIT DID NOT CONSIDER THE SUBMISSION MADE BY THE ASSESSEE, THAT THE ORDER OF THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE.THE DEPA RTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE PCIT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT (PAGE NO.L, 9, 101, 377, 423, 429, 435 AND 445 OF THE PAP ER BOOK ) THE AO HAD CALLED FOR DETAILS ABOUT INTEREST PAYMENT, THAT HE HAD MADE SPECIFIC E NQUIRY ABOUT ALLOWABILITY OF INTEREST OF RS. 67.11 LAKHS AS PER THE PROVISIONS OF SECTION 24(B) OF THE ACT, THAT THE ASSESSEE HAD MADE DETAILED SUBMISSION IN THATS REGARD. PAGES 377 TO 4 05 OF THE PAPER BOOK ARE ABOUT THE LOAN AVAILED BY THE ASSESSEE AND THE INTEREST PAID BY IT . PAGE NO.377-381 GIVE DETAILS OF THE TRANSACTION.CLEARLY THE AO HAD MADE NECESSARY ENQUI RIES BEFORE ALLOWING THE DEDUCTION U/S. 24(B) OF THE ACT.THUS,IT IS A CASE WHERE THE AO HAD APPLIED HIS MIND BEFORE PASSING THE ORDER AND HAD TAKEN AN INFORMED DECISION. WE ALSO FIND THAT IN ITS LETTER,DATED 27/3/2017 (PG -469-474 OF THE PB),THE ASSESSEE HAD EXPLAINED AS TO HOW THE CIRCULAR NO.28 [F.NO.8/69-I T(A-I)],DATED 20/8/1969 WAS NOT APPLICABLE IN ITS CASE.ONE OF THE MAIN REASONS TO I NITIATE THE REVISIONARY PROCEEDINGS WAS THE SAID CIRCULAR.WHILE PASSING THE REVISIONARY ORDER,T HE PCIT HAS NOT DEALT WITH THE SUBMISSIONS MADE BY THE ASSESSEE IN THAT REGARD.FROM THE EXPLAN ATION FILED BY THE ASSESSEE IT IS CLEAR THAT THE CIRCULAR REFERRED TO BY THE PCIT WAS NOT AGAINS T THE ASSESSEE -RATHER IT SUPPORTED THE STAND TAKEN BY IT. WE ALSO FIND THAT THE CASE LAW REFERRED TO BY THE A SSESSEE IN THE PAPER BOOK I.E. SMALL WONDER INDUSTRIES (ITA NO.2464/MUM/2013-AY 09-10, DTD. 24/ 2/2017) ALSO SUPPORT THE STAND TAKEN BY IT. THE PCIT HIMSELF HAS MENTIONED THAT PROPER VERIFICA TION WAS NOT MADE BY THE AO.HIS COMMENTS CLEARLY SHOW THAT IT WAS NOT A CASE OF NO ENQUIRY.THE PCIT HAD SOME OPINION ABOUT THE ALLOWABILITY OF INTEREST EXPENDITURE.BUT HIS PERSONAL OPINION SOLELY CANNOT BE THE BASE OF INVOKING THE PROVISIONS OF SECTION 263 OF T HE ACT. ERROR IN THE ORDER OF AO HAS NOT BEEN ESTABLISHED.THE AO HAS TAKEN ONE OF THE POSSIB LE VIEWS ABOUT ALLOWING INTEREST U/S. 24 (B)OF THE ACT.SECTION 263 IS NOT ON THE STATUTE FOR DISTURBING SUCH ORDERS.IN SHORT,THE BASIS FOR PASSING REVISIONARY ORDER ARE MISSING.SO,DECIDING T HE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE, WE HOLD THAT THE ORDER OF THE PCIT HA S TO BE REVERSED. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS AL LOWED. 2818/M/17 M/S. ROCKCASTLE PROPERTY PVT.LTD. 3 . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE, 2018. 27 2018 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 27.06.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR D BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.