ITO, New Delhi V. M/s. Raghav Auto Engineers Pvt. Ltd, New Delhi

ITA 2957/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2224 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-12-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 22-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Keywords: Opportunity of being heard; Capital expenditure; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI A.K.GARODIA, AM ITA NO.2957/DEL/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-15(1), NEW DELHI. VS. M/S RAGHAV AUTO ENGINEERS PVT.LTD., (NOW MERGED WITH MINDA CAPITAL LTD.), 286D, E-POCKET, GTB ENCLAVE, DELHI 110 093. PAN NO.AACCR4247F. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.PRATIMA KAUSHIK, DR. RESPONDENT BY : NONE. ORDER PER A.K.GARODIA, AM : THIS IS A REVENUES APPEAL DIRECTED AGAINST THE OR DER OF LEARNED CIT(A)- XVIII, NEW DELHI DATED 12.3.2009 FOR THE AY 2006-07 . GROUNDS RAISED BY THE REVENUE READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION O F RS.13,50,000/- BEING INTEREST ON UNSECURED LOAN WITHOUT APPRECIATI NG THE FACT THAT THE AMOUNT OF UNSECURED LOAN FOR WHICH THE INTEREST WAS CLAIMED WAS NOT RELATED TO THE BUSINESS OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION O F RS.9,000/- BEING FILING FEE INCURRED IN CONNECTION WITH RAISING OF F RESH SHARE APPLICATION MONEY WITHOUT APPRECIATING THE FACT THA T THE SAME WAS CLEARLY IN THE NATURE OF CAPITAL EXPENDITURE. ITA-2957/DEL/2009 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF NOTICE SENT BY RPAD ON 6.10.2009. THE NOTICE HAS NOT COME BACK UNSERVED A ND HENCE, THE SERVICE OF NOTICE IS PRESUMED AND THE APPEAL IS HEARD EX-PARTE QUA THE ASSESSEE. 3. LEARNED DR FOR THE REVENUE SUPPORTED THE ASSESSM ENT ORDER ON BOTH THE ISSUES. IT WAS ALSO HIS SUBMISSION THAT EVEN IF TH E ASSESSMENT ORDER IS NOT RESTORED ON THESE ISSUES, THESE ISSUES MAY BE RESTORED BACK TO THE FILE OF THE AO FOR A FRESH DECISION BECAUSE LEARNED CIT(A) HAS ALSO NOT GIVEN ANY SPECIFIC FINDING REGARDING NEXUS OF INTEREST PAID BY THE ASSESSEE AND INTEREST RECEIVED BY THE ASSESSEE. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DR FOR THE REVENUE. WE FIND THAT IT IS NOTICED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS DEBITED INTEREST ON LOANS AMOUNTING TO RS.13.50 LAK HS AND SINCE THE ASSESSEE IS NOT CARRYING ON ANY BUSINESS DURING THE PRESENT YEAR, S UCH INTEREST IS NOT ALLOWABLE. THE AO HAS ALSO DISALLOWED RS.9,000/- CLAIMED BY TH E ASSESSEE TOWARDS FILING FEES. AGAINST BOTH THESE DISALLOWANCES, ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A). REGARDING THE DISALLOWA NCE OF INTEREST AMOUNTING TO RS.13.50 LAKHS, IT IS HELD BY THE LEARNED CIT(A) TH AT EVEN IF INTEREST INCOME IS ASSESSED AS INCOME FROM OTHER SOURCES, THE EXPENDIT URE INCURRED AND CLAIMED IN THE PROFIT AND LOSS ACCOUNT IS ALLOWABLE U/S 57 OF THE IT ACT. BUT NO FINDING IS GIVEN BY THE LEARNED CIT(A) REGARDING THE NEXUS OF INTEREST INCOME AND INTEREST EXPENSES. SIMILARLY, REGARDING PAYMENT OF RS.9,000 /- TO REGISTRAR OF COMPANIES AS FILING FEES, IT HAS BEEN HELD BY THE CIT(A) THAT THE SAME IS PAID FOR FILING OF VARIOUS STATUTORY FORMS AND HENCE, THE SAME ARE NOT CAPITAL EXPENDITURE WITHOUT POINTING OUT AS TO FOR WHICH FORM, THE FILING FEES WAS PAID BY THE ASSESSEE. IF THE FILING FEES IS PAID FOR INCREASE IN AUTHORIZED CAPI TAL, THEN SUCH FILING FEES PAYMENT IS TO BE DISALLOWED AS CAPITAL EXPENDITURE AS PER T HE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF BROOKE BOND AS REPORT ED IN 225 ITR 798. UNDER THESE FACTS, WE FEEL THAT BOTH THESE ISSUES SHOULD GO BACK TO THE FILE OF THE AO FOR A FRESH DECISION. WE THEREFORE SET ASIDE THE ORDER O F LEARNED CIT(A) ON BOTH THESE ITA-2957/DEL/2009 3 ISSUES AND RESTORE THESE MATTERS BACK TO THE AO FOR A FRESH DECISION. REGARDING THE INTEREST PAYMENT BY THE ASSESSEE OF RS.13.50 LAKHS, THE AO SHOULD EXAMINE THE CLAIM OF THE ASSESSEE THAT THIS INTEREST EXPENDITUR E WAS INCURRED FOR THE PURPOSE OF EARNING INTEREST INCOME. IF THE ASSESSEE CAN ESTAB LISH THE NEXUS BETWEEN INTEREST RECEIVED AND INTEREST PAYMENT, THEN TO THAT EXTENT, INTEREST PAYMENT OF THE ASSESSEE SHOULD BE ALLOWED AGAINST INTEREST INCOME OF THE AS SESSEE. REGARDING THE PAYMENT OF FILING FEES OF RS.9,000/- BY THE ASSESSEE, THE A O SHOULD EXAMINE THE DETAILS AS TO FOR FILING OF WHICH FORMS THIS FEES WAS PAID BY THE ASSESSEE AND THE DISALLOWANCE SHOULD BE MADE ONLY FOR THAT PART OF T HE EXPENSES WHICH IS CONNECTED WITH THE INCREASE IN THE AUTHORIZED CAPITAL IF ANY AND IF THERE IS NO SUCH PAYMENT OF FILING FEES FOR INCREASE IN AUTHORIZED CAPITAL THER E SHOULD BE NO DISALLOWANCE OUT OF FILING FEES. THE AO SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE SHOULD FURNISH ALL REQUIRED DETAILS AN D EVIDENCES BEFORE THE AO IN SUPPORT OF ITS CONTENTIONS. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 7 TH DECEMBER, 2009. SD/- SD/- (C.L.SETHI) (A.K.GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.12.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-2957/DEL/2009 4