ITO 1(1)(4), MUMBAI V. GAS & POWER INVESTMENT CO. LTD, MUMBAI

ITA 3128/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1024 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL IBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAVISH SOOD, JUDICIAL MEMBER ./I.T.A./3128/MUM/2015 , /ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER-1(1)(4) ROOM NO.531 A/579, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. VS. M/S. GAS & POWER INVESTMENT CO. LTD. ASIAN BUILDING, GROUND FLOOR, 17, R.KAMANI MARG, BALLARD ESTATE MUMBAI-400 001. PAN:AACCG 3843 J ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI ANADI VARMA-CIT-DR ASSESSEE BY: NONE / DATE OF HEARING: 09/11/2017 / DATE OF PRONOUNCEMENT: 03/01/2018 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT). , / PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 20/01/2015 OF CIT(A)-2, MUMBAI THE ASSESSING OFFICER (A.O.) HAS FILED THE PRESENT APPEAL.THE ASSESSEE IS A SPEC IAL PURPOSE VEHICLE,A DEEMED GOVT. COMPANY AS PER SECTION 619 OF THE COMPANIES ACT. IT WAS PROMOTED BY CONSORTIUM OF BANKS. IT WAS REGISTERED AS NBFC WITH RBI.IT IS ENGAGED IN THE BUSINESS OF SETTLEMENT OF CLAIMS OF OFF-SHORE STAKEHOLDERS OF DABHOL POWER COMPANY,IT F ILED ITS RETURN OF INCOME ON 24/09/2010 DECLARING TOTAL LOSS AT RS.7.57 LAKHS.THE AO COMPLE TED THE ASSESSMENT ,ON 30/03/2013, U/S.143(3) OF THE ACT,DETERMINING ITS INCOME AT RS. 35.99 CRORES. 2. AS PER THE RECORDS,ON 04/10/2017 THE MATTER WAS ADJ OURNED TO A NEXT DAY.THE AUTHORISED REPRESENTATIVE(AR)OF THE ASSESSEE WAS DIRECTED TO F URNISH THE DETAILS OF INTEREST PAYMENT. WHEN THE AR DID NOT APPEAR BEFORE THE BENCH, THE BE NCH DIRECTED THAT NECESSARY DETAILS OF PAYMENT HAD TO BE FILED POSITIVELY ON THE NEXT DATE OF HEARING.THE MATTER WAS ACCORDINGLY ADJOURNED TO 08/11/2017.EARLIER, THIS MATTER WAS AD JOURNED TWICE,ON 23.01.2017 AND 26.04. 2017,AT THE REQUEST OF THE ASSESSEE.ON 08/11/2011 N ONE APPEARED ON BEHALF OF THE ASSESSEE. THE MATTER WAS ADJOURNED TO 09/11/2017.ON 09/11/201 7 NONE APPEARED BEFORE US NOR ANY APPLICATION FOR ADJOURNMENT WAS FILED.THEREFORE,WE ARE DECIDING THE MATTER ON THE BASIS OF AVAILABLE MATERIAL. 3. EFFECTIVE GROUND OF APPEAL IS DELETING THE DISALLO WANCE OF PAYMENT OF INTEREST OF RS.35, 99,47,470/-.THE ASSESSEE IS A SPECIAL PURPOSE VEHI CLE,A DEEMED GOVT. COMPANY AS PER SECTION 619 OF THE COMPANIES ACT. IT WAS PROMOTED BY CONSOR TIUM OF BANKS. IT WAS REGISTERED AS 3128/MUM/2015- M/S.GAS & POWER INVESTMENT COMPANYLTD. 2 NBFC WITH RBI.DURING THE ASSESSMENT PROCEEDINGS,IT HAD ISSUED DEBENTURES OF RS.1309.30 CRORES BY RAISING LOANS FROM FI.S AND PLACED THEM W ITH THE LIC OF INDIA. IT WAS CLAIMED THAT IT HAD SETTLED THE DUES BY FINANCING RATNAGIRI GAS AND POWER P. LTD.(RGPPL).THE ONLY SOURCE OF INCOME OF THE ASSESSEE WAS INTEREST RECEIVED F ROM RGPPL .HE OBSERVED THAT THE ASSESSEE HAD RECEIVED TOTAL INTEREST OF RS.175.24 CRORES FRO M ITS LOANS AND ADVANCES AS WELL AS FDR.S,THAT IT HAD CLAIMED INTEREST EXPENSES OF RS. 21.93 CRORES AGAINST SECURED LOANS AND INTEREST,THAT IT HAD CLAIMED ADMINISTRATIVE AND OP ERATING EXPENSES OF RS.41.60 LAKHS FOR THE YEAR,THAT THERE WAS REASSESSMENT FOR AY.2006-07 WHE REIN THE AO DISALLOWED AN AMOUNT OF RS.9.13 CRORES U/S.43B(E).THE AO,WHILE COMPLETING T HE ASSESSMENT FOR THAT YEAR 2006-07, DIRECTED THE ASSESSEE TO FURNISH PROOF OF ACTUAL PA YMENT OF INTEREST DEBITED TO P&L ACCOUNT SUPPORTED BY A BANK STATEMENT DULY HIGHLIGHTING THE TRANSACTIONS.HE ALSO DIRECTED ASSESSEE TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE DISALLOWED U/S. 43B(E) R.W. EXPLANATION 3D TO THE SAID SECTION,AS THE AMOUNT IN QUESTION WAS NOT ACTU ALLY PAID WITHIN THE PRESCRIBED TIME LIMIT.AFTER EXAMINING THE AVAILABLE MATERIAL,THE AO HELD THAT WHAT WAS CLAIMED TO BE PAYMENT OF INTEREST ON LOAN WAS PAYMENT OF RESTRUCT URED LOAN,THAT THE ASSESSEE HAD NOT PAID INTEREST ON LOAN,THAT THE INTEREST WAS CONVERTED I NTO LOAN . CONSIDERING THE ABOVE FACTS OF THE AY.2006-07,THE A O DIRECTED THE ASSESSEE TO FURNISH THE DETAILS OF THE INTEREST PAYMENTS AND TO EXPLAIN AS TO WHY SIMILAR DISALLOWANCE SHOULD NOT BE MADE FOR THE YEAR UNDER CONSIDERATION ALSO.AS PER T HE AO,THE ASSESSEE DID NOT FILE ANY SPECIFIC REPLY IN THAT REGARD AND RELIED UPON THE S UBMISSION MADE DURING THE ASSESSMENT PROCEEDINGS FOR AY.2006-07.AFTER CONSIDERING THE B OOKS OF ACCOUNT OF THE ASSESSEE THE AO OBSERVED THAT ENTIRE LIABILITY WAS TOWARDS LOAN THA T NO SEPARATE INTEREST LIABILITY EXISTED ,THAT ACCRUED INTEREST HAD BEEN CONVERTED TO FURTHER LOA N LIABILITY,THAT THE ASSESSEE HAD PAID INTEREST OF RS.21,93,36,406/-. HE HELD THAT THE ASSESSEE HAD NOT PAID THE INTEREST AS ENVISAGED BY CL.(D) (E)OF SEC. 43B.FINALLY,HE MADE DISALLOWANCE OF RS.3 5.82 CRORES . 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA)AND MADE ELABORATE SUBMISSI ONS.AFTER CONSIDERING THE AVAILABLE MATERIAL,HE HELD THAT THE FINANCIAL DATA AND THE WR ITTEN SUBMISSIONS OF THE ASSESSEE PROVE THAT THE INTEREST WAS PAID BY THE ASSESSEE ON FUNDED TER M LOANS,THAT INTEREST WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. AS PER THE FAA THE ASSESSEE HAS FURNISHED EVIDENCE IN THAT REGARD. REFERRING TO CIRCULAR NO.7 OF 2006 , D ATED 17/07/2006 HE HELD THAT THE CASE OF THE ASSESSEE WAS COVERED BY SECTION 43B(D)(E) OF THE AC T. FINALLY, HE DELETED THE ADDITION MADE BY AO. 3128/MUM/2015- M/S.GAS & POWER INVESTMENT COMPANYLTD. 3 5. DURING THE COURSE OF HEARING BEFORE US, THE DR STA TED THAT THE AO HAD MADE DISALLOWANCE OF RS.33.14 CRORES U/S. 43B(D) ON ACCOUNT OF PAYMEN T TO LIC, THAT HE HAD DISALLOWED RS.2.67 CRORES U/S.43B(E) ON ACCOUNT OF ALLEGED INTEREST PA ID TO SCHEDULED BANKS, THAT HE HAD HELD THAT NO INTEREST LIABILITY EXISTED WHICH WAS DISCHARGED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, THAT IT WAS PAYMENT OF RESTRUCTURED LOAN, THAT THERE WAS NO SEPARATE RECOGNITION OF THE PRINCIPAL LOAN AMOUNT AND INTEREST LIABILIT Y IN THE BALANCE SHEET, THAT THE FAA HAD ALLOWED THE APPEAL OF THE ASSESSEE. AS STATED EARLI ER NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. WE FIND THAT THE TRIBUNAL HAD DIRECTED THE ASSESSEE TO FILE DETAILS OF INTEREST PAYMENT TO DECIDE THE ISSUE. BUT TILL THE PASSING OF THIS ORDE R, THE ASSESSEE HAS NOT FILED ANY DETAIL THAT COULD PROVE THAT THE STAND TAKEN BY THE AO WAS FACT UALLY INCORRECT. WE DO NOT KNOW HOW THE FAA ARRIVED AT THE CONCLUSION, THAT THE PAYMENT MAD E BY THE ASSESSEE UNDER THE HEAD INTEREST EXPENDITURE WAS RELATABLE TO LOANS AND NOT ABOUT TH E RESTRUCTURED LOANS.WE AGREE WITH THE ARGUMENT OF DR THAT THE ORDER OF THE FAA WAS NON-SP EAKING AND VERY CRYPTIC.WE ARE UNAWARE OF THE REASONS AS TO WHY THE ASSESSEE DID N OT FILE DETAILS OF INTEREST PAYMENTS TO PROVE HIS CASE.THEREFORE, IN OUR OPINION THE MATTER SHOULD BE INVESTIGATED AND VERIFIED FURTHER.SO,WE RESTORE BACK THE ISSUE TO THE FILE OF THE FAA TO DECIDE THE ISSUE AFRESH. HE IS DIRECTED TO PASS A SPEAKING AND DETAILED ORDER AFTE R AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE.THE ASSESSEE SHOULD FILE THE DETAILS OF IN TEREST PAYMENTS BEFORE HIM AND SHOULD PROVE THAT PAYMENTS MADE BY IT IS ALLOWABLE AS PER PROVISIONS OF THE ACT. PARTLY ALLOWING THE APPEAL OF THE AO, WE DECIDE EFFECTIVE GROUND OF APP EAL IN HIS FAVOUR. AS A RESULT,APPEAL FILED BY AO STANDS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JANUARY, 2018. 03 , 2018 SD/- SD/- ( (( ( /RAVISH SOOD) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED :03.01.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR I BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI .