AI Insights
The case involves M/s. Green Earth Asphalt & Power Private Limited appealing against the orders of the Commissioner of Income Tax (Appeals)-1, Nagpur, which upheld certain disallowances made by the Assessing Officer under section 143(3) of the Income Tax Act, 1961. The primary issues in the appeal were the disallowance of Rs.6,76,425 added as an estimated amount of 30% for various miscellaneous expenses, and a disallowance of Rs.5,20,299 pertaining to interest payments made to related parties at a rate higher than that of secured loans. The Tribunal found that the disallowances were not justified and thus modified the amounts accordingly.
Appeal details
Counselvise Citation
[2022] 140 COUNSELVISE.COM (IT) 133441 (ITAT-NAGPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
19 year(s) 3 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-12-2022
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
DB
Next Hearing Date
14-11-2022
Assessment Year
misc
Appeal Filed On
17-09-2003
Judgement Text
आयकर अपीलीय अिधकरण Ɋायपीठ नागपुर मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH : NAGPUR BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपीलसं. / ITA No.345/NAG/2017 िनधाᭅरणवषᭅ / Assessment Year : 2013-14 M/s.Green Earth Asphalt & Power Private Limited, Sadar Bazar, Paratwad, Maharashtra. PAN: AABCM 0254 C Vs. The Dy.CIT, Amravati Circle, Amravati. Appellant/ Assessee Respondent /Revenue Assessee by Shri R.B.Atal – AR Revenue by Shri G.J.Ninawe – DR Date of hearing 15/11/2022 Date of pronouncement 23/12/2022 आदेश/ ORDER Per S.S.Godara, JM: This assessee’s appeal for Assessment Year 2013-14 is directed against the Commissioner of Income Tax(Appeal)-1, Nagpur’s dated 20.07.2017 in case no.CIT(A)-1/19/2016-17, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short “the Act”]. Heard both the parties. Case file perused. 2. Coming to the assessee’s first and foremost substantive ground that both the Lower Authorities have erred in law and on facts in disallowing / adding estimated amount of Rs.6,76,425/- @ 30% of ITA No.345/NAG/2017 for A.Y. 2013-14 Green Earth Asphalt & Power Pvt. Ltd., [A] 2 Rs.19,80,238/- pertaining various miscellaneous heads, suffice to say, we find during the course of hearing that neither this assessee has filed all of its supporting evidence proving the same to have been incurred wholly and exclusively for the purpose of the business nor the department could give any justification regarding the mentioned disallowance at such a higher rate @ 30% in issue. 3. Faced with the situation, we conclude that larger interest of justice would be met in case the impugned disallowance of Rs.6,76,425/- is restricted to a lumpsum figure of Rs.2 lakhs with a rider that the same shall not be treated as a precedent. Ordered accordingly. Necessary computation shall follow as per law. 4. Next comes section 40A(2)(b) disallowance of Rs.5,20,299/- pertaining to various interest payments made to related parties @18% as compared to 12% involving secured loans. A perusal of the case file reveals in the para 6 of the assessment order that all what the Assessing Officer has done is to arrive at average of 15% i.e. 12 to 18% so as to term the assessee’s interest expenditure as excessive. Such an average concept is nowhere found in section 40A(2)(b) wherein the departmental Authorities are supposed to arrive at the market rate of the corresponding payments followed by only the excession element disallowance which has nowhere been done in the present case. ITA No.345/NAG/2017 for A.Y. 2013-14 Green Earth Asphalt & Power Pvt. Ltd., [A] 3 5. Faced with this situation, we delete the impugned disallowance in light of [2014] 50 taxmann.com 52 (Guj) CIT Vs. Sarjan Realities Ltd.,. The assessee succeeds in instant latter substantive ground. No other ground or arguments has been placed before us. 6. This assessee’s appeal is partly allowed in above terms. Order pronounced in the open court on 23 rd December, 2022. Sd/- Sd/- (DR.DIPAK P. RIPOTE) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 23 rd Dec, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, नागपुर बᱶच, नागपुर / DR, ITAT, Bench, Nagpur. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.
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