ACIT CC 38, MUMBAI V. RAVICHANDRAN NARSIMHAN, MUMBAI

ITA 3474/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84281 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: RUTURAJ H GURJAR; SS S K MUTSADDI
• Keywords: Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D B ENCH, MUMBAI , . . , BEFORE SHRI VJAY PAL RAO, JM AND SHRI N.K. BILLAIY A, AM ! './ I.T.A. NO. 3474/MUM/2013 ( / ASSESSMENT YEAR : 2006-07) ACIT, CENTRAL CIRCLE - 38 ROOM NO. 32(1),GR. FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 / VS. SHRI N. RAVICHANDRAN 1/13, SANJIVANI DR. K.A. SUBRAMANIUM MARG MATUNGA, MUMBAI 400019 $ ' . / PAN : AABPN7069H ( ! $% / APPELLANT ) .. ( &'$% / RESPONDENT ) ! $% ( ) / APPELLANT BY : SHRI JEETENDRA KUMAR &'$% ( ) / RESPONDENT BY : S/S. S.K. MUTSADDI & RUTURAJ H. GURJAR * + ( , - / DATE OF HEARING : 24.11.2014 ./01 ( , - / DATE OF PRONOUNCEMENT : 24.11.2014 2 / O R D E R PER SHRI N.K. BILLAIYA: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A)-29, MUMBAI DATED 05.02.2013 PERTAINING TO AY 2006-07. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE CI T(A) ERRED IN DELETING THE ADDITION OF ` 72,88,710/-. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE EA RLIER ASSESSMENT TRAVELLED UPTO THE TRIBUNAL. THE TRIBUNAL, VIDE ORDER DATED 02.06. 2010, RESTORED THE MATTER TO THE AO, DIRECTING THE AO TO VERIFY WHETHER THE AMOUNT B ORROWED BY THE ASSESSEE WAS REPAID IN THE SUBSEQUENT YEAR AND IF FOUND REPAID T HEN ADDITION ONLY TO THE EXTENT OF NOTIONAL INTEREST ON THE INTEREST FREE ADVANCE SHOU LD BE MADE AS PERQUISITES IN THE HAND OF THE ASSESSEE. 4. THE AO STARTED FRESH ASSESSMENT PROCEEDINGS. HOW EVER, THE ASSESSMENT WAS COMPLETED BY FLAUNTING THE DIRECTIONS OF THE TRIBUN AL. INSTEAD OF FOLLOWING THE 2 DIRECTIONS OF THE TRIBUNAL THE AO PROCEEDED BY MAKI NG THE ADDITION ONCE AGAIN. THE AO WAS OF THE FIRM BELIEF THAT THE ASSESSEE COULD N OT SATISFACTORILY EXPLAIN THE SOURCE OF SOURCE FROM WHICH THE LOAN WAS REPAID. TH E CIT(A) DELETED THE ADDITION, AS IN HIS OPINION, THE AO HAS NOT FOLLOWED THE DIRECTI ONS OF THE HON'BLE TRIBUNAL. HOWEVER, THE CIT(A) RESTRICTED THE ADDITION TO THE AMOUNT OF INTEREST OF ` 7,11,290/-, WHICH IS REQUIRED TO BE TREATED AS PERQUISITES AS P ER THE DIRECTIONS OF THE TRIBUNAL. 5. AGGRIEVED REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. WE HAVE ALSO GONE THROUGH THE DIRECTIONS OF THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION. THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE AO WITH THE FOLLOWING OBSERVATIONS: - :WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MAT TER CAREFULLY. THE DISPUTE IS REGARDING ADDITION ON ACCOUNT OF ADVANCE RECEIVED BY THE ASSESSEE FROM THE EMPLOYER COMPANY. THE CASE OF THE ASSESSEE IS THAT THE AMOUNT WAS INTEREST FREE ADVANCE RECEIVED AS PER IN DUSTRIAL PRACTICE WHICH WAS DULY REFLECTED AS STAFF ADVANCE IN THE AUDITED ACCOUNTS. PART OF THE ADVANCE I.E. A SUM OF RS.50 LACS HAD BEEN RETUNED I N THE SUBSEQUENT YEAR. CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESSEE AND H AS CONFIRMED THE ADDITION ONLY TO THE EXTENT OF NOTIONAL INTEREST ON THE INTEREST FREE ADVANCE. THE GROUND OF THE APPEAL RAISED BY THE REVENUE SHOW S THAT THE REVENUE IS BASICALLY AGGRIEVED BY THE RELIEF GIVEN BY THE CIT( A) WITHOUT VERIFICATION OF REPAYMENT OF LOAN IN THE SUBSEQUENT YEAR HAS CLAIME D BY THE ASSESSEE. WE FIND THAT THIS CLAIM WAS NOT MADE BEFORE THE AO NOR ANY SUPPORTING MATERIAL WAS PLACED ON RECORD. WE THEREFORE RESTORE THIS ISS UE TO THE FILE OF THE AO FOR NECESSARY VERIFICATION. IN CASE THE AMOUNT RECEIVED BY THE ASSESSEE IS FOUND TO BE INTEREST FREE ADVANCE WHICH WAS REFUNDABLE TO THE COMPANY AND PART OF WHICH HAS ALSO REFUNDED IN THE SUBSEQUENT YEAR THEN ONLY THE INTEREST ON THE ADVANCE CAN BE ADDED IN CASE OF THE ASSESSEE AS HEL D BY THE CIT(A) AND NOT THE ADVANCE ITSELF. THE AO WILL PASS A FRESH ORDER AFTER NECESSARY VERIFICATION AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE AS SESSEE. 7. A PERUSAL OF THE DIRECTIONS OF THE TRIBUNAL CLEA RLY SHOWS THAT WHAT WAS DIRECTED WAS TO VERIFY THE REPAYMENT OF LOAN IN THE SUBSEQUENT YEAR. IN THE FRESH ASSESSMENT PROCEEDINGS THE AO DID VERIFY AND FOUND THAT ` 50 LAKHS HAVE BEEN REPAID BY THE ASSESSEE TO THE EMPLOYER. THE AO, INS TEAD OF FOLLOWING THE DIRECTIONS OF THE TRIBUNAL, WENT ON TO VERIFY THE SOURCE OF ` 50 LAKHS. THE AO DOES NOT HAVE THE LIBERTY TO GO OUTSIDE THE PURVIEW OF THE DIRECTIONS OF THE TRIBUNAL. THE AO WAS EMPOWERED ONLY TO VERIFY WHETHER THE LOAN AMOUNT WA S REPAID IN FUTURE. IT IS CLEAR THAT THE AO HAS FLAUNTED THE DIRECTIONS OF THE TRIB UNAL. THE CIT(A) HAS VERY RIGHTLY ALLOWED THE APPEAL FOLLOWING VERIFICATION OF THE RE PAYMENT OF LOAN AS PER THE 3 DIRECTION OF THE TRIBUNAL IN THE FIRST ROUND OF LIT IGATION. WE THEREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF THE CIT(A). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 3 1,4 ( ! 5 3 ( , 6 ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH NOVEMBER, 2014. . 2 ( ./01 * 5 7'4 24.11.2014 / ( <+ SD/- SD/- (VIJAY PAL RAO) (N.K. BILLAIYA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER * '+ MUMBAI; 7' DATED: 24 TH NOVEMBER, 2014 N.P. ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! $% / THE APPELLANT 2. &'$% / THE RESPONDENT. 3. * =, ( ! ) / THE CIT(A)-30, MUMBAI 4. * =, / CIT, 19, MUMBAI 5. @< &,AB , ! - !AB 1 , * ' + / DR, ITAT, MUMBAI 6.