VELVET HOLDINGS P. LTD, MUMBAI V. DCIT C EN CIR 31, MUMBAI

ITA 3619/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7259 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 11-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 03-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR DANIEL
• Keywords: Business income; Depreciation
• Section: 234B; 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI T.R. SOOD (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO.3619/MUM/2009 ASSESSMENT YEAR-2006-07 M/S. VELVET HOLDINGS PVT. LTD., 32,MADHULI, DR. A.B. ROAD, WORLI, MUMBAI-400 018 PAN-AAACV 4445R VS. THE DCIT, CC 31, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VIJAY MEHTA RESPONDENT BY: DR. DANIEL O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DT. 20.3.2009 PASSED BY THE LD. CIT(A)-C-IV, MUMBAI FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS NOT PRESSED GROUND NOS. 1, 2, 3 & 5. THEREFORE IT IS DISMISSED AS NOT PRESSED. 3. GROUND NO. 4 RAISED BY THE ASSESSEE READS AS FOL LOWS: THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CO NFIRMING DISALLOWANCE ON ACCOUNT OF INTEREST EXPENSE AMOUNTI NG TO RS. 10,81,205/-. 4. THE FACTS OF THE CASE ARE THAT THE AO STATED IN HIS ORDER THAT IN THE P&L ACCOUNT, ASSESSEE HAS DEBITED RS. 11590138/-BEI NG PROVISION FOR INTEREST ON LOANS. THIS HAS BEEN BIFURCATED INTO INTEREST ON LOAN FOR INVESTMENTS RS. 10508933 AND INTEREST ON LOAN FOR T ERM DEPOSIT RS. ITA NO.3619 /M/09 2 1081205/- AS INTEREST ON BUSINESS LOAN. WHILE NO C LAIM IS MADE ON INTEREST ON LOAN FOR INVESTMENTS, THE ASSESSEE HAS CLAIMED INTEREST ON LOAN FOR TERM DEPOSITS OF RS. 1081205, AGAINST THE TERM DEPOSIT INTEREST INCOME OF RS. 5129429. SIMILARLY, THE ALLEGED INTE REST ON LOAN FOR THE BUSINESS IS CLAIMED IN THE COMPUTATION OF BUSINESS INCOME. THE AO REJECTED THE ASSESSEES CLAIM FOR DEDUCTION OF INTE REST FOR THE FOLLOWING REASONS: A) AS PER RECORDS, AS ON 8.6.92, WHEN THE APPELLANT WAS NOTIFIED UNDER THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT, 1992, THE SPECIAL AUDITORS APPOINTED BY THE SPECIAL COURT IN THEIR REPORT, CAT EGORICALLY STATED THAT THE LOANS TAKEN FROM DIRECTORS ARE INTE REST FREE AND THERE IS NO TERMS OR CONDITION TO PAY INTEREST TO THE CREDITORS FOR INVESTMENT. B) AS REGARDS THE CLAIM OF THE CUSTODIAN, THE HONB LE SPECIAL COURT HAS NOT GIVEN ITS FINAL VERDICT ON TH E ISSUE, EITHER ON THE CHANGING OF INTEREST OR THE RATE AT W HICH IT IS TO BE CHARGED. 5. THE INTEREST LIABILITY NOW CLAIMED AGAINST THE T ERM DEPOSIT INTEREST IS, THEREFORE A CONTINGENT LIABILITY. FURTHER, THE RE IS NO DIRECT NEXUS BETWEEN THE TERM DEPOSITS AND THE LOANS TAKEN BY TH E APPELLANT FROM THE DIRECTORS. IN VIEW OF THIS, THE INTEREST CLAIM OF RS. 1081205, AGAINST THE INTEREST ON TERM DEPOSIT IS DISALLOWED. 6. BEFORE THE LOWER AUTHORITIES, THE LD. AR SUBMITTED AS FOLLOWS: WITH REFERENCE TO THE INTEREST EXPENSES, THE ASSESS EE HAS DEBITED INTEREST EXPENSE OF RS. 1,05,08,933/-. OUT OF THIS, INTEREST EXPENSES OF RS. 10,81,205/- IS APPORTIONED TO INTEREST INCOME ON FDR. THE ASSESSEE HAS APPORTIONED THE IN TEREST ON PRO RATA BASIS. THE APPORTIONED AMOUNT OF INTEREST IS CLAIMED AGAINST THE INTEREST ON TERM DEPOSIT BY THE ASSESSE E. THE ASSESSEE IS ALSO ENTITLED TO CLAIM THE DEDUCTION ON ACCOUNT OF INTEREST PAYABLE TO THE CREDITORS. THE ASSESSEE HA S BEEN PAYING INTEREST ON THE AMOUNTS BORROWED BY HIM TO L ENDERS. THE FUNDS HAVE BEEN BORROWED FOR PURCHASE OF ASSETS BOTH MOVABLE AND IMMOVABLE. THE MOVABLE ASSETS PRIMARIL Y ITA NO.3619 /M/09 3 COMPRISE OF SHARES. THE ASSESSEE HAS ALSO PAID FOR THESE SHARES EITHER BY BORROWING MONEY OR HAS BEEN EXTEND ED CREDIT BY THE THREE BROKERAGE FIRMS OF M/S, HARSHAD S. MEH TA, M/S. ASWIN S. MEHTA AND M/S. J.H. MEHTA, WHO HAVE PURCHA SED SHARES ON BEHALF OF THE ASSESSEE BUT THE ASSESSEE H AS NOT MADE PAYMENT FOR THE SAME. THUS THE MONIES BORROWE D BY THE ASSESSEE ARE DEPLOYED COMPLETELY FOR THE PURPOS E OF ACQUIRING THE ASSETS AND THEREFORE THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF EXPENDITURE OF INTEREST. THE OFFI CE OF THE CUSTODIAN HAS SOLD SOME SHARES AND EXCESS MONEY IN BANK IS INVESTED IN FIXED DEPOSIT WITH VARIOUS BANKS AS PER THE ORDER OF THE SPECIAL COURT. THE ASSESSEE STATES THAT REC ENTLY THE CUSTODIAN IN ITS MISC. PETITION NO. 41 OF 1999 HAS CHARGED INTEREST ON THE ASSESSEE AT THE RATE OF 15% AND 18% PER ANNUM. THE COPY OF THE SAID AFFIDAVIT IS ALSO AVAI LABLE BEFORE YOUR GOODSELF SINCE THE HONBLE CIT IS PARTY TO THE PROCEEDINGS. EVEN IN THIS VIEW OF THE MATTER, THE ASSESSEE IS ENTITLED TO A DEDUCTION ON ACCOUNT OF INTEREST. 7. ON APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE STATE D THAT IN CASE THE HONBLE SPECIAL COURT ORDERS PAYMENT OF INTERES T GREATER THAN 12% P.A. THEN THE APPELLANT WOULD BE ENTITLED TO CLAIM IT AS AN EXPENSE AND REVISE THE INCOME COMPOSITION STATEMENT BY CLAIMING THE ACTUAL INTEREST AWARDED BY THE HONBLE COURT. 8. THE ASSESSEE FURTHER SUBMITTED THAT THE DEPARTMENT HAS ALLOWED SUCH INTEREST EXPENDITURE FOR THE EARLIER ASSESSMEN T YEARS (A.Y. 1990-91) IN M/S. GROWMORE LEASING & INVESTMENT LTD. (ONE OF THE GROUP COMPANIES) AND IS NOW THEREFORE STOPPED FROM DISALL OWING THE SAME AS IT WOULD BE INCONSISTENT WITH THE STAND ALREADY TAKEN. THE ASSESSEE PRAYED THAT THEY ARE ENTITLED TO THE GENUINE EXPENS E OF INTEREST, WHICH IS WITHIN THE PROVISIONS OF LAW. 9. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CONSIDERED THE SUBMISSION OF THE AR. THE C LAIM FOR INTEREST MADE IS FOUND TO BE UNACCEPTABLE. THE BUS INESS ASSETS OF THE APPELLANT STANDS ATTACHED AND THEREFO RE THE APPELLANT CANNOT TRADE THEREIN. AS SUCH, IN RESPEC T OF SHARES ITA NO.3619 /M/09 4 ATTACHED BY THE COURT, THE APPELLANT CANNOT BE SAID TO HAVE CARRIED OUT ANY BUSINESS AFTER THE DATE OF NOTIFICA TION. IN REALITY ALSO APPELLANT HAS NOT DONE ANY BUSINESS EI THER BY WAY OF SHARES TRADING OR ANY OTHER ACTIVITY IN THE LAST FIFTEEN YEARS. IT IS THEREFORE MANIFESTLY CLEAR THAT THERE IS NO BUSINESS AND HENCE THE QUESTION OF ALLOWING BUSINES S EXPENDITURE DOES NOT ARISE. BESIDES, THE LIABILITY ON ACCOUNT OF INTEREST PAYABLE IS ALSO NOT A QUANTIFIED LIABILITY . THE AMOUNT OF INTEREST PAYABLE AS WELL AS RECEIVABLE BY THE AP PELLANT IS THE SUBJECT MATTER OF DISPUTE BEFORE THE HONBLE SP ECIAL COURT AND THE LIABILITY CAN BE SAID TO ACCRUE ONLY WHEN T HE COURT DECIDES THE ISSUE. TILL THEN THE LIABILITY, IF ANY , IS A CONTINGENT LIABILITY, WHICH IS NOT ALLOWABLE AS A DEDUCTION. THE GROUND OF APPEAL FAILS. 10. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSES SEE PREFERRED AN APPEAL BEFORE US. 11. WE HEARD BOTH THE PARTIES. 12. IN THE CASE OF M/S. ORION TRAVELS PVT. LTD. IN ITA NOS. 6888 & 6889/M/08, THE MATTER HAS BEEN DEALT AS FOLLOWS: THE FACTUAL POSITION IN THIS CASE IS ALSO IDENTICA L WITH THE CASE OF M/S. AATUR HOLDINGS PVT. LTD. (SUPRA). FOLLOWING THE RAT IO OF THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF M/S AATUR HOLDINGS PVT. LTD. UNDER IDENTICAL CIRCUMSTANCES, WE DEEM IT FIT TO REMAND T HE CLAIM OF EXPENDITURE BY THE ASSESSEE BY WAY OF INTEREST, AUDIT FEES AND DEPRECIATION IN GROUNDS 5,6,7, BACK TO C.I.T (A) FOR FRESH CONSIDER ATION. RESPECTFULLY FOLLOWING THE ABOVE MENTIONED DECISIO N IN THE CASE OF M/S. AATUR HOLDINGS PVT. LTD. AND M/S. ORION TRAVEL S PVT. LTD. WE REMIT THE ISSUE OF INTEREST BACK TO THE LD. CIT(A) FOR FR ESH CONSIDERATION. 13. GROUND NO. 6 RAISED BY THE ASSESSEE READS AS FO LLOWS: THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CO NFIRMING CALCULATION OF BOOK PROFIT U/S. 115JB AMOUNTING TO RS. 51,17,664/-. 14. THE LD. CIT(A) HELD AS FOLLOWS: ITA NO.3619 /M/09 5 THE LD. AR SUBMITS THAT THE AO HAS INCORRECTLY HEL D THE INTEREST EXPENSES TO BE AN UNASCERTAINED LIABILITY. IT IS THEREFORE PRAYED THAT INTEREST CANNOT BE DISALLOWED WHILE COMPUTING THE BOOK PROFIT IN ACCORDANCE WITH SEC. 1 15JB OF THE ACT. I HAVE CONSIDERED THE FACTS OF THE CASE AS ALSO THE ARGUMENTS OF THE LD. AR. IT MAY BE POINTED OUT THAT FOR THE PURPOSE OF COMPUTING BOOK PROFITS U/S. 115JB OF THE ACT, AN AS SESSEE IS REQUIRED TO PREPARE ITS ACCOUNTS AS PER PART II AND III OF SCH. VI TO THE COMPANIES ACT, 1956, WHICH IS NOT SO IN THE APPELLANTS CASE, AS IS EVIDENT FROM THE FACT THAT IT HAS NOT F ILED THE AUDITED ACCOUNTS TOGETHER WITH ITS RETURN OF INCOME . SUCH A STRUCTURAL INFIRMITY, AT THE VERY OUTSET, ERODES TH E CREDIBILITY OF THE FIGURES ON THE BASIS OF WHICH THE APPELLANT SEEKS TO CHALLENGE THE AOS CONTENTIONS. FOR REASONS STATED IN PARA ABOVE, I HAVE ALREADY HE LD THE INTEREST, AS CLAIMED TO BE PAYABLE BY THE APPELLANT , AS NOT A QUANTIFIED LIABILITY. THERE IS A CLOUD OF DOUBT OV ER THE APPELLANTS CLAIM FOR INTEREST, WHICH UNCERTAINTY H AS NOT BEEN CATEGORICALLY DISPELLED BY THE HONBLE SPL. COURT. THE APPELLANTS CLAIM FOR INTEREST THEREFORE CONSTITUTE S AN UNASCERTAINED LIABILITY, WHICH IN OTHER WORDS IS NO T AN ASCERTAINED LIABILITY, AS REFERRED TO IN CLAUSE (C) OF EXPLANATION 1 TO SEC. 115JB OF THE ACT. THE INTEREST CLAIM AMO UNT OF RS. 1081205, HAS, THEREFORE BEEN CORRECTLY ADDED BACK T O THE BOOK PROFITS OF THE APPELLANT BY THE AO. AUDIT FEE S TOO HAS BEEN HELD AS A CONTINGENT LIABILITY BY ME. I DIREC T THE AO TO RECOMPUTE THE BOOK PROFITS OF THE APPELLANT IN THE LIGHT OF THE AFORESAID DISCUSSION. 15. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSES SEE PREFERRED AN APPEAL BEFORE US. 16. WE HEARD BOTH THE PARTIES. 17. WE FIND THIS ISSUE IS COVERED BY THE DECISION I N THE CASE OF ORION TRAVELS PVT. LTD., IN ITA NOS. 6888 & 6889/M/08 IN WHICH IT HAS BEEN HELD AS UNDER: ITA NO.3619 /M/09 6 AS REGARDS GROUND NO 8, REGARDING COMPUTATION OF B OOK PROFITS U/S 115JB, WE FIND THAT THE ASSESSEE HAS BE EN TAXED UNDER THE NORMAL PROVISIONS OF THE ACT AND NOT ON THE BOO K PROFITS U/S 115JB. IN THE CIRCUMSTANCES WE ARE NOT CONSIDERING THIS ISSUE AND DISMISS THE APPEAL ON THIS ISSUE AS INFRUCTUOUS WIT H A DIRECTION THAT IN CASE THE ASSESSEE AT A LATER STAGE IS ASSESSED O N THEIR BOOK PROFITS U/S 115JB, IT WILL BE OPEN FOR THE ASSESSEE TO RAISE THESE CONTENTIONS AT THAT TIME. 18. GROUND NO. 7 RAISED BY THE ASSESSEE READS AS FO LLOWS: THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN NO T APPRECIATING THAT THE INTEREST CHARGED U/S. 234A, 2 34B AND 234C OF THE ACT ARE INCORRECT. 19. WITH RESPECT TO THIS GROUND THE TRIBUNAL IN THE CASE OF M/S. ORION TRAVELS PVT. LTD., HAS HELD AS FOLLOWS: AS REGARDS THE LAST GROUND NO 9, REGARDING THE LEVY OF INTEREST UNDER SEC 234A, 234B AND 234C, THE ASSESSEE IS A NO TIFIED PERSON UNDER THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT, 1992 AND ALL ITS ASSETS INCLUDING BANK ACCOUNTS WERE ATTACHED AND VESTED IN THE HANDS OF THE CUSTODIAN A PPOINTED UNDER THE SAID ACT. FROM THE DATE OF FUNCTIONING OF THE C OURT I.E., 1.6.1992, THE DISTRIBUTION OF MONIES IN CASE OF NOTIFIED PERS ONS WILL BE DECIDED BY THE SPECIAL COURT. THE TAXES DO NOT HAVE THE PRI ORITY IN SETTLEMENT. EVEN IF A NOTIFIED PERSON HAD WANTED TO PAY THE ADVANCE TAX IT WAS NOT WITHIN HIS CONTROL TO DO SO. HE HAS TO MAKE AN APPLICATION TO THE CUSTODIAN AND ONLY HE CAN PERMIT PAYMENT OF ADVANCE TAX AFTER OBTAINING APPROVAL FROM THE SPECI AL COURT. THE SPECIAL COURT IN ITS RULING HAS OBSERVED AS UNDER: WHERE A NOTIFIED PARTY IS PREVENTED BY REASON OF NOTIFICATION, FROM DOING THINGS WHICH ARE REQUIRED TO BE DONE BY HIM UNDER OTHER ACTS OR CONTRACTS. IN SUCH CASE S, IF THE PROVISION OF THE SPECIAL COURTS ACT PREVENTS A NOTI FIED PARTY FROM DOING THAT THING, THEN BY REASON OF THIS LEGAL DISABILITY, NO PENALTY OR INTEREST CAN BE LEVIED ON THAT PARTY. THUS NO PENALTY OR INTEREST CAN BE IMPOSED FOR NON-FULFILLM ENT OF AN ACT WHICH A NOTIFIED PARTY IS PREVENTED FROM DOING BY R EASON OF THE SPECIAL COURT ACT. IN SUCH CASES EVEN THOUGH T HE PROVISIONS OF SOME OTHER ACT OR CONTRACT LAY DOWN CONSEQUENCES FOR NON-PERFORMANCE, THE PROVISIONS OF THE SPECIAL COURTS ACT WILL PREVAIL. THIS IS BECAUSE I N SUCH CASES ITA NO.3619 /M/09 7 THERE WOULD BE A CONFLICT BETWEEN THE PROVISIONS OF THE SPECIAL COURTS ACT AND THAT OTHER LAW AND/OR CONTRACT. IN CASES OF SUCH CONFLICT, THE PROVISIONS OF THE SPECIAL COURT ACT MUST PREVAIL. TO TAKE AN EXAMPLE, UNDER SECTION 234B OF THE INCOME TAX ACT, EVERY ASSESSEE IS LIABLE TO PAY ADV ANCE TAX. ALL PARTIES WERE NOTIFIED BETWEEN JUNE 1992 TO AUGU ST 1992. ALL OF THEM WOULD BE LIABLE TO ADVANCE TAXES FOR TH E FINANCIAL YEAR ENDING MARCH 1993 AND FOR THE SUBSEQUENT YEARS , HOWEVER AS SEEN EARLIER, TAXES ONLY UPTO ASSESSMENT YEAR 1992-93 CAN BE PAID IN PRIORITY. THESE WOULD HAVE TO RANK AS ORDINARY DEBTS UNDER SECTION 11(2)(C ). THIS THERE FORE CAN ONLY BE RELEASED AFTER THE ENTIRE DISTRIBUTION HAS TAKEN PLACE. EVEN IF THE NOTIFIED PARTY WERE TO MAKE AN APPLICATION T O THIS COURT TO PAY THE ADVANCE TAX, THE COURT WOULD REFUSE IT. THUS MONIES FOR PAYMENT OF ADVANCE TAX HAVE NOT BEEN REL EASED. THUS A NOTIFIED PARTY HAS BEEN PREVENTED FROM PAYIN G ADVANCE TAX. THUS, UNDER THE SPECIAL COURTS ACT, T HERE IS A LEGAL DISABILITY TO PAY ADVANCE TAX. YET UNDER THE INCOME TAX ACT THERE IS A COMPULSION TO PAY ADVANCE TAX. THER E IS A CONFLICT BETWEEN THE PROVISIONS OF THE SPECIAL COUR TS ACT AND THE INCOME TAX ACT. THE PROVISIONS OF THE SPECIAL COURTS ACT MUST PREVAIL. UNDER THE INCOME TAX ACT IF ADVANCE TAX IS NOT PAID, FOR SUCH NON-PAYMENT INTEREST CAN BE LEVIED. THIS OBVIOUSLY ON THE FOOTING THAT THE ASSESSEE IS IN DE FAULT. HOWEVER A NOTIFIED PARTY, HAS BEEN PREVENTED BY LAW FROM PAYING ADVANCE TAX. HE IS NOT A DEFAULTING PARTY. HE NEITHER HAS NOT PAID ADVANCE TAX BECAUSE OF LEGAL RESTRAINT ON HIM. THE LAW HAS PREVENTED HIM FROM PAYING ADVANCE TAX. IN MY VIEW, IN SUCH CASES, I.E. WHERE THERE IS A CONFLICT BETWEEN THE PROVISIONS OF THE SPECIAL COURTS ACT AND SOME OTHER ACT/CONTRACT, THE CONTRARY PROVISIONS MUST NECESSAR ILY GIVE WAY. IF THERE IS THIS LEGAL DISABILITY, THEN THERE IS NO THE QUESTION OF THE NOTIFIED PARTY BEING FOISTED WITH T HE LIABILITY TO PAY INTEREST AND/OR PENALTY. IN THE BACKDROP OF THE ABOVE, IT WAS IMPOSSIBLE FOR THE ASSESSEE TO HAVE PAID THE ADVANCE TAX EVEN IF HE HA D WANTED TO. IT IS A WELL KNOWN LEGAL DICTUM LEX NON COGITAD IMOSS IBILIA (LAW CANNOT COMPEL YOU TO DO THE IMPOSSIBLE). ASSES SEE CANNOT THEREFORE BE FOISTED WITH INTEREST LIABILITY U/S 23 4A, 234B AND 234C. INTEREST U/S 234B AND 234C ARE DIRECTLY RELATED TO PAYMENT OF ADVANCE TAX AND HENCE IS NOT LEVIABLE ON NOTIFIED P ERSONS. EVEN THOUGH LEVY OF INTEREST U/S 234A IS REALLY ON THE D ELAY IN FILING THE RETURN WHICH IS A DEFAULT COMMITTED BY THE ASSESSEE , THE QUANTIFICATION OF THE SAME DEPENDS ON THE ADVANCE T AX PAID WHICH, IN THIS CASE, IS NOT WITHIN THE CONTROL OF THE ASSE SSEE. HENCE INTEREST ITA NO.3619 /M/09 8 U/S 234A CANNOT ALSO BE LEVIED IN THE CASE OF A PER SON A NOTIFIED PERSON UNDER THE SPECIAL COURT (TRIAL OF OFFENCES R ELATING TO TRANSACTIONS IN SECURITIES) ACT, 1992 AND ALL ITS A SSETS INCLUDING BANK ACCOUNTS WERE ATTACHED AND VESTED IN THE HANDS OF THE CUSTODIAN APPOINTED UNDER THE SAID ACT. . THE CO-ORDINATE BENCH IN THE CASE OF DIVINE HOLDI NGS PVT. LTD V DCIT IN ITA NO180/M/2000 DT. 26.6.2001 HAS HELD THA T CIT(A) IS RIGHT IN ADMITTING THE APPEAL OF A NOTIFIED PERSON EVEN THOUGH THE TAX ON THE RETURNED INCOME HAS NOT BEEN PAID BY HIM. IN COMING TO THIS CONCLUSION THEY HAD RELIED ON THE ABOVE PASSAGE OF THE SPECIAL COURT. IN THE CIRCUMSTANCES, WE DIRECT THAT INTEREST U/S 2 34A, 234B AND 234C SHOULD NOT BE LEVIED ON THE ASSESSEE FOR T HE ASSESSMENT YEAR UNDER APPEAL. RESPECTFULLY FOLLOWING THE ABOVE, WE DIRECT THAT I NTEREST U/S. 234A, 234B AND 234C SHOULD NOT BE LEVIED ON THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER APPEAL. 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 24 TH DAY OF MARCH, 2010 SD/- SD/- (T.R. SOOD) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED 24 TH MARCH, 2010 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO.3619 /M/09 9 DATE INITIALS 1 DRAFT DICTATED ON: 22.3.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 22 . 3 .2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______