MAHAVEER YARMS P.LTD, MUMBAI V. ACIT 9(2), MUMBAI

ITA 3712/MUM/2010

• Counselvise Citation: 371219914 RSA 2010
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V SAMPATHKUMAR
• Assessee Lawyers: SUNIL BOHRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 3712/MUM/2010 (ASSESSMENT YEAR: 2005-06) M/S. MAHAVEER YARNS P. LTD. ACIT, RANGE 9(2) 1ST FLOOR, JBF HOUSE 2ND FLOOR, AAYAKAR BHAVAN 13 OLD POST OFFICE LNE, KALBADEVI VS. M.K. ROAD, MUMBAI 400020 ROAD, MUMBAI 400002 PAN - AADCM 6764 B APPELLANT RESPONDENT APPELLANT BY: SHRI SUNIL BOHRA RESPONDENT BY: SHRI K.V. SAMPATH KUMAR O R D E R PER R.S. SYAL, A.M. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 08.02.2010 UPHOLDING THE PENALTY OF ` 1,01,774/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE AC T IN RELATION OF A.Y. 2005- 06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AMOUN T OF LOANS APPEARING IN THE ASSESSEES BALANCE SHEET TOTALLED ` 36,94,085/-, WHICH IN THE OPINION OF THE A.O. WERE OUT OF BORROWED FUNDS. SO CONSIDER ING THE TOTAL AMOUNT OF LOANS AND ADVANCES (INTEREST FREE ` 36.94 LAKHS VIS-A-VIS TOTAL BORROWED FUNDS AT ` 2,30 CORES), THE A.O. WORKED OUT THE RATIO OF TOTA L LOANS AND ADVANCES TO THE TOTAL BORROWED FUNDS AT ` 11.54%. BY APPLYING THIS PERCENTAGE HE WORKED OUT THE AMOUNT OF INTEREST DISALLOWABLE AT RS.2,78, 125/-. AGAINST SUCH ADDITION HE ALSO IMPOSED PENALTY UNDER SECTION 271( 1)(C) AT ` 1,01,774/-. THE LEARNED CIT(A) UPHELD THE PENALTY. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE RELEVANT MATERIAL ON RECORD IT IS NOTICED THAT THE ASSESSEE MADE A CLAIM FOR DEDUCTION OF INTEREST, WHICH WAS NOT FOUND BY THE A.O. TO BE DEDUCTIBLE IN FULL. THE FACTS OF THE CASE ARE IN PARI MATERIAL WITH THOSE O F THE HONBLE SUPREME ITA NO. 3712/MUM/2010 M/S. MAHAVEER YARNS P. LTD. 2 COURT IN CIT VS. RELIANCE PETRO PRODUCTS P. LTD (20 10) 322 ITR 158 (SC), IN WHICH IT HAS BEEN HELD THAT A MERE MAKING OF A CLAI M, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT ATTRACT PENA LTY UNDER THIS SECTION. IN THAT CASE ALSO PENALTY WAS IMPOSED QUA THE DISALLOWANCE OF CERTAIN INTEREST EXPENDITURE. RESPECTFULLY FOLLOWING THE RATIO OF RELIANCE PETRO PRODUCTS P. LTD (SUPRA), WE ORDER FOR DELETION OF THE PENALTY. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MAY 2011. SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27 TH MAY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XX, MUMBAI 4. THE CIT IX, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.