SAMETA EXPORTS P. LTD, MUMBAI V. ACIT CIR 1(3), MUMBAI

ITA 4229/MUM/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4247 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-04-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 25-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEELIMA V NADKARNI
• Assessee Lawyers: K P KAPADIA
• Keywords: Additional evidence; Commercial expediency
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.4229/MUM /2010 ASSESSMENT YEAR-2004-05 M/S SAMETA EXPORTS PVT. LTD. 4 TH FLOOR, N.K. MEHTA INTERNATIONAL HOUSE, 178, BACKBAY RECLAMATION, MUMBAI-400020 / VS. ACIT, CIRCLE-1(3), ROOM NO.540/564, 5 TH FLOOR AAYAKAR BHAVAN, MUMBAI-400020 PAN NO. AARCS4409H ( / ASSESSEE) ( / REVENUE) ITA NOS.4251 & 4252/MUM /2010 ASSESSMENT YEARS-2006-07 & 2004-05 ACIT, CIRCLE-1(3), ROOM NO.540/564, 5 TH FLOOR AAYAKAR BHAVAN, MUMBAI-400020 / VS. M/S SAME TA EXPORTS PVT. LTD. 4 TH FLOOR, N.K. MEHTA INTERNATIONAL HOUSE, 178, BACKBAY RECLAMATION, MUMBAI-400020 PAN NO. AARCS4409H ( / REVENUE) ( / ASSESSEE) ITA NO.4229, 4251 & 4252/MUM/2010 M/S SAMETA EXPORTS PVT. LTD. 2 / REVENUE BY MRS. NEELIMA V. NADKARNI- DR / ASSESSEE BY SHRI K.P. KAPADIA / DATE OF HEARING : 07/04/2016 / DATE OF ORDER: 07/04/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS THE REVENUE IS IN CROSS APP EAL FOR ASSESSMENT YEAR 2004-05, WHEREAS, THE REVENUE I S IN APPEAL FOR A.Y. 2006-07 AGAINST THE RESPECTIVE ORDE RS OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE S HALL TAKE UP ITA NO.4229/MUM/2010), WHEREIN, ONLY GROUND AGITATED BY THE ASSESSEE PERTAINS TO CONFIRMING THE ADDITION OF RS.1,65,57,583/-, MADE U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE CRUX OF ARGUMENT ADVANCED BY SHRI K.P. KAPADIA, LD. COUNSEL FOR THE ASSESSEE IS THAT THE PREDECESSORS COMMISSIONER OF THE PRESENT COMMISSIONER OF INCOME TAX (APPEAL) HAD ALREADY ASK ED FOR REMAND REPORT AND THE NECESSARY DETAILS WERE DULY SUBMITTED BY THE ASSESSEE IN THE REMAND PROCEEDINGS , BUT THE LD. FIRST APPELLATE AUTHORITY CANCELED THE SAID REMAND ON TECHNICAL GROUNDS. ON THE OTHER HAND, THE LD. D R, MS. NEELIMA V. NADKARNI, DEFENDED THE IMPUGNED ORDER BY ITA NO.4229, 4251 & 4252/MUM/2010 M/S SAMETA EXPORTS PVT. LTD. 3 CONTENDING THAT NECESSARY DETAILS WERE NOT FURNISHE D BY THE ASSESSEE. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OB SERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION M ADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY TH E LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, WE NOTE THAT THE LD. ASSESSING OFFICER MADE ADDITIO N OF RS.1,65,57,583/- ON ACCOUNT OF SUNDRY CREDITORS AS UNEXPLAINED BY THE ASSESSING OFFICER. WITHOUT GOING INTO MUCH DELIBERATION, WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEAL) HAS DISCUSSED THE ISSUE AT PAGE -4 (PARA-4). THE ADDITION WAS MADE ON THE PLEA THAT T HE NECESSARY DETAILS WITH RESPECT TO SUNDRY CREDITORS WERE NOT FILED BY THE ASSESSEE. THE ADDITIONAL EVIDENCE FIL ED BY THE ASSESSEE UNDER RULE-46A WAS REJECTED. FROM PARA 15 OF THE IMPUGNED ORDER, THE CONTENTION OF THE ASSESSEE HAS BEEN NOTED THAT HUGE LOSSES WERE INCURRED BY THE AS SESSEE, THEREFORE, ADDITION SHOULD NOT BE SUSTAINED. ON THI S REASONING, THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE, DURING APPELLATE PROCEEDINGS, COULD NOT B E ACCEPTED. WITHOUT COMMENTING MUCH, WE ARE OF THE VI EW THAT NO PERSON SHOULD BE CONDEMNED UNHEARD. EVEN OTHERWISE, THE MANDATE OF ARTICLE 265 OF CONSTITUTI ON OF INDIA IS TO LEVY AND COLLECT DUE TAXES. CONSIDERING THE TOTALITY OF FACTS, WE DIRECT THE LD. ASSESSING OFFI CER TO ITA NO.4229, 4251 & 4252/MUM/2010 M/S SAMETA EXPORTS PVT. LTD. 4 EXAMINE THE CLAIM OF THE ASSESSEE AND THEN DECIDE I N ACCORDANCE WITH LAW, THUS, THE APPEAL OF THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSE ONLY. NEEDLESS TO M ENTION HERE, THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HE ARD WITH FURTHER LIBERTY TO FURNISH NECESSARY EVIDENCE, IF A NY, TO SUBSTANTIATE ITS CLAIM. 3. NOW, WE SHALL TAKE UP THE CROSS APPEAL OF THE REVENUE (ITA NO.4252/MUM/2010) (ASSESSMENT YEAR 200 4- 05). THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE ASSESSEE HAS NOT PROVED THAT STRATEGIC INVESTME NT WAS MADE OR NOT, THEREFORE, THE STAND OF THE COMMISSION ER OF INCOME TAX (APPEAL) MAY BE REVERSED. THE LD. COUNSE L FOR THE ASSESSEE DEFENDED THE CONCLUSION IN THE IMPUGNE D ORDER AND PLACE RELIANCE UPON THE DECISION FROM HON BLE BOMBAY HIGH COURT IN CIT VS M/S PHIL CORPORATION LT D. GOA (2011-TIOL-432-HC-MUM-IT); TAX APPEAL NO.57 OF 2002, ORDER DATED 18/06/2011. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDER ING THE TOTALITY OF FACTS, WE FIND THAT THE HONBLE HIGH CO URT ON THE ISSUE WHETHER WHEN THE ASSESSEE BORROWS FUNDS AND I NVEST IN THE SISTER CONCERN FOR ACQUISITION OF SHARES, TH E INTEREST PAYABLE ON THE BORROWED MONEY IS ELIGIBLE FOR DEDUC TION. HOWEVER, WE FIND THAT THERE IS NO FINDING EITHER IN THE ASSESSMENT ORDER OR IN THE IMPUGNED ORDER WHETHER T HE ASSESSEE MADE STRATEGIC INVESTMENT OR NOT. NO SUCH PROOF ITA NO.4229, 4251 & 4252/MUM/2010 M/S SAMETA EXPORTS PVT. LTD. 5 WAS ALSO FILED BEFORE US. THEREFORE, WE DIRECT THE ASSESSEE TO PROVE WITH NECESSARY EVIDENCE THAT STRATEGIC INVEST MENT WAS MADE IN THE SISTER CONCERN IN THE INTEREST OF BUSINESS/COMMERCIAL EXPEDIENCY AND THE LD. ASSESSIN G OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE ASS ESSEE AND THEN DECIDE IN ACCORDANCE WITH LAW. THE LD. ASSE SSING OFFICER MAY CONSIDER THE DECISION FROM HONBLE APEX COURT IN S.A. BUILDERS LTD. 288 ITR 1 (SC), CIT VS AMRITA BEN R. SHAH 238 ITR 777, ALONG WITH OTHER CASES, IF ANY. T HIS APPEAL OF THE REVENUE IS ALSO ALLOWED FOR STATISTIC AL PURPOSES. 4. NOW, WE SHALL TAKE UP THE APPEAL OF ASSESSMENT YEAR 2006-07 (ITA NO.4251/MUM/2010), WHEREIN, ISSUE OF DELETING THE DISALLOWANCE OF INTEREST OF RS.1,44,33 ,383/-, BEING THE INTEREST ON BORROWED FUNDS ADVANCED TO SI STER CONCERN FOR ACQUIRING CONTROL OVER CORPORATE ENTITI ES UNDER THE PUBLIC DOMAIN HAS BEEN CHALLENGED. THE LD. DR ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE ABOVE GROUND. CONSIDERING THE TOTALITY OF FACTS, WE ARE O F THE VIEW, THAT THIS ISSUE ALSO REQUIRE DUE EXAMINATION AT THE LEVEL OF THE ASSESSING OFFICER, THEREFORE, WE DIRECT THE ASS ESSEE TO PRODUCE THE EVIDENCE OF CLAIM AND THE FACTUM THAT T HE INTEREST ON BORROWED FUNDS WAS ADVANCED TO SISTER C ONCERN FOR COMMERCIAL EXPEDIENCY, AS HAS BEEN CLAIMED. THE LD. ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSES SEE AND THEN DECIDE IN ACCORDANCE WITH LAW, THUS, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.4229, 4251 & 4252/MUM/2010 M/S SAMETA EXPORTS PVT. LTD. 6 FINALLY, THE APPEAL OF THE ASSESSEE AS WELL AS OF T HE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 07/04/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 07/04/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI