ITO, Ward-11(2), Hyderabad V. M/s. Lakshmi Srinivasa Finance Corporation, Secunderabad

ITA 426/HYD/2011

• Counselvise Citation: 42622514 RSA 2011
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 16-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: S RAMA RAO
• Section: 68; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.426/HYD/11 : ASSESSMENT YEAR 2004 - 05 INCOME TAX OFFICER, WARD 11(2), HYDERABAD V/S. M/S. LAXMI SRINIVASA FINANCE CORPORATION, SECUNDERABAD. (PAN - AABFL 3306 R) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI RAJAT MITRA DR RESPONDENT BY : SHRI S.RAMA RAO DATE OF HEARING 11 .0 9 .2014 DATE OF PRONOUNCEMENT 17.09.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) VI, HYDERABAD DATED 30.11.2010 AND THE GRIEVANCE OF THE REVENUE IS PROJECTED IN THE FOLLOWING GROUNDS RAISED THEREIN - 1. THE ORDER O F THE CIT( A) IS ERRONEOUS IN LAW AND ON FACTS. 2. THE CIT(A) ERRED IN ALLOWING THE INTERE S T ON CALL DEPOSITS AMOUN T IN G TO RS.32.97 LAKH S SIN C E THE ADDITION U/ S . 6 8 I N RESPECT OF CALL DEPOSITS WAS DISALLO W ED IN THE E A RLIER ASSESSMENT YEARS. 3. THE CIT(A) OUGHT TO H AV E APP REC IATED THE FACT THAT THE DEPARTMENT HAS FILED SECOND APPEAL BEFORE THE ITAT, HYDERABAD FOR THE A.YS. 1999 - 2000 TO 2003 - 04 IN RESPE CT OF THE ADDITION MADE TOWARDS UN E XPL A IN E D DEPOSITS U/S. 6 8 AND THE IS S UE HAS NOT REACHED FINALITY. 4. .. 2. TH E ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF FINANCE. A SURVEY UNDER I TA NO. 426/H YD/201 1 M/S. LAXMI SRINIVASA FINANCE CORPORATION, SECUNDERABAD. 2 S.133A WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 5.12.2003. SUBSEQUENT TO THE SURVEY, THE RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION WAS FILED BY THE ASSESSEE ON 1.11.2004, DECLARING A LOSS OF RS.22,75,670. IN THE PROFIT & LOSS ACCOUNT FILED ALONGWITH THE SAID RETURN, A SUM OF RS.32,27,555 WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF INTEREST PAID ON CALL DEPOSITS. THE SAI D CALL DEPOSITS RECEIVED BY THE ASSESSEE IN THE EARLIER YEARS WERE TREATED BY THE ASSESSING OFFICER AS BOGUS AND THE AMOUNTS OF SUCH DEPOSITS WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE IN THOSE YEARS. ALTHOUGH THE SAID ADDITIONS WERE SUBSEQUENTLY DELET ED BY THE LEARNED CIT(A), APPEALS AGAINST THE ORDERS OF THE LEARNED CIT(A) WERE FILED BY THE DEPARTMENT BEFORE THE TRIBUNAL ON THIS ISSUE. SINCE THE SAID APPEALS FILED BY THE DEPARTMENT WERE PENDING BEFORE THE TRIBUNAL, THE CLAIM OF THE ASSESSEE FOR DEDUC TION ON ACCOUNT OF INTEREST PAID ON CALL DEPOSITS WAS DISALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED UNDER S.143(3) VIDE ORDER DATED 29.12.2006. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER S.143(3), APPEAL WAS PREFERRED B Y THE ASSESSEE BEFORE THE LEARNED CIT(A) DISPUTING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST PAID ON CALL DEPOSITS AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LEAR NED CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE ON ACCOUNT OF INTEREST FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH 5 OF THE IMPUGNED ORDER - 5. DURING THE COU R SE OF APPELLATE PROCEEDINGS, THE AUTHORISED REPRESENTATIVE OF THE AP PELLANT HAD PRODUCED COPIES OF THE APPELLATE O R DERS OF MY PREDE CE SSOR COMMISSIONER OF INCOME - TAX IN ITA NO.0018/ITO 11(2)/HYD./CIT(A) - VI/2006 - 07 FOR THE AY 2000 - 01, ITA NO.0101/ACIT(OSD)/R - 11/HYD./CIT(A) - VI/2005 - 06 FOR THE AYS 2001 - 02 AND 2002 - 03 AND ITA NO.0019/ITO - 11(2)/HYD./CIT(A) - VI/006 - 07 FOR THE AY 2003 - 04, WHEREIN THE CIT(A) HAD HEL D THAT THE ADDITION MADE U/S. 68 IN RESPE C T OF CALL DEPOSITS WAS DISALLOWED AND HENCE THE IN TE REST CLAIMED ON THE I TA NO. 426/H YD/201 1 M/S. LAXMI SRINIVASA FINANCE CORPORATION, SECUNDERABAD. 3 DEPOSITS DURING THE YEAR I S ALLOWABLE. I HAVE GONE THROUGH THE SUBMI S SION S OF TH E APP E LL A N T AN D ALSO TH E APPELLATE ORDERS OF MY PREDE C ESSORS. HENCE, IN LINE WITH TH E STAND TAKEN BY MY PREDECESSORS THAT THE ADDITION MADE U/S.68 IN RESPECT OF CALL DEPO S ITS WAS DISALLO WE D, THE INT ER EST CLAIMED BY TH E APPELL A N T ON TH E SAME DURING THIS ASST YEAR IS ALLOWABLE ... 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSE D THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE ORDERS OF THE LEARNED CIT(A) DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER UNDER S.68 TREATING THE RELEVANT CALL DEPOSITS AS BOGUS FOR THE EARLIER YEARS HA VE A LREADY BEEN UPHELD BY THE TRIBUNAL. HE HAS ALSO PLACED ON RECORD, COP IES OF THE RELEVANT ORDERS OF THE TRIBUNAL FOR THE EARLIER YEARS , WHICH CLEARLY SHOW THAT THE RELEVANT CALL DEPOSITS RECEIVED BY THE ASSESSEE IN THE EARLIER YEARS HAVE BEEN ACCEPTED BY THE TRIBUNAL AS GENUINE. CONSEQUENTLY, THE INTEREST PAID BY THE ASSESSEE ON THE SAID DEPOSITS DURING THE YEAR UNDER CONSIDERATION IS LIABLE TO BE ALLOWED AS DEDUCTION, AND WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST PAID ON THE RELEVANT CALL DEPOSITS. THE SAME IS, THEREFORE, UPHELD AND THIS APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 17 TH SEPTEMBER, 2014 SD/ - SD/ - ( SAKTIJIT DEY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 17 TH SEPTEMBER, 2014 I TA NO. 426/H YD/201 1 M/S. LAXMI SRINIVASA FINANCE CORPORATION, SECUNDERABAD. 4 COPY FORWARDED TO: 1. M/S. LAXMI SRINIVASA FINANCE CORPORATION, 12 - 13 - 418/11, STREET NO.1, TARNAKA, SECUNDERABAD. 2 . INCOME TAX OFFICER WARD 11(2), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) VI, HYDERABAD COMMISSIONER OF INCOME - TAX V, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S