RAIYANI BUILDERS, MUMBAI V. ITO WD 25(2)(4), MUMBAI

ITA 4286/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9235 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 21-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 4286 / MUM/ 20 1 2 ( ASSESSMEN T YEAR : 200 8 - 20 0 9 ) M/S RAIYANI BUILDERS, RAJ CRESCENT, B - 206, EKSAR ROAD, BORIVLI (WEST), MUMBAI - 400 092 . VS. ITO, WARD 25(2)(4), MUMBAI PAN/GIR NO. : A A AFR 6347 P ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : M S . AARTI SATHE /REVENUE BY : MR. RAKESH RANJAN DATE OF HEARING : 1 1 TH DEC . , 2012 DATE OF PRONOUNCEMENT : 19 TH DEC. , 2012 O R D E R THI S IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 2 - 3 - 2012 OF LEANED CIT(A) - 35 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 8 - 0 9 . 2 . GROUND NO.1 IS GENERAL IN NATURE. GROUNDS NO.2 & 3 ARE RELATING TO CONFIRMATION OF DISALLOWANCE OF RS .1,28,783/ - , BEING INTEREST PAID TO PARTNERS BY THE ASSESSEE FIRM. 3 . THE ASSESSEE CLAIMED INTEREST PAYMENT OF RS. 3,71,751/ - . THE ASSESSEE WAS REQUIRED TO FILE THE DETAILS OF CREDIT BALANCE OF THE ITA NO. 4286 /20 1 2 2 PARTNERS. THE ASSESSING OFFICER NOTED THAT ON THE CLOSING BALANCE AS ON 31 - 3 - 2008, THE INTEREST PAYABLE TO THE PARTNERS IS OF RS . 2,42,968/ - AGAINST CLAIM OF ASSESSEE OF RS. 3,71,751/ - . ACCORDINGLY, HE ALLOWED THE INTEREST PAYMENT OF RS. 2,42,968/ - AND REMAINING AMOUNT WAS DISALLOWED. 4 . IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT, IN FACT THE ASSESSEE HAS CALCULATED THE INTEREST ON THE BASIS OF OPENING CAPITAL AS ON 1 - 4 - 2007, WHEREAS THE ASSESSING OFFICER HAS CALCULATED INTEREST ON CLOSING BALANCE AS ON 31 - 3 - 2008 . THE INTEREST WAS CALCULATED AS PER CLAUSES OF PARTNERSHIP DEED . THE R EFORE, THE CALCULATION MADE BY THE ASSESSEE WAS CORRECT. HOWEVER, LEARNED C IT (A) WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE. IN HIS VIEW ALSO THE INTEREST PAYABLE SHOULD HAVE BEEN CALCULATED ON THE LAST CLOSING BALANCE AT THE END OF THE YE AR, THEREFORE, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, I FOUND THAT THIS ISSUE SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER. I HAVE GONE THROUGH THE CLAUSES O F THE PARTNERSHIP DEED AND I FOUND THAT THE ASSESSEE FIRM HAS PROVIDED THAT THE FIRM WILL PAY INTEREST ON CREDIT BALANCE AND ALSO WILL CHARGE N THE DEBIT BALANCE IN THE ACCOUNT OF PARTNER. I NOTED THAT THERE IS A CREDIT BALANCE IN SOME OF THE PARTNERS AND THERE IS A DEBIT BALANCE IN THE CASE OF TWO PARTNERS. THE FIRM HAS NOT CHARGED ANY INTEREST ON THE DEBITED BALANCE, WHEREAS THE FIRM HAS PAID INTEREST ON CREDIT BALANCE. THEREFORE, CALCULATION IS TO ITA NO. 4286 /20 1 2 3 BE MADE AFTER CHARGING INTEREST ON DEBIT BALANCE. IF THE CONTENTION OF THE ASSESSEE IS ACCEPTED THAT THE INTEREST HAS TO BE CHARGED ON THE BASIS OF CAPITAL AS ON 1 - 4 - 2007 I.E. STARTING OF THE YEAR , THEN IT HAS TO BE ASCERTAINED THAT FOR HOW MANY DAYS AND MONTHS THAT CAPITAL REMAINS WITH THE FIRM. IF FOR SOME TIM E THE CAPITAL HAS BEEN REDUCED OR INCREASED THEN ON THAT BASIS CALCULATION OF THE INTEREST HAS TO BE MADE. SIMILARLY, THE DEBIT BALANCE HAS ALSO TO BE SEEN AS TO WHETHER DURING THE YEAR IT IS INCREASED OR REDUCED THE N ON THAT BASIS CALCULATION OF INTEREST HAS TO BE PROVIDED. THIS WAS CLARIFIED DURING THE APPELLATE PROCEEDING AND LEARNED AR OF THE ASSESSEE FAIRLY AGREED THAT INTEREST ON CREDIT AND DEBIT BALANCE HAS TO BE CONSIDERED LOOKING AFTER THE CREDIT BALANCE AND DEBIT BALANCE DURING THE YEAR. THE ASSES SEE HAS FAIRLY STATED THAT THE MATTER CAN BE SENT BACK AND THE ASSESSEE WILL FILE A CHART OF CALCULATION OF INTEREST ON CREDIT BALANCE AS WELL AS DEBIT BALANCE DURING THE YEAR. LEARNED DR HAS ALSO NO OBJECTION ON THIS PROPOSITION. 6 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICE TO RECALCULATE THE INTEREST AFTER TAKING A CHART OF CALCULATION OF THE INTEREST FROM THE ASSESSEE FIRM AND THEREAFTER AFTER VERIFYING ITS CORRECTNESS . 7 . IN TH E RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURP OSES. ITA NO. 4286 /20 1 2 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF DEC. 2012. 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 19 / 1 2 / 2012 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI