DCIT 8(2), MUMBAI V. NAHAR TEXTILES P.LTD, MUMBAI

ITA 4423/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4478 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MISHRA
• Assessee Lawyers: BEHARILAL
• Keywords: Tax effect; Commercial expediency
• Section: 143(3)

Judgement Text

M/S NAHAR TEXTILES PVT LTD ITA NO. 442 3 /MUM/201 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI RA JESH KUMAR , ACC OUNTANT MEMBER ITA NO. : 442 3 /MUM/201 3 (ASSESSMENT YEAR: 2008 - 09 ) D CIT - CIR 8 ( 2 ) , R. NO. 216 - A, AAYKAR BHAVAN, M K ROAD, MUMBAI - 400 0 2 0 VS M/S NAHAR TEXTILES PVT LTD , 148, NIVADA HOUSE, MAROL CO - OP. INDL. ESTATE, SIR M V ROAD, ANDHERI (EAST), MUMBAI - 400 059 .: PAN: AA ACN 0282 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S K MISHRA RESPONDENT BY : SHRI BEHARILAL /DATE OF HEARING : 05 - 01 - 201 6 / DA TE OF PRONOUNCEMENT : 05 - 01 - 201 6 ORDER : . . : PER AMIT SHUKLA , JM : T HE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 07.03.2013 , PASSED BY CIT(A) - 17 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 2008 - 09 ON THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 9,00,000 / - BEING SALARY PAID TO THE WIVES OF THE 3 DIR ECTORS, IGNORING THAT THE ASSESSEE HAD FAILED TO CONCUSSIVELY PROVE THE COMMERCIAL EXPEDIENCY AND REASONABLENESS OF THE IMPUGNED PAYMENT DESPITE THE SPECIFIC OPPORTUNITY PROVIDED TO THE ASSESSEE IN THIS REGARD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE CAPITALIZATION OF INTEREST ON BORROWED FUNDS @ 13% WITHOUT ASSIGNING ANY COGENT REASONS AND IGNORING THAT SINCE THE ASSESSEE HAD BORROWED FUNDS @ 18%, THE ASSESSING OFFICER WAS JUSTIFIED IN CAPITALIZING INTEREST TOWARDS THE CONSTRUCTION SITE @ 18%. M/S NAHAR TEXTILES PVT LTD ITA NO. 442 3 /MUM/201 3 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN REDUCING THE DISALLOWANCE OF RS. 10,63,000/ - OF CAR HIRE CHARGES MADE BY THE ASSESSING OFFICER U/S 40A(2)(B) OF THE ACT, TO RS. 7,63,000/ - WITHOUT APPRECIATING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS LOGICAL AND REASONABLE AND HENCE THE RELIEF ALLOWED BY THE LD. CIT(A) WAS AD HOC, ARBITRARY AND UNWARRANTED. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE , SHRI BEHARILAL , SUBMITTED THAT THE TAX EFFECT ON THE DISPUTED ISSUE RAISED IN GROUNDS OF APPEAL ARE MUCH LOWER THAN RS. 10 LAKHS THEREFORE, IN VIEW OF THE LATEST CBDT CIRCULAR NO. 21 OF 2015 DATED 10 TH DECEMBER, 2015 THE APPEAL FILED BY THE DEPARTMENT IS NOT M AINTAINABLE. LD. DR ADMITTED THAT, THE TAX EFFECT ON THE DISPUTED ISSUE IS LESS THAN RS. 10 LAKHS AND IS COVERED BY THE CBDT CIRCULAR. 3. AFTER CONSIDERING THE AFORESAID SUBMISSION, WE FIND THAT, IT IS AN ADMITTED FACT THAT THE MONETARY LIMIT ON THE DISPU TED ISSUE IS MUCH BELOW THE PRESCRIBED LIMIT FOR FILING OF APPEAL BEFORE THE TRIBUNAL . NOW AS PER THE LATEST CBDT CIRCULAR NO. 21 OF 2015 DATED 10 TH DECEMBER, 2015, ISSUED BY THE CBDT IN PURSUANCE OF PROVISIONS CONTAINED U/S 268A(1) , THE MONETARY LIMIT , PR ESCRIBED FOR FILING OF THE APPEAL BY THE DEPARTMENT BEFORE THE INCOME - TAX APPELLATE TRIBUNAL IS AT RS. 10 LAKHS, THAT IS, THE TAX AFFECT FOR FILING OF APPEAL SHOULD NOT EXCEED THE SAID MONETARY LIMIT. THIS HAS BEEN LAID DOWN IN PARA 3 OF THE CIRCULAR WHICH READS AS UNDER: - 3. HENCEFORTH, APPEALS/SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: - S NO APPEALS IN INCOME - TAX MATTERS MONETARY LIMIT(IN RS) 1 BEFORE APPELLATE TRIBUNAL 10,00,000/ - 2 BEFORE HIGH COURT 20,00,000/ - 3 BEFORE SUPREME COURT 25,00,000/ - IT HAS FURTHER BEEN CLARIFIED BY THE CBDT THAT THE SAID INSTRUCTION WILL APPLY RETROSPECTIVELY TO THE PENDING APPEALS ALSO AND SUCH M/S NAHAR TEXTILES PVT LTD ITA NO. 442 3 /MUM/201 3 3 APPEALS SHOULD BE EITHER WITHDRAWN OR NOT PRESSED BY THE REVENUE. THE RELEVANT PARA 10 READS AS UNDER: - 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITH DRAWN/NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 4. THUS, THE APPEAL OF THE DEPARTMENT IS NOT MAINTAINABLE AND IS BEING TREATED AS NOT PRESSED IN T ERMS OF THE WORDINGS OF THE CIRCULAR. 5 . RESULTANTLY, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JANUARY , 201 6. ( ) ( ) ( RAJESH KUMAR ) ( AMIT SHUKLA ) ACCOUNTANT M EMBER JUDICIAL MEMBER MUMBAI, DATE: 5 TH JANUARY , 201 6 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 17 , MUMBAI . 4 ) THE COMMISSIONER OF INCOME TAX 8 , MUMBAI . 5 ) , , / THE D.R. B BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS