Sara Construction, Aurangabad V. ITO,Wd. 2(3), Aurangabad

ITA 537/PUN/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66961 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: MRS DEEPA KHARE
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.537/PN/2011 ASSESSMENT YEAR : 200 6 - 0 7 M/S. SARA CONSTRUCTION, D-55, GAJANAN VAIBHAV COMPLEX, CANNAUGHT PLACE, CIDCO, AURANGABAD VS. ITO, WD. 2(3), AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AA LFM1986A APPELLANT BY: MRS. DEEPA KHARE RESPONDENT BY: SHRI MUKESH VERMA DATE OF HEARING : 02-04-2013 DATE OF PRONOUNCEMENT : 30-04-2013 ORDER PER R.S. PADVEKAR, JM:- THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE IMPUGN ED ORDER OF THE LD.CIT, AURANGABAD, PASSED U/S.263 OF THE I NCOME-TAX ACT, DATED 17-02-2011 FOR THE A.Y. 2006-07. THE ASSESSEE HA S TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. THE LEARNED CIT ERRED IN LAW AND ON FACTS IN INVOKIN G THE PROVISIONS OF SECTION 263 BY HOLDING THE ORDER PASSE D BY THE LEARNED AO AS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE IN RESPECT OF THE DISALLOWANCE OF INTEREST U/S.36(I) (III). 2. THE LEARNED IT FAILED TO APPRECIATE THAT THE ISSUE OF ALLOWANCE OF INTEREST U/S.36(I)(III) HAS BEEN PROPERLY EXAMINED BY T HE LEARNED AO DURING THE ASSESSMENT PROCEEDINGS AND HAS TAKEN A VIEW WHICH IS A POSSIBLE VIEW BOTH ON FATS AND IN LAW. T HE ACTION U/S.263 BEING UNJUSTIFIED ON FACTS AND IN LAW MAY KI NDLY BE CANCELLED. 2. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF BUILDER S AND DEVELOPERS. THE ASSESSEE FILED THE RETURN OF INCOME DECLA RING LOSS OF RS.52,611/- FOR THE A.Y. 2006-07. THE ASSESSEES ASSESSM ENT HAS BEEN COMPLETED U/S.143(3) OF THE INCOME-TAX ACT VIDE ORDER DATED 12-12 -2008. THE ASSESSING OFFICER MADE ADDITION OF RS.61,754/- AND THE SAID ADDITION IS DISCUSSED BY THE ASSESSING OFFICER IN PARA NO. 4 OF THE 2 ITA NO.537/PN/2011, SARA CONSTRUCTION, AURANGABAD ASSESSMENT ORDER. SUBSEQUENTLY, THE LD.CIT, AURANGABAD INITIATED THE PROCEEDINGS U/S.263 OF THE INCOME-TAX ACT. THE LD.CIT H AS OBSERVED THAT ON VERIFICATION OF RECORD, IT IS NOTICED THAT THE ASSES SEE HAS PAID INTEREST ON BANK LOAN @ 13% TO 14%, BUT THE ASSESSING O FFICER IN THE ASSESSMENT ORDER HAS ERRONEOUSLY MENTIONED THAT THE ASSESSEE HAS PAID INTEREST ON BANK LOAN @ 10% AND HENCE, HAS DISALLOWED INTE REST @ 2%, CONSIDERING THE DIFFERENCE BETWEEN RATE OF INTEREST PAID O N CAPITAL BALANCES OF THE PARTNERS @ 10% AND RATE OF INTEREST CH ARGED ON THE DEBIT BALANCES OF THE PARTNERS @ 8%. 3. THE LD.CIT HAS OBSERVED THAT THE ASSESSING OFFICER H AS ERRONEOUSLY CONSIDERED THE RATE OF INTEREST ON BANK LO AN @ 10% INSTEAD OF 13% TO 14% AND HENCE, ORDER PASSED BY THE ASSESSIN G OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENU E. THE LD.CIT THEREFORE, DECIDED THE ASSESSMENT ORDER AND DIRECTED TH E ASSESSING OFFICER TO REFRAME THE SAME AFTER CONSIDERING PROPER FACTS AND SUBMISSIONS OF THE ASSESSEE. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THERE ARE TWO LIMBS TO THE ADDITION, FIRST LIMB IS WHETHER THE ASSESSING OFFICE R HAS RIGHTLY MADE THE ADDITION BY ADDING THE DIFFERENCE IN RESPE CT OF INTEREST CHARGED ON CAPITAL ACCOUNT VIS-A-VIS INTEREST PAID ON LOAN TO THE BANK. WE FIND THAT THIS FUNDAMENTAL ISSUE IS NOT SUBJECT MATTER OF IMPUGNED ORDER AS THE ASSESSEE AGREED FOR THE ADDITION. THE ONL Y SOLITARY CONTROVERSY IS CONFINED TO COMPUTATION OF DISALLOWANCE. 5. SO FAR AS QUANTUM OF ADDITION IN RESPECT OF THE INTERES T CHARGED ON THE PARTNERS CAPITAL ACCOUNT, IT IS SEEN THAT THE LD. C IT HAS MADE A CATEGORICAL ASSERTION IN HIS ORDER THAT THE ASSESSEE HAS PAID 13% TO 14% INTEREST ON THE BANK LOAN AND ASSESSING OFFICER WORKED O UT THE ADDITION TAKING THE SAID RATE @ 10%. IN THE DECISION PORTION OF T HE ORDER THE LD. CIT OBSERVED THAT ON VERIFICATION OF RECORDS, IT IS SEEN THAT THE ASSESSING 3 ITA NO.537/PN/2011, SARA CONSTRUCTION, AURANGABAD OFFICER HAS NEITHER CALLED FOR IN THE DETAILS OF INTEREST PAID NOR THE SAME WAS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER . AT ONE END LD. CIT HAS MADE THE CATEGORICAL ASSERTION IN RESPECT OF THE PERCEN TAGE OF INTEREST PAID BY THE ASSESSEE ON THE BANK LOAN AND AT THE OTHER END, HE STATES IN THE ORDER THAT NO DETAILS ARE AVAILABLE IN RESPE CT OF THE INTEREST PAID BY THE ASSESSEE TO THE BANK LOAN. THEN THE QUE STION BEFORE US IS HOW LD. CIT MADE THE CATEGORICAL ASSERTION IN RESPECT OF THE PERCENTAGE OF INTEREST PAID BY THE ASSESSEE TO THE BANK. AS PER T HE PROVISIONS OF SECTION 263, LD. CIT CAN EXERCISE HIS REVISIONAL POWER AFTER EXAMINING THE RECORD AVAILABLE. NOTHING IS THERE EVEN TO SUGGEST T HAT EVEN AFTER THE ASSESSMENT LD. CIT FOUND THAT RATE OF INTEREST PAID BY T HE ASSESSEE TO THE BANK IS @ 13% TO 14%. IN OUR OPINION, THIS IS NOT A FIT CASE ON THE REASON GIVEN BY LD. CIT TO EXERCISE HIS REVISIONAL JURISDICT ION U/S. 263 OF THE ACT. THE ASSESSMENT ORDER PASSED BY THE ASSESSIN G OFFICER CANNOT BE SAID TO BE ERRONEOUS. LAW IS WELL SETTLED BY THE PLET HORA OF DECISIONS. MORE PARTICULARLY THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF MALABAR INDUSTRIAL CO. VS. CIT 243 ITR 83 THAT TWO MAN DATES MUST BE SATISFIED FOR EXERCISING REVISIONAL JURISDICTION U/S.263 OF TH E ACT-(1) THE ORDER MUST BE ERRONEOUS AND (2) IT SHOULD ALSO TO PREJU DICIAL TO THE INTEREST OF THE REVENUE. NOTHING IS THERE ON RECORD TO SUGGEST THAT THE ORDER IS ERRONEOUS. WE THEREFORE QUASH THE ORDER PAS SED BY LD. CIT U/S. 263. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30-04-2013 SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS PUNE, DATED: 30 TH APRIL, 2013 4 ITA NO.537/PN/2011, SARA CONSTRUCTION, AURANGABAD COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT, AURANGABAD 4 THE ADDL. CIT, RANGE - 1, AURANGABAD 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, PUNE