DCIT, Bangalore V. M/s The Senate, Bangalore

ITA 538/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57481 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 10-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARAHAT HUSSAIN QURESHI CITII
• Assessee Lawyers: S RAMASUBRAMANIYAN
• Keywords: Business expenditure
• Section: 143(3); 260A; 148

Judgement Text

PAGE 1 OF 4 ITA NO.53 8/BANG/2011 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.538/BANG/2011 (ASST. YEAR 2002-03) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(3), BANGALORE. VS M/S THE SENATE, 5 TH FLOOR, SHERIFF CENTRE, 73/1, ST. MARKS ROAD, BANGALORE. PA NO.AAAFT4001A (APPELLANT) (RESPONDENT) DATE OF HEARING 27.02.2012 DATE OF PRONOUNCEMENT 27.02.2012 APPELLANT BY : SHRI FARAHAT HUSSAIN QURESHI, CIT-II RESPONDENT BY : SHRI S RAMASUBRAMANIYAN, C.A. O R D E R PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), MYSORE DATED 28.02.2011. T HE RELEVANT ASSESSMENT YEAR IS 2002-03. 2. THE EFFECTIVE GROUND RAISED READS AS FOLLOWS:- THE DECISION OF THE ITAT IN ASSESSEES CASE FOR EAR LIER YEARS HOLDING THAT THE INTEREST PAYMENT IS ALLOWABLE, WHIC H HAS BEEN FOLLOWED BY THE CIT(A) HAS NOT BEEN ACCEPTED BY THE R EVENUE AND A REFERENCE APPEAL UNDER SECTION 260A IS PENDIN G BEFORE THE HONBLE HIGH COURT OF KARNATAKA. PAGE 2 OF 4 ITA NO.53 8/BANG/2011 2 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A FIRM. IT IS ENGAGED IN THE BUS INESS OF INVESTMENT IN REAL ESTATE. RETURN OF INCOME FOR TH E CONCERNED YEAR ON 29/11/2002 DECLARING AN INCOME OF RS.50,14,327/-. THE RETURN OF INCOME WAS ACCEPTED UNDER SECTION 143(1) OF THE ACT. LATE R, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED INTEREST EXPE NDITURE TO THE TUNE OF RS.1,18,86,429/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE AMOUNTS BORROWED WERE UTILIZED FOR MAKING ADVANCES TO THE S ISTER CONCERN AND NOT FOR CONSTRUCTION OF THE PROPERTY FROM WHICH THE ASSE SSEE FIRM WAS RECEIVING RENTAL INCOME. ACCORDINGLY, THE ASSESSING OFFICER W AS OF THE VIEW THAT THE CLAIM OF INTEREST UNDER SECTION 24 OF THE ACT WAS N OT ALLOWABLE AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT FOR REOPENING T HE ASSESSMENT. THE ASSESSEE CHALLENGED BOTH THE REOPENING OF THE ASSES SMENT AS WELL AS THE ISSUE ON MERITS. THE CONTENTIONS RAISED BY THE ASSE SSEE WERE REJECTED AND ASSESSMENT UNDER SECTION 143(3) RWS 147 WAS COMPLET ED VIDE ORDER 29/12/2009 WHEREIN THE INTEREST COST AS A BUSINESS EXPENDITURE AMOUNTING TO RS.1,18,86,429/- WAS DISALLOWED AND ADDED BACK T O THE TOTAL INCOME OF THE ASSESSEE. 4. ON FURTHER APPEAL, THE CIT(A) ALLOWED THE APPEA L OF THE ASSESSEE BY FOLLOWING THE TRIBUNAL ORDER IN ASSESSEE S OWN CASE FOR ASSESSMENT YEARS 2001-02 AND 2003-04 (ITA NOS. 1202 & 1203/BANG/2007 DT.29/8/2008). 5. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. PAGE 3 OF 4 ITA NO.53 8/BANG/2011 3 6. THE LEARNED DR SUBMITTED THAT THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 AND 2003-04 HAS NOT BEEN ACCEPTED BY THE REVENUE AND APPEAL UNDER SECTIO N 260A OF THE ACT HAS BEEN FILED BEFORE THE HONBLE JURISDICTIONAL HIGH C OURT. 7. THE LEARNED AR ON THE OTHER HAND SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE ORDER OF THE TRIB UNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 AND 2003-04. IT WAS CLARIFIED BY THE LEARNED AR THAT THOUGH THE DEPARTMENT HAS FILED THE APPEAL UNDER SECTION 260A OF THE ACT, THE SAME IS STILL PENDING ADJUDICATION BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. WE FIND THAT AN IDENTICAL ISSUE WAS CON SIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 AND 2003-04 IN ITA NOS. 1202 & 1203/BANG/2007 DATED 29/8/2008. THE TR IBUNAL HAD AACCEPTED THE ASSESSEE FIRMS CLAIM THAT BORROWED C APITAL HAS BEEN UTILIZED FOR BUSINESS PURPOSE AND HENCE, THE INTEREST PAYMENT WAS AN ALLOWABLE DEDUCTION. THE FACTS CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 AND 2003-04 ARE IDENTIC AL TO THE FACTS OF THE PRESENT ASSESSMENT YEAR, NAMELY, 2002-03. THE LEARNE D DR DID NOT PLACE ANYTHING ON RECORD TO SUGGEST THAT THE TRIBUNAL ORDE R IN ASESSEES OWN CASE FOR ASSESSMENT YEARS 2001-02 AND 2003-04 WAS REVERSE D BY THE HONBLE HIGH COURT. THEREFORE, WE FOLLOW THE COORDINATE BE NCH DECISION OF THE TRIBUNAL CITED SUPRA AND DECIDE THE MATTER IN FAVOU R OF THE ASSESSEE. HENCE PAGE 4 OF 4 ITA NO.53 8/BANG/2011 4 WE HOLD THAT THE ORDER OF THE CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF FEBRUARY, 2012 SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1. THE REVENUE 2. THE ASSESSEE 3. T HE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.