VIJAY PHARMA, MUMBAI V. ACIT CIR 31(3), MUMBAI

ITA 5613/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8550 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 16-09-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.5613/M/2016 (AY 2008 - 2009) M/S. VIJAY PHARMA, 16, GROUND FLOOR, ASHOK RAJ, S.V. ROAD, GOREGAON (W), MUMBAI 062. / VS. THE ACIT 31(3), 4 TH FLOOR, C - 13, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 51. ./ PAN : AACFV6111H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI NISHIT GANDHI / RESPONDENT BY : MS. BEEN A SANTOSH, DR / DATE OF HEARING : 06.02.2017 / DATE OF PRONOUNCEMENT : 06 .02.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 16.9.2016 IS AGAINST THE ORDER OF THE CIT (A) - 42, MUMBAI DATED 24.6.2016 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE RAISED THE SOLITARY ISSUE RELATING TO THE DISALLOWANCE OF INTEREST PAYMENT OVER A ND ABOVE 12% PAID BY THE ASSESSEE IN RESPECT OF THE LOAN CREDITORS. ASSESSEE UNIFORMLY PAID INTEREST AMOUNT TO THE LOAN CREDITORS APPLYING THE FLAT RATE OF 15% TO 24% OF THE LOAN CREDITORS, WHICH INCLUDES BOTH THE RELATIVES AND OTHERS. WITHOUT INVOKING T HE PROVISIONS OF SECTION 36(1) OR U/S 40A(2 ) (B) OF THE ACT ETC, ASSESSING OFFICER RESTRICTED THE ABOVE RATE OF INTEREST OF 12% ON THE GROUND THAT RATE OF INTEREST APPLIED IN RESPECT OF THE PARTNERS TOWARDS THE CAPITAL CONTRIBUTION IS 12%. ON APPEAL, CIT ( A) CONFIRMED THE ABOVE. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE ME , LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID LOAN CREDITORS ARE APPEARING IN THE BOOKS OF ACCOUNTS. IN THE EARLIER YEAR AL SO THEY RECEIVED INTEREST @15% AN D THE CLAIM WAS ACCEPTED BY THE ASSESSING OFFICER IN THE PAST. THUS, IT IS A CASE OF FLOATING PRINCIPLE OF CONSISTENCY SO FAR AS THE REVENUE IS 2 CONCERNED. BRINGING MY ATTENTION TO THE CHART AT PAGE 66 OF THE PAPER BOOK, LD COUNSEL FOR THE ASSESSEE SUBMIT TED THE GROSS PROFIT (GP) AND NET PROFIT (NP) FIGURES ARE NOT INTERPRETED A GAINST THE REVENUE. BRIN G ING MY ATTENTION TO THE DECISIONS OF THE TRIBUNAL IN THE CASE OF SHYAM CHEMICALS PVT LTD VS. ACIT IN ITA NO.7477/M/2010 (AYS 2007 - 08) AND OTHERS, DATED 25.3.2015, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR THE PURPOSE OF APPROVAL OF THE RATE OF INTEREST OF 1 5%, THE SAID DECISION IS RELEVANT. RELYING ON THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CASE OF SHRI HITESH NARENDRABHAI SHAH (HUF) VS. ITO IN ITA NO.2370/AHD/2010 (AY 2007 - 08), DATED 4.1.2013, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT SUCH DISALL OWANCE OF 3% (15% - 12%) IS UNACCEPTABLE . IN THIS CASE, THE TRIBUNAL HELD THAT THE RATE OF INTEREST @15% CANNOT B E HELD EXCESSIVE. BRINGING MY ATTENTION TO THE FACTS OF THE CASE, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ASSESSING OFFICER MADE A DIS ALLOWANCE IN THE INSTANT CASE HOLDING 15% IS HIGHER SIDE. 4. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE ABOVE CITED ORDERS OF THE TRIBUNAL (SUPRA), I AM OF THE OPINION, THE RATE OF INTEREST OF 15% CLAIMED BY THE ASSESSEE CANNOT BE HELD AS EXCESSIVE. ACCORDINGLY, THE DECISION OF THE CIT (A) ON THIS ISSUE IS REQUIRED TO BE REVERSED. ACCORDINGLY I ORDER. THUS, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 0 6 T H FEBRUARY, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 06.02.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 3 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI