DCIT, CHENNAI V. Saka Marketing Services Pvt. Ltd., CHENNAI

ITA 567/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81199 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 25-08-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 07-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SASI KUMAR
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 143(3); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , ! ' , % & BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 567/MDS/2014 ( / ASSESSMENT YEAR : 2003-04) THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-IV(1), CHENNAI-600 034. VS M/S. SAKA MARKETING SERVICES PVT .LTD., 9, GST ROAD, 86, THOMAS MOUNT, CHENNAI-600 016. PAN:AAACS9583M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. A. SASI KUMAR, JCIT /RESPONDENT BY : MR. R.VIJAYARAGHAVAN, ADVOCATE / DATE OF HEARING : 25 TH AUGUST, 2014 /DATE OF PRONOUNCEMENT : 16 TH OCTOBER, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD , JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- VI, CHENN AI DATED 31.10.2013 FOR THE ASSESSMENT YEAR 2003-04 AR ISING OUT OF ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRE CTING THE 2 ITA NO.567/MDS/2014 ASSESSING OFFICER TO RESTRICT THE ADDITION MADE UND ER SECTION 41(1) OF THE ACT TO THE EXTENT OF ` 36,32,290/- AND GIVING RELIEF OF ` 52,02,934/-. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTI ON 147 OF THE ACT MADE DISALLOWANCE OF ` 88,35,224/- UNDER SECTION 41(1) OF THE ACT ON THE GROUND THAT INTEREST LIABIL ITY TO THIS EXTENT WAS WAIVED BY INDBANK MERCHANT BANKING SERV ICES, WITHOUT ACCEPTING THE SUBMISSIONS OF THE ASSESSEE T HAT CIVIL SUIT FOR RECOVERY BY THE BANK FOR THIS INTEREST AMO UNT IS STILL PENDING. THE ASSESSING OFFICER BROUGHT TO TAX WAIVE R OF INTEREST OF ` 88,35,224/- AS THE ASSESSEE COMPANY HAS ENTERED INTO AGREEMENT WITH INDBANK, AS PER WHICH T HE LIABILITY OF THE ASSESSEE COMPANY HAS TO BE REDUCED TO THIS EXTENT. ON APPEAL, COMMISSIONER OF INCOME TAX (APP EALS) RESTRICTED THE DISALLOWANCE TO ` 36,32,290/- STATING THAT OUT OF INTEREST WAIVER OF ` 88,35,224/- AN AMOUNT OF ` 44,16,167/- AND ` 7,28,767/- WERE ALREADY DISALLOWED IN THE ASSESSM ENT YEARS 1998-99 AND 2001-02 RESPECTIVELY. AGAINST TH IS ORDER, THE REVENUE IS IN APPEAL BEFORE US. 3 ITA NO.567/MDS/2014 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER O F THE ASSESSING OFFICER IN BRINGING TO TAX THE INTEREST O F ` 88,35,224 WAIVED BY THE BANK. DEPARTMENTAL REPRESENTATIVE FU RTHER SUBMITS THAT THE ASSESSEE HAS NEVER FURNISHED ANY D ETAILS BEFORE THE ASSESSING OFFICER TO SAY THAT ` 52,02,934/- IS OUT OF THE WAIVER MADE BY THE BANK AND THIS AMOUNT WAS ALREADY DISALLOWED DURING THE ASSESSMENT YEARS 1998-99 AND 2001- 02. THEREFORE, DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THIS NEEDS TO BE VERIFIED BY THE ASSESSING OFFICER. 4. COUNSEL FOR THE ASSESSEE SUPPORTS THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. HE HAS NO SERIOUS OBJE CTION IN VERIFYING THE FACT AS TO WHETHER INTEREST OF ` 52,02,934/- IS PART OF THE INTEREST WAIVED BY THE BANK AND WHETHER SUCH INTEREST WAS ALREADY DISALLOWED IN ASSESSMENT YEAR S 1998- 99 AND 2001-02. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT DISALLOWED INTEREST UNDER SECTION 41(1) OF THE ACT TO THE TUNE 4 ITA NO.567/MDS/2014 OF ` 88,35,224/- WAIVED BY THE BANK. THE ASSESSEE AP PEARS TO HAVE NOT FILED ANY DETAILS TO SHOW THAT PART OF SUCH INTEREST TO THE EXTENT OF ` 52,02,934/- WAS ALREADY DISALLOWED IN EARLIER ASSESSMENT YEARS. THE ASSESSEE ONLY CONTEND ED THAT THE SUIT FOR RECOVERY IS STILL PENDING AND THEREFO RE WAIVER OF SUCH AMOUNT CANNOT BE BROUGHT TO TAX. THE COMMISSIO NER OF INCOME TAX (APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT PART OF SUCH INTEREST WAS ALREADY WAI VED IN EARLIER YEARS GRANTED RELIEF TO THE EXTENT OF ` 52,02,934/- AND SUSTAINED THE BALANCE OF ` 36,32,290/-. IT APPEARS THAT ASSESSEE FILED INFORMATION BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE FORM OF ASSESSMENT ORDE R, COMMISSIONER OF INCOME TAX (APPEALS) ORDER AND TRI BUNAL ORDER FOR THE ASSESSMENT YEAR 1998-99, RETURN AND COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 2001- 02 ALONG WITH LEDGER ACCOUNT OF INDBANK IN SUPPORT O F ITS CONTENTION THAT PART OF INTEREST WAS ALREADY DISALL OWED IN EARLIER ASSESSMENT YEARS. SINCE THIS INFORMATION WA S NOT FURNISHED BEFORE THE ASSESSING OFFICER AND ALSO AS THERE IS NO SERIOUS OBJECTION BY THE COUNSEL FOR VERIFICATION O F THIS FACT BY THE ASSESSING OFFICER, WE ARE OF THE VIEW THAT THIS MATTER HAS 5 ITA NO.567/MDS/2014 TO BE VERIFIED BY THE ASSESSING OFFICER. WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELE TING THE DISALLOWANCE TO THE EXTENT OF ` 52,02,934/- SUBJECT TO VERIFICATION BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL VERIFY AS TO WHETHER INTEREST OF ` 88,35,224/- WAIVED BY THE BANK INCLUDES INTEREST OF ` 52,02,934/- DISALLOWED IN EARLIER ASSESSMENT YEARS AS CONTENDED BY THE ASSES SEE. IF THE CONTENTIONS OF THE ASSESSEE ARE PROVED TO BE CO RRECT, THE DISALLOWANCE SHOULD BE RESTRICTED ONLY TO THE EXTEN T OF INTEREST NOT PROVED AND NOT DISALLOWED IN EARLIER ASSESSMENT YEARS. 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY , T HE 16 TH DAY OF OCTOBER, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( & () ) ( DR . O.K. NARAYANAN ) ( CHALLA NAGENDRA PRASAD ) ,- /VICE-PRESIDENT ( . / JUDICIAL MEMBER ( /CHENNAI, / /DATED, 16 TH OCTOBER, 2014 SOMU 12 32 /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .