M/s. GOLDEN CHEMICAL TRANSPORT CO., Nagda V. The ITO Ward 2(2), Ujjain

ITA 612/IND/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1943 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: ASHOK BHANUPRIYA ARS; SAKSHI BHANUPRIY A
• Keywords: Retrospective amendment; Notional interest
• Section: 143(3); 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.612/IND/2014 ASSESSMENT YEAR:2010-11 M/S. GOLDEN CHEMICAL TRANSPORT CO. 16, SENIOR MIG, INDORIYA ORAD, NAGDA (M.P.) / VS. ITO, WARD 2(2) UJJAIN (APPELLANT) (REVENUE ) P.A. NO. AADFG7071J APPELLANT BY SAKSHI BHANUPRIY A , & SHRI ASHOK BHANUPRIYA, ARS REVENUE BY SHRI K.G. GOYAL, SR. DR DATE OF HEARING: 27.08.2018 DATE OF PRONOUNCEMENT: 30.08.2018 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL OF ASSESSEE PERTAINING TO A.Y. 2010-11 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- UJJAIN, M.P., (IN SHORT CIT(A)), DATED 01.07.2017 WHICH IS ARISING OUT OF THE ORDER FRAMED BY THE ASSESSING OFFICER WA RD, 2(2), UJJAIN ON 26.03.2013 U/S 143(4) OF THE INCOME TAX ACT 196 1. GOLDEN CHEMICAL TRANSPORT CO. 2 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A PARTNERSHIP FORM ENGAGED IN THE TRANS PORTING, TRADING OF CHEMICALS AND TRADING OF MOTOR VEHICLE PARTS. IN COME OF RS.4,13,340/- DECLARED IN THE INCOME TAX RETURN FIL ED ON 15.10.2010. THE CASE SELECTED UNDER SCRUTINY THROUG H CASS ASSESSMENT UNDER SECTION 143(3) OF THE ACT, FRAMED ASSESSING THE INCOME AT RS. 30,80,976/- AFTER MAKING VARIOUS ADDI TIONS TOTALING TO RS.26,67,636/-. 3. AGGRIEVED WITH THE ADDITIONS MADE BY THE ASSESSI NG OFFICER, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) BUT FAILED TO SUCCEED ON ANY OF THE GROUNDS. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L RAISING FOLLOWING GROUNDS: 1.THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF LD. AO IGNOR ING THE FACT THAT ASSESSMENT ORDER IS BARRED BY LIMITATION. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE LD. AO ON ACCOUNT OF DISALLOWANCE OF INTEREST AND TRANSPORTATION EXPENSE S UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT BY GROSSLY IGNORING THE SUBMISSIONS MADE BY THE APPELLANT FIRM WHEREIN FOLL OWING ADDITIONS WERE MADE; (I) DISALLOWANCE OF INTEREST EXPENSES U/S 40(A)(IA) RS.811481/- (II) DISALLOWANCE OF FREIGHT EXPENSES U/S 40(A)(IA) RS.17,44,677/- 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE ADDITION MAD E ON ACCOUNT OF NOTIONAL INTEREST AT RS.22,521/-. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ON R ECORD THE WRITTEN SUBMISSION AND AS PER HER ARGUMENTS AS WELL AS THE WRITTEN GOLDEN CHEMICAL TRANSPORT CO. 3 SUBMISSIONS PLACED BEFORE US, SHE HAS ONLY CHALLENG ED THE ISSUE OF DISALLOWANCE OF INTEREST EXPENSES U/S 40(A)(IA) AT RS.8,11,481/- WHICH WERE PAID BY THE ASSESSEE TO NON-BANKING FINA NCIAL INSTITUTIONS. WE, THEREFORE, TREAT ALL OTHER ISSUES RAISED IN THE GROUNDS OF APPEAL HAS NOT PRESSED AND DISMISS THE S AME. 6. AS REGARDS THE ISSUE OF DISALLOWANCE OF INTEREST U/S 40(A)(IA) AT RS. 8,11,481/-. THE LD. COUNSEL FOR THE ASSESSEE RE FERRED AND RELIED ON WRITTEN SUBMISSION AND REQUESTED FOR SETTING ASI DE THE SAME ISSUE TO THE FILE OF LD. AO FOR NECESSARY VERIFICAT ION OF THE DOCUMENTS PLACED ON RECORD SHOWING THAT BOTH THE PA YEES (NBFCS) HAVE DISCLOSED THE AMOUNT OF INTEREST RECEIVED BY T HEM IN THEIR REGULAR RETURN OF INCOME AND THE FACT IS DULY CERTI FIED BY A CHARTERED ACCOUNTANTS. 7. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD BEFORE US. THE SOLE ISSUE PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE RELATES TO DISA LLOWANCE OF INTEREST EXPENSES U/S 40(A)(IA) FOR RS.8,11,481/- W HICH PERTAINS TO INTEREST PAID TO SUNDARAM FINANCE LTD. AT RS.4,34,8 02/- AND INTEREST PAID TO TATA MOTORS FINANCE LTD. AT RS.3,7 6,679/-. IT HAS BEEN CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ALLEGED INTEREST HAS BEEN PAID TO NON-BANKING FINANCE COMPA NIES AND TAX WAS NOT DEDUCTED AT SOURCE ON THE INTEREST PAID. HO WEVER, BOTH THESE COMPANIES ARE REGULARLY ASSESSED TO TAX AND T HEY HAVE OFFERED THE ALLEGED INTEREST AMOUNT AS A PART OF THEIR REVE NUE FOR THE YEAR GOLDEN CHEMICAL TRANSPORT CO. 4 AND INCOME TAX RETURN HAVE BEEN FILED AND DUE TAXES HAVE BEEN PAID. THE RELIANCE WAS PLACED ON THE DECISION OF CO ORDINATE BENCH IN THE ASSESSEES OWN CASE FOR A.Y. 2011-12 VIDE ITANO.889/IND/2016 DATED 28.10.2016. 9. FROM PERUSAL OF THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE FOR A.Y. 2011-12, WE FIND THAT THE SAME ISSUE CAME FOR ADJUDICATION AND ISSUE WAS RESTORED TO THE FILE OF LD. AO FOR CA RRYING OUT NECESSARY VERIFICATION. PLACING RELIANCE ON THE JUD GMENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ANSAL LA NDMARK TOWNSHIP (P) LTD. 61 TAXMANN.COM 45, WHEREIN IT WAS HELD TH AT SECOND PROVISO TO SECTION 40(A) (IA) INSERTED BY THE FINANCE ACT 2012 APPLICABLE WITH EFFECT FROM 1 ST APRIL 2013 IS DECLARATORY AND CURATIVE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005 AND THEREFORE, THE ASSESSEE SHOULD NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN TERM OF THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201 OF THE ACT, IF THE PAYEE FURNISHES THEIR RETURNS OF INCOME U/S 139 OF THE ACT AND HAVE TAKEN INTO ACCOUNT, THE ALLEGED AMOUNT FOR COMPUTIN G OF INCOME IN SUCH RETURN OF INCOME AND AS PAID THE TAX DUE ON TH E INCOME DECLARED BY THEM DULY SUPPORTED BY A CERTIFICATE TO BE FURNISHED BY CHARTERED ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRI BED. 10. FROM PERUSAL OF RECORD OF PAPER BOOK, WE FIND T HAT THE ASSESSEE HAS FILED NECESSARY EVIDENCE AS DISCUSSED ABOVE. WE , THEREFORE, RESTORE THIS ISSUE OF DISALLOWANCE OF INTEREST U/S 40(A)(IA) OF THE ACT AT RS.8,11,481/- TO THE FILE OF LD. AO TO CONDUCT N ECESSARY VERIFICATION OF THE DOCUMENTS AND CERTIFICATES TO B E FILED BY THE ASSESSEE AND IN CASE THE DETAILS FILED BY THE ASSES SEE ARE SUFFICIENT GOLDEN CHEMICAL TRANSPORT CO. 5 TO COMPLY TO OUR ABOVE DIRECTIONS THEN THE IMPUGNED DISALLOWANCE MAY BE DELETED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30..08.2 018. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 30/ 08/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE