JT CIT 17(1), MUMBAI V. P.D. WAREHOUSING CORPORATION, MUMBAI

ITA 6265/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8300 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER I.T.A. NO.6265/M/2011 ASSESSMENT YEAR:2008-2009 DY. CIT-17(1), 1 ST FLOOR, R.NO. 113, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI. VS. M/S. P.D. WAREHOUSING CORPORATION, GUPTA MILLS ESTATE, DARUKHANA, REAY ROAD, MUMBAI 400 010. PAN:AAAFP1508J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJARSHI DWIVEDY, SR. DR RESPONDENT BY : SHRI R.C. JAIN DATE OF HEARING: 5.11.2012 DATE OF ORD ER: 7.11.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 9.9.2011 AGAINS T THE ORDER OF CIT (A)-29, MUMBAI DATED 27.6.2011 FOR THE ASSESSMENT YEAR 2008 -2009. 2. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD CIT (A) ERRED IN ALLOWING CLAIM OF DEDUCTION OF INTEREST EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THE BORROWED CAP ITAL HAS BEEN UTILIZED TO SETTLE THE DUES OF THE RETIRING PARTNERS OF THE FIR M AND NOT FOR THE BUSINESS PURPOSE AS DEFINED IN SECTION 36(1)(III) OF THE IT ACT, 1961. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A ) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. AT THE OUTSET, SHRI R.C. JAIN, LD COUNSEL FOR TH E ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL FOR THE AYS 2004-2005, 2005-2 006 & 2006-2007 AND MENTIONED THAT THE ISSUE IS IDENTICAL IN ALL THESE ASSESSMENT YEARS ON THE ISSUE OF ALLOWABILITY OF INTEREST CLAIMED UNDER SECTION 36(1 )(III) OF THE ACT. LD COUNSEL READ OUT THE CONTENTS OF PARA 2 FROM THE ORDER OF THE TR IBUNAL FOR THE AY 2006-2007 VIDE ITA NO.488/MUM/2010 AND MENTIONED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. HE ALSO MENTIONED THAT THE CIT (A) GAVE THE RELIEF IN THIS YEAR FOLLOWING 2 M/S. P.D. WAREHOUSING CORPORATION THE ABOVE CITED DECISIONS OF THE TRIBUNAL WHICH ARE EVIDENT FROM THE CONTENTS OF THE PARA 4 OF THE IMPUGNED ORDER. NOTHING IS BROUGHT T O OUR NOTICE BY THE LD COUNSEL THAT THE FACTS ARE DIFFERENT AND THE ABOVE MENTIONE D DECISIONS OF THE TRIBUNAL ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 4. WE HAVE PERUSED THE SAID PARA 2 OF THE TRIBUNAL S ORDER DATED 26.11.2010 AS WELL AS PARA 2 AND 3 OF THE ORDER OF THE TRIBUNAL F OR THE AY 2007-2008 VIDE ITA NO.6562/M/2010. FOR THE SAKE OF COMPLETENESS, THE SAID PARAGRAPHS ARE REPRODUCED AS UNDER: PARA 2 FROM ITA NO.488/M/2010 2. FIRST GROUND IS AGAINST THE CONFIRMATION OF DISALLO WANCE U/S 36(1)(III) OF THE ACT. SHORN OFF UNNECESSARY DETAILS IT IS NO TED THAT SIMILAR DISALLOWANCE OF INTEREST WAS MADE IN ASSESSMENT YEAR 2004-2005 I N RESPECT OF FUNDS BORROWED FOR MAKING PAYMENT TO RETIRING PARTNERS. T HE LD CIT (A), FOLLOWING THE ORDER HIS PREDECESSOR, UPHELD THE DISALLOWANCE. THE LD AR HAS PLACED ON RECORD A COPY OF THE PASSED BY THE TRIBUNAL IN THE IMMEDIATELY PRECEDING YEAR IN ITA NOS. 2223 & 2224/M/2009. VIDE ORDER DA TED 10.02.2010, THE TRIBUNAL HAS ORDERED FOR DELETION OF THE DISALLOWAN CE OF INTEREST MADE AND SUSTAINED IN THE FIRST APPEAL. THE RELEVANT DISCUS SION IS IN PARAS 9 TO 14 OF THE TRIBUNAL ORDER. IN THE ABSENCE OF ANY DISTINGU ISHING FEATURE HAVING BEEN BROUGHT TO OUR NOTICE, RESPECTFULLY FOLLOWING THE P RECEDENT, WE OVERTURN THE IMPUGNED ORDER ON THIS ISSUE AND ORDER FOR THE DELE TION OF THE DISALLOWANCE. PARAS 2 & 3 FROM ITA NO.6562/M/2010 2. THE ONLY EFFECTIVE GROUND IS AGAINST THE DELETI ON OF ADDITION OF INTEREST EXPENDITURE WHICH WAS MADE BY THE ASSESSIN G OFFICER ON THE GROUND THAT THE BORROWED CAPITAL WAS UTILIZED TO SETTLE TH E DUES OF RETIRING PARTNERS AND NOT AS PER SECTION 36(1)(III) OF THE ACT. THE ASSESSING OFFICER, FOLLOWING THE VIEW TAKEN IN EARLIER YEARS, MADE THE DISALLOWA NCE U/S 36(1)(III) AMOUNTING TO RS. 20,87,338/-. THE LD CIT (A) DELET ED THE ADDITION BY RELYING ON THE VIEW TAKEN BY HIM FOR THE ASSESSMENT YEARS 2 004-2005, 2005-2006 AND 2006-2007 INVOLVING IDENTICAL FACTS. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THE SAID ISS UE TRAVELLED TO THE TRIBUNAL IN EARLIER YEARS. VIDE ITS ORDER DATED 10.10.2010, THE TRIBUNAL FOR ASSESSMENT YEARS 2004-2005 AND 2005-2006 HAS ORDERED FOR THE D ELETION OF ADDITION MADE BY THE AO U/S 36(1)(III). SIMILAR VIEW HAS BE EN REITERATED IN THE TRIBUNAL ORDER DATED 26 TH NOVEMBER, 2010 FOR ASSESSMENT YEAR 2006-2007. AS THE TRIBUNAL HAS CONSISTENTLY DELETED THE ADDITI ON MADE UNDER IDENTICAL CIRCUMSTANCES IN THE IMMEDIATELY PRECEDING THREE AS SESSMENT YEARS, WE ARE OF THE CONSIDERED OPINION THAT THERE CAN BE NO JUST IFICATION TO OBSERVE DEPARTURE THERE FROM. THE LD DEPARTMENTAL REPRESEN TATIVE ALSO FAILED TO POINT OUT ANY DISTINGUISHING FACTS OF THIS YEAR VIS --VIS THE EARLIER YEARS 3 M/S. P.D. WAREHOUSING CORPORATION DECIDED BY THE TRIBUNAL. RESPECTFULLY, FOLLOWING T HE PRECEDENTS, WE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. 5. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSU E, THE ORDER OF THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, G ROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF NOVEMBER, 2012. SD/- SD/- (VIVEK VARMA) (D. KARUNAKARA R AO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 7 .11.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR C, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI