POSHS METAL INDUSTRIES P.LTD, MUMBAI V. ITO 10(2)(2), MUMBAI

ITA 6438/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83806 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Section: 43B; 80IB; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C B ENCH, MUMBAI , , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO.6438/MUM2011 ( ' ' ' ' / ASSESSMENT YEAR : 2008-09 M/S. POSHS METAL INDUSTRIES PVT. LTD., 2A, KALYANDHAM SION TROMBAY ROAD, NEXT TO CENTRAL BANK, MANKHURD (E), MUMBAI-400 088 / VS. THE ITO 10(2)(2), AAYAKAR BHAVAN, MUMBAI-400 020 ( % ./ ) ./ PAN/GIR NO. : AABCP 4751D ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY: SHRI NISHIT GANDHI +,(* . - / RESPONDENT BY: SMT. PARMINDER . /0% / DATE OF HEARING :08.09.2014 12' . /0% / DATE OF PRONOUNCEMENT :12.09.2014 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. CIT(A)-22, MUMBAI DT.14.7.2011 PERTAINING TO A.Y.20 08-09. 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO THE DISALLOWANCE OF INTEREST U/S. 43B(E) OF THE ACT. ITA NO. 6438/M/2011 2 2.1. THE ASSESSEE IS IN THE BUSINESS OF STEEL PROCE SSING. RETURN FOR THE YEAR WAS SELECTED FOR SCRUTINY UNDER CASS SYSTEM. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED INTEREST TO BANK ON TERM L OAN AT RS. 1,03,64,764/- . THE AO FURTHER NOTICED THAT THE BANK IS TRANSFER RING THE FUND FROM ASSESSEES OD ACCOUNT THEREBY ENHANCING THE LIABILI TY OF THE ASSESSEE. THE AO WAS OF THE OPINION THAT INTEREST ON TERM LOA N OBTAINED BY THE ASSESSEE HAS NOT BEEN ACTUALLY PAID. THE ASSESSEE WAS ASKED TO FURNISH PROOF OF ACTUAL PAYMENT OF INTEREST TO BANK IN THE LIGHT OF PROVISIONS OF SEC. 43B OF THE ACT. IT WAS EXPLAINED THAT THE ASS ESSEE WAS HAVING CASH CREDIT FACILITY FROM UCO BANK FOR RS. 100 LAKHS. T HE SAME BANK HAS GIVEN TERM LOAN FOR PUNE UNIT, THE INTEREST AND INS TALLMENTS OF WHICH ARE PAID FROM THE CASH CREDIT ACCOUNT AND TRANSFERRED T HE INSTALMENT TO TERM LOAN ACCOUNT. THUS, ALL THE PAYMENTS OF INTEREST AN D INSTALMENTS ARE DULY PAID AND THEREFORE THERE IS NO QUESTION OF ANY DISA LLOWANCE U/S. 43B OF THE ACT. 2.2. THE SUBMISSIONS OF THE ASSESSEE WERE NOT ACCEP TED BY THE AO. ACCORDING TO THE AO BY DEBITING THE INTEREST AMOUNT , THE ASSESSEES LOAN LIABILITY TOWARDS BANK WAS INCREASED WHICH AMOUNTED TO CONVERSION OF INTEREST LIABILITY INTO A FURTHER LOAN. SINCE THER E WAS A NEGATIVE BALANCE IN THE CASH CREDIT ACCOUNT, THERE IS NO ACTUAL PAYMENT OF INTEREST. INVOKING THE PROVISIONS OF SEC. 43B R.W. EXPLANATION 3D, THE AO PROCEEDED TO DISALLOW INTEREST OF RS. 92,88,354/- U/S. 43B(E) OF THE ACT. {{ 3. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) BUT FAILED TO CONVINCE THE LD. CIT(A) THAT T HE INTEREST WAS ACTUALLY PAID. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED COPY OF THE BANK STATEMENT FOR THE SUCCEEDING YEAR AND POINTED OUT THAT BEFORE FILING ITA NO. 6438/M/2011 3 OF THE RETURN, THE ASSESSEE HAD CLEAR CREDIT BALANC E IN ITS CASH CREDIT ACCOUNT WHICH MEANS THAT THE INTEREST HAVE ACTUALLY BEEN PAID BEFORE FILING OF RETURN, THEREFORE, THERE IS NO QUESTION O F DISALLOWANCE U/S. 43B OF THE ACT. WE FIND FORCE IN THE CONTENTION OF THE LD . COUNSEL. AS THERE IS A POSITIVE BALANCE IN THE CASH CREDIT ACCOUNT PRIOR T O THE FILING OF THE RETURN, THEREBY THE ASSESSEE HAS PAID INTEREST BEFORE FILIN G THE RETURN OF INCOME AND THEREFORE COVERED BY THE FIRST PROVISO TO SEC. 43B OF THE ACT. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 5. GROUND NO. 2 RELATES TO THE NON DISPOSAL OF THE GROUND PERTAINING TO COMPUTATION OF DEDUCTION U/S. 80IB OF THE ACT BY THE LD. CIT(A). 6. A PERUSAL OF THE ORDER OF THE LD. CIT(A) SHOWS T HAT THE LD. CIT(A) HAS DIRECTED THE AO TO DISPOSE OF APPLICATIO N U/S. 154 FILED BY THE ASSESSEE , BUT THE LD. CIT(A) HAS NOT DISPOSED THE GRIEVANCE RAISED BY THE ASSESSEE. IN OUR CONSIDERED OPINION, THIS ISSUE NE EDS TO BE DECIDED AFRESH BY THE LD. CIT(A). WE, THEREFORE, RESTORE THIS ISS UE TO THE FILE OF THE LD. CIT(A). THE LD. CIT(A) IS DIRECTED TO DISPOSE OF T HE GROUND TAKEN BEFORE HIM PERTAINING TO THE CLAIM OF DEDUCTION U/S . 80IB OF THE ACT. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2014 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) / JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 4 DATED : 12 TH SEPTEMBER, 2014 . . ./ RJ , SR. PS ITA NO. 6438/M/2011 4 3 3 3 3 . .. . +/ +/ +/ +/ 5 '/ 5 '/ 5 '/ 5 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 78 +/ , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// ; ;; ; / < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI