M/s. Amin Automobiles, Ahmedabad V. The Dy.CIT, Circle-3, Ahmedabad

ITA 657/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8950 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO.657/AHD/2014 (ASSESSMENT YEAR:2010-11) M/S. AMIN AUTOMOBILES, LALDARWAJA, AHMEDABAD APPELLANT VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3, AHMEDABAD RESPONDENT PAN: AAFFA6860R /BY ASSESSEE : SHRI NIMISH B. SHAH, A.R. /BY REVENUE : SHRI JAMES KURIAN, SR. D.R. /DATE OF HEARING : 08.03.2017 /DATE OF PRONOUNCEMENT : 16.03.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-11 ARISES AGAINST THE CIT(A)-II, AHMEDABADS ORDER DATED 03.01.2014, PASS ED IN APPEAL NO. CIT(A)-II/DCIT.CIR-3/405/2013-14, PARTLY UPHOLDING ASSESSING OFFICERS ACTION DISALLOWING INTEREST EXPENDITURE OF RS.15,00 ,349/- BY ADOPTING INTEREST RATE FROM 8% TO 10% IN CASE OF SPECIFIED PARTIES U/ S.40A(2)(B), IN ITA NO. 657/AHD/2014 ( M/S. AMIN AUTOMOBILES VS. DC IT) A.Y. 2010-11 - 2 - PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED . 2. RELEVANT FACTS OF THE CASE ARE IN A VERY NARROW COMPASS. THE ASSESSEE HAD INCURRED INTEREST EXPENSES @12% IN CASE OF FOUR SPECIFIED PARTIES SMT. SUSHILABEN, HANSABEN, M/S. AMIN FINANCE AND A. S. M OTORS, BARODA TO THE TUNE OF RS.29,89,774/-, RS.10,83,750/-, RS.278847/- AND RS.148676/-; RESPECTIVELY TOTALING TO RS.15,01,047/- IN QUESTION . IT HAD HOWEVER PAID INTEREST TO SIX NON SPECIFIED PARTIES @8% INVOLVING GROSS EXPENSES OF RS.66,031/-. THE ASSESSING OFFICER FRAMED A REGULA R ASSESSMENT ON 26.11.2012 ADOPTING 8% AS REASONABLE RATE OF INTERE ST TO DISALLOW THE EXCESSIVE 4% COMPONENT OF THE ABOVE INTEREST EXPENS ES COMING TO RS.15,00,349/- BY INVOKING SECTION 40A(2)(B) OF THE ACT. LEARNED CIT(A) GRANTS PART RELIEF TO ASSESSEE BY ADOPTING RATE OF INTEREST ABOVESAID AS 10% THEREBY DISALLOWING REMAINING 2% COMPONENT OF THE A BOVE EXPENSES. THIS LEAVES THE ASSESSEE AGGRIEVED. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO R IVAL CONTENTIONS. IT IS APPARENT THAT BOTH THE LOWER AUTHORITIES HAVE COMPA RED ASSESSEES INTEREST OUTGO @12% TO 8% IN OTHER CASES IN ORDER TO DISALLO W THE SUM IN QUESTION U/S.40A(2)(B) OF THE ACT. THEY HAVE BEEN GUIDED BY ASSESSEES NON SPECIFIED CREDITORS RATE OF INTEREST @8% IN OTHER WORDS. WE NOWHERE SEE ANY COMPARISON OR EVEN A REFERENCE TO THE RELEVANT MARK ET RATE OF INTEREST IN ORDER TO DISALLOW THE ASSESSEES 12% INTEREST PAYMENT BY HOLDING THE SAME AS EXCESSIVE. WE QUOTE HONBLE JURISDICTIONAL HIGH CO URTS DECISION IN [2014] 50 TAXMANN.COM 52 (GUJARAT) CIT VS. SARJAN REALITIES H OLDING THAT THE IMPUGNED SECTION 40A(2)(B) DISALLOWANCE INVOKED SOLELY BECAU SE AN ASSESSEE HAS MADE INTEREST PAYMENTS AT MUCH LOWER RATES THAN TO THE S PECIFIED PARTIES AS NOT ITA NO. 657/AHD/2014 ( M/S. AMIN AUTOMOBILES VS. DC IT) A.Y. 2010-11 - 3 - SUSTAINABLE. WE FOLLOW THE SAME REASONING HEREIN A S WELL TO DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED DISALLOWAN CE. 4. THE ASSESSEE SUCCEEDS IN ITS APPEAL. [PRONOUNCED IN THE OPEN COURT ON THIS THE 16 TH DAY OF MARCH, 2017.] SD/- SD/- ( N. K. BILLAIYA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 16/03/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0