ORION TRAVELS P.LTD, MUMBAI V. DCIT CEN CIR 31, MUMBAI

ITA 6599/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5879 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 11-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 6599/MUM/2013 (ASSESSMENT YEAR: 2006-07) M/S. ORION TRAVELS PVT. LTD. DCIT, CENTRAL CIRCLE-3 1 32, MADHULI, DR. A.B. ROAD AAYAKAR BHAVAN, M.K. ROA D WORLI, MUMBAI 400018 VS. MUMBAI 400020 PAN - AAACO1591K APPELLANT RESPONDENT APPELLANT BY: SHRI DHARMESH SHAH RESPONDENT BY: DR. P. DANIEL DATE OF HEARING: 13.03.2014 DATE OF PRONOUNCEMENT: 26.03.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL IS FILED AT THE INSTANCE OF THE ASSESSE E COMPANY AND IT PERTAINS TO A.Y. 2006-07. 2. THE FOLLOWING GROUND IS URGED BY THE ASSESSEE BEFOR E THE TRIBUNAL: - THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS E RRED IN LAW AND FACTS IN CONFIRMING THE DISALLOWANCE OF INTEREST EX PENDITURE AMOUNTING TO RS.15,33,325/-. 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE BELONGS TO HARSHAD METHA GROUP OF COMPANIES. ASSESSEE CLAIMED TOTAL INTEREST EXPENDITURE OF ` 26,67,555/- OUT OF WHICH THE ASSESSEE SUO MOTO DISALLOWED ` 11,34,230/- BY APPLYING SECTION 14A OF THE ACT AND ONLY THE BALANCE AMOUNT OF ` 15,33,325/- WAS CLAIMED AS DEDUCTION. THE AO OBSERVED THAT THE INTEREST WAS NO T PROVIDED IN THE PAST YEARS SINCE THERE WAS NO STIPULATION OF INTEREST PA YABLE. HE FURTHER OBSERVED THAT INTEREST IS A CONTINGENT LIABILITY AN D THE ISSUE IS PENDING BEFORE THE SPECIAL COURT. IN HIS OPINION THE ASSESS EE IS NOT ENTITLED TO CLAIM INTEREST. ON AN APPEAL FILED BY THE ASSESSEE THE LE ARNED CIT(A) OBSERVED ITA NO. 6599/MUM/2013 M/S. ORION TRAVELS PVT. LTD. 2 THAT THE LOANS TAKEN FROM THE DIRECTORS ARE INTERES T FREE AND THERE IS NO TERMS AND CONDITIONS TO PAY INTEREST TO CREDITORS A ND BY FOLLOWING THE ORDER PASSED IN ASSESSEES OWN CASE FOR EARLIER ASSESSMEN T YEARS, I.E. A.Y. 2004- 05 AND A.Y. 2005-06 AND ALSO FOR THE REASONS GIVEN IN THE CASE OF SHRI HITESH S. MEHTA FOR A.Y. 2005-06 THE CLAIM OF INTER EST EXPENDITURE WAS NOT ACCEPTED BY THE LEARNED CIT(A) AND THUS THE ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL BUT THE FACT REMAINS THAT ON IDENTICAL CIRCUMSTANCES THE MATTER WAS SET ASIDE FOR DE NOVO CONSIDERATION AFTE R EXAMINING THE FACTS IN THE FOLLOWING GROUP OF CASES: - I. HITESH S. MEHTA VS DCIT ITA NO./ 7726 AND 7727/MUM/ 2010 DATED 26.04.2013. II. HITESH S. MEHTA VS. DCIT ITA NO. 5587 TO 5589/MUM/ 2011 DATED 12.06.2013. III. HARSH ESTATES VS. ACIT ITA NO. 5139/MUM/2012 DATED 06.11.2013. IV. TOPAZ HOLDINGS PVT. LTD. VS. DCIT ITA NO. 3922/MUM/ 2013 DATED 19.02.2014. 4. NEITHER THE ASSESSEES COUNSEL NOR THE REVENUES CO UNSEL COULD POINT OUT AS TO WHAT HAPPENED IN THE IMMEDIATELY PRECEDIN G YEAR IN ASSESSEES OWN CASE, I.E. ORION TRAVELS PVT. LTD. THE LEARNED STANDING COUNSEL FOR THE INCOME TAX DEPARTMENT STATED THAT THIS IS THE THIRD ROUND OF LITIGATION AND HENCE IT DOES NOT DESERVE TO BE SET ASIDE THOUGH HE ADMITTED THAT IN THE OTHER GROUP OF MATTERS, UNDER IDENTICAL CIRCUMSTANC ES, THE MATTER WAS SET ASIDE TO THE FILE OF THE CIT(A) FOR RECONSIDERATION . SINCE THE LEARNED CIT(A) REFERRED TO THE ORDER PASSED BY HIS PREDECESSOR IN ASSESSEES OWN CASE FOR EARLIER YEARS THE BENCH WANTED TO KNOW AS TO WHAT A RE THE STATUS OF THOSE APPEALS; WHETHER SECOND APPEAL WAS FILED BY THE ASS ESSEE AND IF SO WHETHER THE MATTER WAS SET ASIDE IN THESE CASES ALSO. IT AP PEARS THAT THE LEARNED STANDING COUNSEL WAS OF THE FIRM VIEW THAT OTHER TH AN THOSE CASES IN WHICH HE IS BRIEFED, IT IS NOT NECESSARY FOR HIM TO KEEP TRACK OF. PRESUMABLY BECAUSE OF THAT OPINION HE SUBMITTED THAT HE WAS NO T AWARE OF THE STATUS OF THE APPEALS IN ASSESSEES OWN CASE FOR EARLIER YEAR S. IT IS WELL SETTLED THAT THE TRIBUNAL IS A FACT FINDING BODY AND IT IS THE DUTY OF THE PARTIES APPEARING FROM BOTH SIDES TO ASSIST THE COURT PROPERLY BY PLA CING ALL THE FACTS RELEVANT ITA NO. 6599/MUM/2013 M/S. ORION TRAVELS PVT. LTD. 3 FOR DISPOSAL OF THE APPEAL. WHEN THE FIRST APPELLAT E AUTHORITY REFERRED TO THE EARLIER ORDERS PASSED BY HIS PREDECESSOR IN ASSESSE ES OWN CASE AND PER CHANCE FURTHER APPEALS FILED BY THE ASSESSEE WERE D ISMISSED BUT ON ACCOUNT OF LAXITY ON THE PART OF THE PARTIES IN BRINING THA T INFORMATION TO THE NOTICE OF THE BENCH, IF THE MATTER IS SET ASIDE IN THIS CASE, IT WOULD LEAD TO INCONSISTENCY WHICH COULD HAVE BEEN AVOIDED IF THE PARTIES ARE VIGILANT TO OBTAIN SUCH INFORMATION SO AS TO ASSIST THE COURT P ROPERLY. BOTH THE PARTIES ADMITTED, HOWEVER, THAT IN NUMBER OF CASES OF THIS GROUP THE TRIBUNAL HAD TAKEN A CONSISTENT STAND, EVEN IN THE THIRD ROUND O F LITIGATION, THAT THE FACTS NEED TO BE PROPERLY EXAMINED AND, THEREFORE, SET AS IDE THIS ISSUE TO THE FILE OF THE CIT(A). IN FACT IN ONE SUCH CASE THE MATTER WAS PLACED BEFORE THIS BENCH WHEREIN I HAVE SET ASIDE THIS ISSUE FOR RE-EX AMINATION (TOPAZ HOLDINGS P. LTD.). UNDER THESE CIRCUMSTANCES I HERE BY SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) TO ADJUDICATE THE MATTER AFR ESH ON RE-EXAMINING THE FACTS. IF, BY ANY CHANCE, THE APPEALS PERTAINING TO THE ASSESSEE FOR A.Y. 2004-05 AND A.Y. 2005-06 WERE TO BE TAKEN UP FOR HE ARING SUBSEQUENTLY, IF THEY ARE PENDING, THE BENCH IS FREE TO TAKE ITS OWN DECISION WITHOUT BEING PREJUDICED BY THE VIEW TAKEN IN ASSESSEES OWN CASE FOR SUBSEQUENT YEAR, I.E. 2006-07. AT THE COST OF REPETITION IT MAY BE MENTIO NED THAT THE DECISION HAD TO BE RENDERED BECAUSE OF LACK OF ASSISTANCE FROM B OTH THE PARTIES. 5. IN ADDITION TO THE ABOVE GROUND THE ASSESSEE COMPAN Y RAISED AN ADDITIONAL GROUND WHICH READS AS UNDER: - THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT AS P ER THE DECISION OF HON'BLE SPECIAL COURT DATED 30.04.2010 IN MP NO. 4 1 OF 1999, THE ASSES UNDER CONSIDERATION AND THE CONSEQUENTIAL INC OME BELONGS TO SHRI HARSHAD S. MEHTA AND HENCE THE INCOME ASSESSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN TAXED IN THE H ANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE APPELL ANT. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE CASE OF SHRI HITESH S. MEHTA (SUPRA) THE EARLIER BENCHES OF THE ITAT HAVE ADMITTED THE ADDITIONAL GROUND AND DISMISSED IT AS INFRUCTUO US. WHEN IT WAS POINTED OUT THAT THE SAME ISSUE HAS COME UP BEFORE THE SMC BENCH WHEREIN THIS BENCH HAD TAKEN A VIEW THAT THE ADDITIONAL GROUND N EED NOT TO BE ADMITTED, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT CONSISTENT VIEW HAVING ITA NO. 6599/MUM/2013 M/S. ORION TRAVELS PVT. LTD. 4 BEEN TAKEN IN THE EARLIER CASES, DESPITE A LATER SM C BENCH ORDER, EARLIER VIEW DESERVES TO BE FOLLOWED. 7. THE STANDING COUNSEL FOR THE REVENUE, ON THE OTHER HAND, SUBMITTED THAT THE ADDITIONAL GROUND DOES NOT DESERVE TO BE A DMITTED AND RELIED UPON THE DECISION OF THE ITAT SMC BENCH IN THE CASE OF T OPAZ HOLDINGS PVT. LTD. (SUPRA). 8. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED THE RECORD. I HAVE ALREADY TAKEN A VIEW IN THE CASE OF TOPAZ HOLDINGS PVT. LTD. THAT IT IS NOT A PURE LEGAL ISSUE WHICH GOES TO THE ROOT OF THE MATTER AS OTHERWISE IT COULD NOT HAVE BEEN DISMISSED AS ACADE MIC AND FURTHER NOTICED THAT THESE FACTS WERE NOT ON RECORD BEFORE THE TAX AUTHORITIES AND HENCE THE ADDITIONAL GROUND CANNOT BE ADMITTED. FOR THE DETAI LED REASONS MENTIONED IN PARAS 14 & 15 OF THE AFOREMENTIONED ORDER I REJE CT THE ADDITIONAL GROUND SUMMARILY. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MARCH, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 26 TH MARCH, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 37, MUMBAI 4. THE CIT CENTRAL-II, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.