ACIT, Coimbatore V. M/s. Sakthi Finance Ltd., Coimbatore

ITA 710/CHNY/2006

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5113 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 21-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Keywords: Retrospective amendment; Notional interest
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH D : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NOS. 709 & 710/MDS/2006 ASSESSMENT YEARS : 2000-01 &2002-03 THE ACIT COMPANY CIRCLE I(1) COIMBATORE VS M/S SAKTHI FINANCE LTD 475, DR. NANJAPPA ROAD COIMBATORE [PAN AAADCS0656G ] (APPELLANT) (RESPONDENT) I.T.A NOS. 928 & 927/MDS/2006 ASSESSMENT YEARS : 2000-01 &2002-03 M/S SAKTHI FINANCE LTD 475, DR. NANJAPPA ROAD COIMBATORE VS THE ACIT COMPANY CIRCLE I(1) COIMBATORE (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI ANIRUDH RAI ASSESSEE BY : SHRI VIKRAM VIJAYARAGHAVAN O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THESE ARE CROSS APPEALS, FOR ASSESSMENT YEARS 2 000-01 AND 2002-03, WHICH HAVE BEEN FILED AGAINST THE SEPARATE ORDERS OF THE LD. CIT(A), COIMBATORE, BUT DATED 9.1.2006. IN THESE A PPEALS, ALMOST IDENTICAL ISSUES ARISING OUT OF COMMON FACTS ARE IN VOLVED, THEREFORE, WE PROCEED TO DECIDE THEM BY A COMMON ORDER FOR THE SA KE OF ITA 709&710/06 927 & 928/06 :- 2 -: CONVENIENCE AND BREVITY. THE SECTIONS MENTIONED IN THIS ORDER ARE THAT OF INCOME TAX ACT, 1961. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE- COMPANY IS A FINANCE COMPANY. IN BOTH THE YEARS, COMMON ISSUES INVOLVED IN ASSESSEES APPEALS ARE (I) NON-DEDUCTI ON OF PROVISION FOR NON-PERFORMING ASSETS(NPAS) AS BAD DEBT OR BUSINES S LOSS; AND (II) NON-DEDUCTION OF SHARE ISSUE EXPENSES U/S 35. 3. IT WAS FAIRLY SUBMITTED BY THE LD.AR APPEARING FOR THE ASSESSEE THROUGH A CHART THAT AFTER AMENDMENT TO SECTION 36( 1)(VII) WITH EFFECT FROM 1.4.1989, THE DEBTS SHOULD BE ACTUALLY WRITTEN OFF. IN THIS REGARD, DECISION OF HON'BLE SUPREME COURT RENDERED IN THE C ASE OF SOUTHERN TECHNOLOGIES VS JCIT, 320 ITR 527, IS AGAINST THE C LAIM OF THE ASSESSEE. IN SO FAR AS NON-DEDUCTION OF SHARE ISSU E EXPENSES U/S 35D IS CONCERNED, THAT IS ALSO AGAINST THE ASSESSEE BY THE DECISION OF HON'BLE MADRAS HIGH COURT RENDERED IN ASSESSEES OW N CASE (256 ITR 488) WHEN THE DEPARTMENT WENT IN APPEAL THROUGH CIT . HENCE, BOTH THE ISSUES INVOLVED IN BOTH THE ASSESSMENT YEARS WH ICH ARE COMMON, IN THE APPEALS OF THE ASSESSEE, STAND COVERED AGAIN ST THE ASSESSEE AS STATED ABOVE. SO, THERE IS NO SCOPE TO GIVE RETHINK INTO THE FACTS OF THESE ISSUES, HENCE, IN VIEW OF THE FAIR SUBMISSIO N OF THE LD.AR, WE DISMISS BOTH THE ISSUES. IN I.T.A.NO. 927/MDS/2006 FOR ASSESSMENT YEAR 2002-03, AN ISSUE REGARDING NON-DEDUCTION OF P ROVISION FOR NPAS ITA 709&710/06 927 & 928/06 :- 3 -: WHILE COMPUTING BOOK PROFITS U/S 115JB HAS BEEN TAK EN. THE LD.AR FOR THE ASSESSEE FAIRLY SUBMITTED THAT THIS ISSUE STAND S COVERED AGAINST THE ASSESSEE BY VIRTUE OF RETROSPECTIVE AMENDMENT MADE IN SECTION 115JB THROUGH EXPLANATION 1 BY FINANCE (NO.2) ACT, 2009 W ITH EFFECT FROM 1.4.2001. THE DECISION OF HON'BLE SUPREME COURT REN DERED IN THE CASE OF CIT VS HCL COMNET SYSTEMS AND SERVICES(305 ITR 49) HAS BEEN NEUTRAL. HENCE, THIS ISSUE ALSO STANDS COVERED AGA INST THE ASSESSEE. CONSEQUENTLY, BOTH THE APPEALS OF THE ASSESSEE STAN D DISMISSED. 4. IN REVENUES APPEALS FOR BOTH THE YEARS, A COMMON I SSUE REGARDING DELETION OF NOTIONAL INTEREST ON NPAS IS INVOLVED. ADMITTEDLY, THE ASSESSEE HAS NOT RECOGNIZED INTEREST ON NPAS AS INCOME UNDER REAL INCOME PRINCIPLE. THE ASSESSING OFFICER HAS ADDED THE NOTIONAL AMOUNT OF INTEREST. THIS ISSUE STANDS COVERED IN F AVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE MADRAS HIGH COU RT RENDERED IN THE CASE OF CIT VS ELGI FINANCE(293 ITR 357) AGAINST WH ICH SLP FILED BY THE DEPARTMENT HAS BEEN DISMISSED BY THE HON'BLE SU PREME COURT. IN ASSESSEES OWN CASE IN I.T.A.NO. 3409 TO 3411/MDS/2 004 FOR ASSESSMENT YEARS 1996-97 TO 1998-99, VIDE ORDER DAT ED 11.6.2010, THE TRIBUNAL HAS TAKEN A FAVOURABLE VIEW AND THE ASSESS EE HAS SUCCEEDED. HENCE, BY FOLLOWING THE HON'BLE MADRAS HIGH COURT D ECISION AND THAT OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE CANNOT A LLOW THE GROUND RAISED BY THE REVENUE IN BOTH THE YEAS. ITA 709&710/06 927 & 928/06 :- 4 -: 5. IN THE RESULT, ALL THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23. 5.2011. (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 23 RD MAY, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR