SHRIRAM CHITS ( MAHARASHTRA ) LTD, MUMBAI V. ASST CIT 3(3), MUMBAI

ITA 7118/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8332 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 14-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 29-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SAMI
• Section: 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , ! '# $ $ $ $ , % && , , '# ' BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUICIAL MEMBER ./ I.T.A. NO.7118/MUM/2012 ( ( ( ( ( / ASSESSMENT YEAR :2009-10 SHRIRAM CHITS (MAHARASHTRA) LTD. , C/O SHANKARLAL JAIN & ASSOCIATES, 12, ENGINEER BLDG., 265, PRINCESS STREET, MUMBAI-400 002 / VS. THE ACIT, CIRCLE 3(3), AAYAKAR BHAVAN, MUMBAI-400 020 #) ! ./ %* ./ PAN/GIR NO. : AAECS 7592Q ( )+ / APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . / APPELLANT BY: SHRI S.L. JAIN ,-)+ / . / RESPONDENT BY: SHRI VIJAY KUMAR SAMI / 01! / DATE OF HEARING :14.08.2014 23( / 01! / DATE OF PRONOUNCEMENT :22.08.2014 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-7, MUMBAI DT.23.8.2012 PERTAINING TO A.Y .2009-10. 2. THE ASSESSEE HAS RAISED 3 SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO THE DISALLOWANCE OF INTEREST OF R S. 7,90,996/- BEING INTEREST PAID ON LATE PAYMENT OF SERVICE TAX. ITA NO. 7118/M/2012 2 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED RS. 8.30,350/- WHICH INCLUDED INTEREST ON SERVICE TAX AMOUNTING TO RS. 7,90,996/-. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM. IT WAS EX PLAINED THAT THE INTEREST PERTAIN TO LATE PAYMENT OF SERVICE TAX AND THEREFOR E THE INTEREST PAID ON THE SERVICE TAX SHOULD BE ALLOWED AS BUSINESS EXPEN DITURE. THE SUBMISSION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO WHO DISALLOWED RS. 7,90,996/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE INTEREST IS OF COMPENSATORY IN NATURE AND IT IS NOT A PENALT Y, THEREFORE IT SHOULD BE ALLOWED. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. THE UNDISPUTED FACT IS THAT THE INTEREST HAS BEEN PAID ON THE DELAYED PAYMENT OF SERVICE TAX. U/S. 75 OF THE SERVICE TAX ACT, IN TEREST PAYMENT IS OF COMPENSATORY IN NATURE AND HAS THE SAME CHARACTER A S SERVICE TAX AND IT IS AN UNDISPUTED FACT THAT SERVICE TAX IS A PERMISSIBL E DEDUCTION, THEREFORE, IN OUR CONSIDERED VIEW, THE INTEREST SHOULD ALSO BE ALLOWED IN THE SAME MANNER. WE, ACCORDINGLY DIRECT THE AO TO DELETE TH E ADDITION OF RS. 7,90,996/-. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 8. GROUND NO. 2 & 3 ARE INTER LINKED AND ARE RELATE D WITH THE AIR INFORMATION. BOTH THE ADDITIONS HAVE BEEN MADE AS ACCORDING TO THE AO, ITA NO. 7118/M/2012 3 THE AIR DETAILS COULD NOT BE RECONCILED WITH THE IN COME RETURNED BY THE ASSESSEE. 9. THE LD. CIT(A) ALSO CONFIRMED THE FINDINGS OF TH E AO ON THE SAME GROUND. 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT A COMPLETE RECONCILIATION STATEMENT WAS FILED BEFORE THE AO WI TH AN APPLICATION U/S. 154 OF THE ACT. HOWEVER, THE AO DISMISS THE APPLIC ATION FILED U/S. 154 OF THE ACT WITHOUT EVEN CONSIDERING THE RECONCILIATION OF THE ASSESSEE. IN OUR CONSIDERED VIEW AND IN THE INTEREST OF JUSTICE, THIS NEEDS TO BE VERIFIED BY THE AO. WE, ACCORDINGLY RESTORE THIS ISSUE TO T HE FILE OF THE AO. THE ASSESSEE IS DIRECTED TO FILE NECESSARY DETAILS AND A COMPLETE RECONCILIATION OF INCOME AS PER RETURN VIS--VIS AIR INFORMATION. THE AO IS DIRECTED TO VERIFY THE RECONCILIATION AND DECIDE THE ISSUE AFRE SH AS PER THE PROVISIONS OF LAW. GROUND NO. 2 & 3 IS ALLOWED FOR STATISTICA L PURPOSE. 11. GROUND NO. 4 RELATES TO ADHOC DISALLOWANCE OF E XPENSES AMOUNTING TO RS. 7,20,353/-. 12. THIS ISSUE HAS BEEN CONSIDERED BY THE AO AT PAR A-6 OF HIS ORDER WHEREIN HE HAS GIVEN A COMPARABLE CHART OF EXPENDIT URES CLAIMED DURING THE YEAR UNDER CONSIDERATION VIS--VIS IMMEDIATELY PRECEDING ASSESSMENT YEAR AND ON FINDING A SHARP INCREASE IN THE EXPENDI TURES, HE COMPLETED THE ASSESSMENT BY MAKING AN ADDITION OF RS. 7,20,353/- BEING 1% OF THE TOTAL EXPENDITURE. 13. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. ITA NO. 7118/M/2012 4 14. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT FROM THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CHANGED ITS POLICIES IN RESPECT OF EMPLOYEES BY WHICH THE ASSESSEE HAS STARTED GIVI NG ALLOWANCES TO THE STAFF WHICH WAS NOT THERE IN THE IMMEDIATELY PRECED ING ASSESSMENT YEAR. IT IS THE SAY OF THE LD. COUNSEL THAT THE EXPENDITU RES HAVE BEEN INCREASED ONLY BECAUSE OF THIS REASON. 15. THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. 16. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT IN THE I MMEDIATELY PRECEDING ASSESSMENT YEAR I.E. A.Y 2008-09, ALLOWANCES TO STA FF WAS AT RS. 79.16 LAKHS WHEREAS FOR THE YEAR UNDER CONSIDERATION, THE SAME IS AT RS. 4.21 CRORES. IN OUR CONSIDERED VIEW, THIS SHARP INCREAS E IN THE STAFF ALLOWANCE NEEDS TO BE VERIFIED. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AO. THE ASSESSEE IS DIRECTED TO JUSTIFY ITS CLAIM THAT FROM THE YEAR UNDER CONSIDERATION, IT HAS STARTED PAYING ALLOWANCES TO THE STAFF WHICH WAS NOT PAID IN EARLIER YEARS. THE AO IS DIRECTED TO VERIF Y THE CLAIM OF THE ASSESSEE AFTER GIVING A REASONABLE OPPORTUNITY OF B EING HEARD. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND AUGUST, 2014 SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) '# / JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI; 5' DATED : 22 ND AUGUST, 2014 . . ./ RJ , SR. PS ITA NO. 7118/M/2012 5 '4 '4 '4 '4 / // / ,0 ,0 ,0 ,0 6(0 6(0 6(0 6(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 8& ,0 , , / DR, ITAT, MUMBAI 6. &9 : / GUARD FILE. '4 '4 '4 '4 / BY ORDER, -0 ,0 //TRUE COPY// ; ;; ; / < < < < % % % % (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI