M/s. Jyoti Enterprise, Mehsana V. The Dy.CIT.,Mehsana Circle, Mehsana

ITA 750/AHD/2012

• Counselvise Citation: 75020514 RSA 2012
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G C DAXINI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER M/S. JYOTI ENTERPRISE, F - 33, PANCHRATNA COMPLEX, NR. MODHERA CHAR RASTA, MEHSANA - 384002 PAN:AAEFJ9027G (APPELLANT) VS DCIT, MEHSANA CIRCLE, MEHSANA (RESPONDENT) REVENUE BY : S H RI G.C. DAXINI , SR. D . R. ASSESSEE BY: S H RI P.M. MEHTA, A.R. WITH SHRI G.M. THAKOR, A.R. DATE OF HEARING : 30 - 09 - 2 015 DATE OF PRONOUNCEMENT : 21 - 10 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 200 8 - 09 , ARISES FROM O RDER OF THE CIT(A), GANDHINAGAR DATED 28 - 12 - 2011 IN APPEAL NO. CIT(A) - I T A NO . 750 / A HD/20 12 A SSES SMENT YEAR 200 8 - 09 I.T.A NO. 750 /AHD/20 12 A.Y. 2008 - 09 PAGE NO M/S. JYOTI ENTERPRISE VS. DCIT 2 GNR/176/ 10 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE S SOLE SUBSTANTIVE GROUND CHALLENGES INTEREST DISALLOWANCE OF RS. 1,33,109/ - MADE BY BOTH THE AUTHORITIES BELOW U/S. 40A(2)(B) OF THE ACT AFTER TREATING THE SAME AS EXCESSIVE. THE ASSESSING OFFICER NOTICED IN THE COUR SE OF SCRUTINY THAT THE ASSESSEE HAD PAID INTEREST OF RS. 71,92, 43 / - INCLUDING BANK INTEREST. HE FURTHER FOUND THAT THIS INTEREST WAS @ 12% PAID TO DEPOSITORS WHO ARE NOT FAMILY MEMBERS, 15% TO RELATIVES AND 18% TO THE ASSOCIATED CONCERN. THE ASSESSEE JUS TIFIED THIS HIGHER INTEREST RATE ON THE PRINCIPLE, COMMERCIAL MARKETING PREVAILING RATE, EMERGENCY ADVANTAGE ETC. THE ASSESSING OFFICER REJECTED ALL THESE PLEAS IN ASSESSMENT ORDER 15 - 12 - 2010 AND INVOKED SECTION 40A(2)(B) OF THE ACT FOR ADOPTING UNIFORM I NTEREST RATE IN ALL THE ABOVE THREE CATEGORIES TO BE @ 15% RESULTING IN THE IMPUGNED DISALLOWANCE OF RS. 1,33,107/ - IN EXCESS THEREOF. THE CIT(A) HAS CONFIRMED THE ASSESSING OFFICER S ACTION. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CASE FILE. RELEVANT FACTS NARRATED HEREIN ABOVE ARE NOT REITERATED FOR THE SAKE BREVITY. WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT IN (2014) 50 TAXMANN.COM 52 GUJARAT CIT VS. SARJAN REALITIES LTD. HOLDS THAT SOLELY BECAUSE AN ASSESSEE HAD PAID AN INTEREST TO DIFFERENT PARTIES WOULD NOT ITSELF BE A GROUND TO COME TO CONCLUSION THAT PAYMENT OF INTEREST TO RELATED COMPANIES A T RATE OTHER THAN THAT PAID TO OTHER I.T.A NO. 750 /AHD/20 12 A.Y. 2008 - 09 PAGE NO M/S. JYOTI ENTERPRISE VS. DCIT 3 PARTIES WAS EXCESSIVE AND UNREASONABLE RESULTING IN SECTION 40A(2)(B) ADDITION IN QUESTION. WE REIT ERATE THAT NEITHER OF THE LOWER AUTHORITY GIVES AN INDEP EN DENT FINDING OF SUCH AN EXCESSIVE COMPONENT OVER AND ABOVE THE PREVAILING MARKET INTEREST RATE. THE REVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS OR LAW. WE ACCEPT ASSESSE E S ARGUMENTS AND DE LETE THE IMPUGNED ADDITION 4. THIS ASSESSEE S APPEAL IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 21 - 10 - 2015 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABA D : DATED 21 /10 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,