REACHWELL KSM PROPERTIES P. LTD, MUMBAI V. ITO 4(3)(2), MUMBAI

ITA 821/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71137 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 07-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALMAN KHAN
• Assessee Lawyers: B N RAO

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO.821/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 M/S. REACHWELL KSM PROPERTIES PVT. LTD., 274, DR. CAWASJI HORMUSJI STREET, CHITALIA HOUSE, 4 TH FLOOR, DHOBI TALAO, MUMBAI 400002 ' ' ' ' / VS. THE ITO 4(3)(2), AAYKAR BHAVAN, MK ROAD, MUMBAI 400020. $ ./ % ./ PAN/GIR NO. : AACCR 1153Q ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $& ) / APPELLANT BY: SHRI B.N.RAO '($& * ) / RESPONDENT BY : SHRI SALMAN KHAN ' * + / DATE OF HEARING : 17/09/2013 ,-# * + / DATE OF PRONOUNCEMENT : 17/09/2013 . / O R D E R PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-9,MUMBAI DATED 5/12/2011 FOR A SSESSMENT YEAR 2005- 06. GROUND OF APPEAL READ AS UNDER: . / ITA NO.821/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE - (A) THE LEARNED CIT(A)-9, MUMBAI ERRED IN NOT APPRE CIATING THE FACTS OF THE CASE AND THE LAW APPLICABLE THEREOF AND THEREFORE ERRED IN DISALLOWING INTEREST OF RS.2,74,320/- IN COMPUTING THE TOTAL INCOME OF THE APPELLANT. (B) THE LEARNED CIT(A)-9, MUMBAI ERRED IN NOT APPRE CIATING THE FACTS OF THE CASE AND THE LAW APPLICABLE THEREOF AND THEREFORE ERRED IN DISALLOWING INTEREST OF RS.26,83,328/- IN COMPUTING THE TOTAL INCOME OF THE APPELLANT. THE LEARNED CIT(A) DID NOT APPRECIATE THAT WHEREAS THE APPELLANT DEBIT ED THE INTEREST WHICH WAS A VESTED LIABILITY DID NOT ACCOUNT THE REVENUE AS REC EIPT OF THE PRINCIPAL LOAN AND INTEREST WAS CONTINGENT DUE TO THE COMPANY BECOMING SICK AND THEREFORE HE OUGHT TO HAVE APPRECIATED THAT THE INTEREST WAS DEBITED R IGHTLY AND WAS TO BE ALLOWED AS A DEDUCTION IN COMPUTING THE TOTAL INCOME OF THE APPELLANT. HE OUGHT TO HAVE APPRECIATED THAT SECTION 40A(V) WAS NOT APPLICABLE TO THE FACTS OF THE CASE. 2. AT THE TIME OF HEARING LD. AR DID NOT PRESS GROU ND (B), THEREFORE, THE SAME IS DISMISSED BEING NOT PRESSED. 3. THE FACTS RELATING TO GROUND NO.(A) ARE THAT AN AMOUNT OF RS.2,74,320/- WAS DISALLOWED BY INVOKING SECTION 40(A)(II)OF THE INCOME TAX ACT,1961(THE ACT) WITH REGARD TO INTEREST PAID BY THE ASSESSEE TO M/S . ROSY BLUE SECURITIES PRIVATE LIMITED. THE SAID AMOUNT WAS PAID AS INTER EST ON WHICH TAX WAS NOT DEDUCTED. IT WAS EXPLAINED THAT THE SAID CONCERN I S THE MAIN BROKER THROUGH WHOM THE ASSESSEE IS CARRYING OUT SHARE TRANSACTION S. WHENEVER, THERE WAS DELAY IN MAKING THE PAYMENT THE SAID CONCERN WAS C HARGING INTEREST BY DIRECTLY DEBITING THE SAME TO THE ACCOUNT OF THE AS SESSEE, THEREFORE, TAX COULD NOT BE DEDUCTED AT SOURCE AS IT WAS DISCOVERED AT THE END OF THE YEAR WHEN THE ACCOUNTS WERE BEING FINALIZED. THE AO APPLIED THE PROVISIONS OF SECTION 40(A)(II) OF THE ACT AND MADE DISALLOWANCE. THE DISALLOWANCE HAS BEEN UPHELD BY LD. CIT(A). THE ASSESSEE IS AGGRIEVED, HENCE, HAS FILE D AFOREMENTIONED GROUND. 4. THE CONTENTIONS RAISED BEFORE AO WERE REITERATE D BEFORE US. IT WAS SUBMITTED BY LD. AR THAT THE SAID AMOUNT WAS PAY ABLE, THEREFORE, ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX, THEREFORE, THE ADDITION SHOULD BE DELETED. . / ITA NO.821/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 3 5. ON THE OTHER HAND, IT WAS THE CASE OF LD. DR THA T THE OBLIGATION OF THE ASSESSEE TO DEDUCT TAX FROM INTEREST IS THERE IN TH E STATUTE. SUCH OBLIGATION HAS NOT BEEN DISCHARGED, THEREFORE, LD. CIT(A) HAS RIGHTLY UPHELD THE ADDITION. 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IT IS THE CONTENTION OF THE ASSESSEE T HAT WITHOUT ITS KNOWLEDGE THE AMOUNT WAS DIRECTLY TREATED AS INTEREST BY THE OTH ER PARTY BUT SUCH CONTENTION OF THE ASSESSEE DOES NOT DISCHARGE THE ASSESSEE FR OM ITS OBLIGATION FOR DEDUCTION OF TAX AS THE ASSESSEE HAS CLAIMED THIS AMOUNT AS INTEREST IN ITS PROFIT AND LOSS ACCOUNT. THE ASSESSEE COULD GET DE DUCTION OF SUCH INTEREST EXPENDITURE IF IT WOULD HAVE DEDUCTED TAX EVEN AT THE END OF THE YEAR. WE ALSO DO NOT FIND ANY FORCE IN THE CONTENTION THAT SUCH A MOUNT WAS PAYABLE AS THE SAME HAS BEEN APPROPRIATED BY THE OTHER PARTY AS I NTEREST FROM THE PAYMENTS MADE BY THE ASSESSEE TO THE SAID PARTY THE TREA TMENT GIVEN BY THE OTHER PARTY HAS BEEN ACCEPTED BY THE ASSESSEE BY MAKING APPROPRIATE ENTRIES IN ITS BOOKS OF ACCOUNT. THEREFORE, WE SEE NO INFIRMITY IN THE ORDER OF LD. CIT(A) VIDE WHICH SUCH ADDITION HAS BEEN UPHELD. WE DECLINE TO INTERFERE AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/09/2013 . * ,-# / 0'1 17/09/2013 - * 2 3 SD/- S D/- ( / RAJENDRA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 0' DATED 17/09/2013 . / ITA NO.821/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 4 . . . . * ** * '+45 '+45 '+45 '+45 65#+ 65#+ 65#+ 65#+ / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 582 '+' , , / DR, ITAT, MUMBAI 6. 29 : / GUARD FILE. .' .' .' .' / BY ORDER, (5+ '+ //TRUE COPY// ; ;; ; / < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS