AATUR HOLDINGS P. LTD, MUMBAI V. DCIT CEN CIR 31, MUMBAI

ITA 8481/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101185 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 234B; 147; 6; 2

Judgement Text

, ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SAN JAY GARG,JUDICIAL MEMBER /. ITA NO S . 8481 /MUM/201 0 , / ASSESSMENT YEAR - 200 7 - 08 M/S. AATUR HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR DR. ANNIE BEANT ROAD NEHRU CENTRE, WORLI , MUMBAI - 400 0 18 . PAN: A A B C A 1472 C VS DCIT - CENTRAL CIRCLE - 31 MUMBAI. /. ITA NO S . 84 6 /MUM/201 0 , / ASSESSMENT YEAR - 200 8 - 09 M/S. AATUR HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR WORLI VS DCIT - CENTRAL CIRCLE - 31 MUMBAI. /. ITA NO S . 1 032 /MUM/201 0 , / ASSESSMENT YEAR - 200 9 - 10 M/S. AATUR HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR WORLI VS DCIT - CENTRAL CIRCLE - 31 MUMBAI. /. ITA NO S . 2 1 47 /MUM/201 0 , / ASSESSMENT YEAR - 20 1 0 - 11 M/S. AATUR HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOORWORLI VS DCIT - CENTRAL CIRCLE - 31 MUMBAI. /. ITA NO S . 8 352 /MUM/201 0 , / ASSESSMENT YEAR - 200 7 - 08 DCIT - CENTRAL CIRCLE - 31 MUMBAI. VS M/S. AATUR HOLDINGS PVT. LTD. 32, MADHULI, WORLI. ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : SHRI DHAVAL SHAH / REVENUE BY : DR. P.DANI E L / DATE OF HEARING : 15 - 09 - 2015 / DATE OF PRONOUNCEMENT : 23 - 0 9 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDERS OF C S. IT(A) - 40, MUMBAI THE ASSESSEE AND THE ASSESSING OFFICER (AO)HAVE FI LED CROSS - APPEALS FOR AY.2007 - 08 .FOR THE OTHER YEARS,ONLY THE ASSESSEE HAS FILED APPEALS.IT HAS RAISED ALMOST IDENTICAL GROUNDS OF APPEAL FOR THE ABOVE MENTIONED ALL THE FOUR YEARS . ITA NO.8481/MUM/2010,ASSESSMENT YEAR - 2007 - 08 1 .THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/ S. 250 OF THE ACT AND CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE APPRECIATED TH AT THE NOTICES ISSUED BY THE ASSESSING OFFICER ARE INVALID AND HENCE THE ASSESSMENT ORDER U/S.143(3)OF THE ACT WAS ALSO AB INITIO VOID. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER WITHOUT COMPLYIN G WITH THE PRINCIPLES OF NATURAL JUSTICE. 4. THE LEARNED COMMI SSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CAN BE ASSESSED IN THE HANDS OF THE APPELLANT. ITA/ 8481 /M/1 0; 8352 /1 0 , AATUR H OLDINGS P.LTD. 2 5 .THE LEARNED COMMISSIO NER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING RELIEF OF LIABILITY AMOUNTING TO RS. 60,94,456/ - , TOWARDS INTEREST EXPENDITURE CLAIMED BY THE APPELLANT. 6 . THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING RELIEF OF LIABILITY AMOUNTING TO RS.69,40,693/ - TOWARDS INTEREST EXPENDITURE CLAIMED BY THE APPELLANT. 7. THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD TO, ALTER, AMEND AND/ OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. ITA NO.8352/MUM/2010 - AY.2007 - 08 THE AO HAS RAISES THE FOLLOWING GROUND OF APPEAL: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSEE BEING A NOTIFIED PERSON UNDER THE SPECIA L COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURTIES) ACT 1992 IS NOT LIABLE TO PAY INTEREST U/S.234A, 234 B AND 234C OF THE I.T.ACT, 1961, IGNORING THE LEGAL SANCTITY OF LAW THAT THE INTEREST CHARGEABLE UNDER THESE SECTIONS IS NOT ONLY CONSEQUE NTIAL BUT IS MANDATORY IN NATURE. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS ERRED IN HOLDING THAT INTEREST U/S.234A, 234 B AND 234C OF THE I.T.ACT, 1961 IS NOT CHARGEABLE IN THE ASSESSEE'S CASE BEING NOTIFIED PERSON UNDE R THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURTIES) ACT 1992 WITHOUT APPRECIATING THAT THE SAID ACT HAS NOT RULED THAT THE PROVISIONS OF SECTIONS 234A, 2348 & 234C ARE NOT APPLICABLE TO THE NOTIFIED PERSONS OR THEY ARE EXEMPT FROM THE LIABILITY OF PAYMENT OF INTEREST UNDER THESE SECTIONS OF INCOME TAX ACT, 1961. 3) THE APPELLANT CRAVES TO LEAVE TO ADD, TO AMEND AND / OR TO ALTER ANY OF THE GROUNDS OF APPEAL, IF NEED BE. 4) THE APPELLANT, THEREFORE, PRAYS THAT ON THE GRO UNDS STATED ABOVE, THE ORDER OF THE CIT(A) - 40, MUMBAI MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED . AS THE ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS ARE ALMOS T IDENTICAL FOR ALL THE YEARS,SO, FOR THE SAKE OF CONVENIENCE WE ARE DISPOSI NG THE APPEALS BY A SINGLE ORDER. ITA NO.8481/MUM/2010,AY . 2007 - 08 2. DURING THE COURSE O F HEARING BEFORE US, THE AUTHORIS ED REPRESENTATIVE (AR) STATED THAT THE ASSESSEE WAS NOT INTEREST IN PURSUING GROUNDS NO.1 - 4 FILED FOR THE AY . UNDER APPEAL. THEREFORE,SAME STAND DISMISSED, AS NOT PRESSED. I T WAS ALSO STATED THAT THE GROUND NO.6 WAS CONSEQUENTIAL TO GROUND NO.5. 3. IT LEAVES US WITH GROUND NO. 5 WHICH DEALS WITH DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 69.40 LAKHS .DURING THE COURSE OF HEARING BEFORE US, REPRESENTATIVES OF BOTH THE SIDES AGREED THAT THE ISSUE HAS ARISEN IN THE HARSHAD S. MEHTA(HSM) GROUP ON MANY OCCASIONS AND THAT THE TRIBUNAL HAD DECIDED THE IDENTICAL ISSUE IN THE CASES OF THE INDIVIDUAL OF THE GROUP AS WELL AS THE C ORPORATE ENTITIES OF THE GROUP. WE FIND THAT THE TRIBUNAL HAS RESTORED BACK THE ISSUE TO THE FILE OF THE AO IN ALL SUCH CASES. WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION O F THE CASE OF PRATIMA H MEHTA, ONE OF THE MEMBERS OF THE HSM GROUP, TO WHICH ONE OF US WAS PARTY (ITA/350/ MUM/ 2013 (AY - 2009 - 10 DT. 11.5.2015).IN THAT MATTER THE THIRD GROUND OF APPEAL READ AS UNDER : THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING DEDUCTION OF LIABILITY AMOUNTING TO RS.9, 3587628/ - TOWARDS INTEREST EXPENDITURE CLAIMED BY THE APPELLANT. THE TRIBUNAL DECIDED THE CASE AS UNDER : '2. .. . GROUND NO.3 WAS STATED TO BE COVERED BY THE EARLIER DECISION OF THE TRIBUNAL IN GROUP CASE. REFERENCE WAS MADE TO THE DECISION DATED 5/3/201 5 PASSED IN ITA NO. 5135& ITA/ 8481 /M/1 0; 8352 /1 0 , AATUR H OLDINGS P.LTD. 3 5136/MUM/2012 & ITA NOS.2151/MUM/2013 IN THE CASE OF GROWMORE LEASING & INV. LTD. AND REFERENCE WAS MADE TO THE FOLLOWING OBSERVATIONS: ' 3. GROUND NO. 4 RELATES TO THE DISALLOWANCE OF INTEREST EXPENSE. THE LD. COUNSEL FOR THE ASS ESSEE BROUGHT TO OUR NOTICE THAT THE DECISION RELIED UPON BY THE LD. CIT(A) WHILE DISPOSING THIS GROUND HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF THE LD. CIT(A). 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WHILE DISPOSING THE GROUND RELATING TO THE DISALLOWANCE OF INTEREST,WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE FINDINGS GIVEN IN THE CASE OF EMINENT HOLDINGS PVT. LT D. WE FIND THAT THE TRIBUNAL IN THE CASE OF EMINENT HOLDINGS IN ITA NOS. 2139, 2140 AND 2141/MUM/2013 HAVE FOLLOWED THE DECISION OF THE TRIBUNAL GIVEN IN COMMON GROUP CASE OF HITESH S. MEHTA AT PARA 2.3 OF THE ORDER AND RESTORED THE MATTER TO THE FILE OF T HE LD. CIT(A) FOR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO ORDINATE BENCH, WE RESTORE THIS ISSUE TO THE FILES OF THE LD. CIT(A) FOR FRESH ADJUDICATION AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. BEFORE CL OSING THIS ISSUE, THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE LD. CIT(A) HAS HELD THAT THE ISSUE OF INTEREST EXPENDITURE IS PENDING BEFORE THE HON'BLE SPECIAL COURT. IT IS THE SAY OF THE LD. COUNSEL THAT THE PROCEEDINGS IN WHICH THE SAID ISSUE OF INTEREST WAS ISSUED BY THE CUSTODIAN HAVE BEEN ALREADY CONCLUDED WHICH FACT HAS ALREADY BEEN RECORDED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. WE, THEREFORE , DIRECT THE LD. CIT(A) TO CONSIDER THIS FACT WHILE DECIDING THE ISSUE AFRESH. THE LD. CIT(A) MAY AL SO DIRECT FOR THE TAXING OF INCOME IN THE HANDS OF THE RECIPIENT (FAMILY MEMBERS) IN ACCORDANCE WITH THE METHOD OF ACCOUNTING FOLLOWED BY THEM AND AS PER THE PROVISIONS OF THE LAW. GROUND NO. 4 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE.' 3. LD. SPECIAL COUNSEL DID NOT CONTROVERT TO SUCH CONTENTION OF LD. AR THAT THE ISSUE IS COVERED BY THE AFOREMENTIONED DECISION. 4. IN VIEW OF THE SITUATION, AFTER HEARING BOTH THE PARTIES, WE PASS SIMILAR ORDER AND THIS GROUND IS CONSIDERED TO BE ALLOWED FOR STATISTICA L PURPOSES IN THE MANNER AFORESAID.' FOLLOWING THE ABOVE, WE PASS SIMILAR ORDER. GROUND NO.4 IS ALLOWED FOR STATISTICAL PURPOSES FOR BOTH THE YEARS. FOLLOWING THE ABOVE, WE ALLOW GROUND NO. 5 FOR STATISTICAL PURPOSES FOR THE YEAR UNDER APPEAL. GROUND NO.6 C ONSEQUENTIAL IN NATURE,HENCE IS NOT BEING ADJUDICATED. ITA NOS.846,1032,2147/MUM/2010,AY.S.2008 - 09 TO 2010 - 11 4. THE ASSESSEE HAS RAISED SIX GROUNDS OF APPEALS FOR THE ABOVE MENTIONED THREE AY.S.DURING THE COURSE OF HEARING BEFORE US,THE AR DID NOT PRESS GROUNDS NO.1 - 3 FOR ALL THE AY.S.,SO,SAME ARE DISMISSED AS NOT PRESSED. 5. GROUND NO.4 FOR ALL THE YEARS DEALS WITH DISALLOWANCE OF INTEREST EXPENDITURE AND THE AMOUNTS INVOLVED ARE RS.2,03,65,051 RS.84,61,000/ - A ND RS.88,80,018/ - RESPECTIVELY FOR THE AY.S. 2008 - 09,2009 - 10 AND 2010 - 11. FOLLOWING OUR ORDER FOR THE EARLIER YEARS, INCLUDING THE AY.2007 - 08,WE ALLOW GROUND NO.4 FOR STATISTICAL PURPOSES - THE CIT (A)WILL LOOK IN THE MATTER AFRESH AS INDICATED IN THE ORDERS OF THE EARLIER YEARS.GROUND NO. 5 FOR ALL THE THREE AY.S.IS CONSEQUENTIAL TO GROUND NO.4.SO,IT IS NOT BEING ADJUDICATED. 6. LAST GROUND OF APPEAL FOR ALL THE THREE ASSESSMENT YEARS PERTAINS TO LEVY OF INTEREST U/S.234 A, 234B AND 234C OF THE ACT.BEFORE US,THE REPRESENTATIVES OF BOTH THE SIDES AGREED T HAT IDENTICAL ITA/ 8481 /M/1 0; 8352 /1 0 , AATUR H OLDINGS P.LTD. 4 ISSUE WAS DECIDED IN THE CASES OF TOPAZ HOLDINGS PVT.LTD.(ITA/2146/MUM/2013,AY.2001 - 02 DTD.18.06.2014)AND EMINENT HOLDINGS PVT.LTD.(ITA/2139/MUM/2013,AY.2002 - 03,DATED 18.06. 2014),THAT THE TRIBUNAL HAD UPHELD THE LEVY OF INTEREST IN PRINCIPAL ,THAT IT HAD SET ASIDE THE ISSUE FOR CALCULATING THE INTEREST TO THE FILE OF THE AO WITH DIRECTION THAT THE TAX DEDUCTED AS SOURCE SHOULD BE REDUCED WHILE CALCULATING THE INTEREST.WE FIND THAT THE ISSUE WAS DISCUSSED IN THE CASE OF EMINENT HOLDINGS PVT.LTD (SUPRA)AS UNDER: 3. NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S. 234 OF THE ACT.BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFIED ENTITY,THAT THE PROVISIONS OF S. 234A, 234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLIED WITH,THAT THE ASSETS WERE ALREADY IN ATTACHMENT OF THE CUSTODIAN APPOINTED UNDER THE PROVISIONS OF THE SPECIAL COURTS ACT,THAT THE TRIBUNAL IN THE CASE OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE VIEW IN FAVOUR OF THE APPELLANT,THAT THE HONBLE BOMBAY HIGH COURT I N THE CASE OF DIVINE HOLDINGS PVT. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVISIONS OF SECTIONS 234A,234B AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO THE NOTIFIED ENTITIES ALSO,THAT THE ASSESSEE WAS IN THE PROCESS OF FILING AN APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE SUPREME COURT,THAT THE INCOME EARNED IN THE YEAR UNDER CONSIDERATION WAS SUBJECTED TO PROVISIONS OF TDS,THAT THE CHANGEABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD BE AFTER CONSIDERING THE A MOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED. THE APPELLANT RELIES IN THIS REGARD ON THE FOLLOWING DECISIONS. HE RELIED UPON THE CASES OF MOTOROLA INC. V. DCIT [95 ITD 269 (DEL.(SB)], SEDCO FORES DRILLING CO. LTD. [264 ITR 320],NGC NETWORK AS IA LLC [313 ITR 187] SUMMIT BHATACHARYA [ 300 ITR (AT) 347 (BOM)(SB)], VIJAL GOPAL JINDAL [ITA NO. 4333/DEL/2009] & EMILLO RUIZ BERDEJO [320 ITR 190 (BOM)].DR RELIED UPON THE CASES OF DEVINE HOLDINGS PVT. LTD. 3.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL BEFORE US.WE FIND THAT IN THE CASE OF DEVINE HOLDINGS PVT. LTD. HONBLE BOMBAY HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO.THEREFORE, UPHOLDING THE ORDER OF THE FAA TO THA T EXTENT,WE HOLD THAT PROVISIONS OF SECTION 234 OF THE ACT ARE APPLICABLE.AS FAR AS CALCULATION PART IS CONCERNED,WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE.THEREFORE, WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSIDERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.GROUND NO.5 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. RESPECTFULLY,FOLLOW ING THE ABOVE ORDER WE RESTORE BACK THE ISSUE TO THE FILE OF THE AO WHO WOULD LEVY THE INTEREST AS PER THE PROVISIONS OF SECTION 234 OF THE ACT AND GIVE CREDIT FOR THE TDS AMOUNTS.GROUND NO.6 FOR A LL THE THREE AY.S.STANDS PARTLY ALLOWED,IN FAVOUR OF THE =. ITA NO.8352/MUM/2010, AY. - 2007 - 08 : 7. ONLY ISSUE,RAISED BY THE AO,IS ABOUT LEVY OF INTEREST U/S. 234A,234B AND 234C OF THE ACT. WHILE DEALING WITH THE GROUND NO.6 FOR THE APPEALS FILED BY THE ASSESSEE FOR THE SUBSEQUENT YEARS IN T HE EARLIER PARAGRAPH,WE DECIDE THE ISSUE IN FAVOUR OF THE AO,IN PART.WE ARE RESTORING THE MATTER TO THE FILE OF THE AO WHO WOULD CALCULATE THE INTEREST TO BE LEVIED U/S.234 OF THE ACT FOR THE YEAR UNDER CONSIDERATION AND WOULD GIVE CREDIT FOR THE TAX DEDUC TED AT SOURCE. AS A RESULT,APPEALS FILED BY THE ASSESSEE FOR AY.S.20 07 - 08 TO1 0 - 11 STAND STATISTICAL LY /PARTLY ALLOWED AND THE APPEAL OF THE AO STAND PARTLY ALLOWED . . . 200 7 - 0 8 20 1 0 - 11 . . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER ,2015. ITA/ 8481 /M/1 0; 8352 /1 0 , AATUR H OLDINGS P.LTD. 5 23 , 2015 SD/ - SD/ - ( / SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 23 . 09 . 20 15 . . . JV. SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.