ITO 19(2)(4), MUMBAI V. NARSEY BROTHERS, MUMBAI

ITA 979/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2731 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 12-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S M KESHKAMAT S S RANA
• Assessee Lawyers: PRAKASH R MUNIARUN K SHAH
• Keywords: Opportunity of being heard; Set aside

Judgement Text

ITA NO.979/M/09 M/S. NARSEY BROTHERS 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, MUMBAI. BEFORE S/SHRI R.S.SYAL, AM & SMT, ASHA VIJAYARAGHAVAN ,JM I.T.A. NO. 979/MUM/2009 ASSESSMENT YEAR: 2003-04 THE I.T.O. 19(2)(4), V. NARSEY BROTHERS, PIRAMAL CHAMBERS, LALBAUG, 3 RD FLOOR, EMGEEN CHAMBERS, 10, PAREL, MUMBAI-12. CST ROAD, KALINA, SANTACRUZ(E ), MUMBAI-98 PA NO.AAAFN 1383 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAKASH R.MUNI/ARUN K.SHAH REVENUE BY : SHRI S.M.KESHKAMAT/S.S.RANA (DR) O R D E R PER R.S.SYAL, AM THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A)-XIX, MUMBAI ON 8.12.2008 IN RELATION TO ASSESSMENT YEAR 2003-04. 2. THE FIRST GROUND IS AGAINST DELETION OF DISALLOW ANCE OF INTEREST OF RS.5,20,276/- MADE BY THE AO. 3. BRIEF FACTS OF THIS GROUND ARE THAT THE ASSESSEE HAD CLAIMED INTEREST EXPENSES AMOUNTING TO RS.10,73,894/-. THE ASSESSEE WAS CALL ED UPON TO FILE DETAILS OF UNSECURED LOANS AND CONFIRMATIONS ABOUT INTEREST, ETC. TOTAL 24 CONFIRMATIONS WERE FILED IN RESPECT OF WHICH INTEREST WAS PAID TO THE TUNE OF RS.2,90,1 24/-. THE AO NOTED THAT AS AGAINST THESE LOAN CONFIRMATIONS, THE ASSESSEE HAD CLAIMED DEDUCTION OF INTEREST AMOUNTING TO RS.2,95,847/-. AS REGARDS THE INTEREST PAYMENTS TO MILLS AMOUNTING TO RS.5,24,553/-, THE ASSESSEE DID NOT FILE ANY DETAILS. THE AO MADE AN ADDITION OF RS.5,30,276/- ITA NO.979/M/09 M/S. NARSEY BROTHERS 2 (RS.5,24,553/- + RS.5,723/- REPRESENTING THE DIFFER ENCE BETWEEN THE INTEREST AS CLAIMED AND THE AMOUNT AS CONFIRMED). 4. IN THE FIRST APPEAL, THE ASSESSEE FILED THE DETA ILS OF INTEREST PAID. THE LD CIT (A) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFF ICER, COPY OF WHICH IS AVAILABLE AT PAGE 18 OF PAPER BOOK IN WHICH IT HAS BEEN CLAIMED THAT SUCH INTEREST DISALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS RELATE TO THE EARLI ER YEARS. THE LD CIT (A) NOTED THAT THE ASSESSEE HAD DEBITED TO PARTY ACCOUNT INTEREST CHAR GED BY THE BANK ON SALES BILL DISCOUNTED AND IT WAS NOT DEBITED TO EXPENDITURE AC COUNT AND NOT CLAIMED DEDUCTION IN PRECEDING PREVIOUS YEAR. HE, THEREFORE, CHOOSE TO DELETE THE ADDITION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL ON RECORD, WE FIND THAT MAJOR AMOUNT OF RS.5,24,553/- IS IN RESPE CT OF INTEREST DEBITED IN THE ACCOUNT OF M/S. MAFATLAL INDUSTRIES LTD. THE ASSESSEE IN EARL IER YEARS WAS PAYING INTEREST TO THE BANK FOR DISCOUNTING OF BILLS AND DEBITING TO THE A CCOUNT OF M/S. MAFATLAL INDUSTRIES LTD. SHOWING IT AS RECOVERABLE. HOWEVER, IN THE INSTANT YEAR, THE ASSESSEE REALIZED THAT THE AMOUNT WAS NOT RECOVERABLE FROM M/S. MAFATLAL INDUS TRIES LTD. AND IT DEBITED THE INTEREST ACCOUNT WHILE CREDITING THE ACCOUNT OF M/S. MAFATLA L INDUSTRIES LTD. THE CASE OF THE ASSESSING OFFICER IS THAT SUCH INTEREST DOES NOT RE LATE TO THE YEAR IN QUESTION AND HENCE NOT ALLOWABLE. THE LD A.R. OF THE ASSESSEE SUBMITT ED THAT THE CASE OF M/S. MAFATLAL INDUSTRIES LTD WAS REFERRED TO BIFR. HOWEVER, NO S UCH DETAILS WERE FURNISHED PRECISELY INDICATING THE DATE ON WHICH THE AMOUNT TURNED OUT TO BE NON-REALIZABLE FROM M/S. MAFATLAL INDUSTRIES LTD. IN THE ABSENCE OF SUCH DE TAIL, IT IS NOT POSSIBLE TO ADJUDICATE AS TO WHETHER THE INTEREST LIABILITY GOT CRYSTALISED IN T HIS YEAR OR NOT. IF THE NON-REALISABILITY OF THE AMOUNT FROM M/S. MAFATLAL INDUSTRIES LTD., OCCU RS IN THIS YEAR, NATURALLY THE AMOUNT WOULD BE DEDUCTIBLE AS HAVING ACCRUED AS EXPENDITUR E OR LOSS. IF, HOWEVER, SUCH EVENT TOOK PLACE IN EARLIER OR LATER YEAR, THEN NO DEDUCT ION WOULD BE AVAILABLE IN THIS YEAR. IN THE ABSENCE OF SUCH DETAILS, WE SET ASIDE THE IMPUG NED ORDER ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR DECIDING IT AFRESH I N ACCORDANCE WITH OUR ABOVE GUIDELINES. NEEDLESS TO SAY THAT THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF BEING HEARD. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.979/M/09 M/S. NARSEY BROTHERS 3 6. THE SECOND GROUND IS AGAINST RESTRICTING THE DIS ALLOWANCE TO 20% IN RESPECT OF MOTOR CAR EXPENSES. 7. THE ASSESSEE HAD CLAIMED DEDUCTION FOR RS.89,818 /- ON ACCOUNT OF MOTOR CAR REIMBURSEMENT EXPENSES. IN ABSENCE OF ANY DETA ILS, THE AO MADE ADDITION FOR THE ENTIRE SUM. 8. IN THE FIRST APPEAL, IT WAS ARGUED BEFORE LD CIT (A) THAT THE CAR WAS OWNED BY THE PARTNER, WHICH WAS USED FOR THE BUSINESS PUR POSES. THE LD CIT (A) REDUCED THE DISALLOWANCE TO 20%. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIALS ON RECORD, WE FIND THAT IT IS NOT DISPUTE D BY THE AO EITHER IN THE ORIGINAL ASSESSMENT OR IN THE REMAND PROCEEDINGS TH AT THE SAID CAR WAS NOT USED BY THE PARTNER FOR THE BUSINESS PURPOSES. THE DETA IL OF EXPENDITURE CLAIMED AS DEDUCTIBLE IS AVAILABLE ON RECORD. UNDER SUCH CIRCU MSTANCES, WE ARE SATISFIED THAT THE DISALLOWANCE OF 20% OF SUCH EXPENSES, REPRESENT ING THE USER BY THE PARTNER FOR PERSONAL PURPOSES, IS ADEQUATE. NO INTERFERENC E IS WARRANTED ON THIS ISSUE. THIS GROUND IS DISMISSED. 10. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STA TISTICAL PURPOSES. PRONOUNCED ON 9 TH DECEMBER, 2009 SD/- SD/- (ASHA VIJAYARAGHAVAN) ( R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 9 TH DECEMBER , 2009. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T.A.T., MUMBAI. PARIDA BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. ITA NO.979/M/09 M/S. NARSEY BROTHERS 4 DATE INITIALS SR.P.S 1. DRAFT DICTATED ON 8.12. 2009 2. DRAFT PLACED BEFORE AUTHOR 8..12.2009 3. DRAFT PROPOSED & PLACED BEFORE THE JM/AM SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY JM/AM SECOND MEMBER 5. APPROVED DRAFT COMES TO THE SR.PS SR .PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR. P S 8. DATE ON WHICH FILE GOES TO THE H.C. 9. DATE OF DISPATCH OF ORDER