LAFFANS PETROCHEMICALS LTD ,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(2)(1), MUMBAI

ITA 5293/MUM/2024

AI Insights

The case involves Laffans Petrochemicals Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi, pertaining to an assessment order for the Assessment Year 2008-09. The primary issue was the disallowance of Rs. 1,22,10,166 under section 36(1)(iii) of the Income Tax Act, related to the capitalisation of interest expenses on borrowed funds used for acquiring fixed assets. The ITAT noted procedural delays and communication issues in the handling of the appeal and previous submissions, leading to the decision to remand the case for further examination of the submitted evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669168 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: ADITYA RAI
• Assessee Lawyers: AARTI SATHE; AASAVARI KADAM; ARS
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.5293/MUM/2024 (A.Y. 2008-09) Laffans Petrochemicals Ltd.Gujral House, 601, 6th Floor, 167 CST Road, Next to Axis Bank, Kalina, Santacruz East, Mumbai 400 098, Maharashtra v/s. बनाम Assistant Commissioner of Income Tax, Circle – 10(2)(1), Room No. 209, 2nd Floor, Aayakar Bhawan, Maharishi Karve Road, Mumbai 400020, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACL0645D Appellant/अपीलार्थी .. Respondent/प्रतिवादी Appellant by : Ms Aarti Sathe & Ms Aasavari Kadam,ARs Respondent by : Shri Aditya Rai, (Sr. DR) Date of Hearing 11.06.2025 Date of Pronouncement 26.06.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 11.03.2024 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) r.w.s. 254 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 28.09.2021 for the Assessment Year [A.Y.] 2008-09. P a g e | 2 ITA No. 5293/Mum/2024 A.Y. 2008-09 Laffans Petrochemicals Ltd., Mumbai 2. In the only ground of appeal it is stated that the learned CIT (Appeals) has erred in law and on the facts of the case in sustaining the disallowance of Rs. 1,22,10,166/- u/s. 36(1)(iii) of the Income Tax Act. 3. At the outset, it may be stated here that as per the intimation of the Registry, the appeal is delayed by 152 days. In this regard, the assessee has submitted an application for condonation of delay alongwith an affidavit. It is contented that the appeal before CIT(A) was filed manually and subsequently the appeal was migrated to NFAC. It received notice of hearing from the CIT (A) vide notices dated 16-12- 2022 and 19-02-2024. It filed its written submissions on 21-12-2022 in response to notice dated 16-12-2022 and was not aware of the notice dated 19-02-2024 and thereafter the CIT (Appeals) had passed the order on 11-03-2024 i.e. after a period of more than one year from the date of filing of written submissions. In the month of September 2024, the department started putting pressure on the company for recovery of demand and it was then that the company's consultants, S. M. Kapoor & Co. checked the e-proceedings account and noted that the CIT (A) had already passed the order on 11-03-2024 dismissing the appeal of the company. The assessee immediately taken necessary steps to file the appeal and hence there has been a delay in filing the appeal. It is submitted that the present appeal before the Hon'ble Tribunal is the 3rd P a g e | 3 ITA No. 5293/Mum/2024 A.Y. 2008-09 Laffans Petrochemicals Ltd., Mumbai round. In all these proceedings, the company never delayed in filing the appeals which have been filed in time. It is requested to condone the same being bonafide and unintentional 4. We have carefully considered the facts stated by the assessee giving reasons for the delay. We find that the delay is not intentional and bonafide and occurred due to certain lack of communication. However, it may be mentioned here that the while adjudicating its own appeal for AY 2009-10 in ITA No.5293/Mum/2024,it was noticed that there was also a delay of 131 days in filing appeal. However, in the interest of in justice delay therein was condoned. On the same line, we condone this delay as well but with a cost as the assessee is a repeat offender. Accordingly, we are constrained to impose cost of Rs 2,000/- which the assessee would deposit with the Income Tax Department under the head ‘Other Taxes’ and submit the copy of challan to the ld.CIT(A) within 15 days of this order. We proceed to adjudicate the appeal on merits. 5. In so far as the facts of the case are concerned, it may be stated here that this is second round of litigation. Brief issue is the disallowance of Rs. 1,56,71,031/- under section 36(1)(iii) of the Act on account of capitalisation of interest expenses. The assessee had acquired certain fixed assets during the year which according to the AO were P a g e | 4 ITA No. 5293/Mum/2024 A.Y. 2008-09 Laffans Petrochemicals Ltd., Mumbai purchased using borrowed funds. Therefore, he disallowed interest expenses pertaining to the acquisition of fixed assets which was upheld by the ld.CIT(A). Before ITAT, the assessee submitted that they had their own funds over and above the borrowed funds which were sufficient to meet the purchase of fixed assets during the year. The ITAT directed it to submit necessary details to the AO by remanding the matter. It is contented that the assessee had earlier submitted all the relevant details before the AO. It is requested that the captioned appeal may be remanded to CIT(A)/NFAC to examine the voluminous data submitted by the before this Bench and pass an order in accordance with the Act after considering the law laid down in judicial precedents. 6. In the light of above stated facts, we also consider it appropriate to remand the issue back to the file of the ld.CIT(A) with a direction to the assessee to furnish necessary evidence in support of its contentions before him. The ld.DR has not objected to this proposition. The ld.CIT(A) would examine the issue in the light of such evidences and decide the it in accordance with the provisions of the Act. Further, he is also allowed liberty to call for remand report from the AO, if required. P a g e | 5 ITA No. 5293/Mum/2024 A.Y. 2008-09 Laffans Petrochemicals Ltd., Mumbai 7. In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 26.06.2025. Sd/- Sd/- SANDEEP GOSAIN PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai ददनाुंक /Date 26.06.2025 Lubhna Shaikh / Steno आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अयिकरण/ ITAT, Bench, Mumbai. "