DCIT, CHENNAI V. A V S Raja, CHENNAI

MA 105/CHNY/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0807 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-09-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 11-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Business income; Depreciation; Business expenditure; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI [BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] M.P.NOS.105 & 106/MDS/2013 [IN I.T.A NOS.768 & 769/MDS/2011 ] ASSESSMENT YEARS : 1999-2000 & 2000-01 THE DY. CIT COMPANY CIRCLE VI(2) CHENNAI VS SHRI A.V.S. RAJA A-7, SECOND AVENUE IIND FLOOR, ANNA NAGAR CHENNAI [PAN AAEPR 6507 P] (PETITIONER) (RESPONDENT) PETITIONER BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI A.S. SRIRAMAN, ADVOCATE DATE OF HEARING : 13-09-2013 DATE OF PRONOUNCEMENT : 30-09-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE MISCELLANEOUS PETITIONS FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER OF THE TRIBUNAL DATE D 21.10.2011 PASSED IN I.T.A.NOS.768 & 769/MDS/2011, FOR ASSESSM ENT YEARS 1999- 2000 AND 2000-01. MP NOS.105 & 106/13 :- 2 -: 2. THE MISCELLANEOUS PETITIONS ARE VERBATIM SIMILAR FOR BOTH THE ASSESSMENT YEARS AND THEREFORE, WE QUOTE THE MISCEL LANEOUS PETITION FILED FOR ASSESSMENT YEAR 1999-2000 WHICH READS AS UNDER: 1 . THE ABOVE APPEALS WERE DISPOSED OF BY THE HON'BLE T RIBUNAL BY ITS COMMON ORDER DATED 21 . 10.2011 . THE APPELLANT ABOVE NAMED BEG TO PRESENT THIS APPLICATION FOR RECTIFICATION OF A MIS TAKE, WHICH IS APPARENT FROM RECORD, IN THE SAID ORDER. 2. THE CIT(A) VIDE HIS COMMON ORDER IN ITA NOS. 122,1 23 &124/2007-08 DT.31 . 01 . 2011 HAS DIRECTED THE ASSESSING OFFICER TO ASSESS T HE INCOME OF THE ASSESSEE UNDER THE HEAD BUSINESS & ALLOW THE INTEREST PAID TO INDIAN BANK AS BUSINESS EXPENDITURE BESIDES THE OTH ER EXPENDITURE OF SALARY, BONUS AND DEPRECIATION ETC . THE HON'BLE ITAT VIDE ITS COMMON ORDER IN ITA NO.767,768 &769/MDS/2011 DT. 21 . 10.2011 FOR THE ASSESSMENT YEAR 1998-99, 1999-2000 &2000-2001 HAD C ONFIRMED THE ORDER OF THE CIT(A) DISMISSING THE REVENUE APPEAL . 3. THE APPELLANT SUBMIT THAT THE ASSESSEE FOLLOWS CAS H SYSTEM OF ACCOUNTING AND IN THE ASSESSMENT YEAR 1999-2000, TH E ASSESSEE HAS ACTUALLY PAID INTEREST TO INDIAN BANK OF RS. 1,32,0 83 AS AGAINST THE TOTAL CLAIM OF INTEREST TO INDIAN BANK OF RS. 6,42, 555 AND THE BALANCE AMOUNT WAS CONVERTED INTO A TERM LOAN. THIS FACT WA S DISCUSSED IN THE ASSESSMENT ORDER U/S. 143(3) R.W.S 254 DT. 23.10.20 07 AND ALSO SPECIFICALLY MENTIONED IN THE GROUNDS OF APPEAL AT POINT NO. 2.3 (COPIES ARE ENCLOSED FOR READY REFERENCE) FILED BEF ORE THE HON'BLE ITAT, WHICH GAVE NO FINDINGS ON THIS GROUND OF APPE AL . 4. THE APPELLANT FURTHER SUBMIT THAT IN THE ASSESSMENT YEAR 2000-2001, THE ASSESSEE CLAIMED INTEREST PAYMENT OF RS. 6,35,0 87 TO INDIAN BANK, WHICH WAS NOT ACTUALLY PAID BUT THE SAME WAS CONVERTED INTO A TERM L O AN. THIS FACT W AS D I SCUSSED IN THE ASSESSMENT ORDER U/S. 143(3) R.W . S 254 D T . 23. 1 0.2007 AND ALSO SPEC I F I CALLY MENT I O NED IN THE GROUNDS O F APPEA L AT POINT NO. 2 . 3 ( COP I ES ARE ENC L OSED FOR READY R EFERENCE ) F I LED BEFORE THE HON'BLE ITAT, WHICH GAVE NO F I NDINGS ON THIS GROUND O F APPEAL . 5. T HE APPE L LANT SUBMIT THAT THE ASSESSEE HIMSELF FILED A NOTE AT THE T I ME OF ASSESSMENT PROCEEDINGS I . E. ON 10.11 . 2003 CONFIRMING THAT HE HAS ACTUALLY PAID INTEREST OF RS. 1,32,083 & BALANCE AMOUNT CONVERTED INTO TERM LOAN IN RESPECT OF THE ASST. YE AR 1999-2000 MP NOS.105 & 106/13 :- 3 -: AND THE ENTIRE AMOUNT OF I NTEREST OF RS. 6 , 35,087 IN RESPECT OF THE ASST. YEAR 2000 - 2001 WAS CONVERTED INTO TERM LOAN. COPY OF THE SAME I S ENCLOSED FOR K I ND I NFORMAT I O N. 6. THE APPELLANT RESPECTFULLY SUBMIT THAT THE ORDER I N ITA NO. 767, 768 & 769/MDS/2011 DT. 21 . 10.2011 OVERLOOKS THE FACT MENTIONED IN THE GROUNDS OF APPEAL AT POINT NO. 2.3 FILED BEF ORE THE HON ' BLE ITAT , WH I CH CONST I TUTE A M I STAKE APPARENT FROM THE RECORDS. 7. THE APPELLANT, THEREFORE, P R AYS THAT THE TRIBUNAL MAY BE PLEASED TO SUITABLY AMEND ITS SAID ORDER TO RECTIFY THE AFO RESAID MISTAKE WHICH IS APPARENT FROM THE RECORD. 3. THE FINDING OF THE TRIBUNAL IN ITS ORDER DATED 21.1 0.2011 READS AS UNDER: 8. DURING THE COURSE OF HEARING, THE LD. D.R. WAS REQUESTED BY THE BENCH TO PRODUCE THE COPY OF THE ORDER OF THE T RIBUNAL PASSED IN THE FIRST ROUND OF APPEAL. THE LD. D.R. SUBMITTED THAT THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL HAS BEEN EXTRA CTED BY THE LD. CIT(A) IN HIS ORDER AND THE SAME IS NOT IN DISPUTE. WE THUS FIND THAT' THE TRIBUNAL IN THE ORIGINAL ORDER REMANDED THE MAT TER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE SPECIFIC DIRECTIO N TO CAREFULLY EXAMINE THE STATEMENT OF SHRI H. SRINIVASAN AND THE REAFTER READJUDICATE THE ISSUE OF ALLOWABILITY OF INTEREST EXPENDITURE AS PER LAW. THUS WE FIND THAT THE ISSUE OF THE HEAD UNDER WHICH INTEREST INCOME DECLARED BY THE ASSESSEE IS TO BE ASSESSED W AS NOT AN ISSUE WHICH WAS REMANDED BACK BY THE TRIBUNAL TO THE FILE OF THE ASSESSING OFFICER. THEREFORE, IN OUR CONSIDERED OPINION, THE LD. CIT(A) WAS JUSTIFIED IN OBSERVING THAT THE ASSESSING OFFICER H AS EXCEEDED HIS JURISDICTION IN DECIDING THE ISSUE OF HEAD UNDER WH ICH INTEREST INCOME RETURNED BY THE ASSESSEE IS ASSESSABLE IN THE PROCE EDINGS PURSUANT TO THE REMAND MADE BY THE TRIBUNAL. FURTHER, WE FIN D THAT THE ASSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD AFTER VERIFYING THE STATEMENT OF SHRI H. SRINIVASAN ON THE BASIS OF WHICH IT CAN BE HELD THAT INTEREST EXPENDITURE INCURRED BY THE ASSE SSEE CANNOT BE ALLOWED AS PER LAW. WE, THUS, DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). IT IS CONFIRMED. GROUNDS OF APPEAL OF THE ASSESSEE FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION ARE DISMIS SED. MP NOS.105 & 106/13 :- 4 -: 4. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A ) READS AS UNDER: 14. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFF ICER WHO HAS MADE THE REASSESSMENT CONSEQUENT TO TRIBUNAL OR DER. WHEN THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICE R TO LOOK IN TO THE SPECIFIC ISSUE OF CONSIDERING THE SWORN S TATEMENT GIVEN BY ONE MR. H.SRINIVASAN, ONE OF THE LOANEES A FRESH AND PASS THE ORDER, THE ASSESSING OFFICER HAS TAKEN A DIFFERENT STAND TO ASSESS THE INCOME FROM MONEY LENDING BUSI NESS UNDER THE HEAD INCOME FROM OTHER SOURCES BY SHIFTING THE SAME FROM BUSINESS HEAD. HERE THE APPELLANT HAS RIGHTLY POINTED OUT T HAT EVEN UNDER THE HEAD I.O.S THE EXPENDITURE NAMELY THE INTEREST PAID TO INDIAN BANK WAS ALLOWABLE U/S 57 (HIII). THE ALLOWABILITY OF THE I NTEREST ON LOAN FROM INDIAN BANK WAS TO BE CONSIDERED BY THE PURPOSE FOR WHICH THE AMOUNT WAS UTILIZED RATHER THAN THE PURPOSE FOR WHICH THE AMOU NT WAS BORROWED FROM THE BANK. HERE IT IS PROVED BY THE APPELLANT THAT T HE AMOUNT WAS UTILIZED BY HIM IN THE MONEY LENDING BUSINESS BY LENDING TO ONE MR. H.SRINIVAS WHO HAS CONFIRMED THE SAME IN HIS SWORN STATEMENT. HENCE IN MY VIEW THERE IS A MERIT IN THE ARGUMENT OF THE APPELLANT T HAT THE INTEREST IS ALLOWABLE AS BUSINESS EXPENDITURE UNDER THE HEAD BU SINESS. FURTHER THERE WAS NO DISPUTE WITH RESPECT TO THE ASSESSING THE INCOME OF THE MONEY [ENDING BUSINESS OF THE APPELLANT NAMELY AARTHREYAS TILL THE STAGE OF COMPLETION OF APPEAL PROCEEDINGS IN THE I. T TRIBUNAL. BUT IN THE REASSESSMENT PROCEEDINGS NO STRONG REASONS WERE RECORDED BY THE ASSESSING OF FICER FOR SHIFTING THE BUSINESS INCOME FROM THE HEAD BUSINESS TO THE HEAD I.O.S AND EVEN IN THAT CASE ALSO FOR DENYING THE DEDUCTION U/ S 57 (HIII) BY GOING BEYOND THE SPECIFIC DIRECTION OF I. T. TRIBUNAL.' 15. THE SUBMISSIONS OF THE APPELLANT, OBSERVATIONS OF THE LD. CIT(A) IN THE FIRST APPEAL, THE DIRECTIONS OF THE TRIBUNAL AND RECORDINGS OF THE ASSESSING OFFICER IN HIS REASSESSMENT ORDER WERE CAREFULLY LOOKED INTO B Y ME. ACCORDINGLY, I HEREBY DIRECT THE ASSESSING OFFICER TO ASSESS THE INCOME U NDER THE HEAD BUSINESS AND ALLOW THE INTEREST PAID TO INDIAN BANK IN ALL THE T HREE YEARS AS BUSINESS EXPENDITURE BESIDES THE OTHER EXPENDITURES OF SALARY, BONUS AND DEPRECIATION ETC. ' 5. THE LD. DR FAILED TO POINT OUT HOW THE ISSUE RAISED IN THE GROUNDS OF APPEAL STATED IN THE MISCELLANEOUS PETIT ION WAS ARISING OUT OF THE ORDER OF THE LD. CIT(A). THE LD. DR COULD N OT POINT OUT FROM THE MP NOS.105 & 106/13 :- 5 -: ORDER OF THE LD. CIT(A) WHERE THE LD. CIT(A) HAS DI RECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION FOR THE AMOUNT OF INTERE ST WHICH WAS NOT ACTUALLY PAID BY THE ASSESSEE BUT WAS CONVERTED IN TO TERM LOAN. IN ABSENCE OF THE ABOVE, WE DO NOT FIND ANY MERIT IN T HESE MISCELLANEOUS PETITIONS FILED BY THE REVENUE AND ACCORDINGLY, THE Y ARE DISMISSED. 6. IN THE RESULT, THE MISCELLANEOUS PETITIONS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 30 TH OF SEPTEMBER, 2013, AT CHENNAI SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S. SAINI) ACCOUNTANT MEMBER DATED: 30 TH SEPTEMBER, 2013 RD : COPY TO: 1. PETITIONER 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR