ITO 7(1), V. NAMAN ESTATES P.LTD,

MA 267/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9468 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2004-2005
• Appeal Filed On: 30-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SANTOSH PARAB
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE AND SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER. M.A. NOS. 267 & 268/MUM/2012. (IN ITA NOS .4114 & 4115/MUM/2010) ASSTT. YEARS : 2004-05, 2005-06 THE INCOME-TAX OFFICER, M/S NAMAN ESTATES PVT. LTD. 7(1)(4), MUMBAI. VS. MAHINDRA TOWERS, P.K. KURNE, DR. G.M, BHOSALE MARG, W ORLI, MUMBAI 400 018. AAACN 1980F APPLICANT. RESPONDENT. APPLICANT BY : SHRI RAKESH RANJAN. RESPONDENT BY : SHRI SANTOSH PARAB. DATE OF HEA RING : 30-11-2012. DATE OF PRONOUNCEM ENT : 30-11-2012. O R D E R PER P.M. JAGTAP, A.M. : BY THESE MISCELLANEOUS APPLICATIONS, THE REVENUE I S SEEKING RECTIFICATION OF THE MISTAKE ALLEGED TO HAVE CREPT IN THE ORDER OF T HE TRIBUNAL DATED 19-08-2011 PASSED IN ITA NOS. 4114 AND 4115/MUM/2010. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT INTEREST EX PENDITURE OF RS.47,93,763/- AND RS.29,75,347/- CLAIMED BY THE ASSESSEE FOR ASSESSME NT YEARS 2004-05 AND 2005-06 RESPECTIVELY WAS DISALLOWED BY THE AO IN ASSESSMENT COMPLETED U/S 143(3) PRIMARILY ON THE GROUND THAT IT WAS NOT ALLOWABLE U /S 36(1)(III) IN THE ABSENCE OF ANY BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE. H E ALSO HELD THAT THE SAID INTEREST 2 MA NOS.267 & 268/MUM/2012 EXPENDITURE ALTERNATIVELY WAS NOT ALLOWABLE AS PER THE PROVISIONS OF SECTION 14A AS THE SAME WAS INCURRED IN RELATION TO EARNING OF EX EMPT DIVIDEND INCOME. ON APPEAL, THE LEARNED CIT(APPEALS) CONFIRMED THE DISA LLOWANCE OF INTEREST ON BOTH THE GROUNDS GIVEN BY THE AO. ON FURTHER APPEALS FIL ED BY THE ASSESSEE, THE TRIBUNAL UPHELD THE ORDERS OF THE LEARNED CIT(APPEALS) CONFI RMING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF INTEREST EXPENDITURE FOR BO TH THE YEARS I.E. ASSESSMENT YEARS 2004-05 AND 2005-06 ON THE GROUND THAT THE SA ME WAS NOT ALLOWABLE U/S 36(1)(III) IN THE ABSENCE OF ANY BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE. AS REGARDS THE DISALLOWANCE OF THE SAID INTEREST MADE ALTERNATIVELY BY APPLYING THE PROVISIONS OF SECTION 14A, THE TRIBUNAL SENT THE MA TTER BACK TO THE AO WITH A DIRECTION TO DECIDE THE SAME AFRESH IN THE LIGHT OF PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOY CE MFG. CO. LTD. 328 ITR 81. 3. AS RIGHTLY SUBMITTED BY THE REVENUE IN THE PRESE NT MISCELLANEOUS APPLICATIONS, WHEN THE DISALLOWANCE MADE ON ACCOUNT OF INTEREST EXPENDITURE WAS CONFIRMED BY THE TRIBUNAL ON THE GROUND THAT THE SA ME WAS NOT ALLOWABLE U/S 36(1)(III) IN THE ABSENCE OF ANY BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE, THE SECOND ISSUE REGARDING APPLICABILITY OF SECTION 14A WHICH WAS INVOKED BY THE AO AS AN ALTERNATIVE, HAD BECOME INFRUCTUOUS AND THERE IS A MISTAKE IN THE ORDER OF THE TRIBUNAL IN RESTORING THE SAID ISSUE TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH, WHICH IS CLEARLY APPARENT FROM RECORD. EVEN THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO ACCEPTED THIS POSITION. WE, THERE FORE, RECTIFY THE SAME BY SUBSTITUTING THE FOLLOWING PARAGRAPHS AS PARAGRAPH NOS. 6 AND 7 IN THE ORDER OF THE TRIBUNAL IN PLACE OF THE EXISTING PARAGRAPH NOS. 6 AND 7: 6. SO FAR AS THE FIRST GROUND OF THE ASSESSEE THAT THE ENTIRE INTEREST EXPENDITURE IS TOWARDS THE BUSINESS, WE FIND THAT T HE IDENTICAL ISSUE HAS BEEN 3 MA NOS.267 & 268/MUM/2012 DECIDED AGAINST THE ASSESSEE IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02 BY THE TRIBUNAL TO WHICH REFERENCE HAS BEEN GIVEN BY THE LEARNED CIT(APPEALS) IN HIS IMPUGNED ORDER. RESPECTFULLY FO LLOWING THE SAID DECISION OF THE TRIBUNAL, WE UPHOLD THE IMPUGNED OR DERS OF THE LEARNED CIT(APPEALS) CONFIRMING THE DISALLOWANCE MADE BY TH E AO ON ACCOUNT OF INTEREST EXPENDITURE HOLDING THAT THE SAME IS NOT A LLOWABLE U/S 36(1)(III) IN THE ABSENCE OF ANY BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE IN THE YEARS UNDER CONSIDERATION. AS A RESULT OF OUR DECISION RE NDERED ON GROUND NO.1, THE OTHER ISSUE RAISED BY THE ASSESSEE IN GROUND NO . 2 OF ITS APPEALS DISPUTING THE DISALLOWANCE OF INTEREST MADE ALTERNATIVELY BY THE AO BY APPLYING SECTION 14A HAS BECOME INFRUCTUOUS AND THE SAME IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 3. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS OF THE REVENUE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOV., 2012. SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 30 TH NOV., 2012. WAKODE COPY TO : 1. APPLICANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. D.R., H-BENCH. (TRUE COPY) BY ORDER 4 MA NOS.267 & 268/MUM/2012 ASSISTANT REGISTRAR, ITAT, MUMBAI.