Total Environment Building Systems Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore

MA 45/BANG/2023

AI Insights

The case involves M/s. Total Environment Building Systems Pvt. Ltd., the appellant, contesting the disallowances made by the Deputy Commissioner of Income Tax, the respondent, for the assessment years 2010-11 and 2011-12. The primary issues were the disallowance of interest on borrowed funds and the disallowance related to sales tax paid. The Tribunal found that the initial order did not address certain grounds raised by the assessee and remanded the issues back to the assessing officer for verification and reconsideration in accordance with the law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124310 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-04-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 29-12-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. Nos. 45 & 46/Bang/2023 (in ITA Nos. 45 & 46/Bang/2017) Assessment Years : 2010-11 & 2011-12 M/s. Total Environment Building Systems Pvt. Ltd., ‘Imagine’, No. 78, ITPL Main Road, EPIP Zone, Whitefield, Bangalore – 560 066. PAN: AABCT9452F Vs. The Deputy Commissioner of Income Tax, Circle – 7 (1)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Smt. Tanmayee Rajkumar, Advocate Revenue by : Shri Ramanathan, Addl. CIT (DR) Date of Hearing : 21-04-2023 Date of Pronouncement : 03-05-2023 ORDER PER BEENA PILLAI, JUDICIAL MEMBER The present miscellaneous petition has been filed by assessee against a common order passed on 29.06.2022 in ITA Nos. 45 & 46/Bang/2017 for A.Ys. 2010-11 and 2011-12. 2. The Ld.AR first took up the MP raised in A.Y. 2010-11. 3. She submitted that this Tribunal while considering the ground nos. 12-13 recorded the submissions in paras 20-20.1. However, this Tribunal has not given any finding in respect of the same. Page 2 of 5 M.P. Nos. 45 & 46/Bang/2023 (in ITA Nos. 40, 45 & 46/Bang/2017) She thus submitted that the said grounds needs to be completely disposed of. 4. On perusal of the impugned order, we note that ground nos. 12-13 has been considered in para 20 at page 23 of the impugned order. Wherein the submissions are recorded without any finding. Accordingly we are adding one para in continuation. 4.1 We note that the issue is in respect of disallowance of interest on borrowed funds. The assessing officer had disallowed the interest on the pretext that there is a diversion of loan funds whereas the assessee as raised submitted the argument that the borrowed funds were completely utilised for the purpose of business. As the observation by this Tribunal has not been expressed therein, we record the finding in respect of these grounds as under. 5. Following para 20.2 shall be read after para 20.1 at page 23 of the impugned order: “20.2 We have perused the submissions advanced by both sides in the light of records placed before us. The Ld.AO has disallowed a sum of Rs.16,10,960/- by holding that the said amount is not utilised for the purpose of business activities. The Ld.CIT(A) observed that except for stating that the said amounts were fully utilised for the purpose of business activities of assessee, no other statements were made by the assessee on this issue. In the interest of justice, we deem it fit to remand this issue for necessary verification. Assessee is directed Page 3 of 5 M.P. Nos. 45 & 46/Bang/2023 (in ITA Nos. 40, 45 & 46/Bang/2017) to file relevant details / information to establish there is no diversion of funds and that the entire borrowed funds have been utilised for the purposes of business of the assessee. The Ld.AO is directed to carry out necessary verification in respect of the same and to consider the issue in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. We therefore remand this issue to the Ld.AO to consider the claim of assessee in accordance with law. Accordingly, this ground raised by assessee stands allowed for statistical purposes.” AY 2011-12 6. The miscellaneous petition raised by assessee for A.Y. 2011-12 is in respect of certain clarification that is required for disposing of additional ground raised by the assessee vide application dated 22.06.2022. This Tribunal had observed in para 15 at page 16 of the impugned order as under: “15. We note that the demand notice was received by the assessee during financial year relevant to the assessment year 2011-12, and the assessee discharged the liability during assessment year 2011-12. We therefore agree with the submissions of the Ld.AR that the disallowance is to be deleted for AY 2011-12 as per the additional ground raised by the assessee in appeal filed for AY 2011-12. Accordingly ground no.4-5 for AY 2010-11 stands dismissed and Additional ground raised for AY 2011-12 stands allowed.” 7. The Ld.AR submitted that specific directions has to be provided to the Ld.AO to carry out necessary verification as there Page 4 of 5 M.P. Nos. 45 & 46/Bang/2023 (in ITA Nos. 40, 45 & 46/Bang/2017) is a double disallowance for A.Ys. 2010-11 and 2011-12 in respect of the sales tax paid. As we have already recorded in para 15 reproduced hereinabove that, if the assessee has discharged the liability in A.Y. 2011-12 that pertains to A.Y. 2010-11, any disallowance made for A.Y. 2011-12 is to be deleted. 8. Accordingly following para shall be read as 15.1 in continuation to para 15:- “15.1 The submission of the assessee is that it has discharged the liability pertaining to sales tax for period April 2008 to October 2008 before the due date of filing of return of income for A.Y. 2010-11. This factual aspect may be verified by the Ld.AO and in the event, the taxes have been paid in A.Y. 2010-11 for A.Y. 2011-12, the disallowance made should be deleted.” 9. The rest of the part of the order remains unchanged and the M.P. filed by assessee stands allowed. In the result, both the miscellaneous petitions filed by assessee stands allowed. Order pronounced in the open court on 03 rd May, 2023. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 03 rd May, 2023. /MS / Page 5 of 5 M.P. Nos. 45 & 46/Bang/2023 (in ITA Nos. 40, 45 & 46/Bang/2017) Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore