AVIK PHARMACEUTICALS LTD, V. DCIT 8(1),

MA 56/MUM/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0624 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . , , ! ! ! ! '# $% '# $% '# $% '# $% , ,, , & & & & ' ' ' ' BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER (!(! !) . / M.A. NO.56/MUM./2013 ( . / ITA NO. 5587/MUM./2007 +,# - ( &) . !/. / ASSESSMENT YEAR : 200304 ) M/S. AVIK PHARMACEUTICALS LTD. 194, ARVIND STUDIO COMPOUND WESTERN EXPRESS HIGHWAY ANDHERI (E), MUMBAI 400069 .. ! / APPLICANT ) V/S DY. COMMISSIONER OF INCOME TAX CIRCLE8(1), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400020 .... 0123 / RESPONDENT 2 . / PERMANENT ACCOUNT NUMBER AAACA5490R 5 ! 6 7 / REVENUE BY : MR. MOHIT JAIN &) .8# 6 7 / ASSESSEE BY : NONE )! 6 # / DATE OF HEARING 21.06.2013 $ 9/ 6 # / DATE OF ORDER 05.07.2013 $ $ $ $ / ORDER '# $% '# $% '# $% '# $% , ,, , & & & & : : : : / PER AMIT SHUKLA, J.M. THE ASSESSEE, BY WAY OF THIS MISCELLANEOUS APPLICAT ION, SEEKS RECALL / MODIFICATION OF THE IMPUGNED ORDER DATED 24 TH FEBRUARY 2009, PASSED BY THE TRIBUNAL, MUMBAI BENCH, IN ITA NO.5587/MUM./2007, F OR THE ASSESSMENT YEAR 200304. M/S. AVIK PHARMACEUTICALS LTD. 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. IN THE APP LICATION, IT HAS BEEN POINTED OUT BY THE ASSESSEE THAT THE TRIBUNAL, WHILE ADJUDICATING THE ISSUE OF DISALLOWANCE OF INTEREST, HAS HELD THAT FO LLOWING INTERESTS PAYABLE TO THE BANKS ARE COVERED UNDER SECTION 43B OF THE INCO ME TAX ACT, 1961 (FOR SHORT THE ACT ). INTEREST ON BILLS DISCOUNTED 17,67,377 BANK CHARGES 91,378 INTEREST ON ADVANCE BILLS 1,39,475 TOTAL: 19,98,230 3. IT HAS BEEN CONTENDED THAT THE SAID INTEREST DO NOT FALL WITHIN THE AMBIT OF SECTION 43B(E) AS THESE INTERESTS DO NOT C OME WITHIN THE MEANING OF INTEREST ON TERM LOAN , THEREFORE, THE FOLLOWING FINDINGS RECORDED BY THE TRIBUNAL IS INCORRECT IN LAW AND, HENCE, CONSTITUTE S MISTAKE APPARENT ON RECORD. PARA 7 WITH REGARD TO THE REMAINING SUM OF ` 19,98,320 BEING INTEREST PAID TO BANKS, WHICH ATTRACTS PROVISIONS O F SECTION 43B OF THE ACT, WE ARE OF THE VIEW THAT THE MATTER SHOULD BE SENT BACK TO THE ASSESSING OFFICER FOR VERIFICATION OF THE DETAILS OF ACTUAL PAYMENTS. ASSESSING OFFICER WILL VERIFY THE DETAILS OF ACTUAL PAYMENT AND DECIDE CLAIM OF T HE ASSESSEE FOR DEDUCTION IN ACCORDANCE WITH LAW AND IN THE LIGHT OF THE PROV ISIONS OF SECTION 43B OF THE ACT. 4. FURTHER, THE INTEREST ON TERM LOAN WHICH WAS RELEVANT FOR ASSESSMENT YEAR 200304 WAS ONLY AMENDED AFTER THE ASSESSMENT YEAR 200405 WHEREBY THE WORDS TERM LOAN WAS SUBSTITUTED BY THE WORDS LOANS AND ADVANCES . WHILE DECIDING THE ISSUE, THE TRIBUNAL WAS UNDER THE IMPRESSION THAT ALL THE INTERESTS PAID TO THE BANK ARE COVERED UNDER SECTION 43B AND HAD, ACCORDINGLY, RESTORED THE MATTER TO THE FILE O F THE ASSESSING OFFICER FOR VERIFICATION OF THE DETAILS OF ACTUAL PAYMENTS. SIN CE THE NATURE OF INTEREST IS NOT COVERED UNDER SECTION 43B, THEREFORE, THERE IS A MISTAKE APPARENT ON M/S. AVIK PHARMACEUTICALS LTD. 3 RECORD AND IT WAS NOT NECESSARY TO VERIFY THE ACTUA L PAYMENT OF THE SAID INTEREST BY THE ASSESSING OFFICER. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT EVEN THOUGH THE DISPUTED DISALLOWANCE OF INTEREST WAS NOT COVER ED UNDER SECTION 43B, HOWEVER, THE MATTER HAS BEEN RESTORED BACK TO THE F ILE OF THE ASSESSING OFFICER WHO CAN LOOK INTO AND DECIDE THIS ISSUE AND THE PRESENT APPLICATION IS BEYOND THE SCOPE OF SECTION 254(2). 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE, THE CONTENTIONS RAISED IN THE MISC. APPLICATION AND ALS O PERUSED THE RELEVANT FINDINGS OF THE TRIBUNAL VISAVIS THE MATERIAL ON RECORD. IN THIS CASE, THE DEPARTMENT HAD PREFERRED ON APPEAL BEFORE THE TRIBU NAL ON THE GROUND THAT THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN DEL ETING THE DISALLOWANCE OF ` 44,66,574, ON ACCOUNT OF INTEREST PAYMENT. BREAKU P OF THE INTEREST HAS BEEN GIVEN AT PAGE2 OF THE APPELLATE ORDER AND ALS O PARA5 OF THE TRIBUNALS ORDER. ON A PERUSAL OF THE DETAILS AND THE BREAKUP OF INTEREST AMOUNTING TO ` 19,98,230, IT IS SEEN THAT THESE INTERESTS PERTAIN TO BILL DISCOUNTING, BANK CHARGES AND INTEREST ON ADVANCE BILLS. THESE INTERE STS DO NOT COME WITHIN THE REALM OF CLAUSE (E) OF SECTION 43B, AS WAS APPLICAB LE IN THE ASSESSMENT YEAR 200304 WHEREIN THE WORDS USED WERE TERM LOAN . WHILE DECIDING THE ISSUE, THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE ASSESS ING OFFICER AFTER HOLDING THAT THESE INTERESTS PAID TO THE BANKS FALLS WITHIN THE AMBIT OF SECTION 43B AND, THEREFORE, THE ASSESSING OFFICER SHOULD VERIFY THE DETAILS OF ACTUAL PAYMENTS. SUCH A FINDING OF THE TRIBUNAL IS INCORRE CT IN LAW AS THE INTEREST DOES NOT PERTAIN TO TERM LOAN AND, THEREFORE, THE SAME WILL NOT FALL WITHIN THE PURVIEW OF SECTION 43B. TO THIS EXTENT, THERE I S A MISTAKE OF LAW. SUCH A MISTAKE DEFINITELY FALLS WITHIN THE REALM OF MISTAKE APPARENT FROM RECORD WITHIN THE MEANING SECTION 254(2). CONSEQUENTLY, WE MODIFY THE IMPUGNED ORDER AND HOLD THAT TO THE EXTENT THAT THE AMOUNT O F INTEREST AGGREGATING TO ` 19,98,320, DOES NOT ATTRACT THE PROVISIONS OF SECT ION 43B AND THE M/S. AVIK PHARMACEUTICALS LTD. 4 ASSESSING OFFICER IS DIRECTED TO ALLOW THIS INTERES T AFTER VERIFYING THE NATURE OF INTEREST PAID TO THE BANK. 7. 8 #; &) .8# 6 (!(! !) !# < ) 5# => ? 7. IN THE RESULT, ASSESSEES M.A. IS TREATED AS ALL OWED. $ 6 / @ A); 5 TH JULY 2013 6 B ? ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY 2013 SD/- . .. . B. RAMAKOTAIAH ACCOUNTANT MEMBER SD/- '# '# '# '# $% $% $% $% & & & & AMIT SHUKLA JUDICIAL MEMBER MUMBAI, A) A) A) A) DATED: 5 TH JULY 2013 $ 6 0&#'( C(/# / COPY OF THE ORDER FORWARDED TO : (1) &) .8# / THE ASSESSEE; (2) 5 ! / THE REVENUE; (3) D () / THE CIT(A); (4) D / THE CIT, MUMBAI CITY CONCERNED; (5) (!GB 0&#&) , , / THE DR, ITAT, MUMBAI; (6) BH. I / GUARD FILE. 1(# 0&# / TRUE COPY $) / BY ORDER 0 5. JK / PRADEEP J. CHOWDHURY !8L &)5 J! / SR. PRIVATE SECRETARY + / = 5 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI