Yash Pal Gupta, Ludhiana V. ACIT, Ludhiana

MA 8/CHANDI/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0170 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-04-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: Y K SOOD
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER M.A. NO.8 /CHD/2013 (IN ITA NO.577/CHD/2012) (ASSESSMENT YEAR: 2008-09) YASH PAL GUPTA, VS. THE A.C.I.T., C/O M/S BALDEV RAJ RAM MURTI, CIRCLE V, LOHA MANDI, LUDHIANA. LUDHIANA. PAN: AARPG3936G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.K.SOOD RESPONDENT BY : SHRI N.K.SAINI, DR DATE OF HEARING : 15.03.2013 DATE OF PRONOUNCEMENT : 03.04.2013 O R D E R PER SUSHMA CHOWLA, JM: THE APPLICANT HAS FILED THIS MISCELLANEOUS APPLICAT ION FOR RECALLING THE ORDER DATED 12.07.2012 IN ITA NO. 577 /CHD/2012 RELATING TO THE ASSESSMENT YEAR 2008-09. 2. THE MISCELLANEOUS FILED BY THE APPLICANT READS A S UNDER: 1. THAT ORDER IN THE ABOVESAID CASE WAS PASSED BY THE HON'BLE BENCH ON 31.07.2012 RECEIVED BY THE ASSESSEE ON 7.9.2012. PERUSAL TO TH E ORDER SHOWS THE FOLLOWING MISTAKES. 2. THAT IN PARA 9 OF THE ORDER WHILE RECORDING THE ARG UMENTS OF THE UNDERSIGNED COUNSEL IT IS SEEN THAT THE FULL ARGUMENTS ADVANCED BY THE COUNSEL HAVE NEITHER BEEN RECORDED NOR HAVE BEEN APPRECIATED BY THE BENCH. THE COUNSEL HAD SUBMITTED THAT FOR INVOKING SEC. 40 A(2) IT IS MANDATORY ON THE AO TO ESTABLISH THE MARKET RATE. THE AO AND THE C1T(A) BO TH COULD NOT ESTABLISH THE MARKET RATE OF THE INTEREST ON UNSECURED LOANS AND THIS HAS BEE N AGITATED BY THE APPELLANT IN GROUND NO. 2 OF THE APPEAL WHICH HAS NOT BEEN DISPOSED OFF BY THE HON'BLE BENCH. 3. THAT ON A SPECIFIC QUERRY BY THE HON'BLE J.M. T O THE COUNSEL TO ESTABLISH THE MARKET RATE OF INTEREST ON UNSECURED LOANS IT WAS S PECIFICALLY ARGUED BY THE COUNSEL THAT THE ONUS OF ESTABLISHING MARKET RATE IS ON THE DEPARTMENT AND NOT ON THE ASSESSEE. FURTHER THE ASSESSEE DREW THE KIND ATTENTION OF THE BENCH TOWARDS THE FOLLOWING JUDGMENTS. 2 I. 101 TTJNAG(TM)761 II. 133TTJAGRA(TM) 1 III L22TTJLUCKNOW 839 IV ACIT VS MEX JFLSWITCHGEARS (P)LTD. ITA 346)ASR )/2005) OF AMRITSAR BENCH, PARA 5 & 6 V. 70 TTJ ASR 43 COPIES OF THESE JUDGMENTS WERE PLACED ON PAPER BOOK PAGE NO.8 TO 34 AND THE RELEVANT PARTS OF THESE JUDGMENT WERE DULY READ OUT AT THE T IME OF ARGUMENTS AND TWO JUDGMENTS OF THE NAGPUR & AGRA BENCHES OF ITAT APPENDED ON PAGE 8 AN D 16 OF PAPER BOOK WERE A THIRD MEMBER JUDGMENTS AND WERE BINDING ON THE BENC H, AND THEREFORE WERE REQUIRED TO BE FOLLOWED WHICH THE HON'BLE BENCH NOT ONLY FAILED TO FOLLOW BUT ALSO LOST THE TOTAL SIGHT WHILE PRONOUNCING THE ORDER. 4. THAT THESE JUDGMENTS HAVE NEITHER BEEN CONSIDERE D OR ANALYSED BY THE HON'BLE BENCH ANYWHERE IN THE ORDER AND IT IS WELL SETTLED LAW THAN NON CONSIDERATION OF THE JUDGMENTS AMOUNTS TO MISTAKE APPARENT FROM RECO RD AND IT IS THEREFORE PRAYED THAT THE GROUND NO. 2 OF THE APPEAL BE DISPOSED OFF IN THE LIGHTS OF ARGUMENTS ADVANCED AND THE JUDGMENTS CITED AT THE TIME OF ARG UMENTS IN THE APPEAL, BY WAY OF A SPEAKING ORDER. 5. THAT IT WAS ALSO ARGUED BY THE UNDERSIGNED COUN SEL THAT ON THE BASIS OF THE CONSISTENCY WHICH WAS ESTABLISHED IN COMPARATIVE CH ART APPENDED ON PAGE 7 OF THE PAPER BOOK, THIS DISALLOWANCE CANNOT BE MADE AN D ON THE SPECIFIC QUERRY BY THE BENCH THE KIND ATTENTION OF THE BENCH WAS DRAWN TOWARDS THE ASSESSMENT ORDER PASSED U/S 143(3) FOR A.Y. 2006-07 APPENDED ON PAGE 36 TO 38 OF THE PAPER BOOK THAT 18% INTEREST PAID TO RELATIVE HAD BEEN ACCEPTE D BY THE AO, NO DISALLOWANCE COULD HAVE BEEN MADE DURING THE YEAR UNDER CONSIDER ATION ON THE PRINCIPLES OF THE CONSISTENCY FOR WHICH THE ASSESSEE RELIED ON THE FO LLOWING JUDGMENTS: A. 266 ITR SC 99 B. 193 ITR SC 321 C. 257 ITR SC 59 D. 326 ITR P&H 640 E. 327 ITR P&H 26 F. 88 ITDCHD(TM)313 G. 330 ITR BOM 485 THIS ARGUMENT AND JUDGMENTS RELIED BY THE ASSESSEE HAVE NOT BEEN DISPOSED OFF BY THE BENCH. 6. THAT SINCE THE MISTAKES STATED ABOVE IN PARA 2 TO 5 ARE APPARENT FROM RECORDS THE SAME MAY KINDLY BE RECTIFIED AND RESULTANT RELIEF M AY BE GRANTED. 3. THE LEARNED A.R. FOR THE APPLICANT REFERRED TO T HE PARA 2 OF THE MISCELLANEOUS APPLICATION AND POINTED OUT THAT THE OBSERVATIONS IN PARA 3 9 OF THE ORDER OF THE TRIBUNAL WAS INCOMPLETE AS FU LL ARGUMENTS OF THE COUNSEL WERE NOT RECORDED, NOR APPRECIATED AND FURT HER THE CASE OF THE APPLICANT WAS FULLY COVERED BY THE ORDERS IN THE EA RLIER YEARS AND FOLLOWING THE PRINCIPLES OF CONSISTENCY THE RATE OF INTEREST PAID TO THE RELATED PARTIES @ 18% BEING CONSISTENTLY ALLOWED SH OULD HAVE BEEN ALLOWED IN THE PRESENT YEAR ALSO. 4. THE LEARNED D.R. FOR THE REVENUE POINTED THAT TH E PRIME LENDING RATE FROM THE BANKS DURING THE YEAR WERE 8.75% AND THE ASSESSEE HAD PAID INTEREST @ 18% TO HIS FAMILY MEMBERS. 5. ON THE PERUSAL OF THE RECORD WE FIND THAT THE IS SUE RAISED IN THE CAPTIONED APPEAL WAS AGAINST THE DISALLOWANCE OF IN TEREST TOTALING RS.1,72,200/-. THE APPLICANT HAD PAID INTEREST @ 1 8% TO ALL HIS FAMILY MEMBERS WHO WERE COVERED PERSONS UNDER SECTION 40A( 2)(B) OF THE ACT WHEREAS THE ASSESSEE HAD PAID INTEREST TO OTHERS AT LESSER RATE. THE LIST OF FAMILY MEMBERS AND THE RATE AT WHICH INTEREST WA S PAID TO OTHERS IS INCORPORATED AT PAGE 4 OF THE ASSESSMENT ORDER AT P ARA 5. THE INTEREST WAS PAID TO OTHER PARTIES AT RATES VARYING BETWEEN 9% TO 18% AND TO THE BANK AT 12% PER ANNUM BY THE APPLICANT ITSELF DURIN G THE YEAR. THE ASSESSING OFFICER HAD CONFRONTED THE ASSESSEE WITH THE FACT OF 12% INTEREST BEING PAID PER ANNUM ON THE BANK LOANS, AG AINST WHICH THE PLEA OF THE ASSESSEE WAS THAT IT WAS CONSTANTLY PAYING I NTEREST @ 18% TO ITS FAMILY MEMBERS FROM ASSESSMENT YEARS 2002-03 ONWARD S. THE ASSESSING OFFICER RESTRICTED THE RATE OF INTEREST TO 12%, WHE REAS THE CIT (APPEALS) ALLOWED THE SAME AT 15%. THE TRIBUNAL VIDE PARA 9 NOTED THE ARGUMENTS OF THE LEARNED A.R. FOR THE APPLICANT AND OBSERVED AS UNDER: 9. THE LEARNED A.R. FOR THE ASSESSEE STRESSED THAT THE PRINCIPLES OF CONSISTENCY DEMANDED THAT THE INTEREST RATE OF 18% BE APPLIED IN THE HANDS OF THE ASSESSEE AND NO ADDITION WAS WARRANTED. THE 4 LEARNED A.R. FOR THE ASSESSEE ALSO PLACED RELIANCE ON THE SERIES OF DECISIONS FOR THE RATIO THAT WHERE THE ASSESSING OFFICER HAD NO INFORMATION VIS--VIS FAIR MARKET RATE OF INTEREST, NO DISALLOWANCE COULD BE MADE BY THE ASSESSING OFFICER. 6. THE TRIBUNAL VIDE PARA 10 HELD AS UNDER: 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS IN APPEAL AGAINST THE DISALLOWANCE OF INTEREST BY INVOKING TH E PROVISIONS OF SECTION 40A(2)(A) OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD PAID INTEREST @ 18% PER ANNUM TO THE PERSONS COVERED UNDER SECTION 40A(2)(B) OF THE ACT AS AGAINST RATE OF INTEREST VARYING BETWEEN 9% TO 18% PAID TO OTHER PERSONS. THE BREAK UP OF THE UNSECURED LOANS RAISED FROM THE FAMILY MEMBERS AND FROM OTHERS IS AVAILABLE AT PAGE 4 OF THE ASSESSMENT ORDER. THE PERUSAL OF THE SAID TABULATED DETAILS REFLECT THAT THE ASSESSEE HAD PAI D UNIFORM RATE OF INTEREST ON THE LOANS RAISED FROM I TS FAMILY MEMBERS WHO ARE COVERED PERSONS UNDER SECTION 40A(2)(B) OF THE ACT. IN RESPECT OF LOANS FROM OTHER PERSONS THE ASSESSEE HAD PAID THE RATE OF INTEREST @ 9% TO ONE PARTY AND 12% WAS PAID TO OTHER PARTY. TO OTHERS, THE RATE OF INTEREST OF 15 % WAS PAID. THE ASSESSING OFFICER ALSO CONFRONTED THE ASSESSEE VIS--VIS BANK LOAN WHICH WAS 12% PER ANNUM. AS AGAINST THE ABOVE SAID DETAILS, THE ASSESSEE HAD FURNISHED ON RECORD COMPARATIVE CHART OF THE RATE OF INTEREST PAID YEAR-WISE UNDER WHICH CONSISTENTLY IT WAS PAYING RATE OF INTEREST OF 18% TO ITS FAMILY MEMBERS FROM ASSESSMENT YEAR 2002-03 ONWARDS. HOWEVER, TO THE OTHER PERSONS, THE RATE OF INTEREST VARIED FROM 8.5% TO 18%. IN THE PRECEDING YEAR THE ASSESSEE WAS PAYING INTEREST @ 8.5% TO FOUR PARTIES, 9% TO ONE PARTY, 12% TO THREE PARTIES, 15% TO TWO PARTIES AND 18% TO THREE PARTIES. IN THE YEAR UNDER APPEAL THE ASSESSEE IS PAYING INTEREST @ 9% TO ONE, 12% TO ANOTHER AND 15% TO FOUR PARTIES AND 18% PER ANNUM TO THE BALANCE PARTIES. IN THE FACTS AND CIRCUMSTANCES AND IN VIEW THE ASSESSEE HAVING PAID INTEREST AT VARYING RATES OF INTEREST, WE DO NOT FIND MERIT IN THE CLAIM OF THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 40A(2)(A) OF THE ACT, WHICH CLEARLY PROVIDES THAT WHERE THE PAYMENT IS BEING MADE TO ANY PERSON SPECIFIED UNDER SECTION 40A(2)(B) OF THE ACT, SUCH SERVICE SHOULD BE PROVIDED AT MARKET RATE. WHERE THE ASSESSEE HIMSELF HAS PAID INTEREST AT A RATE LESSER THAN 18%, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE VIS--VIS THE RATE OF INTERES T @ 18% PER ANNUM PAID TO ITS FAMILY MEMBERS WHO ARE ADMITTEDLY SPECIFIED PERSONS COVERED UNDER SECTION 40A(2)(B) OF THE ACT. WE FIND THAT THE 5 ASSESSING OFFICER HAD ALLOWED RATE OF INTEREST OF 12% PER ANNUM, WHICH WAS ENHANCED TO 15% BY THE CIT (APPEALS) IN VIEW OF THE ASSESSEE HAVING PAID SIMILAR RATE OF INTEREST TO OTHER PERSONS AND ALSO THE RATE OF INTEREST BEING PAID TO THE BANK. IN TH E CHANGING SCENARIO OF MARKET RATE OF INTEREST BEING PAYABLE, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE OF THE CONSTANT RATE OF INTEREST PAID FROM ASSESSMENT YEAR 2002-03 TO ASSESSMENT YEAR 2008- 09 @ 18% PER ANNUM. WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT (APPEALS) IN APPLYING THE RATE OF INTEREST OF 15% IN RESTRICTING THE DISALLOWANCE OF INTEREST MADE BY THE ASSESSING OFFICER. UPHOLDING THE SAME WE DISMISS GROUND OF APPEAL RAISED BY THE ASSESSEE. 7. THE TRIBUNAL HAD CONSIDERED THE PLEADINGS OF THE APPLICANT BEFORE THE LOWER AUTHORITIES AND ALSO BEFORE TRIBUNAL AND THE PLEADINGS OF THE LEARNED D.R. FOR THE REVENUE AND DECIDED THE ISSUE VIDE PARA 10 OF THE ORDER DATED 31.7.2010, UNDER WHICH IT WAS SPECIFICA LLY OBSERVED THAT WE FIND THAT THE ASSESSING OFFICER HAD ALLOWED RATE OF INTEREST OF 12% PER ANNUM, WHICH WAS ENHANCED TO 15% BY THE CIT (AP PEALS) IN VIEW OF THE ASSESSEE HAVING PAID SIMILAR RATE OF IN TEREST TO OTHER PERSONS AND ALSO THE RATE OF INTEREST BEING PAID TO THE BANK. IN THE CHANGING SCENARIO OF MARKET RATE OF INTEREST BEING PAYABLE, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE OF THE CONSTA NT RATE OF INTEREST PAID FROM ASSESSMENT YEAR 2002-03 TO ASSES SMENT YEAR 2008-09 @ 18% PER ANNUM. 8. THE PLEAS OF THE LEARNED A.R. FOR THE APPLICANT BEFORE US WERE MISPLACED AS THE ISSUE OF CONSISTENCY OF HAVING PAI D AND ALLOWED INTEREST @ 18% WAS CONSIDERED BY THE TRIBUNAL AND ALSO THE F ACTUM OF THE MARKET RATE RELATABLE TO THE YEAR UNDER CONSIDERATION BEIN G LOWER IN THE CHANGING MARKET SCENARIO WAS TAKEN NOTE OF EVEN BY THE LOWER AUTHORITIES AND THE TRIBUNAL IN COMING TO THE DECIS ION THAT THE RATE OF INTEREST DURING THE YEAR BEING LOWER AND THE CONCER NED PARTIES BEING COVERED UNDER THE PROVISIONS OF SECTION 40A(2)(B) O F THE ACT, THE 6 REQUIREMENT OF THE ACT WAS TO ALLOW THE INTEREST AT THE MARKET RATE AS PER SECTION 40A(2)(A) OF THE ACT IRRESPECTIVE OF THE RA TE OF INTEREST BEING PAID BY THE APPLICANT. THUS WE FIND NO ERROR IN TH E ORDER OF THE TRIBUNAL DATED 31.7.2012. IN ANY CASE, THERE IS NO POWER O F REVIEW WITH THE TRIBUNAL UNDER SECTION 254(2) OF THE ACT AND ONLY A PPARENT MISTAKES FROM RECORD COULD BE CORRECTED UNDER THE SAID PROVI SIONS. THE ARGUMENTS RAISED BY THE APPLICANT IN THE GARB OF THE PRESENT MISCELLANEOUS APPLICATION ARE NOT SUSTAINABLE AND HENCE, THE PRES ENT MISCELLANEOUS APPLICATION IS DISMISSED. 9. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF APRIL, 2013. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 3RD APRIL, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH