Sree Atreya Enterprises, Trichy V. JCIT, Trichy

MA 95/CHNY/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3415 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: M VISWANATHAN
• Section: 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER M.P. NO.95/MDS/2015 (IN I.T.A. NO.348/MDS/2015) & '& / ASSESSMENT YEAR : 2010-11 M/S SREE ATREYA ENTERPRISES, N0.12, TAMIL SANGAM BUILDING, WEST BOULEWARD ROAD, TRICHY 620 008. PAN : AABFS 0105 R V. THE JOINT COMMISSIONER OF INCOME TAX, RANGE II (I/C), TRICHY. ()*& /PETITIONER) ()+*,/ RESPONDENT) )*& . / /PETITIONER BY : SHRI M. VISWANATHAN, CA )+*, . / / RESPONDENT BY : DR. B. NISCHAL, JCIT 0 . 1$ / DATE OF HEARING : 04.09.2015 2!' . 1$ / DATE OF PRONOUNCEMENT : 11.09.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE ASSESSEE FILED THE PRESENT MISCELLANEOUS PETI TION ON THE GROUND THAT THERE IS AN ERROR IN THE ORDER OF THE T RIBUNAL DATED 08.05.2015. 2 M.P. NO.95/MDS/15 2. SHRI M. VISWANATHAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE BORROWED A SU M OF ` 1.85 CRORES BY PLEDGING THE EXISTING FIXED DEPOSIT AND U SED THE BORROWED FUNDS FOR PAYMENT OF INCOME-TAX. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE HAD SURPLUS PROFIT WHI CH ITSELF WAS SUFFICIENT FOR PAYMENT OF INCOME-TAX. MOREOVER, IN STEAD OF PRE- CLOSING THE FIXED DEPOSIT, THE ASSESSEE BORROWED LO AN. THE LD. REPRESENTATIVE CLARIFIED THAT IT IS NOT A CASE OF P AYMENT OF INTEREST UNDER SECTION 234A, 234B & 234C OF THE INCOME-TAX A CT, 1961 (IN SHORT 'THE ACT'). IT IS A CASE OF PAYMENT OF INTER EST ON THE BORROWED FUNDS. THEREFORE, THE INTEREST PAID BY THE ASSESSE E ON THE BORROWED FUNDS OF ` 1.85 CRORES IS ALLOWABLE AS DEDUCTION. 3. ON THE CONTRARY, DR. B. NISCHAL, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT PAYMENT OF INCOME-TA X IS NOT AN ALLOWABLE EXPENDITURE UNDER THE SCHEME OF INCOME-TA X ACT. THEREFORE, THE FUNDS BORROWED FOR PAYMENT OF INCOME -TAX CANNOT BE TREATED AS FUNDS BORROWED FOR THE PURPOSE OF BUSINE SS. HENCE, THE INTEREST PAID BY THE ASSESSEE ON THE BORROWED FUNDS CANNOT BE ALLOWED AS DEDUCTION WHILE COMPUTING THE TOTAL INCO ME. 3 M.P. NO.95/MDS/15 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. UNDER THE SCHEME OF INCOME-TAX ACT, TAX HAS TO BE PAID ON THE NET INCOM E COMPUTED AFTER DEDUCTING OF ALLOWABLE EXPENDITURE AND DEDUCT IONS. THEREFORE, INCOME-TAX PAID BY THE ASSESSEE ON THE NET INCOME C OMPUTED UNDER THE PROVISIONS OF INCOME-TAX ACT CANNOT BE AL LOWED AS DEDUCTION IN THE ABSENCE OF ANY SPECIFIC PROVISION IN THE INCOME-TAX ACT. THEREFORE, WHEN THE ASSESSEE BORROWED FUNDS F OR PAYMENT OF INCOME-TAX, IT CANNOT BE ALLOWED AS DEDUCTION FROM THE NET INCOME COMPUTED. IN THE CASE BEFORE US, ADMITTEDLY, THE A SSESSEE BORROWED FUNDS BY PLEDGING THE EXISTING FIXED DEPOS IT WITH BANKERS. THE FIXED DEPOSIT WAS MADE WITH THE BANK FOR EARNI NG THE INTEREST INCOME. THE FUNDS WERE BORROWED FROM THE BANK FOR PAYMENT OF INCOME-TAX. THEREFORE, THERE IS NO NEXUS BETWEEN T HE DEPOSIT MADE BY THE ASSESSEE WITH THE BANK AND BORROWED FUN DS. IN OTHER WORDS, DEPOSIT OF FUNDS IN THE FIXED DEPOSIT AND BO RROWAL OF FUNDS ARE FOR DIFFERENT PURPOSE. THEREFORE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE INTEREST PAID BY THE AS SESSEE ON THE BORROWED FUNDS, WHICH WERE USED FOR THE PURPOSE OF PAYMENT OF INCOME-TAX, CANNOT BE ALLOWED FOR DEDUCTION WHILE C OMPUTING THE TAXABLE INCOME OF THE ASSESSEE. 4 M.P. NO.95/MDS/15 5. IN VIEW OF THE ABOVE, THIS TRIBUNAL FINDS NO ERR OR MUCH LESS PRIMA FACIE ERROR IN THE ORDER OF THE TRIBUNAL DATED 08.05.201 5. THEREFORE, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS DISMISSED AS DEVOID OF MERIT. 6. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 11 TH SEPTEMBER, 2015 AT CHENNAI. SD/- SD/- (. !' ) ( ... ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 11 TH SEPTEMBER, 2015. KRI. . )156 76'1 /COPY TO: 1. )*& / PETITIONER 2. )+*, /RESPONDENT 3. 0 81 () /CIT(A) 4. 0 81 /CIT 5. 69 )1 /DR 6. :& ; /GF.