IMPULSE MARKETING,NEW DELHI vs. ACIT, NEW DELHI

PDF · subscribers
ITA 4427/DEL/2016Status: DisposedITAT Delhi10 May 2019AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that a similar issue for a prior assessment year was restored to the AO for reconsideration by the ITAT. Following this precedent, the Tribunal set aside the orders of the lower authorities and restored the matter to the AO for re-decision.

What were the facts?

The assessee, a partnership firm, advanced a significant sum to its partners without charging interest. The Assessing Officer (AO) made an addition for notional interest, a decision upheld by the CIT(A).

What were the issues?

Whether notional interest should be charged on advances given to partners without interest. Whether the AO should reconsider the issue based on evidence, following a previous ITAT order on identical facts.

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “C” : DELHI

Before: SHRI BHAVNESH SAINI, J.M. & SHRI O.P. KANT, A.M.

Hearing: 09.05.2019Pronounced: 10.05.2019

ORDER PER BHAVNESH SAINI, J.M. This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-10, New Delhi, Dated 09.04.2015, for the A.Y. 2012-2013, challenging the addition of Rs.34,41,209/- on account of notional interest.

2.

The A.O. noted that assessee is a partnership firm and is engaged in the business of trading of educational books and electronic items. The assessee firm 2 ITA.No.4427/Del./2016 M/s. Impulse Marketing, New Delhi. has six partners. The A.O. noted that assessee had debited Rs.2,13,633/- in P & L A/c. under the Head “Bank Interest”. Perusal of the details shows that assessee has received loan from Bank and paid interest thereon. However, assessee has given advance to four partners of the firm without charging interest in a sum of Rs.2,78,43,412/-. The explanation of assessee was called for. However, it was rejected. The A.O. noted that in preceding A.Y. 2010-2011 on the same issue, interest were directed to be applied @ 14% on the amount of the loan for making the addition. The assessee preferred appeal before the Ld. CIT(A) who vide Order dated 29.08.2014 restricted the rate of interest to 12% only. The A.O. accordingly made the addition of Rs.33,41,209/-. The Ld. CIT(A) following the Order of the Ld. CIT(A) for A.Y. 2010-2011 dismissed the appeal of assessee.

3.

Learned Counsel for the Assessee submitted that in A.Y. 2010-2011, ITAT, Delhi C-Bench, New Delhi in the case of the same assessee in ITA.No.5791/Del./2014 for the A.Y. 2010-2011 vide Order dated 16.04.2018 restored the 3 ITA.No.4427/Del./2016 M/s. Impulse Marketing, New Delhi. identical matter back to the file of A.O. for reconsideration on the basis of the evidences tendered by the assessee. Copy of the Order is placed on record.

4.

The Ld. D.R. did not dispute the same.

5.

After considering the rival submissions, we are of the view that the matter requires reconsideration as directed by the Tribunal in A.Y. 2010-2011 vide Order dated 16.04.2018. Since the issue is same as was considered in A.Y. 2010-2011 and following the Order for the A.Y. 2010- 2011 for making the addition. Further when the identical matter in A.Y. 2010-2011 have been restored to the A.O. therefore, we set aside the Orders of the authorities below and restore the matter in issue to the file of A.O. with a direction to re-decide this issue as is directed by the Tribunal in A.Y. 2010-2011 (supra). A.O. shall give reasonable, sufficient opportunity of being heard to the assessee.

6.

In the result, appeal of Assessee allowed for statistical purposes.

4 ITA.No.4427/Del./2016 M/s. Impulse Marketing, New Delhi. Order pronounced in the open Court.

More judgments on Section 2(22)(e)

All 1,757 judgments and leading authorities on Section 2(22)(e) →

Recent GST High Court judgments

Search GST case law →