VELVET HOLDINGS P.LTD,MUMBAI vs. DCIT CEN CIR 4 (3 ), MUMBAI

The only common issue raised in these two appeals by assessee is as regards to the order of CIT(A) confirming the action of the AO in making disallowance of interest expenditure and charging of interest under section 234A, 234B and 234C of the Act.

At the outset, the learned Counsel for the assessee first of all drew my attrition to the additional ground raised. The relevant ground raised in both the years is common and the grounds raised read as under: -

It was contended that assessee has earned income by way of interest and this was offered by assessee for assessment and assessment was completed on that very basis but the AO has incorrectly recorded total income as positive in both the years as against assessed loss as is evident from grounds raised above. Hence, assessee requested that for admission of the additional grounds and adjudication of the same. The facts and circumstances are exactly identical in both the years and hence, a common order in both the years is being passed.

In the present case, the assessment was originally completed on 18.03.2004 & 20.03.2006 for AY 2001-02 and 2002-03 respectively under section 144 r.w.s. 147 of the Act determining the total income of the assessee on estimated basis at ₹ 6,61,137 & ₹ 6,60,000/- for AY 2001-02 and 2002-03 respectively. In the first round of litigation, the issues were then assailed before the CIT(A) wherein various details and information were submitted. These details were later remanded by the CIT(A) for verification and determination of income on the basis of said details. The assessee submitted the computation of income disclosing the total income of ₹ (-) 11,54,021/- in AY 2002-03 & ₹ (-) 11,30,964 in AY 2001-02. However, in the above referred Remand Report, after

The ClT(A) upheld the working of the Assessing Officer and disposed off the appeal vide his order dated 20.02.2013 in both the years. The orders giving effect to the said appellate order was passed on 09.05.2013 by the AO. However, in the said order, inadvertently and due to oversight, the Assessing Officer determined the income of the assessee at ₹34,009 instead of ₹(-) 34,009/- in AY 2001-02 & ₹ 62,816/- instead of ₹ (-) 62,816/- in AY 2002-03. Since the issue of disallowance of interest expenses was decided against the assessee, the said issue was challenged in appeal before the Tribunal; who vide its order dated 24.12.2014 in ITA No.2805/Mum/2013 had set aside the issue to the file of the Assessing Officer.

The AO passed the orders under section 143 r.w.s 254 of the Act dated 29.06.2016 in both the years disallowing the interest expenses and once again inadvertently determined the total income at ₹ 34,009/- (instead of correct working of ₹ (-) 34,009/-) as per order giving effect dated 09.05.2013 for AY 2001-02 & ₹ 62,816/- as per order giving effect dated 09.05.2013 (instead of correct working of Rs. (-) 62,816/-) for AY 2002-03. 5 | P a g e ITA Nos. 6963 & 6964/Mum/2018 Velvet Holdings Pvt. Ltd.

I note that the above mistake has occurred in the orders and I direct the AO to adopt the correct figure as is evident from the orders. I direct the AO accordingly.

I note that the assessee has challenged the disallowance of interest expenses. Since, in spite of disallowance of interest expenses, the assessed income remains at loss, and that there is no tax effect, the said ground is not pressed by the learned counsel for the assessee. Hence, the same is dismissed as not pressed. Similarly, the ground no.2 and 3, with respect to levy of interest u/s. 234A. 2345 and 234C of the Act is also not pressed due to NIL tax impact. Hence, this is also dismissed as not pressed.

In the result, both the appeals of the assessee are allowed partly as indicted above. Order pronounced in the open court on 18.12.2019. (महावीर स िंह /MAHAVIR SINGH) (न्याययक दस्य/ JUDICIAL MEMBER) मुिंबई, ददिािंक/ Mumbai, Dated: 18.12.2019 स दीप सरकार, व.यनजी सधिव / Sudip Sarkar, Sr.PS