MADHU ENTERTAINMENT & MEDIA LTD,MUMBAI vs. ACIT 16(1), MUMBAI

This appeal has been preferred by the assessee against the order dated 13.01.2017 passed by the Commissioner of Income Tax (Appeals)-4 (for short ‘the CIT(A), Mumbai, for the assessment year 2012-13, whereby the Ld. CIT(A) has partly allowed the appeal filed by the assessee against the assessment order passed by AO u/s 143 (3) of the Income Tax Act, 1961 (for short the ‘Act’).

Brief facts of the case are that the assessee engaged in the business of purchasing and selling video rights, theatre rights, satellite right and telecast rights of television programme and feature films, filed its return of income for the assessment year under consideration. It was noticed that the assessee had claimed interest on unsecured loans to the tune of Rs. 7,64,040/-. Accordingly, the AO asked authorized representative of the assessee (AR) to submit the details of interest paid on unsecured loans. In response thereof authorized Assessment Year: 2012-13 representative of the assessee furnished the details. Since, the assessee had paid interest @ 18% to Mr. Hirachand Dand and 21% to Mr. Pratik H Shah, the AO asked the AR to show cause as to why excess interest should not be disallowed. The AR submitted that since no security and processing fees was required to be paid by the assessee, the assessee obtained unsecured loan from the aforesaid parties and paid higher rate of interest. However, the AO rejected the contention of the assessee and restricted the interest to 12% per annum and disallowed the excess amount to the extent of Rs. 2,74,894/- and added the same to the income of the assessee. In the first appeal, the Ld. CIT (A) sustained the addition holding that the explanation given by the assessee is not plausible. The assessee is in appeal against the said order passed by the Ld. CIT (A). 3. The assessee has preferred this appeal before the Tribunal on the following effective ground:- “The learned CIT (A)-4 has erred in upholding disallowance of interest of Rs. 2,74,894/- paid on unsecured loan.”

Before us, the Ld. counsel for the assessee submitted that this issue is covered by the decision of the ITAT rendered in the assessee’s own case for the assessment year 2010-11. Therefore, the impugned order is liable to be set aside. The Ld. Departmental Representative (DR) relied on the orders passed by the Ld. CIT (A), however, did not controvert the fact that the ITAT has decided the identical issue in favour of the assessee in the assessee’s own case.

We have heard the rival submissions and also perused the material on record. We notice that the co-ordinate Bench has decided the identical issue in favour of the assessee in the assesse’s own case for the A.Y. 2010-11. The relevant part of the order of the Tribunal reads as under:- Assessment Year: 2012-13