DCIT, CHENNAI vs. M/S. DOSHI HOUSING LTD., CHENNAI

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -1, Chennai, dated 17.05.2016 and pertains to the assessment year 2008-09.

The first issue arises for consideration is disallowance made by the Assessing Officer under Section 36(1)(iii) of the Income-tax Act, 1961 (in short 'the Act').

Shri M. Mathivanan, the Ld. Departmental Representative, submitted that the Assessing Officer disallowed ₹27,60,000/- towards interest paid to the Directors, under Section 36(1)(iii) of the Act. According to the Ld. D.R., the assessee-company had enough surplus funds for conducting business, therefore, there was no need for payment of interest. Moreover, according to the Ld. D.R., the funds given to the Directors were not charged interest. The assessee is paying interest for what was received from the Directors.. The CIT(Appeals), according to the Ld. D.R., by following the order of this Tribunal in the assessee's own case for assessment years 2004-05 to 2006-07, allowed the claim of the assessee. According to the Ld. D.R., the Revenue has already filed an appeal before the High Court and the same is pending for adjudication.

We heard Ms. S. Sriniranjani, the Ld.counsel for the assessee also. According to the Ld. counsel, the advances given in the earlier years continue this year also. The interest paid earlier year was allowed by this Tribunal. Therefore, according to the Ld. counsel, there is no reason to disallow the claim of the assessee during the year under consideration.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the advances were received from Directors during the earlier assessment years and the assessee was continuously paying interest. This Tribunal allowed the claim of the assessee towards interest in the earlier assessment years. Now, the only objection of the Ld. D.R. is that an appeal is pending before the High Court. This Tribunal is of the considered opinion that mere pendency of appeal before the High Court cannot be a ground to take a different view. It is not a case of the Revenue that the order of the Tribunal is stayed by the High Court. In those circumstances, the CIT(Appeals) has rightly followed the order of this Tribunal, therefore, we find no reason to interfere with the order of the lower authority. Accordingly, the same is confirmed.

The next issue arises for consideration is disallowance made by the Assessing Officer under Section 14A of the Act.

We heard the Ld. D.R. and the Ld.counsel for the assessee. The CIT(Appeals) by following the order of this Tribunal in the assessee's own case in directed the Assessing Officer to exclude the strategic investment made by the assessee-company in the partnership firms. Since the CIT(Appeals) has followed the order of this Tribunal, this Tribunal is of the considered opinion that there is no reason to interfere with the order of the lower authority. Accordingly, the same is confirmed.

In the result, the appeal filed by the Revenue stands dismissed.