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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI C.N. PRASAD, HONBLE & SHRI RAJESH KUMAR, HONBLE
These two appeals are filed by the assessee for the Assessment Years 2010-11 and 2011-12 against different orders of the Learned Commissioner of Income Tax (Appeals) -52, Mumbai Dated 29.10.2015 arising out of the Assessment Orders passed u/s. 144 r.w.s. 147 of the Act.
2 ITA.No.5802 & 5803/MUM/2015 Shri Harshad S. Mehta 2. The first issue in the appeal of the assessee for the Assessment Year 2010-11 is Ld.CIT(A) erred in confirming the disallowance on account of advertisement expenses amounting to ₹.3,95,234/-.
Learned Counsel for the assessee submits that, this issue arises in both the Assessment Years i.e., 2010-11 and 2011-12 and for the Assessment Year 2011-12 the Ld.CIT(A) in Para No.13 of his order stated that advertisement expenses have been incurred in connection with issue of public notices for sale of property and expenditure is not allowable against interest income from FDR’s. Learned Counsel for the assessee submits that, it is the observation of the Ld.CIT(A) that this expenditure may also be capitalized and may be allowable while computing the capital gains on sale of properties as and when such sales takes place. However, for the Assessment Year 2010-11 the Ld.CIT(A) though observed that the expenditure on advertisement was incurred on issue of public notices for sale of property it was held that the expenditure is capital in nature and not allowable. Therefore, the Learned Counsel for the assessee submits that similar observation as made by the Ld.CIT(A) for Assessment Year 2011-12 may also be given for the Assessment Year 2010-11 also.
The Ld.DR has no serious objection for giving similar observation.
3 ITA.No.5802 & 5803/MUM/2015 Shri Harshad S. Mehta 5. Having heard both sides, we hold that the observation of the Ld.CIT(A) for the Assessment Year 2011-12 in respect of the advertisement expenses given in Para No.13 holds good for the Assessment Year 2010-11 also. The advertisement expenses may be capitalized and may be allowed while computing the capital gains on sale of property as and when such sale takes place. This ground is disposed off with the above observations.
The next common grounds in both the appeals of the assessee are as under: -
1. 1. The Learned Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming the levy of interest u/s. 234A, 234B and 234C of the Act.
2. The Learned Commissioner of Income Tax (Appeals) has erred in law and in facts in not appreciating that the income assessed in the hands of the appellant were subjected to the provisions of TDS and hence on the said amount of tax, no interest can be computed u/s. 234A, 234B and 234C of the Act.
7. At the outset, Learned Counsel for the assesse submits that these grounds are covered by the decision of the Coordinate Bench in assessee’s own case for the Assessment Year 2009-10 in ITA.No.3271/Mum/2015 dated 20.03.2017. Ld.DR fairly submits that as far as levy of interest is concerned the ITAT upheld in charging interest but restored the matter to Assessing Officer for recalculation.
4 ITA.No.5802 & 5803/MUM/2015 Shri Harshad S. Mehta 8. We have heard the rival submissions, perused the orders of the authorities below and the decision of the Coordinate Bench and find that the issue in appeal is covered by the Coordinate Bench, wherein, the issue was restored to the file of the Assessing Officer with a direction to recompute the interest u/s. 234A, 234B and 234C after taking into account the tax deductible on total income of the assessee observing as under: - “4. After hearing both the parties and on perusal of the record including the orders of authorities below and case law relied upon by the Id.AR, we find that the issue in hand has been decided by the Co-ordinate Bench of the Tribunal vide para 6 and 6.1 in favour of the assessee. For the sake of convenience, we reproduce the above referred paras as under: "6. The only other issue in this appeal is with regard to the chargeability of interest under section 234A, 234B & 234C of the Act. On this aspect, pleas of the assessee are two fold. First, the plea is to the effect that the provisions of section 234A, 234B and 234C are not applicable to notified entity. This aspect of the matter is required to be held against the assessee following the judgment of the Hon’ble Bombay High Court in the case of Divine Holdings Pvt. Ltd(ITA No.3334 of 2010 dated 7/3/2012), as decided by our Co-ordinate Bench in the case Eminent Holdings Pvt. Ltd. in dated 18/6/2014, which also was a case of notified entity under the Special Court (Trial of Offences relating to transactions in Securities) Act, 1992. At the time of hearing this aspect of the matter was fairly conceded by the Ld. Representative of the assessee. 6.1 The second plea of the assessee is with regard to the quantum of interest chargeable under section 234A, 2348 & 234C of the Act which is to the effect that the interest should be charged after considering the amount of tax deductible at source on the income 5 ITA.No.5802 & 5803/MUM/2015 Shri Harshad S. Mehta assessed. Similar plea of the assessee was upheld by our Co-ordinate Bench in the case of Eminent Holdings Pvt. Ltd. (supra). Following the same, we deem it fit and proper to restore the matter back to the file of AO who shall recompute the interest chargeable under section 234A, 234B & 234C of the Act after considering the amount of tax deductible at source on the income assessed. Needless to mention, the AO shall allow the assessee a reasonable opportunity of being heard and thereafter, recompute the interest chargeable under section 234A, 2348 & 234C of the Act, as per law. Thus, on this aspect, the assessee partly succeeds."
Respectfully following the decision of the Co-ordinate Bench of the Tribunal in assessee's own case, we restore the issue to the file of the AO with a direction to recompute the interest u/s 234A, 234B and 234C after taking into account the tax deductible on total income of the assessee by affording fair and reasonable opportunity of being heard to the assessee.
Therefore, as could be seen from the above, the Coordinate Bench so far as ground No.1 i.e., the levy of interest is concerned the Coordinate Bench held against the assessee following the judgment of Hon'ble Bombay High Court in the case of Divine Holdings Pvt. Ltd in ITA.No. 3334 of 2010 dated 07.03.2012. However, in respect of the Ground No.2 is concerned it was restored to the file of the Assessing Officer with a direction to recompute the interest u/s. 234A, 234B and 234C after taking into account the tax deductible on total income of the assessee.
Respectfully following the said decision, we dismiss ground No.1 in so far as levy of interest is concerned and restore ground No.2 with a 6 ITA.No.5802 & 5803/MUM/2015 Shri Harshad S. Mehta direction to recompute interest u/s.234A, 234B and 234C after taking into account the tax deductible on total income of the assessee by affording fair and reasonable opportunity of being heard to the assessee.
In the result, both the appeals of the assessee are partly allowed for statistical purposes.
Order pronounced in the open court on the 25th October, 2017.