MEDIA RESEARCH USERS COUNCIL,MUMBAI vs. COMMISSIONER OF INCOME TAX(APPEALS)-NATIONAL FACELESS APPEAL CENTRE (NFAC) , DELHI

Per Rahul Chaudhary, Judicial Member:

By way of the present appeal the Assessee has challenged the order, 1. dated 22/11/2022, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] for the Assessment Year 2011-12, whereby the Ld. CIT(A) dismissed the appeal of the Assessee against the Assessment Order, dated 04/11/2016, passed under Section 143(3) read with Section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The Assessee has raised following grounds of appeal: 2. “1. (i) The CIT(A) erred in confirming the disallowance of interest pertaining to prior years amounting to Rs 12,06,849 pursuant to the order of the CIT(E) under section 263. (ii) Without prejudice to the above, the CIT(A) failed to appreciate that the said provision of interest was written back by the appellant in the Assessment year 2012-13 on which the appellant had paid income tax and thus it is a case of double taxation. (iii) The learned CIT(A) omitted to consider Ground No. VI (3) and VII raised before him. (iv) In view of the above the CIT(A) should have either allowed the provision of interest in the assessment year 2011-12 or give directions to rectify the order of the Assessment year 2012-13 by deleting the income of Rs. 12,06,849 in respect of interest in respect of prior years.” The brief facts of the case are that the Appellant, a company 3. registered under Section 25 of the Companies Act, 1956, filed return of income for Assessment Year 2011-12 on 26/09/2011 declaring ‘Nil’ income. The Assessment was framed on the Appellant under Section 143(3) of the Act vide order, dated 12/03/2014. Thereafter, the Assessment Order, dated 12/03/2014, was subjected to revision proceedings under Section 263 of the Act and vide revision order, dated 16/03/2016, passed under Section 263 the Act, the Assessing Officer was directed to examine the Appellant's claim of deduction for prior period expenditure (being prior period interest) amounting to INR 12,06,849/- debited to the Profit & Loss Account which was not examined by the Assessing Officer during the original assessment proceedings. Pursuant thereto, the Assessing Officer called upon the Appellant to furnish documents and explanation on the admissibility of the claim for deduction of prior period interest of INR 12,06,849/-

2 debited to the Profit & Loss Account. The Assessing Officer passed Assessment Order on 04/11/2016 giving effect to the order under Section 263 and making addition of INR 12,06,849/-, being inadmissible prior period interest debited to the Profit & Loss Account.

We have heard the rival submissions and perused the material on 5. record.

It is the case of the Appellant that INR 50,00,000/- was received as 6. advance from one of the patron sponsors of a research project during the financial year 2007-08. In the Board meeting held on 11/08/2011 it was decided by the Appellant to provide for the interest amounting to INR 17,06,849/- which included the amount of INR 12,06,849/- relating to prior period upto 31/03/2010. On perusal of the record it emerges that the Appellant had debited INR 12,06,849/- being aggregate interest pertaining to Financial Year 2007-08 (INR 2,06,849/-), 2008-09 (INR 5,00,000/-), and 2009-10 (INR 5,00,000/-). The Appellant had claimed the entire amount as expenditure as deduction in computation of income for the Assessment year 2011-12. However, the Assessing Officer disallowed deduction for the same vide order dated 04/11/2016, passed under Section 143(3) read with Section 263 of the Act.

The CIT(A) also declined to interfere with the order passed by the 7. Assessing Officer.

Therefore, the Appellant is before us in appeal on this issue. 8. 3 During the course of hearing, it was contended on behalf of the 9. Appellant that the decision to provide for interest was taken in respect of meeting for the Financial Year 2010-11 (held on 11/08/2011) and therefore, entire amount of interest expenses were allowable as deduction during the assessment year relevant to the Financial Year 2010-11. We do not find merit in the aforesaid contention raised on behalf of the Appellant. There is nothing on record to support the contention of the Appellant that the interest expenses were incurred during the previous year relevant to the Assessment Year 2011-12. The CIT(A) has rightly noted that even the board meeting was held on 11/08/2011 (i.e. during the financial year relevant to Assessment Year 2012-13). Further, the tax auditor has stated in the tax audit report that the interest for INR 12,06,849/- debited to the Income & Expenditure Account pertains to prior years. Accordingly, we do not find any infirmity in the order passed by the CIT(A) confirming the disallowance of claim of deduction of interest of INR 12,06,849/- pertaining to prior years debited to the Income & Expenditure Account.

During the course of hearing, on a without prejudice basis, it was 10. submitted by the Learned Authorised Representative that entire amount of the interest of INR 12,06,849/- claimed as deduction during the Assessment Year 2011-12 was written back in the financial year ended 31/03/3012 relevant to the Assessment Year 2012-13 and appropriate tax was paid on the same. Therefore, in case the disallowance is upheld, the same would amount to double taxation. We are in agreement with the Learned Authorised Representative, that the Appellant cannot be subject to tax twice once on account of disallowance of interest in the Assessment Year 2011-12 and thereafter, also on account of write back of interest

4 expenses in the Assessment Year 2012-13. Since we have confirmed the disallowance of interest in the Assessment Year 2011-12, the write back of interest expenses cannot be subjected to tax in the Assessment Year 2012-13. Accordingly, the Appellant would have such liberty as available under law to seek appropriate remedy for the Assessment Year 2012-13. In view of the above, all the grounds raised by the Appellant 11. are dismissed.

In result, the present appeal preferred by the Appellant/Assessee is 12. dismissed.

Order pronounced on 28.02.2024. (Prashant Maharishi) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 28.02.2024 Alindra, PS

5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file.

आिेश न स र/ BY ORDER, सत्य दपि प्रदि //// उप/सह यक पुंजीक र /(Dy./Asstt.