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Income Tax Appellate Tribunal, BENCH “E”,MUMBAI
Before: SHRI P.K.BANSAL & SHRI PAWAN SINGH
Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. This appeal filed by assessee u/s 253 of the Income-tax Act (‘Act’) is directed against the order of Ld. Commissioner of Income-tax (Appeals) [for short ‘the CIT(A)] –3, Mumbai dated 21.01.2004 for Assessment Year (AY) 2004-05. The assessee has raised the following grounds of appeal: 1) The learned CIT(A) has enhance the assessment without giving show cause, therefore the order is without jurisdiction and bad in law. 2) The learned CIT(A) states in para 1.5 that "In the circumstances, interest at the rate of 14% on the opening balance of Rs. 25,76,220/- is to be disallowed." 14% of 25,76,220/- is Rs. 3,60,671/-, whereas quantum of addition made is Rs. 10,23,325/· 3) The learned CIT(A) stated that "It is further seen that no TDS has been deducted on the interest of Rs. 10,23,325/-. Therefore, even u/s. 40(a)(ia), the interest expenses of Rs. 10,23,3251- cannot be allowed." The provision of section 40(a)(ia) has come into operation from A.Y. 2005 - 06 whereas assessment under consideration is A.Y. 2004 -
05. Therefore addition made is without jurisdiction and bad in law. 4) The grounds of appeal is without prejudicial to each another.
2 Television News & Entertainment (I) Ltd.
Brief facts of the case are that the assessee filed return of income for relevant AY on 28.10.2004 declaring total loss of Rs. 1,86,010/-. The assessment was completed u/s. 143(3) on 15.12.2006 determining the income of Rs. 23,90,120/-. The AO while making the assessment made the disallowance of unexplained cash credit u/s 68 of the Act of Rs. 25,76,221/-. On appeal before the ld. CIT(A), the disallowance was sustained vide order dated 14.08.2008. The assessee filed appeal before the ITAT vide ITA No. 6929/Mum/2008. Before the Tribunal the assessee filed additional evidence. The additional evidence was admitted by Tribunal and set-aside the appeal to the file on AO vide order dated 12.03.2012. In the setting-aside order the AO was directed to decide afresh after taking into consideration the additional evidence filed by assessee. The AO after considering the direction of the Tribunal, again confirmed the disallowance u/s 68 while passing order passed u/s 143 r.w.s 253 dated 20.12.2012. On appeal before the ld. CIT (A), the disallowance was deleted.
However, the ld. CIT(A) issued a show cause notice on 06.11.2013 during the appellate proceeding and asked the assessee as to why the interest expenses of Rs.10,23,000/- should not be disallowed as there is no apparent business purpose. The assessee filed its reply and contended that the assess paid interest to M/s UTV software communication on Rs. 73,08,000/- @ 14% p.a. The assessee actually borrowed the fund and not on credit by bank entry. The assessee also filed the copy of ledger account of UTV for the financial year 2000-01. The assessee further contended that the assessee received interest of Rs. 8,39,071/-. The ld CIT(A) instead of giving any finding disallowed the interest expenses holding that no TDS was made on payment of such interest expenses. Thus, further aggrieved by the order of ld. CIT(A), the present appeal is filed before us.
We have heard ld. Authorized Representative (AR) for assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. AR of the assessee argued that disallowance of Rs. 25,76,220/- was deleted by ld. CIT(A) and the same has not been challenged by the Revenue, thus the finding of the CIT(A) attains finality. It was further argued that ld. CIT(A) enhance the disallowance of interest expenses on Rs. 10,23,325/- is only Rs. 3,60,671/- whereas the quantum of addition is made by Rs. 10,23,325/-. It was 3 Television News & Entertainment (I) Ltd. further argued that the provision of section 40(a)(ia) came into operation from AY 2005-06 whereas the assessment under consideration is AY 2004-05. Ld. DR for the Revenue supported the order of authorities below.
We have considered the rival contention of the parties and gone through the orders of authorities below. We have seen that addition u/s 68 of the Act were deleted by ld. CIT(A) and the same has not been challenged before us. Thus, the order of ld. CIT(A) so far as deletion of addition u/s 68 is attains finality. The perusal of provisions of section 40(a)(ia) was substituted by Finance Act, 2003 w.e.f. 01.04.2004. Thus, the same is not applicable for the year under consideration. Even otherwise, the disallowances of interest expenses were made without giving any show cause notice by ld CIT(A), hence the same are not sustainable.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on this 21st December, 2016. Sd/- Sd/-/- (P.K.BANSAL) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 21/12/2016 S.K.PS Copy of the Order forwarded to :