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Income Tax Appellate Tribunal, BENCH “H”,MUMBAI
Before: SHRI R.C.SHARMA & SHRI PAWAN SINGH
Assessee by : Shri Dhaval Shah (AR) Revenue by Shri Dr. P. Daniel (Special : Counsel) Date of hearing : 05.10.2016 Date of Pronouncement : 07.10.2016 O R D E R
PER PAWAN SINGH, JM:
This appeal u/s 253 of the Income-tax Act is directed by the assessee against the order of CIT(A)-40, Mumbai dated 21.10.2014. The assessee has basically raised the following ground of appeal:- (i) That the ld. CIT(A) erred in confirming the disallowance of interest expenses of Rs. 6,14,669/-. (ii) That the ld. CIT(A) erred in confirming the levy of interest u/s 234A, 234B and 234C of the Act. (iii) That the ld. CIT(A) erred in law and in facts in not appreciating that income assessed in the hands of the appellant was subjected to the provisions of TDS and hence on the said amount of tax, no interest can be levied u/s. 234B and 234C of the Act.
2. Brief facts of the case are that the assessee filed its return of income for relevant AY on 29.09.2011. While framing the assessment, the Assessing Officer (AO) besides other addition and disallowance disallowed the interest expenditure of Rs. 6,14,669/- in the assessment order. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A) wherein the addition of interest expenditure was sustained. Further, aggrieved by the order of CIT(A), the assessee filed this appeal before us challenging the confirmation of disallowance of interest expenses as well as levy of interest u/s 234A, 234B & 234C of the Act.
3. At the outset, hearing the Authorized Representative (AR) of the assessee argued that the grounds of appeal raised in the present appeal is covered in favour of assessee by the decision of this Tribunal in Aatur Holding Pvt. Ltd. vs. ACIT in ITA No. 599/Mum/2015. Ld. Departmental Representative (DR) for the Revenue argued that in the jurisdictional Court has restored this similar ground of appeal to the file of ld. CIT(A) and he has no objection if this ground is restored to the file of AO with similar direction. We have considered the rival contentions of the parties and seen that in ITA No. 599/Mum/2015 the similar ground of appeal of the assessee in that case was restored to the file of the ld. CIT(A) with the following direction:
“3. The assessee is aggrieved for disallowance of interest expenses of Rs.6,14,669/-. Ld. AR placed on record order of the Tribunal in assessee's own case for the assessment year 2007-08, dated 23-9-2015, wherein similar issue was decided by the Tribunal after observing as under :-
3: Ground No. 4 relates to the disallowance of interest expense. The Ld. Counsel for the assessee 40ught to our notice that the decision relied upon by the Ld. CIT(A) while disposing this ground has been set aside by the Tribunal to the file of the Ld. CIT(A).
4. The Ld. Departmental Representative could not bring any distinguishing decision in favour of the Revenue.
5. We have carefully perused the orders of the authorities below. While disposing the ground relating to the disallowance of interest, we find that the Ld. CIT(A) has followed the findings given in the case of Eminent Holdings Pvt. Ltd. We find that the Tribunal in the case of Eminent Holdings in IT A Nos. 2139, 2140 and 21411MumJ2013 have followed the decision of the Tribunal given in common group case of Hitesh S. Mehta at para 2.3 of the order and restored the matter to the file of the Ld. CIT(A) for fresh adjudication. Respectfully following the findings of the Co ordinate Bench, we restore this issue to the files of the Ld. CIT(A) for fresh adjudication after giving reasonable opportunity of being heard to the assessee.
Before closing this issue, the Ld. Counsel for the assessee pointed out that the Ld. CIT(A) has held that the issue of interest expenditure is pending before the Hon'ble Special Court. It is the say of the Ld. Counsel that the proceedings in which the said issue of interest was issued by the custodian have been already concluded which fact has already been recorded by the Ld. CIT(A) in the impugned order. We, therefore, direct the Ld. CIT(A) to consider this fact while deciding the issue afresh. The Ld. CIT(A) may also direct for the taxing of income in the hands of the recipient (family members) in accordance with the method of accounting followed by them and as per the provisions of the law. Ground No. 4 is treated as allowed for statistical purpose."
Ld. Special Counsel did not controvert to such contention of Ld. AR that the issue is covered by the aforementioned decision.
In view of the situation, after hearing both the parties, we pass similar order and this ground is considered to be allowed for statistical purposes in the manner aforesaid." Following the above, we pass similar order. Ground No.4 is allowed for statistical purposes for both the years. " Following the above, we allow Ground No.5 for statistical purposes for the year under appeal. Ground no.6 consequential in nature, hence is not being adjudicated."
4. As the facts and circumstances during the year under consideration are same, respectfully, following the order of the Tribunal in assessee's own case matter is restored back to the file of CIT(A) for deciding afresh as per the direction given by the Tribunal in its order dated 23-9-2015.”
With regard to charging of interest u/s.234B & 234C, I found that similar issue has been dealt with by the Tribunal in assessee's own case and the matter was restored back to the file of AO. The Tribunal have dealt with the issue of charging of interest in its order dated 23-9-2015 as under :-
"3.Next ground of appeal is about levy of interest u/s. 234 of the Act. Before us, AR stated that the assessee was a notified entity, that the provisions of s. 234A, 234B and 234C.of the Act were deemed to have complied with, that the assets were already in attachment of the Custodian appointed under the provisions of the Special Courts Act that the Tribunal in the case of the appellant and several other entities had held the view in favour of the appellant, that the Hon'ble Bombay High Court in the case of Divine Holdings Pvt. Ltd. and Cascade Holdings Pvt. Ltd. had held that the provisions of sections 234A,234B and 234C of the Act were mandatory and were applicable to the notified entities also that the assessee was in the process of filing an appeal against the said order before the Hon'ble Supreme Court that the income earned in the year under consideration was subjected to provisions of TDS, that the changeability of the section 234A, 234B and 234C of the Act should be after considering the amount of tax deductible at source on the income assessed. The appellant relies in this regard on the following decisions. He relied upon the cases of Motorola inc. v. DCIT [95 ITD 269 (Del. (SB)J, Sedco Fores Drilling Co. Ltd. [264 fTR 320J,NGC Network Asia LLC [3 f
3. ITR 187] Summit Bhatacharya [ 300 ITR (AJ) 341' (Bom)(SB)J, Vijal Gopal Jindal [ITA No. 4333/Del/2009] & Emillo Ruiz Berdejo [320 fTR 190 (Bom)].DR relied upon the cases of Devine Holdings Pvt. Ltd. ' 3.1. We have heard the rival submissions and perused the material before us. We find that in the case of Devine Holdings Pvt. Ltd. Hon'ble Bombay High Court has held that provisions of section 234A, 234B and 234Cwere applicable to the notified person also. Therefore, upholding the order of the FAA to that extent, we hold that provisions of section 234 of the Act are applicable. As far as calculation part is concerned, we find merits in the submission made by the assessee. Therefore, we are restoring back the issue to the file of the AO for fresh adjudication who would decide the issue after considering the amount taxed deductible at source on the income assessed and after affording a reasonable opportunity of hearing to the assessee. Ground no.5 is allowed in part in favour of the assessee.”
4. We have seen that the identical grounds were restored to the file of AO in thus respectfully following the order of the Tribunal, both the grounds of the present appeal are restored to the file of AO for deciding afresh in accordance with the direction contained in order dated 08.08.2016 (supra).
5. Ground No.3 in the present appeal is consequential in nature and needs no specific adjudication when Ground No.2 is already restored to the file of AO. 6. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on this 7th October, 2016.