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Income Tax Appellate Tribunal, “G”, BENCH MUMBAI
Before: SHRI RAJENDRA, AM & SHRI RAM LAL NEGI, JM
आदेश / O R D E R
PER RAM LAL NEGI, JM
This appeal has been preferred by the assessee against order dated 20/10/2014 passed by the CIT (Appeals)-40, Mumbai for the assessment year 2011-12, whereby the Ld. CIT(A) dismissed the appeal filed by the assessee against assessment order dated 02/12/2013.
Brief facts of the case are that the appellant/assessee is a notified entity under the Special Court (Trial of Offences relating to Transactions in Securities.) Act, 1992 and all its assets including bank accounts were attached and vested in the hands of the custodian appointment under the said Act. The assessee filed its return of income for the year under consideration, declaring the total income of Rs. 53, 07,353/-. The AO after making certain additions completed assessment order under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) and determined the total income of the assessee at Rs.98,13,465/-for tax purposes under regular provisions. In appeal the Ld. CIT(A) confirmed the action of the AO.
Still aggrieved by the impugned order, the assessee is in appeal before the Tribunal. The assessee has raised the following effective grounds of appeal:-
“1. The learned Commissioner of Income-Tax (Appeals) ought to have appreciated that as per the decision of Hon’ble Special Court dated. 30/04/2010 in MP No. 41 of 1999, the assets under consideration and the consequential income belongs to Shri. Harshad S. Mehta and hence the income assessed by the Assessing Officer ought to have been taxed in the hands of Shri. Harshad S. Mehta and not in the hands of the appellant.
2. The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in not granting relief of liability amounting to Rs. 45,06,112/-, towards interest expenditure claimed by the appellant.
3. The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming calculation of book profit u/s 115JB amounting to Rs. 98,13,465/-.
4. The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming interest charged u/s 231A, 234B, and 234C of the Act.
5. The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in the hands of the appellant was subjected to the provisons of TDS and hence on the said amount of tax no interest can be computed u/s 234B and 234C of the Act. “
Before us, the Ld. Authorised Representative (AR) submitted that the assessee does not want to contest Ground No. 1. Accordingly, Ground No 1 of the appeal is dismissed as not pressed.
The Ld. AR further submitted that the remaining grounds of appeal are covered by the decision dated 29/09/2014 rendered by the Mumbai Tribunal in the case of Cascade Holdings Pvt. Ltd. vs DCIT Mumbai, for the assessment year 2010-11.
6. On the other hand the Ld. Departmental Representative (DR) relying on the concurrent findings of the authorities below, submitted that the Ld. CIT(A) has rightly dismissed the appeal of the assessee and there is no scope to interfere with the impugned order.
7. We notice that the co-ordinate Bench has dealt with the identical issue in the case of Cascade Holding P. Ltd vs DCIT Mumbai (supra). Ground No 2 and 3 of the present appeal are identical to ground No 4 and 5 of the aforesaid case. The co-ordinate Bench has decided these connected grounds holding as under:-
“2.1. Grounds no 4 and 5 are interconnected and are about disallowance of interest expenditure of Rs. 86,15,970/-(GOA-4) and calculation of book profit u/s 115JB of the Act. Before us, AR stated that identical issue had come up for adjudication before the Tribunal in one of the group cases i.e. in the case of Eminent Holdings Pvt. Ltd.(ITA/82000/2010dt.12.02.2014), that matter was restored back to the file of the FFA. Departmental Representative (DR) left to the issue to the discretion of the Bench. 2.2. After hearing the rival contentions, we are of the opinion that issues raised in the grounds no. 4 & 5 should be remanded back to the file of the FAA. We find that while deciding the appeal in the case of Eminent Holdings Pvt. Ltd., for the AY 2007-08(supra),E Bench of Tribunal has decided the issue as under: “4. Ground nos. 4 & 5 are inter-connected relating to the disallowance of interest expenditure of Rs. 5,14,455/-.In this regard, at the outset, Ld Counsel mentioned that an identical issue came up for adjudication before the ITAT, Mumbai in the cased of Hitesh S. Mehta vs. DCIT vide & 7727/M/2010 dated 26.04.2013, wherein the Tribunal set aside the issue to the files of CIT(A) for adjudication of the issue afresh by adjudicating the respective ground relating to the rejection/reliability of the books of account. Para 5 from the said order of the Tribunal (supra) is relevant in this regard and the same reads as under: “5. Ground no.4 relates to the action of the Ld CIT(A) in confirming the liabilities amounting to Rs. 11,24,99,052/- and Rs. 12,61,36,245/- respectively for the AYs 2005-06 and 2006-07 towards interest expenditure claimed by the assessee. It is pertinent to note that the findings given in para 3.3 above in respect of rejection/ reliability of the books of accounts and the proposed adjudication of the Ld CIT(A) in view of the said direction may have direct impact on the issue of the impugned liability, we set aside this issue to the files of the CIT(A) to adjudicate afresh along with the adjudication of the respective ground pertaining to the rejection/ reliability of the books of accounts.”
5. On the other hand, Ld DR dutifully relied on the order of the AO/CIT(A).
We have heard both the parties and perused the orders of the Revenue Authorities as well as the order of the Tribunal in the case of Hitesh S. Mehta (supra). Whether the interest liabilities of Rs. 5,14,455/- constitutes ascertained one or not is also linked to the issue of rejection of books of accounts as the books of account is the basis for computation of book profits u/s 115JA of the Act. This is common issue qua the issue adjudicated in the case of the Hitesh S. Mehta (supra) and matter was set aside. Respectfully following the said order of the Tribunal, we are of the considered opinion that the issue raised in ground no.4 should be set aside to the files of the CIT(A) for fresh adjudication of the issue after granting a reasonable opportunity of being heard to the assessee. The decision if any should be taken only after considering the decision in the case of Hitesh S Mehta, (supra). Accordingly, ground nos. 4 & 5 are set aside.” Respectfully, following the above order, we are restoring back the matter to the file of the FAA for fresh adjudication. He is directed to afford a reasonable opportunity of hearing to the assessee. Ground no.4 is allowed in favour of the assessee, in part. In view of the above discussion grounds no.4 and 5 are restored back to the file of the FAA and the both the grounds are partly allowed in favour of the assessee.
Respectfully, following the above order, we restore back the matter to the file of the Ld. CIT(A) for fresh adjudication after giving an opportunity of being heard to the assessee. Hence, ground No. 2 and 3 are partly allowed in favour of the assessee.
Ground No 4 and 5 of present appeal are identical to ground No 6 of the aforesaid case. The co-ordinate Bench has decided these connected grounds holding as under:-
“3.Ground no.6 is about interest to be charged u/s.234A,234B and 234 C of the Act. At the time of the hearing before us, it was agreed by the representatives of both the sides that the identical issue was deliberated upon and decided by the Tribunal in the case of M/s. Topaz Holdings Pvt. Ltd. (ITA No.2146/Mum/2013,AY.2001- 02,dated 18.06.2014).We find that in the matter of Topaz Holdings Pvt.Ltd.(supra),one of the group concerns, the Tribunal had decided the issue 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)], Sedco Fores Drilling Co. Ltd. [264 ITR 320],NGC Network Asia LLC [313 ITR 187] ,Summit Bhatacharya [ 300 ITR (AT) 347 (Bom)(SB)], Vijal Gopal Jindal [ITA No. 4333/Del/2009] & Emillo Ruiz Berdejo [320 ITR 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 234C were 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.”
10. Respectfully following the view taken by the co-ordinate Bench on the identical issue, we restore the issue to the file of AO for adjudicating the issue afresh after giving proper opportunity of being heard to the assessee. Ground No 4 and 5 are accordingly allowed for statistical purposes.
In the result the appeal filed by the assessee for the assessment year 2011-12 is partly allowed.