M/S. SWAMI HITECH PROJECTS LTD.,NEW DELHI vs. ADDL. CIT, FARIDABAD

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ITA 5873/DEL/2015Status: DisposedITAT Delhi29 March 2016AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found the CIT(A)'s order to be contradictory and non-speaking, as it did not adequately explain why the current year's submissions were different from the previous year's when the facts were similar. The matter was remanded for fresh adjudication.

What were the facts?

The assessee claimed interest expenditure, which was disallowed by the AO. The CIT(A) confirmed the disallowance, distinguishing it from a similar issue in the previous year where the assessee's claim was allowed.

What were the issues?

Whether the disallowance of interest expenditure was justified, especially when a similar claim was allowed in the preceding year, and if the CIT(A) provided a speaking order.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-1’, NEW DELHI

Hearing: 08.03.2016Pronounced: 29.03.2016

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC-1’, NEW DELHI Before Sh. N. K. Saini, AM And Smt. Beena Pillai, JM Asstt. Year : 2012-13 M/s Swami Hitech Projects Ltd., Vs Addl. Commissioner of Income B-532, Nehru Ground, NIT, Tax, Range-II, Faridabad Faridabad (APPELLANT) (RESPONDENT) PAN No. AAICS7754C Assessee by : Sh. Abhishek Anand, Adv. Revenue by : Sh. Subhakant Sahu, Sr. DR Date of Hearing : 08.03.2016 Date of Pronouncement : 29.03.2016 ORDER Per N. K. Saini, AM:

This is an appeal by the assessee against the order dated 18.09.2015 of ld. CIT(A), Faridabad.

2.

The only grievance of the assessee in this appeal relates to the sustenance of disallowance of Rs.3,01,864/- made by the AO, out of the interest expenditure incurred u/s 36(1)(iii) of the Income Tax Act, 1961 (hereinafter referred to as the Act).

3.

Facts of the case in brief are that the assessee filed the return of income on 21.09.2012 declaring a loss of Swami Hitech Projects Ltd. Rs.1,91,402/- which was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and the income was assessed on 27.02.2015 at an income of Rs.6,29,050/- by making the following additions:

(i) Addition of Rs.3,01,864/- on account of disallowance of interest u/s 36(1)(iii). (ii) Addition of Rs.4,38,978/- on account of disallowance of unverifiable ‘Indirect expenses’. (iii) Addition of Rs.79,606/- on account of disallowance u/s 14A.

4.

Being aggrieved the assessee carried the matter to the ld. CIT(A) who confirmed the addition of Rs.3,01,864/- by observing as under: “9. I have carefully perused the assessment order and the submissions of the appellant. A similar issue had come up for adjudication in the case of the appellant for A.Y. 2011-12 which had been allowed by me in favour of the appellant. However, a perusal of facts of the case and the submissions of the appellant shows that the facts of the case in the present appeal are a little different. First of all, the list of parties whom advances have been given is different from the last year. Secondly, during the course of the appellant proceedings for Appeal No. 245/13-14 for the A.Y. 2011-12, the appellant had made detailed submissions along with documentary evidence to establish that only own funds were utilized for making these advances and no borrowed funds were utilized for these purpose. Neither such contention has been made by the appellant this year nor any documentary evidence to this extent has been filed in the written submissions as reproduced above. Thus in view of these

Swami Hitech Projects Ltd. facts, I find no reason to follow my own order for A.Y. 2011- 12 and to interfere with the order of the AO. Thus this ground of the appeal is dismissed.” 4. The other additions made by the AO were deleted by the ld. CIT(A).

5.

Now the assessee is in appeal against the sustenance of addition of Rs.3,01,864/-. The ld. Counsel for the assessee submitted that the ld. CIT(A) was not justified in confirming the addition made by the AO, particularly when he himself deleted the similar addition in the earlier assessment year i.e. assessment year 2011-12.

6.

In his rival submissions the ld. DR supported the order of the authorities below and further submitted that in the Income Tax proceedings res judicata is not applicable and even if the ld. CIT(A) had allowed the relief to the assessee in the earlier year, he was not prevented to sustain the addition for the year under consideration, particularly when the assessee had not furnished the documentary evidence.

7.

We have considered the submissions of both the parties and perused the material available on the record. In the present case, it appears that the ld. CIT(A) while confirming the action of the AO has passed a non-speaking order,

Swami Hitech Projects Ltd. particularly, he has not pointed out how the submissions made for the year under consideration were not detailed submissions and similar to that of the earlier years wherein the ld. CIT(A) has accepted the contention of the assessee on the identical issue having similar facts. The submissions of the assessee in the present case was that the interest bearing borrowed funds had been utilized for the business purposes only and that there was no finding given by the AO that the borrowed funds were used for non-business purposes. The ld. Counsel for the assessee submitted that the addition made by the AO was not justified and the ld. CIT(A) without appreciating the fact in right prospective passed the impugned order in slip-shod manner. In the present case, the ld. CIT(A) in para 9 of the impugned order categorically stated that in assessee’s own case for the assessment year 2011-12, the claim of the assessee was allowed. However, in the year under consideration the ld. CIT(A) confirmed the addition made by the AO. In our opinion, the stand of the ld. CIT(A) for the year under consideration is contradictory to the stand taken by him for the assessment year 2011-12. We, therefore, deem it appropriate to set aside this issue back to the file of the ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being

Swami Hitech Projects Ltd. heard to the assessee. We also direct the assessee to Co- operate and not to seek unwarranted or undue adjournment.

8.

In the result, appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 29/03/2016)

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