ITO 19(2)-1, MUMBAI vs. APPOSITE TRADING CO., MUMBAI

The facts of the case are that the assessee is a partnership firm engaged in the business of trading and investment in shares, securities and financing. The appellant filed return of income on 29.10.1997 declaring total loss of Rs.1,59,38,536/-. The assessment was completed Assessment Year: 1997-98 on 24.03.2000 determining total loss of Rs.80,67,389/-. The Assessing Officer made the following disallowances:-

Discounting charges Rs.62,65,735/-

The interest received on debentures amounting to Rs.4,45,050/- was also taxed separately. The assessee was not satisfied with the above said disallowance therefore filed an appeal before the learned CIT(A) and the learned CIT(A) confirmed the said addition but the assessee again filed the appeal before the Income Tax Appellate Tribunal but the Income Tax Appellate Tribunal ‘H’ bench, Mumbai accepted the appeal on the basis of decision in the case of East West Corporation in dated 20.08.2007 and remanded the case. Thereafter the Assessing Officer again assessed the income of the assessee and confirmed the addition and thereafter the assessee filed the appeal before the learned CIT(A). The learned CIT(A) allowed the disallowance of discount charges / finance charges and interest on call money therefore feeling aggrieved the revenue has filed the appeal before us.

We have heard the arguments advanced by the learned representative of the parties and have gone through the record carefully. The finding given by the learned CIT(A). Before discussing the matter further, it is necessary to advert:-

The issue no.2 is in connection with the allowance of interest paid on call money to the tune of Rs.16,00,362/-. This issue has been decided by the learned CIT(A) by following the decision in case of Nirmala M. Doshi Vs. CIT 82 ITR 648 (Bom). Thereafter the Income Tax Appellate Tribunal in in case of Alpha Corporation decided the issue and allowed the interest on call money. On the basis of the decision in case of Nirmal M. Doshi, consider the said interest as revenue expenditure, therefore allowed the same thereafter on the basis of said case the Tribunal has decided the case M/s. Delta International (Supra). The learned departmental representative did not brought any kind distinguishable facts on record which is contrary to the aforesaid observation. Therefore, in view of the said circumstances we are of the view that the learned CIT(A) has passed the order on this issue judiciously and correctly which does not required to be interfere with at this appellate stage. Accordingly this issue is decided in favour of the assessee and against the revenue.

In result the appeal of the Revenue is hereby dismissed accordingly.