2013 (9) TMI 1110 - AT - Income Tax

Interest expenditure claimed rejected - Held 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 also to the files of the Ld.CIT(A) to adjudicate afresh along with the adjudication of the respective ground pertaining to the rejection/reliability of the books of accounts Levy of interest u/s. 234A, 234B and 234C is mandatory.

Summary

Issues:
1. Liability amounting to &8377; 1,04,35,918/- for the AYs 2002-03 towards interest expenditure claimed by the assessee.
2. Additional ground raised by the assessee regarding the taxation of income in the hands of another individual.
3. Deletion of interest charged u/s 234A, 234B & 234C of the Income Tax Act.

Analysis:

Issue 1: Liability for Interest Expenditure
- The ITAT referred to previous judgments in the assessee's own cases and decided to set aside the issue to the file of the Ld.CIT(A) for fresh adjudication.
- Grounds No. 1 & 2 were allowed for statistical purposes based on the findings of the Tribunal in similar cases.
- The additional ground raised by the assessee was considered academic and decided in line with previous Tribunal decisions.
- The Tribunal emphasized that the decision of the Hon'ble Supreme Court must be followed without dispute, and no direction was necessary if the Supreme Court decides on the matter.

Issue 2: Taxation of Income in Another Individual's Hands
- The ITAT decided that the additional ground raised by the assessee was legal in nature and required no new facts, following the decision of the Hon'ble Apex Court.
- The Tribunal treated the additional ground as academic, stating that if the Supreme Court decides that income belongs to another individual, it should be assessed in their hands.

Issue 3: Deletion of Interest Charged
- The ITAT discussed the decision in the assessee's own case for AYs 2005-06 & 2006-07, where the ground was set aside as premature.
- Referring to a group case, the ITAT held that interest u/s. 234A, 234B, and 234C cannot be levied on a notified person under the Special Court Act.
- The Tribunal considered the judgment of the High Court in a related case and held that the levy of interest u/s. 234A, 234B, and 234C is mandatory.
- The ITAT allowed the grounds of appeal, following the decision of the High Court.

In conclusion, the ITAT allowed the appeals for statistical purposes and upheld the decision regarding the liability for interest expenditure, taxation of income in another individual's hands, and the deletion of interest charged under sections 234A, 234B, and 234C of the Income Tax Act. The Tribunal emphasized the importance of following decisions of higher courts and previous Tribunal rulings in similar cases.