2015 (8) TMI 1353 - AT - Income Tax

Rejection of claim of interest expenditure under the normal provisions of the Act - Rejection of interest liability under section 115JB of the Act - Held that - The assessee is one of the notified entities coming under Harshad Mehta group against whom stock scam charges are pending. With regard to above said issue relating to rejection of interest claim these issues are being set aside by the Tribunal to the file of ld. CIT(A) for fresh adjudication in all other group cases belonging to Harshad Mehta. Charging of interest u/s 234A, 234B and 234C - Held that - As already held in Divine Holdings Pvt. Ltd. 2012 (4) TMI 100 - BOMBAY HIGH COURT and Cascade Holdings Pvt. Ltd. 2014 (4) TMI 973 - BOMBAY HIGH COURT that the provision of sections 234A, 234B and 234C are mandatory in nature and would also apply to the notified entities also. The ld. Counsel submitted that the Tribunal, by following the above said decisions of Hon ble Bombay High Court in assessment year 2007-08, has held that the assessee would be liable to pay interest under section 234A, 234B and 234C of the Act. The Ld A.R submitted that the assessee has preferred an appeal against the said decision of the Tribunal before the Hon ble Jurisdictional High Court and the same is pending. The ld. Counsel submitted that the assessee has filed a declaration in Form no.8 in terms of Section 158A(1) of the Act and accordingly, he submitted that this legal issue may be set aside to the file of the AO with a direction to follow the decision rendered by the Hon ble Bombay High Court for the assessment year 2007-08. The ld. Special Counsel appearing for the Revenue submitted that the appeal filed by the assessee before the Hon ble Bombay High Court has not been admitted so far. However, when it was pointed out that the Tribunal has set aside the matter to the file of the AO by taking cognizance of declaration filed by the assessee, the ld. Special Counsel agreed that the similar direction may be given in the instant case also

Summary

Issues:
- Rejection of claim of interest expenditure under normal provisions of the Act
- Rejection of interest liability under section 115JB of the Act
- Computation of interest u/s 234A, 234B, and 234C of the Act

Analysis:

1. The appeals filed by the assessee were against orders passed by the ld. CIT(A)-40, Mumbai, with identical issues across multiple assessment years. The ld. Counsel pressed specific grounds related to interest expenditure rejection, leading to the dismissal of other grounds not pressed.

2. The issues regarding interest claims and computations in various assessment years were considered together due to their similarity. The Tribunal set aside these issues to the file of ld. CIT(A) for fresh adjudication, following previous decisions and directions given in similar cases.

3. The matter of charging interest under sections 234A, 234B, and 234C of the Act was contested on grounds of liability and computation. The Hon'ble Bombay High Court's rulings were cited to support the mandatory nature of these provisions, with directions given for further proceedings based on previous decisions and declarations filed by the assessee.

4. The computation of interest under sections 234A, 234B, and 234C was also subject to debate, with arguments presented regarding the deduction of tax deductible at source from the income of the assessee. Previous Tribunal decisions were referenced to support the assessee's position, leading to the matter being set aside for fresh adjudication by the AO.

5. Ultimately, the Tribunal partially allowed the appeals for statistical purposes, setting aside certain issues for reconsideration by the respective authorities in line with previous decisions and directions provided. The final pronouncement was made on 25th August 2015.