2014 (1) TMI 1779 - AT - Income Tax

Interest expenditure - Held that - Respectfully following the findings of the Tribunal this issue is restored back to the files of the AO to follow the directions of the Tribunal in A.Y. 2005-06 and 2006-07 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 Charging of interest u/s. 234A, 234B & 234C - Held that - Tribunal in the case of Topaz Holding Pvt. Ltd 2013 (10) TMI 1067 - ITAT MUMBAI held that the chargeability of interest u/s. 234A, 2324B and 234C of the Act does not fall within the domain of the Special Court (Control of offences relating to transactions in securities) at 1992. Since levy of interest is mandatory and is very much applicable in the case of notified persons, ground No. 1 (d) and 1 (e) are allowed. Needless to mention that the levy of interest would be consequential.

Summary

Issues Involved:
Cross appeals by assessee and Revenue against the order of Ld. CIT(A)-40, Mumbai for A.Y. 2007-08.

Analysis:

1. Agreement on Settlement of Grievances:
The cross appeals by the assessee and the Revenue were directed against the same order of the Ld. CIT(A)-40, Mumbai for A.Y. 2007-08. Both parties agreed that the issues raised had been resolved in the case of Shri Hitesh S. Mehta, part of the Harshad Mehta group of cases. The Tribunal carefully reviewed the orders of the lower authorities and the relevant Tribunal decision.

2. Assessee's Grounds Dismissed:
The Ld. Counsel for the assessee did not press ground No. 1, 2, and 3 in the assessee's appeal, leading to their dismissal as not pressed. However, grievance raised through ground No. 4 & 5, along with an additional ground, mirrored issues addressed in a previous Tribunal decision for A.Y. 2005-06.

3. Restoration of Issue to AO:
The Tribunal noted that the issue concerning interest expenditure liabilities had been restored to the files of the Ld. CIT(A) for fresh adjudication based on directions from a previous Tribunal decision for A.Y. 2005-06. The Tribunal allowed ground No. 4 for statistical purposes, following the findings of the earlier Tribunal decision.

4. Dismissal of Additional Ground by Assessee:
An additional ground raised by the assessee regarding the taxation of assets and income belonging to another individual was dismissed as academic in nature, in line with a previous Tribunal decision for A.Y. 1994-05. The Tribunal emphasized that the decision of the Hon'ble Supreme Court must be followed without dispute.

5. Revenue's Grievance on Interest Charges:
The Tribunal considered the Revenue's grievance regarding the charging of interest under specific sections of the Act. Citing a decision of the Hon'ble Jurisdictional High Court, the Tribunal allowed the Revenue's appeal, stating that the levy of interest was mandatory and applicable to notified persons. The appeal filed by the Revenue was partly allowed based on this decision.

6. Final Decision and Orders:
The Tribunal partly allowed the appeal filed by the assessee for statistical purposes and allowed the cross-appeal filed by the Revenue. The orders were pronounced in open court on a specified date.

This detailed analysis covers the issues involved in the legal judgment, highlighting the key points and decisions made by the Tribunal in response to the appeals by both the assessee and the Revenue.