2014 (1) TMI 1273 - AT - Income Tax

Addition made on account of discounting charges paid to bank - whether such discount/interest was incurred by the assessee in carrying on of its business Held that - The Tribunal in its earlier order directed the Assessing Officer to examine the nature of interest/discount incurred and its nexus with the carrying on of the business - it is apparent that after recording the dates on which notices were issued, the A.O. reproduced the original order passed by him u/s 143(3) and thereafter reproduced its confirmation by the learned CIT(A) in the first round. The Assessing Officer simply repeated the assessment and first appellate authority s order without discussing anything new about the matter on which the Tribunal gave direction - The present assessment order was passed by the A.O. on 18.12.2006 after filing of the above referred documents by the assessee - the Assessing Officer did not make a whisper in the assessment order of such details having been filed by the assessee - This fact has been elaborately considered by the learned CIT(A) the CIT(A) has recorded that these expenses were incurred during the course of business - order of the CIT(A) upheld Decided against Revenue.

Summary

Issues Involved:
Assessment of discounting charges and finance charges for connected assessees for assessment years 1996-1997 and 1997-1998.

Analysis:
The appeals by different but connected assessees raised a common issue related to the assessment of discounting charges and finance charges for the assessment years 1996-1997 and 1997-1998. The Tribunal directed the Assessing Officer to examine the nature of interest/discount incurred and its nexus with the carrying on of the business. In the case of M/s. Delta International, the original assessment included additions for discounting charges paid to the bank and payments made to others. The Tribunal's order directed the AO to re-examine the issue, resulting in a repeat addition of finance charges. However, the CIT(A) deleted this addition, leading to an appeal by the Revenue against the deletion.

Upon reviewing the submissions and evidence, the Tribunal noted that the AO merely reiterated the earlier orders without considering the fresh evidence presented by the assessee. The assessee provided detailed documents, including fund flow statements, balance sheets, profit and loss accounts, and details of discount charges paid. Despite this, the AO did not acknowledge or discuss these documents in the assessment order. The CIT(A) extensively analyzed the evidence and concluded that the expenses were indeed incurred during the course of business. The Tribunal upheld the deletion of the addition based on the evidence presented by the assessee and the CIT(A)'s findings.

Considering the similarity of facts in the other four appeals, the Tribunal upheld the impugned orders and confirmed the deletion of additions in all cases. Ultimately, all appeals were dismissed, and the order was pronounced on July 24, 2013.