2015 (3) TMI 1342 - AT - Income Tax

Disallowance of interest expense - HELD THAT - CIT(A) has held that the issue of interest expenditure is pending before the Hon ble Special Court. It is the say of the proceedings in which the said issue of interest was issued by the custodian have been already concluded which fact has already been recorded by the Ld. CIT(A) in the impugned order. We therefore direct the CIT(A) to consider this fact while deciding the issue afresh. CIT(A) may also direct for the taxing of income in the hands of the recipient (family members) in accordance with the method of accounting followed by them and as per the provisions of the law. Ground No. 4 is treated as allowed for statistical purpose. Interest u/s. 234A 234B and 234C - HELD THAT - The Tribunal has considered this issue at para-6 of its order and restored the matter to the file of the AO to recompute the interest liability as per the provisions of the law. We direct accordingly. Ground No. 6 is treated as allowed for statistical purpose.

Summary

Issues:
- Disallowance of interest expense
- Computation of Book Profit u/s. 115JB of the Act
- Charging of interest u/s. 234A, 234B, and 234C of the Act

Disallowance of Interest Expense:
The appeals were against orders of the Ld. CIT(A) for assessment years 2006-07, 2007-08, and 2010-11. The Ld. Counsel for the assessee did not press ground No. 1, 2, and 3. Ground No. 4 related to the disallowance of interest expense. The decision relied upon by the Ld. CIT(A) was set aside by the Tribunal to the file of the Ld. CIT(A). The Tribunal found that the Ld. CIT(A) followed the findings in the case of Eminent Holdings Pvt. Ltd., which was set aside by the Tribunal for fresh adjudication. The issue was restored to the files of the Ld. CIT(A) for reconsideration after providing a reasonable opportunity to the assessee. The Ld. CIT(A) was directed to consider the fact that the proceedings related to the interest expenditure had concluded. Ground No. 4 was treated as allowed for statistical purposes.

Computation of Book Profit u/s. 115JB of the Act:
The ground related to the computation of Book Profit u/s. 115JB was considered consequential to the decision on the disallowance of interest expense. Therefore, this ground was disposed of accordingly.

Charging of Interest u/s. 234A, 234B, and 234C of the Act:
Ground No. 6 raised by the assessee related to the charging of interest u/s. 234A, 234B, and 234C of the Act. The Tribunal considered an identical issue in another case and directed the AO to recompute the interest liability as per the law. Ground No. 6 was treated as allowed for statistical purposes. Ground No. 7 raised by the assessee was not pressed and was dismissed as such. Consequently, all three appeals filed by the assessee were allowed in part for statistical purposes.