2015 (5) TMI 1178 - AT - Income Tax

Income from attached assets to be assessed in the hands of the appellant - non granting deduction of liability towards interest expenditure claimed by the appellant - HELD THAT - As M/S. GROWMORE LEASING & INV. LTD., M/S. GROWMORE RESEARCH & ASSETS MGT. LTD., VERSUS THE ACIT, CENTRAL CIRCLE-31, MUMBAI 2015 (3) TMI 1243 - ITAT MUMBAI assessee pointed out that the CIT(A) has held that the issue of interest expenditure is pending before the Hon ble Special Court. Say of the Counsel that 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 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. Levy of interest u/s. 234B and 234C - HELD THAT - In Devine Holdings Pvt. Ltd. 2012 (4) TMI 100 - BOMBAY HIGH COURT has held that provisions of section 234A, 234B and 234C were applicable to the notified person also. Therefore, upholding the order of the FAA to that extent, we hold that provisions of section 234 are applicable. As far as calculation part is concerned. we find merits in the submission made by the assessee. Therefore, we are restoring back the issue to the file of the AO for fresh adjudication who would decide the issue after considering the amount taxed deductible at source on the income assessed and after affording a reasonable opportunity of hearing to the assessee.

Summary

Issues involved:
1. Appeal against order passed by Ld. CIT(A)-40, Mumbai dated 19/11/2012 for assessment year 2009-10.
2. Disallowance of interest expenditure claimed by the appellant.
3. Levying of interest u/s. 234B and 234C on the facts of the present case.

Analysis:

1. The appellant appealed against the order passed by Ld. CIT(A)-40, Mumbai for the assessment year 2009-10. The grounds of appeal included issues related to the order passed under section 250 of the Act, assessment of income from attached assets, and the deduction of liability amounting to a specific sum towards interest expenditure claimed by the appellant. The Tribunal noted that Ground No.1 & 2 were not pressed, while Ground No.3 was stated to be covered by an earlier decision of the Tribunal in a group case. The Tribunal referred to specific observations made in a related case and directed the issue to be restored to the file of the Ld. CIT(A) for fresh adjudication. The Ld. Special Counsel did not contest this contention, leading to the ground being allowed for statistical purposes.

2. Regarding Ground No.4, the appellant contended that it was covered by a decision of the Tribunal dated 18/6/2014 in a specific case. The Tribunal referred to observations made in that case related to the levy of interest u/s. 234 of the Act. The appellant argued that the provisions of sections 234A, 234B, and 234C were deemed to have been complied with, as the assets were already under attachment of the Custodian. The Tribunal considered the arguments presented by both parties and decided to partially allow the ground in favor of the appellant, directing the issue to be sent back to the AO for fresh adjudication after considering the amount of tax deductible at source on the income assessed.

3. The Tribunal carefully considered the submissions made by both parties regarding the issue of levying interest u/s. 234B and 234C on the facts of the present case. The appellant relied on specific decisions to support their case, while the DR relied on the case of Devine Holdings Pvt. Ltd. The Tribunal noted that the Hon'ble Bombay High Court had held that the provisions of section 234A, 234B, and 234C were applicable to notified persons. Therefore, the Tribunal upheld the order of the FAA on this aspect and directed the issue to be sent back to the AO for fresh adjudication, considering the amount of tax deductible at source on the income assessed. As a result, the appeal filed by the appellant for the A.Y 2002-03 was partly allowed.

In conclusion, the Tribunal partly allowed the appeal filed by the appellant, addressing the issues related to the order passed by Ld. CIT(A)-40, Mumbai, the disallowance of interest expenditure, and the levying of interest u/s. 234B and 234C on the facts of the case. The Tribunal provided detailed reasoning for its decisions and directed specific issues to be reconsidered by the respective authorities for fresh adjudication.