2016 (1) TMI 1449 - AT - Income Tax

Disallowance u/s 14A - Interest expenditure disallowance - MAT computation - HELD THAT - Whether the interest expenditure constitutes ascertained liability or not is linked to the issue of rejection of books of account as the books of account are the basis for computation of book profits under section 115JB of the Act. This issue was set aside to the file of the Ld. CIT(A) for fresh adjudication. Following the aforesaid order of the Co-ordinate Bench of this Tribunal in the case of Hitesh S Mehta 2017 (12) TMI 1668 - ITAT MUMBAI - Thus we are of the considered opinion that the issue of disallowance of interest expenditure is to be set aside to the file of the Ld. CIT(A) for fresh adjudication. Charging of interest u/s 234A 234B and 234C - HELD THAT - Following the decision of the co-ordinate Bench of the Tribunal in the case of Eminent Holdings Pvt. Ltd. 2014 (7) TMI 466 - ITAT MUMBAI we restore the issue of computation of interest chargeable u/s. 234A 234B and 234C of the Act to the file of the Assessing Officer for fresh examination and adjudication after considering the amount of TDS made on income assessed. Chargeability of interest u/s.234A 234B and 234C - notified persons notified under the Special Court Act - AY 2008-09 - HELD THAT - Respectfully following the decision of the Hon ble Bombay High Court in the case of Divine Holdings Pvt. Ltd. 2012 (4) TMI 100 - BOMBAY HIGH COURT and in accordance with the ratio laid down in the Hon ble Apex Court s order in Anjum H. Ghaswala 2001 (10) TMI 4 - SUPREME COURT we hold that interest u/s. 234A 234B and 234C of the Act is mandatorily chargeable in the case on hand eventhough it is a notified person .

Summary

Issues Involved:
1. Condonation of delay in filing appeals.
2. Disallowance of interest expenditure.
3. Charging of interest under sections 234A, 234B, and 234C of the Income Tax Act.
4. Consideration of TDS on income assessed for the computation of interest under sections 234A, 234B, and 234C.
5. Computation of book profits under section 115JB of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The assessee filed appeals with delays of 16 days for the assessment year 1992-93 and 52 days for the assessment year 2008-09. The reasons for the delays were explained through affidavits, citing reasons beyond the control of the assessee. The Tribunal found the reasons reasonable and condoned the delays, allowing the appeals to be admitted for adjudication on merits.

2. Disallowance of Interest Expenditure:
For both assessment years, the issue of disallowance of interest expenditure was linked to the rejection of the books of account. The Tribunal referred to a similar case (Shri Hitesh S. Mehta) where the issue was set aside to the CIT(A) for fresh adjudication. Following this precedent, the Tribunal set aside the disallowance of interest expenditure to the CIT(A) for fresh adjudication after giving the assessee a reasonable opportunity to present details and submissions.

3. Charging of Interest under Sections 234A, 234B, and 234C:
The Tribunal upheld the charging of interest under sections 234A, 234B, and 234C, referring to the Bombay High Court's decision in the case of Devine Holdings Pvt. Ltd., which held that such interest is mandatorily chargeable even for 'notified persons' under the Special Court Act. The Tribunal dismissed the assessee's grounds against the charging of interest under these sections.

4. Consideration of TDS on Income Assessed for Computation of Interest:
The assessee argued that interest under sections 234A, 234B, and 234C should not be charged on income subjected to TDS. The Tribunal referred to a co-ordinate Bench decision in the case of Eminent Holdings Pvt. Ltd., which restored the issue to the Assessing Officer for fresh adjudication considering the amount of TDS. Following this precedent, the Tribunal restored the issue to the Assessing Officer for fresh examination and adjudication after considering the TDS on the assessed income.

5. Computation of Book Profits under Section 115JB:
For the assessment year 2008-09, the issue of computation of book profits under section 115JB was considered consequential to the decision on the disallowance of interest expenditure. Since the disallowance of interest expenditure was set aside for fresh adjudication, the Tribunal also restored the issue of computation of book profits to the CIT(A) for fresh adjudication.

Conclusion:
The appeals for both assessment years were partly allowed for statistical purposes, with specific issues being set aside for fresh adjudication by the CIT(A) or the Assessing Officer, as applicable. The Tribunal's decisions were guided by precedents and relevant High Court rulings, ensuring a thorough and fair examination of the issues involved.