2014 (2) TMI 1115 - AT - Income Tax

Relief of liability on account of interest expense - Calculation of book profit U/s. 115JB of the Act - Changeability of interest u/s. 234A, 234B and 234C of the Act - Held that - Matter remitted back to the CIT(A) for fresh consideration - Decided in favour of Assessee. Correctness of taxability of income in the hands of the company - Held that - The assessee cannot be permitted to blow hot and cold - the matter is subjudice before the Hon ble Supreme Court and thus it cannot be said that the facts are settled finally - None of the issues were taken up before the AO or the CIT(A) and hence it cannot be said that the facts concerning the so called legal issue are already on the record of the Tax Authorities - The expression Record means the record of the year under consideration and not the history of the assessee spanning over several years - Since the issue was not urged before the Tax Authorities and the facts concerning the same are not established or available before the AO/CIT(A), the assessee cannot be permitted to raise additional ground for the first time before the Tribunal - the facts were not on record of the Tax Authorities for the assessment year - the assessee is making counter claims would suggest that the facts are not finally settled and on such an issue additional ground cannot be admitted - Decided partly in favour of Assessee.

Summary

Issues:
1. Appeal challenging the order of the Commissioner of Income-tax (Appeals).
2. Relief on interest expenses claimed by the assessee.
3. Calculation of book profit under section 115JB.
4. Charging of interest under sections 234A, 234B, and 234C.
5. Taxability of income in the hands of the company based on a legal issue regarding assets belonging to another individual.

Issue 1: Appeal against the Commissioner of Income-tax (Appeals):
The appeal was filed by the assessee company challenging the order of the Commissioner of Income-tax (Appeals) for the assessment year 2006-07. The grounds raised by the appellant included errors in law and facts by the Commissioner of Income-tax (Appeals) in confirming the Assessing Officer's order. During the hearing, the appellant decided not to press grounds 1, 2, and 3, which were subsequently dismissed by the Tribunal.

Issue 2: Relief on Interest Expenses:
The appellant contended that the Commissioner of Income-tax (Appeals) erred in not granting relief on account of interest expenses claimed. The Tribunal noted that similar circumstances were observed in previous cases related to the appellant and a related party. The matter was set aside to the file of the Commissioner of Income-tax (Appeals) for reconsideration based on the decision of the ITAT "H" Bench, Mumbai.

Issue 3: Calculation of Book Profit under Section 115JB:
The issue of calculating book profit under section 115JB was found to be dependent on the availability of liability regarding interest expenditure claimed by the assessee. Both parties agreed that this issue's outcome would be consequential to the decision on the relief of interest expenses. Consequently, the matter was set aside for reconsideration by the Commissioner of Income-tax (Appeals).

Issue 4: Charging of Interest under Sections 234A, 234B, and 234C:
The Tribunal observed that the charging of interest needed to be recomputed following the final income and taxability determined after considering the ITAT's order. Therefore, the matter was set aside for fresh computation by the Commissioner of Income-tax (Appeals).

Issue 5: Taxability of Income in the Hands of the Company:
An additional ground was raised concerning the taxability of income in the hands of the company based on a legal issue regarding assets belonging to another individual. The appellant argued that the assets and liabilities belonged to the other individual, and hence the income assessed should be taxed in their hands. However, the Tribunal rejected this additional ground, stating that the issue was not raised before the Tax Authorities and the facts were not established during the assessment proceedings.

In conclusion, the appeal filed by the assessee was partly allowed, with various issues being remanded back to the Commissioner of Income-tax (Appeals) for reconsideration based on specific legal and factual aspects. The Tribunal emphasized the importance of raising relevant issues before the Tax Authorities and the need for established facts to support additional grounds raised during the appeal process.