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2014 (3) TMI 802 - AT - Income TaxClaim of deduction on account of interest expenditure Held that - The decision in Hitesh S. Mehta Versus DCIT Central Circle- 23, Mumbai 2013 (10) TMI 1065 - ITAT MUMBAI followed - rejection/reliability of the books of accounts and the proposed adjudication of the CIT(A) in view of the direction may have direct impact on the issue of the liability thus, the order of the CIT(A) set aside and the matter remitted back to the CIT(A) for fresh adjudication Decided in favour of Assessee. Deletion of interest u/s 234A, 234B and 234C of the Act Held that - The charging of interest u/s. 234A, 234B and 234C squarely depends on the adjudication of the CIT(A) and since the matter is remitted back to the CIT(A). Levy of interest of notified person Held that - The decision in M/s. Topaz Holdings Pvt. Ltd. Versus ACIT, CC-31 Mumbai 2013 (10) TMI 1067 - ITAT MUMBAi followed - the chargeability of interest u/s. 234A, 234B and 234C of the Act does not fall within the domain of the Special Court (Control of offences relating to transactions in securities) at 1992 - Since levy of interest is mandatory and is very much applicable in the case of notified persons thus, the levy of interest would be consequential Decided partly in favour of Revenue.
Issues:
1. Appeal by the assessee regarding deduction on interest expenditure. 2. Additional ground raised by the assessee regarding taxation of income in the hands of another individual. 3. Appeal by the Revenue regarding deletion of interest charged under sections 234A, 234B, and 234C of the Act. Assessee's Appeal - Deduction on Interest Expenditure: The assessee raised two substantive grounds of appeal, with one ground being dismissed as not pressed. The remaining ground related to the claim of deduction on account of interest expenditure. The counsel for the assessee argued that the issue was favorably covered by a previous Tribunal decision in a related case. The Departmental Representative agreed with this assertion. The Tribunal, after reviewing the CIT(A)'s order and the previous Tribunal decision, set aside the issue for fresh adjudication by the CIT(A) in line with the directions given for a similar case in A.Y. 2005-06. The additional ground raised by the assessee regarding the taxation of income in another individual's hands was considered academic by the Tribunal, following a similar decision in a related case. The appeal by the assessee was partly allowed for statistical purposes. Revenue's Appeal - Deletion of Interest Charged: The Revenue's grievance centered on the deletion of interest charged under sections 234A, 234B, and 234C of the Act. The Revenue contended that the Special Court Act, 1992 did not exempt the notified person from the liability of paying interest under the Income Tax Act, 1961. The Departmental Representative acknowledged that this issue had been decided in favor of the Revenue by the Tribunal. The Tribunal, upon reviewing the lower authorities' orders, noted that the charging of interest under the specified sections depended on the CIT(A)'s adjudication. As one issue was restored to the CIT(A) in the assessee's appeal, the Tribunal also restored this interest issue to the AO for recomputation. Citing a decision by the Jurisdictional High Court, the Tribunal held that the levy of interest under sections 234A, 234B, and 234C was mandatory for notified persons and did not fall under the Special Court's jurisdiction. Therefore, the ground raised by the Revenue was allowed, with the understanding that the levy of interest would be consequential. The appeals by both the assessee and the Revenue were partly allowed for statistical purposes. In conclusion, the Tribunal's judgment addressed the appeals by the assessee and the Revenue, providing detailed analysis and decisions on the issues of deduction on interest expenditure and the deletion of interest charged under specified sections of the Act. The Tribunal's rulings were based on legal precedents and directions for fresh adjudication, ensuring a comprehensive resolution of the disputes presented in the appeals.
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