2014 (7) TMI 2 - AT - Income Tax

Interest expenditure Calculation of book profit u/s 115JB of the Act - minimum alternate tax (MAT) Held that - Following Hitesh S. Mehta Versus DCIT Central Circle- 23, Mumbai 2013 (10) TMI 1065 - ITAT MUMBAI - books of accounts produced by the assessee during the assessment proceedings has been held to be unreliable - Whether the interest liabilities constitutes ascertained one or not is also linked to the issue of rejection of books of accounts as the books of account is the basis for computation of book profits u/s 115JA of the Act thus, the order of the CIT(A) is set aside and the matter is remitted back for fresh adjudication Decided in favour of Assessee.

Summary

Issues involved:
1. Appeal against the order of CIT (A)-40, Mumbai dated 16.9.2010 for the assessment year 2007-08.
2. Chargeability of interest u/s 234A, 234B, and 234C of the Income Tax Act, 1961 to notified persons.

Detailed Analysis:

Issue 1: Appeal against CIT (A) Order
The judgment involves two cross-appeals against the CIT (A) order for the assessment year 2007-08. The appeals were clubbed together as the issues raised were interlinked. The first appeal, ITA No.8200/M/2010, raised various grounds related to the assessment. Notably, grounds 1, 2, and 3 were not pressed by the assessee and were dismissed. Grounds 4 and 5 were about the disallowance of interest expenditure. The Tribunal referred to a previous case where a similar issue was set aside for fresh adjudication. Consequently, the Tribunal set aside grounds 4 and 5 for the CIT (A) to re-examine after considering the previous case. An additional ground raised by the assessee regarding the taxation of income in another individual's hands was rejected as having no substance. The appeal was partly allowed for statistical purposes.

Issue 2: Chargeability of Interest to Notified Persons
The second appeal, ITA No.8353/M/2010, was filed by the Revenue against the CIT (A) order. The grounds raised by the Revenue focused on the chargeability of interest u/s 234A, 234B, and 234C of the Income Tax Act, 1961 to notified persons under a specific Act. The Tribunal noted that the issue of interest liability was interlinked with the earlier appeals where the matter of interest expenditure deduction was set aside for fresh adjudication. Considering the consequential nature of the grounds, the Tribunal set aside the grounds raised by the Revenue for the CIT (A) to re-examine after the earlier appeals were resolved. The appeal of the Revenue was allowed for statistical purposes.

In conclusion, the judgment addressed various grounds raised in the appeals related to the assessment order and the chargeability of interest to notified persons under specific sections of the Income Tax Act. The Tribunal set aside certain issues for fresh adjudication by the CIT (A) after considering relevant precedents and interlinked matters from previous cases.