9911796707
TMI Blog2016 (2) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... rought on record before the Tribunal and the assessment framed vide orders dated 31.12.2009 being concluded assessment as framed prior to date of second search on 29/03/2011, we are of considered view that the concluded assessments in the instant appeal cannot be disturbed on the same set of material facts as prevailing when the assessment was framed u/s 153A read with Section 143(3) of the Act on 31.12.2009 in pursuant to first search on 19.07.2007 and hence, we dismiss the appeal filed by the Revenue. - Decided against revenue - I.T.A. No. 3187/Mum/2014, I .T.A. No. 3188/Mum/2014, I .T.A. No. 3189/Mum/2014 - - - Dated:- 18-1-2016 - SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri Rahul Raman CIT DR For The Assessee : Shri Vijay Mehta, Shri Govind Javeri and Shri Anuj Kisnadwala ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: These three appeals by the Revenue are directed against three separate orders of the learned Commissioner of Income Tax (Appeals)- 40 , Mumbai (Hereinafter called the CIT(A) ) all dated 18-2-2014 pertaining to the assessment years 2007-08 to 2009-10. Since similar grounds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 14,74,33,828/-. Notices dated 11-7-2012 u/s 143(2) and 142(1) of the Act were issued to the assessee and served upon the assessee. During the course of the assessment proceedings u/s 153A of the Act, the assessee replied the relevance of the seized material. The learned assessing officer(Hereinafter called the AO ) observed that the assessee has earned interest income of ₹ 99,01,472/- and claimed interest expenses of ₹ 96,24.943/- against the same. The break up is as under:- Name of the party Interest (Rs) Amount(Rs.) INTEREST EARNED Kanakia Constructions Pvt. Ltd. 5805208 Kanakia Hospitality Pvt. Ltd. 1833985 Supreme Real Estate Developers P. Ltd. 2262279 99,01,472 INTEREST PAID Babubhai M. Kanakia 1395443 Evergreen Financial Services 8139500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- paid to Shri M.J. Chotani is disallowed and added to the total income. Further, the assesse has received interest of ₹ 99,01,472/- on the average value of loans given during the year ₹ 8,25,12,267/- as against, the assesse has paid interest of ₹ 95,34,933/- (excluding the interest of ₹ 90,000/- paid to Shri M.J. Chotani as discussed above) on average value of loan received during the year of ₹ 11,43,43,933/- (excluding the loan of ₹ 5,00,000/- received from Shri M.J. Chotani). The assesse has paid excess interest Rs, 38,19,800/- (@ 12% on the excess average value of loans given of ₹ 3,18,31,666/-). Keeping in view of the facts of the case, the interest of ₹ 38,19,800/- is disallowed out of interest paid. Copy of the order is enclosed for reference. As it is evident from the above, the claim of interest paid of ₹ 57,15,143/- was allowed to the assesse after disallowing sum of ₹ 39,09,800/- considering facts of the case. On the basis of the same, in the return filed u/s. 153 A, assessee had already disallowed sum of ₹ 39,09,800/- out of total interest paid of ₹ 96,24,943/-. Thus, clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect to the claim of interest in comparison to the last assessment completed u/s 153A of the Act vide orders dated 31.12.2009. The assessee vide letter dated 25-3-2013 has submitted that similar issue was considered while passing the order dated 31.12.2009 u/s 153A of the Act which was passed with the approval of Addl. CIT, Central Range -7, Mumbai. The assessee has also relied upon the decision of Special Bench decision of ITAT in the case of All Cargo Global Logistics Ltd. v. DCIT (2012) 23 taxmann.com 103 (Mum)[SB] and the relevant extracts of the decision are as under:- In case of assessments which do not abate pursuant to issue of notice under section 153A in addition to income that has already been assessed, assessment will be made on basis of incriminating material found in course of search but not produced in course of original assessment and undisclosed income or property discovered in course of search. Thus , the assessee contended in nutshell that once the assessment has already been finalized earlier after due deliberation on the same issue and that no incriminating material has been found during the course of search on the same issue, additions cannot be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and since decision of Hon ble Delhi High Court is a later decision, it shall supersedes the Special Bench decision dated 06-07-2012 in the case of All Cargo Global Logistics (supra). The AO held that the total income can be assessed de-novo of the assessee based upon sound reasoning and a well reasoned order, on any issue, hence, the alternative contention of the assessee is rejected and interest income is assessed at ₹ 99,01,472/- and claim of deduction of interest of ₹ 96,24,943/- against interest income was disallowed vide assessment order dated 28-03-2013 passed u/s 143(3) of the Act read with Section 153A of the Act. 7.Aggrieved by the assessment orders dated 28-03-2013 passed by the A.O. u/s 143(3) of the Act read with Section 153A of the Act , the assessee preferred an first appeal before the CIT(A). 8. Before the CIT(A), the assessee submitted that the A.O. erred in disallowing the assessee s claim of deduction of ₹ 47,22,282/- towards interest paid on loans while the A.O. taxed the entire interest income of ₹ 99,01,472/- on the ground that there was no direct correlation between the loan taken and loan advanced. The assessee submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 215 Taxman 616 (Gujarat) (iv) Consolidated Fibres Chemicals Ltd. v. ClT - 273 ITR 353 (Cal.) (v) ClT, West Bengal-3 v. Rajan Prasad Moody - 115 ITR 516 (vi) ClT v. Sujani Textile Pvt. Ltd. - 151 ITR 653 (vii) ClT v. Amritaben Shah 238 ITR 777 (Del.) (viii) ClT v. Neo Poly Pack Pvt. Ltd. - 245 ITR 492 (ix) Parshuram Pottery Works Co. Ltd. v. ITO - 106 ITR 1 (SC) Thus, the assessee contended that the addition of ₹ 47,22,282/- made by the AO to the income of the assessee needs to be deleted on account of consistency as no new material fact has come on record. The CIT(A) after considering the facts of the case and submission of the assessee and the orders of the A.O. observed that the earlier search and seizure action u/s 132(1) of the Act was carried out in the year 2007 on 19.07.2007 and subsequently the assessment order u/s 153A read with section 143(3) of the Act was passed on 31-12-2009 for the assessment years 2005-06 to 2008-09 , wherein no disallowance of interest paid on loan taken was made under identical circumstances and the assessee s claim towards payment of interest on funds borrowed was allowed as expenditure u/s 57(iii) of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 9,92,861/- u/s 14A of the Act on average investment in shares amounting to ₹ 5,13,43,681/- , dividend income from which has been claimed as exempted income . The total disallowance of interest of ₹ 49,02,661/- which has been voluntarily disallowed by the assessee appears to be fair and reasonable. The CIT(A) on perusal of Bank statement of the assessee gave categorical finding that there is strong direct co-relation between loan given and taken. The CIT(A) observed that the AO has not doubted the genuineness of loan taken and loan given. Thus, as per CIT(A) addition of ₹ 47,22,282/- is unsustainable and unjustified and directed the A.O. to delete the same vide orders dated 18.02.2014. 9.Aggrieved by the orders of the CIT(A) dated 18.02.2014, the Revenue is in appeal before the Tribunal. 10. The ld. D.R. relied upon the order of the A.O. and contended that the A.O. has rightly disallowed the expenses of ₹ 47,22,282/- as per the well reasoned order passed by the A.O. 11. The ld. Counsel for the assessee submitted that there are two search and seizure action u/s 132(1) of the Act conducted in the case of the assessee, one in the year 2007 on 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132(1) of the Act conducted by the Revenue on 29-3- 2011 related to the claim of deduction of interest expenditure of ₹ 47,22,282/- on the loans borrowed against the interest income of ₹ 99,01,472/- earned by the assessee on the loans advanced. We have also observed that the assessments u/s 153A of the Act pursuant to first search on 19.07.2007 have been concluded for the assessment year 2007-08 on 31.12.2009 which is prior to the date of second search conducted by Revenue on 29-03-2011 and hence in our considered view, no addition can be made with respect to the claim of deduction of interest expenditure of ₹ 47,22,282/- payable on loans borrowed by the assessee against the interest income from the loans advanced by the assessee company on the same set of material facts as existing while framing assessments u/s 153A read with Section 143(3) of the Act on 31.12.2009, in the absence of any incriminating material found during the course of second search on 29-03- 2009 . The decision in the case of All Cargo Global Logistics Ltd. (supra) relied upon by the assessee is squarely applicable to this case that In case of assessments which do not abate pursuant to issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not already disclosed or made known in course of original assessment and undisclosed income or property discovered in course of search , while in the instant appeal the AO has in the assessments framed vide orders dated 31.12.2009 u/s. 153A read with Section 143(3) of the Act in pursuance to the first search on 19.07.2007 has duly examined and allowed the claim of the assessee for deduction of interest of ₹ 47,22,282/- being interest paid on loan borrowed against the interest income earned on loans advanced by the assessee and no new incriminating material has been found or unearthed during the course of second search on 29-03-2011 . The relevant extract of the assessment orders u/s 153A of the Act dated 31.12.2009 in pursuance of first search u/s 132(1) of the Act on 19.07.2007, are as under: I have considered the submission of the assesse and the facts and circumstances of the case. The assesse has paid interest of ₹ 90,000/- to Shri M J Chotani on a loan of ₹ 5,00,000/- @ 18%. The interest paid to Shri M.J. Chotani was disallowed for the reasons discussed in earlier assessment years. There is no difference in the facts of the case. Accordingly, interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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