JAYNEER CAPITAL P. LTD, MUMBAI v. ACIT WD 6(1), MUMBAI

ITA 1427/MUM/2009 | 2005-2006
Pronouncement Date: 30-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 142719914 RSA 2009
Assessee PAN AAACJ1683J
Bench Mumbai
Appeal Number ITA 1427/MUM/2009
Duration Of Justice 2 year(s) 6 month(s) 27 day(s)
Appellant JAYNEER CAPITAL P. LTD, MUMBAI
Respondent ACIT WD 6(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 30-09-2011
Date Of Final Hearing 28-09-2011
Next Hearing Date 28-09-2011
Assessment Year 2005-2006
Appeal Filed On 03-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI R.S. SYAL AM AND SHRI R.S.PADVEKAR JM ITA NO.1427/MUM/2009 : ASST.YEAR 2005-2006 M/S.JAYNEER CAPITAL PRIVATE LIMITED CONTINENTAL BUILDING 135 DR.A.B.ROAD WORLI MUMBAI 400 018. PAN : AAACJ1683J. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX WARD 6(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.SHIVARAM & MISS RENU CHOUDHAR Y RESPONDENT BY : SHRI D.S.SUNDER SINGH DATE OF HEARING : 28.09.2011 DATE OF PRONOUNCEMENT :30.09.2011 O R D E R PER R.S. SYAL AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 05.12.2008 IN RELATION TO THE ASSESSMENT YEAR 2005-2006. 2. FIRST GROUND IS AGAINST THE CONFIRMATION OF DISA LLOWANCE OF RS.72 38 746 U/S 14A OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS PL ACED ON RECORD A COPY OF THE ORDER PASSED BY THE TRIBUNAL IN ITS OWN CASE IN ASS ESSMENT YEAR 2006-2007. VIDE ORDER DATED 29 TH MARCH 2011 THE TRIBUNAL IN ITA NO.6203/MUM/2009 H AS RESTORED THE MATTER TO THE FILE OF ASSESSING OFFICER FOR COM PUTING THE DISALLOWANCE AS PER THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF GODREJ & BOYCE LTD. MFG. CO. VS. DCIT [(2010) 328 ITR 81 (BO M)] . CERTAIN OTHER OBSERVATIONS ON THE COMPUTATION OF DISALLOWANCE HAV E ALSO BEEN MADE IN THE SAID ORDER. RESPECTFULLY FOLLOWING THE PRECEDENT WE SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF A. O. FOR DECIDING THE QUESTION OF ITA NO.1427/MUM/2009 M/S.JAYNEER CAPITAL PRIVATE LIMITED. 2 DISALLOWANCE U/S 14A AS PER THE VIEW TAKEN BY THE T RIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY SUCCEEDING YEAR I.E. 2006-2007. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 4. SECOND GROUND IS AGAINST THE CONFIRMATION OF DIS ALLOWANCE OF RS.54 39 483 OUT OF INTEREST EXPENDITURE. FACTS APROPOS THIS GRO UND ARE THAT THE ASSESSEE PAID INTEREST AT THE RATE OF 13% TO CHOLAMANGALAM INVEST MENT & FINANCE CO. LIMITED AS WELL AS KOTAK MAHINDRA INVESTMENT LIMITED. THE A .O. NOTED THAT THE TOTAL INTEREST PAID WAS RS.2.33 CRORE. ON BEING CALLED UP ON TO FURNISH THE DETAILS OF THE PARTIES TO WHOM THE ASSESSEE HAD IN TURN ADVANCED LOAN THE ASSESSEE FILED THE SAME. THE A.O. NOTED THAT THE ASSESSEE HAD USED BOR ROWED FUNDS ON WHICH INTEREST WAS PAID AT THE RATE OF 13% FOR ADVANCING LOANS TO ITS SISTER CONCERNS AT THE RATE OF 10%. IN HIS OPINION THE INTEREST WAS TO BE DISALLO WED AT THE RATE OF 3%. HE THEREFORE COMPUTED THE DISALLOWANCE AT RS.1 48 06 627. THE LEARNED CIT(A) ECHOED THE ASSESSMENT ORDER ON THIS ISSUE. 5. WE HAVE HEARD BOTH SIDES AND PERUSED THE RELEVAN T MATERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSEE STATED BEFORE THE LEARNE D CIT(A) THAT THE BORROWINGS WERE MADE IN EARLIER YEARS AT 13% RATE OF INTEREST AND LOANS WERE ADVANCED AT THE RATE OF 14%. THESE LOANS CONTINUED ON BOTH SIDES. I N THE MEANTIME INTEREST RATE DROPPED AND ON THE INSISTENCE OF THE BORROWER FOR T HE MARKET RATE OF INTEREST THE COMPANY REDUCED THE RATE OF INTEREST TO 10% AND 1 1% FROM 1.04.2004 WHILE THE COMPANYS BORROWINGS WERE TERM LENDING AND HENCE HA D TO PAY HIGHER INTEREST TILL MATURITY AND ON MATURITY THE COMPANY REPAID ITS ENT IRE LOAN OF RS.20 CRORE CARRYING INTEREST RATE OF 13% FROM CHOLAMANGALAM INVESTMENT & FINANCE CO. LIMITED AND KOTAK MAHINDRA INVESTMENT LIMITED AND BORROWED RS.1 0 CRORE AT THE RATE OF 9.5% IN THE MONTH OF DECEMBER 2004. THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THE LEARNED A. R. HAS PLACED ON RECORD A COPY OF THE ORDER PASSED BY THE TRIBUNAL IN THE CAS E OF ITS SISTER CONCERN IN ITO VS. ITA NO.1427/MUM/2009 M/S.JAYNEER CAPITAL PRIVATE LIMITED. 3 M/S.RUPEE FINANCE & MANAGEMENT PVT. LTD. VIDE ORDER DATED 24.02.2010 IN ITA NO.5897/MUM/2008 THE TRIBUNAL HAS DELETED THE ADDI TION MADE UNDER SIMILAR CIRCUMSTANCES. NO DISTINGUISHING FEATURE IN THE FAC TS OF THE INSTANT CASE AND THAT OF THE SISTER CONCERN WAS BROUGHT TO OUR NOTICE BY THE LD. DR. IN VIEW OF THE FOREGOING DISCUSSION AND RESPECTFULLY FOLLOWING THE PRECEDENT ON THIS ISSUE WE ORDER FOR THE DELETION OF THE ADDITION. 6. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF SEPTEMBER 2011. SD/- SD/- (R.S.PADVEKAR) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 30 TH SEPTEMBER 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - VI MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.