S.M. Overseas (P) Ltd, v. ACIT Karnal Circle,

ITA 1991/DEL/2008 | 2003-2004
Pronouncement Date: 06-04-2010 | Result: Allowed

Appeal Details

RSA Number 199120114 RSA 2008
Assessee PAN AACCS5336C
Bench Delhi
Appeal Number ITA 1991/DEL/2008
Duration Of Justice 1 year(s) 10 month(s) 15 day(s)
Appellant S.M. Overseas (P) Ltd,
Respondent ACIT Karnal Circle,
Appeal Type Income Tax Appeal
Pronouncement Date 06-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 06-04-2010
Date Of Final Hearing 06-04-2010
Next Hearing Date 06-04-2010
Assessment Year 2003-2004
Appeal Filed On 21-05-2008
Judgment Text
ITA NO. 1991/DEL/2008 A.Y. 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 1991/DEL/2008 A.Y. 2003-04 SM OVERSEAS PVT. LTD. VS. ASST. COMMISSI ONER OF INCOME TAX MULTIROD HOUSE KARNAL CIRCLE KARNAL (HARYANA) KUNJPURA CROSSING KARNAL-132001 (HARYANA) (PAN: AACCS5336C) [APPELLANT] (RESPONDENT) ASSESSEE BY : SH. RAJESH JHALANI CA DEPARTMENT BY : SH. P.K. PRUSTY SR. DR ORDER PER SHAMIM YAHYA AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 5.3.200 8 AND PERTAINS TO ASSESSMENT YEAR 2003-04. 2. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN REJECTING THE PETITION OF THE ASSESSEE FOR CONDONATION OF DELAY IN FILING THE APPEAL BEFORE HIM. 3. ON THE MERIT IT HAS BEEN URGED THAT LD. COMMISS IONER OF INCOME TAX (APPEALS) IN CONFIRMING THE PROPORTIONATE DISALLOWA NCE INTEREST OF RS. 1 17 500/- OUT OF TOTAL INTEREST OF RS. 2 59.173/- PAID ON BOR ROWED FUNDS. ITA NO. 1991/DEL/2008 A.Y. 2003-04 2 4. THE ASSESSEE IN THIS CASE IS A COMPANY ENGAGED IN THE BUSINESS OF EXPORT OF WELDING ELECTRODES. DURING THE COURSE OF ASSES SMENT ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD ADVANCED RS. 15 LACS TO SHRI RM JAIN ON 6.8.2002 FOR PURCHASE OF LAND. IT WAS FURTHER STATED THAT THE AMOUNT HAS BEEN RECEIVED FROM SHRI RM JAIN AS THE PURCHASE OF LAND DID NOT MATERI ALIZE. THE ASSESSING OFFICER HELD THAT ASSESSEE HAD PAID INTEREST TO THE BANK TO THE TUNE OF RS. 259173/- AND OUT OF THIS INTEREST A SUM OF RS. 117500/- IS DISAL LOWED UPTO THE EXTENT OF INTEREST OF RS. 15 LACS @ 12%. 5. ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER O F INCOME TAX (APPEALS) AGAINST THE ORDER OF THE ASSESSING OFFICER . THERE WAS A DELAY IN FILING OF THE APPEAL BY 5 MONTHS AND 7 DAYS. IT WAS EXPLAINED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT APPEAL WAS INITIALLY NOT FILED BECAUSE THE ASSESSMENT WAS MADE AT NIL INCOME. LATER ON UPON ADVISE FROM A SENIOR COUNSEL THE ASSESSEE FILED THE APPEAL AS IT WOULD HAVE IMPACT O N SUBSEQUENT YEARS. HOWEVER LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT FIND THE REASONS ADEQUATE AND HELD THAT PETITION FOR CONDONATION OF APPEAL IS REJECTED AND THE APPEAL IS DISMISSED. 5.1 DESPITE DISMISSING OF THE APPEAL ON ACCOUNT OF DELAY LD. COMMISSIONER OF INCOME TAX (APPEALS) PROCEEDED TO DECIDE THE ISSUE ON MERITS. ON THE ISSUE OF INTEREST ON ADVANCE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT IT ITA NO. 1991/DEL/2008 A.Y. 2003-04 3 WAS CLAIMED BY THE ASSESSEE BEFORE HIM THAT ADVANC E FOR PURCHASE OF LAND WAS FOR THE PURPOSE OF BUSINESS BECAUSE BUILDING WAS T O BE CONSTRUCTED ON THIS LAND. IT WAS ALSO CLAIMED THAT THE ASSESSEE HAS SUFFICIEN T CAPITAL OF ITS OWN AND ADVANCE OF RS. 15 LACS. HOWEVER LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT ACCEPT THESE CONTENTIONS AND HE ALSO REJECTED TH E ASSESSEES RELIANCE UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF SA BUILDERS VS. CIT 288 ITR 1. 6. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 7. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THE REASONABLE CAUSE ATTRIBUTED IN THE DELAY OF FIL ING OF APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS COGENT ENO UGH. IN OUR CONSIDERED OPINION LD. COMMISSIONER OF INCOME TAX (APPEALS) S HOULD HAVE CONDONED THE SAID DELAY. FURTHER IN OUR CONSIDERED OPINION WHEN LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CONDONED THE DELAY AND DISMISSED THE APPEAL HE SHOULD NOT HAVE GONE ON AND ADJUDICATED THE MERITS OF THE CASE. BE IT AS MAY WE CONDONE THE DELAY IN FILING OF THE APPEAL BEFORE TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) FINDING THE CAUSE ATTRIBUTED FOR DEL AY AS REASONABLE. ITA NO. 1991/DEL/2008 A.Y. 2003-04 4 7.1 ON THE ISSUE OF MERITS WE FIND THAT LD. COMM ISSIONER OF INCOME TAX (APPEALS) HAS NOT ACCEPTED THE ASSESSEES PLEA THAT IT WAS DUE TO THE BUSINESS EXIGENCY THAT THE ADVANCE WAS GIVEN AND THAT THERE WERE SUFFICIENT NON-INTEREST BEARING FUNDS AVAILABLE TO GRANT THE SAID ADVANCE. WE FIND THAT THIS ASPECT OF THE ASSESSEES CLAIM HAS NOT AT ALL EXAMINED BY THE AUT HORITIES BELOW. HENCE IN THE INTEREST OF JUSTICE WE REMIT THIS ISSUE TO THE FILE S OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06/04/201 0 UPON CONCLUSION OF THE HEARING. SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 06/04/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES