M/s. Metro Services Ltd.,, Baroda v. The Income tax Officer, Ward-4(1),, Baroda

ITA 4214/AHD/2007 | 2002-2003
Pronouncement Date: 08-07-2010 | Result: Partly Allowed

Appeal Details

RSA Number 421420514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 4214/AHD/2007
Duration Of Justice 2 year(s) 7 month(s) 9 day(s)
Appellant M/s. Metro Services Ltd.,, Baroda
Respondent The Income tax Officer, Ward-4(1),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 08-07-2010
Date Of Final Hearing 08-07-2010
Next Hearing Date 08-07-2010
Assessment Year 2002-2003
Appeal Filed On 29-11-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MAHAVIR SINGH JUDICIAL MEMBER) ITA.NO.4214/AHD/2007 ASSTT.YEAR : 2002-2003 M/S.METRO SERVICES LTD. C/O. ASHISH P. SHAH 7 VIKRAM NAGAR B/H. ARYA KANYA SCHOOL KARELIBAUG BARODA. VS. ITO WARD-4(1) BARODA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.J. SHAH REVENUE BY : SHRI GAURAV BATHAN O R D E R PER G.D. AGRAWAL VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III BARODA DATED 25.09.2007 ARISING OUT OF THE ORDERS OF THE A SSESSING OFFICER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961. 2. IN THIS APPEAL OF THE ASSESSEE THE FOLLOWING GR OUNDS ARE RAISED: 1. THE CIT(A) IN FACTS OF THE CASE AND IN LAW ERRE D IN CONFIRMING THE ADDITION OF RS.10 46 734/- MADE ON ACCOUNT OF NOTIO NAL INTEREST INCOME DESPITE THE FACT THAT INTEREST HAS NOT ACCRUED DURI NG THE YEAR. 2. THE CIT(A) ERRED IN FACTS OF THE CASE AND IN LA W IN CONFIRMING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES INST EAD OF BUSINESS INCOME DESPITE THE FACT THAT FOR EARLIER YEARS THE INTEREST IS ASSESSABLE AS BUSINESS INCOME. 3. THE CIT(A) ERRED IN FACTS OF THE CASE AND IN LAW IN UPHOLDING THE ACTION OF AO IN NOT GIVING SET OFF OF BROUGHT FORWA RD LOSSES AND UNABSORBED DEPRECIATION OF EARLIER YEARS AGAINST TH E INCOME ASSESSED. ITA.NO.4214/AHD/2007 -2- 4. THE CIT(A) ERRED IN FACTS OF THE CASE AND IN LAW IN RESTRICTING 10% OUT OF 50% OF AD HOC DISALLOWANCE MADE OF TOTAL EXPENDITURE ON THE GROUND THAT THERE WAS NO BUSINESS ACTIVITY DURI NG THE YEAR. 5. THE CIT(A) ERRED IN FACTS AND IN LAW IN UPHOLDIN G THE INTEREST U/S.234B. 3. THE ASSESSEE HAS NOT PRESSED THE GROUND NOS.2 TO 5 FOR ADJUDICATION HENCE THESE GROUNDS ARE DISMISSED AS NOT BEING PRES SED. THE ONLY GROUND NOW REMAIN TO BE ADJUDICATED IS GROUND NO.1. 4. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE RAIS ED IN GROUND NO.1 AND PERUSED MATERIAL PLACED BEFORE US. IT IS BROUGHT T O OUR NOTICE BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT SIMILAR ISSUE IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 WAS DECIDED IN FAVOUR OF TH E ASSESSEE BY THE TRIBUNAL VIDE ITA NO.1869/AHD/2005 DATED 12-9-2008. THE LEA RNED COUNSEL DREW OUR ATTENTION TO THE FOLLOWING FINDINGS OF THE TRIBUNAL IN THIS BEHALF: 5. WE FIND FROM THE ABOVE FACTS THAT THE ASSESSEE HAS NOT CHARGED INTEREST BECAUSE THERE WAS NO RECOVERY OF PRINCIPAL FROM THAT PARTY AND THEREFORE FURTHER INCLUDING INTEREST ON THE OVERDUE AMOUNT WILL NOT SERVE THE PURPOSE. FROM THE ABOVE FACTS IT IS CLEAR THA T THE VARIOUS LETTERS WRITTEN BY MINI COMP. LTD. WHEREIN IT HAS SHOWN IT S INABILITY TO REPAY THE LOAN AND INTEREST THEREON FROM AND INCLUDING TH E YEAR 2000-01 RELEVANT TO ASSESSMENT YEAR 2001-02. EVEN FROM THE RESOLUTION DATED 24-4-2000 THE ASSESSEE-COMPANY THROUGH ITS DIRECTO R PASSED A RESOLUTION AND CONVERTED THE OUTSTANDING AMOUNT INT O NON-INTEREST BEARING ADVANCE DUE TO HUGE FINANCIAL CRISIS IN MIN I COMP. LTD. AND ON THE CONDITION THAT THE OUTSTANDING LOAN WILL BE REP AID BY THEM AT THE EARLIEST. WE FIND THAT THE POSITION TAKEN BY THE M ANAGEMENT OF THE COMPANY FOR NOT CHARGING OF INTEREST IS A DECISION FOR THE BUSINESS EXPEDIENCY AND FOR BAD BUSINESS LOAN. WE FIND THAT THE ASSESSEE HA SNOT CHARGED THE INTEREST AFTER PROPERLY CONSIDERING THE NATURE OF LOAN AND THE PROSPECTUS FOR THE RECOVERY OF THE SAME. WE FI ND THAT THIS IS A BUSINESS DECISION AND NON-CHARGING OF INTEREST ON B AD LOAN IS AS PER THE CIRCUMSTANCES PREVALENT AT THAT TIME. ACCORDINGLY THE CIT(A) AS WELL AS ASSESSING OFFICER HAVE ERRED IN MAKING THIS ADDI TION AND WE DELETE THE SAME. THIS ISSUE OF THE ASSESSEES APPEAL IS A LLOWED. ITA.NO.4214/AHD/2007 -3- RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL IN THE ASSESSEES OWN CASE WE DELETE THE ADDITION OF RS.10 46 734/- MADE ON ACCOUNT OF NOTIONAL INTEREST AND ALLOW THIS GROUND OF THE ASSESSEES AP PEAL. 5. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 8 TH JULY 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 08-07-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER AR ITAT AHMEDABAD