CHEMTECH INDUSTRIAL VALVES P. LTD, MUMBAI v. ITO WD -10(3(1), MUMBAI

ITA 48/MUM/2009 | 2004-2005
Pronouncement Date: 03-03-2010 | Result: Allowed

Appeal Details

RSA Number 4819914 RSA 2009
Assessee PAN AAACG5866H
Bench Mumbai
Appeal Number ITA 48/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 29 day(s)
Appellant CHEMTECH INDUSTRIAL VALVES P. LTD, MUMBAI
Respondent ITO WD -10(3(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 03-03-2010
Date Of Final Hearing 22-02-2010
Next Hearing Date 22-02-2010
Assessment Year 2004-2005
Appeal Filed On 05-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI T.R. SOOD AM AND SHRI V. DURG RAO JM I.T.A.NO. 48/MUM/2009 ASSESSMENT YEAR : 2004-05 M/S. CHEMTECH INDUSTRIAL VALVES PVT. LTD. 105 HIRANANDANI INDUSTRIAL ESTATE KANJUR MARG (WEST) MUMBAI 400 078 PAN: AAACG 5866 H VS. THE INCOME-TAX OFFICER WARD 10(3)(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAPIL K. JAIN RESPONDENT BY : SHRI VIJAY VARMA O R D E R PER T.R. SOOD AM: IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUND: ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF THE INTEREST EXPENSES PAID ON WORKING CAPITAL CC LIMIT AND UNSEC URED LOANS. 2. AFTER HEARING BOTH THE PARTIES WE THAT THAT DUR ING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE0 HAS TAKEN FRESH SECURED AND UNSECURED LOANS. IT WAS FURTHER NOTED THAT ASSESSEE HAD TAKEN CERTAIN LOANS ON WHICH NO INTEREST WAS CHARGED. IT WAS ALSO NOTICED THAT ASSESSEE HAD MADE INVESTMENT IN SHARES OF THE BANK TO THE TU NE OF RS. 1 25 252/-. THE ASSESSING OFFICER AFTER EXAMINING THE SUBMISSIONS D ISALLOWED THE INTEREST IN RESPECT OF INTEREST FREE ADVANCES GIVEN UNDER SECTI ON 36(1)(III). HE ALSO MADE DISALLOWANCE OF SECTION 14A FOR THE INVESTMENT MAD E IN RESPECT OF INVESTMENT IN SHARES. THE DISALLOWANCES WERE CONFIRMED BY THE LEA RNED CIT(A). 3. BOTH THE PARTIES WERE HEARD. AFTER CONSIDERING T HE RIVAL SUBMISSIONS WE FIND THAT AS FAR AS THE DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF INTEREST IN RESPECT OF INVESTMENT IN SHARES IS CONCERNED THOUGH IT WAS ARGUED THAT INVESTMENT WAS ITA NO.48/M/09 CHEMTECH INDL. VALVES P. LTD. 2 COMPULSORY FOR TAKING THE LOAN FROM THE CO-OPERATIV E BANK BUT NO SUCH RULE WAS BROUGHT TO OUR ATTENTION. WE HAD GIVEN TWO DAYS TI ME TO THE ASSESSEES COUNSEL TO FILE ANY MATERIAL TO SHOW THAT BUYING OF SHARES IN THE CO-OPERATIVE BANK FROM WHERE THE ASSESSEE HAD TAKEN LOAN WAS OF COMPULSORY NATURE BUT NOTHING HAS BEEN FILED ON RECORD. WE FURTHER FIND THAT THE ISS UE IS COVERED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF CHEMINVEST LTD. V. ITO (121 ITD 318 (DELHI)(SB) WHEREIN IT WAS HELD THAT SINCE THE DIVIDEND IS EXEM PTED FROM TAX INTEREST PAID ON BORROWED CAPITAL UTILIZED IN PURCHASE OF SHARES BE ING EXPENDITURE INCURRED IN RELATION TO DIVIDEND INCOME NOT FORMING PART OF ASS ESSEES TOTAL INCOME CANNOT BE ALLOWED AS A DEDUCTION. FURTHER SUCH DISALLOWANCE UNDER SECTION 14A CAN BE MADE EVEN IN A YEAR IN WHICH NO EXEMPT INCOME HAS BEEN E ARNED OR RECEIVED BY THE ASSESSEE. 4. AS FAR AS DISALLOWANCE OF INTEREST IN RESPECT OF INTEREST FREE BORROWINGS ARE CONCERNED WE FIND THAT CERTAIN DETAILS WERE FI LED BEFORE THE ASSESSING OFFICER SHOWING THAT INTEREST FREE FUNDS WERE AVAILABLE TO THE ASSESSEE FOR GIVING SUCH INTEREST FREE ADVANCES BUT THE SAME HAS NOT BEEN CO NSIDERED BY THE ASSESSING OFFICER. THEREFORE WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) IN THIS RESPECT AND DIRECT THE ASSESSING OFFICER TO CONSIDER THE INTERE ST FREE FUNDS AVAILABLE TO THE ASSESSEE AND ONLY THAT BESIDES THE QUANTUM OF INTER EST TO BE DISALLOWED. NEEDLESS TO SAY THAT THE ASSESSEE SHOULD BE GIVEN PROPERTY O PPORTUNITY OF BEING HEARD. 5. IN THE RESULT THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED ON THIS 3 RD DAY OF MARCH 2010. SD. SD. (V.DURGA RAO) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 3 RD MARCH 2010. KN ITA NO.48/M/09 CHEMTECH INDL. VALVES P. LTD. 3 COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT-XIV MUMBAI 4. THE CIT(A)-XIV MUMBAI 5. THE DR C BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI ITA NO.48/M/09 CHEMTECH INDL. VALVES P. LTD. 4 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 24.02.2010 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 24.02.2010 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.48/M/09 CHEMTECH INDL. VALVES P. LTD. 5 ORDER PRONCOUNCED ON . 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE- APPELLANT AS WELL AS NO PETITION FOR ADJOURNMENT WA S FILED. WE FIND FROM THE RECORDS THAT ASSESSEE-APPELLANT WAS SERVED NOTICE B Y REGISTERED POST ACKNOWLEDGEMENT DUE TWICE AND THE ACKNOWLEDG EMENT CARDS DULY SIGNED BY THE ASSESSEE ON 25.07.2007 AND 16.11.2 007 RECEIVED BACK. IT IS THEREFORE PRESUMED THAT THE ASSESSEE IS NOT INT ERESTED IN PURSUING THE APPEAL FILED BY IT. IT HAS BEEN HELD BY THE HONBLE MADHYA PRADESH HIGH COURT IN ESTATE OF LATE TUKOJIRAO HOLKAR VS. CWT (2 23 ITR 480)(MP) THAT IF THE PARTY AT WHOSE INSTANCE THE REFERENCE IS MADE FAILS TO APPEAR AT THE HEARING OR FAILS IN TAKING STEPS FOR PREPARATION OF PAPER-BOOKS SO AS TO ENABLE HEARING OF THE REFERENCE THE COURT IS NOT B OUND TO ANSWER THE REFERENCE. THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CIT VS. MULTIPLAN (INDIA) PVT. LTD. 38 ITD 320 (DEL.) IS A LSO TO THE SAME EFFECT. IN THE FACTS OF THE CASE WE HOLD THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THE PRESENT APPEAL BEFORE THE TRIBUNAL ACCORDINGLY THE APPEAL OF THE ITA NO.48/M/09 CHEMTECH INDL. VALVES P. LTD. 6 ASSESSEE IS DISMISSED AS UNADMITTED. THE ASSESSEE IF SO ADVISED SHALL BE FREE TO MOVE THE TRIBUNAL PRAYING FOR RECALLING OF THIS ORDER PROVIDED THE ASSESSEE IS ABLE TO ESTABLISH THE REASONABLE CAUSE BEHIND THE NON- APPEARANCE ON THE DATE OF HEARING AND IN THAT CASE THE TRIBUNAL MAY IN ITS DISCRETION RECALL THIS ORDER AND THE APPEAL MAY BE RESTORED FOR RE-HEARING. 3. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2 007. 2. FROM THE GROUNDS FILED BY THE ASSESSEE BEFORE TH E LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WE FIND THAT THE LEVY PERTA INED TO CONCEALMENT OF INCOME OF RS. 1 02 744/- AND THE PENALTY LEVIED WAS RS. 22 248/-. THEREFORE IN VIEW OF CBDT CIRCULAR F.NO. 279/MISC.142/2007-IT DATED 15 TH MAY 2008 THE APPEAL IS NOT MAINTAINABLE TAX EFFECT BEING LESS THAN RS. 2 LAKH S. VIDE PARA 4 OF THIS CIRCULAR IT IS CLEARLY MENTIONED THAT THE TAX EFFECT IN ASCERTA INING MONETARY LIMITS FOR FILING OF APPEALS IN THE CASE OF PENALTY ORDERS WOULD MEAN QUANTUM OF PENALTY DELETED OR REDUCED. 3. THEREFORE APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED ON THIS _______ DAY OF MAY 2009 . (G.C. GUPTA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE ______MAY 2009. KN COPY TO: 6. THE ASSESSEE 7. THE ITO-26(1)(2) MUMBAI. 8. THE CIT CITY-XXVI MUMBAI 9. THE CIT(A)-XXVIII MUMBAI 10. THE DR G BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI ITA NO.48/M/09 CHEMTECH INDL. VALVES P. LTD. 7 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 18.05.09 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18.05.09 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.48/M/09 CHEMTECH INDL. VALVES P. LTD. 8