Muthoot Bankers, Kollam v. ACIT, Kollam

ITA 582/COCH/2010 | 2005-2006
Pronouncement Date: 16-12-2011

Appeal Details

RSA Number 58221914 RSA 2010
Assessee PAN AABFM3194Q
Bench Cochin
Appeal Number ITA 582/COCH/2010
Duration Of Justice 1 year(s) 1 month(s) 1 day(s)
Appellant Muthoot Bankers, Kollam
Respondent ACIT, Kollam
Appeal Type Income Tax Appeal
Pronouncement Date 16-12-2011
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 16-12-2011
Assessment Year 2005-2006
Appeal Filed On 15-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORESHRI N.R.S. GANESAN JM I.T.A NO. 582/COCH/2010 ASSESSMENT YEAR: 2005-06 M/S. MUTHOOT BANKERS PUNALUR KOLLAM. [PAN: AABFM 3194Q] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1 KOLLAM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI R.SREENIVASAN CA REVENUE BY MS. S. VIJAYAPRABHA JR. DR DATE OF HEARING 02/11/2011 DATE OF PRONOUNCEMENT 16/12/2011 O R D E R PER N.R.S.GANESAN JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-I TRIVANDRUM DATED 19.10.2010 AND PERTAINS TO THE ASS ESSMENT YEAR 2005-06. 2. SHRI R. SREENIVASAN THE LD. CHARTERED ACCOUNTAN T-REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CLAIMED INTEREST PAID TO THE PARTNERS AS EXPENDITURE. THE ASSESSING OFFICER DISALLOWED THE ASSESSEES CLAIM O N THE GROUND THAT THE ASSESSEE HAS NOT CARRIED ON ANY BUSINESS DURING THE YEAR UNDER CONSI DERATION. HOWEVER ON APPEAL OF THE ASSESSEE THE CIT(A) FOUND THAT THE ASSESSEE WAS C ARRYING ON BUSINESS DURING THE YEAR UNDER CONSIDERATION. HOWEVER THE CIT(A) CONFIRMED THE DISALLOWANCE ON THE GROUND THAT ONLY ONE PARTNER WAS PAID INTEREST AND THE OTH ER PARTNERS WERE NOT PAID. ACCORDING TO THE LD. CHARTERED ACCOUNTANT-REPRESENTATIVE OF THE ASSESSEE WHEN THE PARTNERSHIP DEED PROVIDES FOR PAYMENT OF INTEREST ON THE CAPITAL CON TRIBUTED BY EACH PARTNER MERELY I.T.A. NO.582 /COCH/2010 2 BECAUSE INTEREST WAS PAID TO ONLY ONE PARTNER THAT CANNOT BE A REASON TO DISALLOW THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD. CHARTE RED ACCOUNTANT-REPRESENTATIVE OF THE ASSESSEE IT IS FOR THE ASSESSEE TO PAY EITHER ALL THE PARTNERS OR SOME OF THE PARTNERS IN ACCORDANCE WITH THE PARTNERSHIP DEED. MERELY BECAU SE THE PARTNERSHIP DEED PROVIDES FOR PAYMENT OF INTEREST TO ALL THE PARTNERS THE ASSESS ING OFFICER CANNOT DISALLOW THE CLAIM OF THE ASSESSEE ON THE GROUND THAT ONLY ONE PARTNER W AS PAID INTEREST. 3. ON THE CONTRARY MS. VIJAYAPRABHA THE LD. DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT SECTION 40(B)(III) CLEARLY SAYS THAT THE PAYME NT WHICH WAS NOT AUTHORISED BY THE PARTNERSHIP DEED CANNOT BE ALLOWED WHILE COMPUTING TOTAL INCOME OF THE ASSESSEE. ACCORDING TO THE LD. REPRESENTATIVE FOR THE REVENUE WHEN THE PAYMENT WAS NOT IN ACCORDANCE WITH THE PARTNERSHIP DEED IT CANNOT BE ALLOWED WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE. IN THIS CASE THE LD. DEPA RTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS PAID INTEREST TO ONLY ONE PARTNER . THE OTHER PARTNERS WERE NOT PAID. THEREFORE THE PAYMENT WAS NOT MADE IN ACCORDANCE W ITH THE PARTNERSHIP DEED. THEREFORE THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. THE RIVAL CONTENTIONS ON EITHER SIDE ARE CONSIDE RED IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE L D. DEPARTMENTAL REPRESENTATIVE THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE ON THE GROUND THAT THE ASSESSEE HAS NOT CARRIED ON ANY BUSINESS DURING THE YEAR UND ER CONSIDERATION. HOWEVER THE CIT(A) FOUND THAT THE ASSESSEE WAS CARRYING ON BUS INESS ACTIVITY. FROM THE ORDERS OF THE BOTH THE AUTHORITIES BELOW IT APPEARS THAT THE ENT IRE ASSETS AND LIABILITIES OF THE ASSESSEE - FIRM WAS TAKEN OVER BY M/S. MUTHOOT FINCORP LTD.. SINCE THERE WAS A DELAY IN THE PAYMENT OF DUES TO THE ASSESSEE-FIRM MUTHOOT BANKE RS PAID INTREST TO THE ASSESSEE AS COMPENSATION FOR THE DELAYED PAYMENT. THE CIT(A) A CCEPTED THE CLAIM OF THE ASSESSEE FOR THE REASONS APPARENTLY STATED IN THE ARGUMENT N OTES FILED BEFORE THE CIT(A). HOWEVER THE COPIES OF THE ARGUMENT NOTES SAID TO B E FILED BEFORE THE CIT(A) HAS NOT BEEN FILED BEFORE THIS TRIBUNAL. THEREFORE IT IS NOT KNOWN FOR WHAT REASON THE CIT(A) I.T.A. NO.582 /COCH/2010 3 CAME TO THE CONCLUSION THAT THE ASSESSEE WAS CARRY ING ON ITS BUSINESS ACTIVITY FOR THE YEAR UNDER CONSIDERATION. ADMITTEDLY THE PROCEEDINGS U NDER THE INCOME TAX ACT ARE JUDICIAL PROCEEDINGS THEREFORE THE ASSESSING OFFICER AS WE LL AS THE FIRST APPELLATE AUTHORITY IS BOUND TO GIVE REASONS FOR THEIR CONCLUSION SO AS TO ENABLE THE APPELLATE FORUM TO APPRECIATE THE REASON FOR ARRIVING AT A PARTICULAR CONCLUSION. SIMPLY BY SAYING THAT FOR THE REASONS STATED IN THE ARGUMENT NOTES THE CIT(A) AG REED WITH THE LD. REPRESENTATIVE WITHOUT BRINGING ON RECORD WHAT IS STATED IN THE AR GUMENT NOTES. AND WHAT FOR THE CIT(A) AGREED WITH THE LD. REPRESENTATIVE OF THE ASSESSEE. THIS TRIBUNAL IS OF THE OPINION THAT THE CIT(A) IS DUTY BOUND TO BRING ON RECORD THE REASONS FOR COMING TO A PARTICULAR CONCLUSION. UNFORTUNATELY THE CIT(A) HAS NOT RECO RDED SUCH A REASON FOR COMING TO THE CONCLUSION. THE CIT(A) FURTHER FOUND THAT THE ASSE SSEE HAS NOT PRODUCED THE PARTNERSHIP DEED WHICH AUTHORISES THE PAYMENT OF INTEREST. IN THE NEXT LINE THE CIT(A) SAYS THAT FROM THE ASSESSMENT RECORD SHE FOUND THE PARTNERSH IP DEED DATED 1.4.2004 AT PARA 5 AND SOME CLAUSE ENABLES THE ASSESSEE TO PAY INTEREST A T THE RATE OF 12% ON ALL CREDIT BALANCES IN THE CAPITAL ACCOUNT OF THE PARTNERS. THE CIT(A) HOWEVER FOUND THAT THERE IS NO JUSTIFICATION FOR MAKING THE PAYMENT TO ONLY ONE PA RTNER WHEN THERE ARE OTHER CREDIT BALANCES IN THE CAPITAL ACCOUNT OF THE OTHER PARTNE RS. THE CIT(A) HAS ALSO FOUND THAT THE ASSESSEE HAS NOT PRODUCED THE DETAILS OF INTEREST PAID TO THE PARTNER AS PER THE PARTNERSHIP DEED. THE SPECIFIC CASE OF THE ASSESSEE IS THAT IN TEREST IS PAID AT THE RATE OF 12% AS AUTHORISED BY THE PARTNERSHIP DEED. WHEN THE CIT(A ) FOUND THAT THE PARTNERSHIP DEED WHICH WAS AVAILABLE ON THE ASSESSMENT RECORDS AUTH ORISED THE ASSESSEE TO PAY INTEREST AT 12% AND THE CREDIT BALANCES OF EACH PARTNER ARE AVA ILABLE ON RECORD IT IS NOT KNOWN WHAT PARTICULARS WAS NOT PRODUCED BY THE ASSESSEE. IF T HE CIT(A) SAYS THAT THE CREDIT BALANCES ARE NOT AVAILABLE OR THE RATE OF INTEREST IS AVAILA BLE ON RECORD THE MATTER MAY STAND ON DIFFERENT FOOTING. THE CIT(A) HERSELF ADMITTED THA T THERE ARE CREDIT BALANCES IN THE ACCOUNT OF ALL THE PARTNERS THEREFORE THE CIT(A) IS WITHIN HER KNOWLEDGE ABOUT THE CREDIT BALANCES AVAILABLE IN THE ACCOUNTS OF EACH OF THE PARTNERS. IN VIEW OF THE CONTRADICTORY FINDING RECORDED BY THE CIT(A) WITH R EGARD TO THE DETAILS AVAILABLE ON RECORD THIS TRIBUNAL IS OF THE OPINION THAT THE MA TTER NEEDS TO BE RECONSIDERED BY THE CIT(A). THE CIT(A) SHALL CALL FOR DETAILS IF ANY R EQUIRED FOR COMPLETING THE ASSESSMENT I.T.A. NO.582 /COCH/2010 4 EITHER FROM THE ASSESSEE OR FROM THE ASSESSING OFF ICER. IF THE ASSESSEE FURNISHES ANY OTHER MATERIAL WHICH WAS NOT PRODUCED BEFORE THE AS SESSING OFFICER EARLIER THEN IT IS OPEN FOR THE CIT(A) TO CALL FOR REMAND REPORT FROM THE ASSESSING OFFICER BEFORE TAKING ANY DECISION. HOWEVER FOR WANT OF PARTICULARS WHEN TH E DETAILS OF THE CREDIT BALANCES AND THE RATE OF INTEREST ARE AVAILABLE ON RECORD THE CIT(A ) CANNOT REJECT THE APPEAL OF THE ASSESSEE. 5. IN VIEW OF THE ABOVE FINDING THE ORDER OF THE C IT(A) IS SET ASIDE AND THE ISSUE OF PAYMENT OF INTEREST TO THE PARTNERS IS REMITTED BAC K TO THE FILE OF THE CIT(A). THE CIT(A) SHALL RECONSIDER THE ISSUE AND RECORD THE REASONING FOR THE CONCLUSION REACHED ONE WAY OR THE OTHER. THE CIT(A) SHALL GIVE REASONABLE OPPORT UNITY OF HEARING TO THE ASSESSEE. WITH THE ABOVE OBSERVATIONS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS DAY OF 16TH DECEMBER 2011. SD/- (N.R.S.GANESAN) JUDICIAL MEMBER PLACE: ERNAKULAM DATED: 16TH DCEMBER 2011 GJ COPY TO: 1. M/S. MUTHOOT BANKERS PUNALUR KOLLAM. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -1 KOLLAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX TRIVANDRUM. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE .