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of <h1>ITAT Mumbai Decides on Interest Expenses, Taxation & Assessing Officer's Decisions</h1> <h3>M/s. Aatur Holding Pvt. Ltd. Versus ACIT-CC-31 Mumbai</h3> The ITAT Mumbai addressed the issues of disallowance of interest expenses, confirmation of interest levy, and taxation of income assessed by the Assessing ... Levy of interest u/s 234A, 234B, 234C of the Income Tax Act – Held that:- Relying upon the judgment in the case of CIT vs. Divine Holdings Pvt. Ltd[2012 (4) TMI 100 - BOMBAY HIGH COURT], it has been held that levy of interest u/s. 234A, 234B and 234C is mandatory – Decided against the Revenue. Issues:1. Disallowance of interest expenses amounting to Rs.2,03,65,051.2. Confirmation of the levy of interest under sections 234A and 234B of the Income Tax Act.3. Taxation of income assessed by the Assessing Officer in the hands of the appellant instead of the actual owner.Issue 1: Disallowance of Interest ExpensesThe appeal concerns the disallowance of interest expenses amounting to Rs.2,03,65,051. The Assessee, part of the Harshad Mehta group of cases, claimed interest based on the custodian's stand. The Assessing Officer disallowed the claim, and the CIT(A) confirmed the disallowance following the decision in the case of Hitesh Mehta. The issue was set aside for fresh adjudication in line with similar cases. The ITAT held that the issue should be reconsidered by the CIT(A) according to the stand taken in other cases. The ground was allowed for statistical purposes.Issue 2: Confirmation of Levy of InterestRegarding the levy of interest under sections 234A and 234B of the Income Tax Act, the ITAT referred to a case involving Velvet Holdings Pvt. Ltd where it was held that the interest could be levied. The High Court upheld this view, emphasizing that the Special Court Act does not address the determination of interest liability under the Income Tax Act. The ITAT decided that the levy of interest was mandatory, following the High Court's judgment in the case of Divine Holdings Pvt. Ltd. The ground for the levy of interest was accordingly allowed.Issue 3: Taxation of IncomeThe Assessee raised an additional ground arguing that the income assessed by the Assessing Officer belonged to Harshad S. Mehta and should have been taxed in his hands. The ITAT admitted this ground, considering it a legal issue not requiring new facts. The Tribunal held that if the Supreme Court decides that the income belongs to Harshad S. Mehta, it must be assessed in his hands. As the decision of the Supreme Court is binding, no further direction was needed. The additional ground was treated as academic, and the ITAT decided it in the same manner as previous cases. The appeal was partly allowed for statistical purposes.In conclusion, the ITAT Mumbai addressed the issues of disallowance of interest expenses, confirmation of interest levy, and taxation of income assessed by the Assessing Officer. The decisions were based on legal interpretations and precedents, ensuring adherence to the relevant laws and court judgments.
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