2014 (3) TMI 264 - AT - Income Tax

Appeals Disposed with Assessee and Revenue Both Successful, Emphasizing Precedents and Tax Liabilities

The appeals were disposed of with the Assessee's appeal allowed for statistical purposes and that of the Revenue also allowed. The judgment emphasized the ... Liability towards Interest expenditure – Held that:- The decision in Hitesh S. Mehta Versus DCIT Central Circle- 23, Mumbai [2013 (10) TMI 1065 - ITAT MUMBAI] followed - The findings in respect of rejection/reliability of the books of accounts and the proposed adjudication of the CIT(A) in view of the direction may have direct impact on the issue of the impugned liability – thus, the matter remitted back to the CIT(A) for fresh adjudication – Decided in favour of Assessee. Admission of additional grounds – Held that:- The decision in Hitesh S. Mehta Versus DCIT Central Circle- 23, Mumbai [2013 (10) TMI 1065 - ITAT MUMBAI] followed - The CIT(A) ought to have appreciated that the assets under consideration and the consequential income belongs to hence, the income assessed by the Assessing Officer ought to have been taxed in the hands of Shri Harshad S. Mehta and not in the hands of the appellant - the ground is legal ground, which does not require any new facts to be brought on record – relying upon National Thermal Power Co. Ltd. Vs. CIT [1996 (12) TMI 7 - SUPREME Court] - the legal ground can be admitted, if no new facts are to be brought on record – thus, no direction is to be required to be given to the AO in this respect because if the Hon'ble Apex Court decides that all the income belongs to Shri Harshad S. Mehta, then the income has to be assessed in the hands of Shri Harshad S. Mehta, not in the hands of any other person – Decided against Assessee. Deletion of interest charged u/s 234A, 234B & 234C of the Act – Held that:- The decision in CIT vs. Divine Holdings Pvt. Ltd. [2012 (4) TMI 100 - BOMBAY HIGH COURT] followed - no reduction or waiver of interest shall be ordered unless the assessee files a return of income for the relevant Assessment Year and pays the entire income tax due on the income as assessed - levy of interest u/s. 234A, 234B and 234C is mandatory – Decided in favour of Revenue. Issues:1. Liability amounting to interest expenditure for AY 2008-09.2. Taxation of income in the hands of the appellant.3. Deletion of interest charged under sections 234A, 234B & 234C of the Income Tax Act.Issue 1: Liability amounting to interest expenditure for AY 2008-09The cross-appeals filed by the Assessee and Revenue were directed against the order of the Ld.CIT(A)-40, Mumbai for AY 2008-09. Grounds No. 1 & 2 were not pressed, and hence not adjudicated. Ground No. 3 related to the action of the Ld.CIT(A) in confirming the liability amounting to Rs.1,02,64,463/- for AY 2008-09 towards interest expenditure claimed by the assessee. The ITAT, in a similar issue for AYs 2005-06 and 2006-07, set aside the issue to the file of the Ld.CIT(A) for fresh adjudication. Following the findings of the Tribunal in previous cases, Ground No. 3 was allowed for statistical purposes.Issue 2: Taxation of income in the hands of the appellantThe assessee raised additional grounds stating that the assets under consideration and the consequential income belonged to another individual, and thus, the income assessed should be taxed in the hands of that individual. The ITAT decided that the additional ground was academic in nature, as the decision of the Hon'ble Supreme Court would prevail, and the income would have to be assessed accordingly. The ITAT treated the additional ground as academic, following previous decisions, as no distinguishing facts were brought on record.Issue 3: Deletion of interest charged under sections 234A, 234B & 234CIn the Revenue's appeal, the issue related to the deletion of interest charged under sections 234A, 234B & 234C of the Income Tax Act. The ITAT set aside the ground as premature in the assessee's group case for AYs 2005-06 & 2006-07. However, in a different case, it was held that interest under these sections cannot be levied on an assessee who is a notified person under a specific Act. The Hon'ble High Court upheld this view, stating that the levy of interest was mandatory. The ITAT, noting that this decision was not considered in previous cases, held that the levy of interest under these sections was mandatory, and the grounds were allowed.In conclusion, the appeals were disposed of with the Assessee's appeal allowed for statistical purposes and that of the Revenue also allowed. The judgment highlighted the importance of following legal precedents and decisions of higher courts in determining tax liabilities and interest charges.