2018 (12) TMI 1829 - AT - Income Tax

Tribunal grants partial relief to assessee for AY 2009-10, directs AO to re-compute interest liabilities

The appeal filed by the assessee for the assessment year 2009-10 was allowed for statistical purposes. The Tribunal provided specific directions to the AO ... Disallowance of interest expenditure - HELD THAT:- As decided in own case [2017 (12) TMI 1668 - ITAT MUMBAI] direct the AO to allow deduction to the assessee in respect of interest expenditure out of interest earned on term deposit - The revenue has not brought on any order passed by the courts of law, contrary to the decision of the coordinate Bench. Hence, respectfully following the decision of the coordinate Bench, we allow this ground of appeal of the assessee and set aside the findings of the Ld. CIT(A). We accordingly direct the AO to delete the addition. Addition on account of personal household expenses - assessee submitted that the ITAT, Mumbai has dealt with this issue and partly allowed this ground of appeal and allowed 50% of expenditure claimed in the assessee’s own case for the A.Y. 2006-07 - HELD THAT:- Since, the coordinate Bench has dealt with the identical issue in assessee’s own case for the A.Y. 2006-07 [2016 (4) TMI 1348 - ITAT MUMBAI] and restricted the disallowance to 50%, we respectfully following the decision of the coordinate Bench and restrict the addition confirmed by the Ld. CIT (A) to 50% i.e. ₹ 3,00,000/-. Hence, this ground of appeal of the assessee is partly allowed. Levy of interest u/s 234A, 234B and 234C - Whether as the income assessed in the hands of the appellant was subjected to the provisions of TDS and hence on the said amount of tax no interest can be computed u/s 234B and 234C of the Act ? - HELD THAT:- Since, the coordinate Bench has set aside the identical issue to the file of the AO with the direction to re-compute the interest u/s 234B and 234C of the Act, in assessee’s own cases for the earlier years, we respectfully following the decision of the coordinate Bench set aside this issue to the file of the AO to re-compute the interest liability after reducing the amount of tax deductible at source on the income earned. Direct the AO to bring to tax the correct interest income in the hands of the assessee and add the same in the income of the assessee. Issues Involved:1. Taxation of income in the hands of the correct individual.2. Disallowance of interest expenditure.3. Estimated addition on account of personal household expenses.4. Levy of interest under sections 234A, 234B, and 234C.5. Correct determination of interest income.Detailed Analysis:1. Taxation of Income in the Hands of the Correct Individual:The assessee argued that the income assessed should be taxed in the hands of Shri Harshad S. Mehta as per the decision of the Hon’ble Special Court. However, the assessee did not press this ground during the appeal. Consequently, the Tribunal dismissed this ground as not pressed.2. Disallowance of Interest Expenditure:The assessee contended that the disallowance of interest expenditure amounting to Rs. 53,42,839/- was incorrect. The Tribunal noted that in the assessee's own case for the assessment years 2002-03 to 2004-05, the ITAT had allowed the deduction of interest expenditure. The Tribunal followed the precedent set by the coordinate Bench and directed the AO to allow the deduction of interest expenditure, thus setting aside the findings of the CIT(A).3. Estimated Addition on Account of Personal Household Expenses:The assessee challenged the addition of Rs. 6,00,000/- for personal household expenses. The Tribunal referred to its earlier judgment in the assessee's case for the assessment year 2006-07, where the addition was restricted to 50% of the amount confirmed by the CIT(A). Following this precedent, the Tribunal reduced the addition to Rs. 3,00,000/-.4. Levy of Interest under Sections 234A, 234B, and 234C:The assessee objected to the levy of interest under sections 234A, 234B, and 234C. The Tribunal noted that in the assessee's own case for the assessment years 2002-03 to 2004-05, the ITAT had directed the AO to re-compute the interest after reducing the amount of tax deductible at source on the income earned. Following this direction, the Tribunal set aside the issue to the AO for re-computation in accordance with the directions.5. Correct Determination of Interest Income:The assessee raised an additional ground regarding the correct determination of interest income. The Tribunal observed that in the assessee's own case for the earlier assessment years, the ITAT had directed the AO to bring to tax the correct interest income receivable from family members and others. Following this precedent, the Tribunal directed the AO to determine and tax the correct interest income in the hands of the assessee.Conclusion:The appeal filed by the assessee for the assessment year 2009-10 was allowed for statistical purposes. The Tribunal provided specific directions to the AO to re-compute interest liabilities and to correctly determine the interest income, following the precedents set in the assessee's own cases for earlier assessment years. The Tribunal also partially allowed the appeal concerning personal household expenses and interest expenditure.