2015 (9) TMI 1704 - AT - Income Tax

Interest expenditure disallowance - HELD THAT - We find that the Tribunal in the case of Eminent Holdings 2014 (7) TMI 466 - ITAT MUMBAI have followed the decision of the Tribunal given in common group case of Hitesh S. Mehta 2013 (10) TMI 1065 - ITAT MUMBAI and restored the matter to the file of the Ld. CIT(A) for fresh adjudication We restore this issue to the files of the Ld. CIT(A) for fresh adjudication after giving reasonable opportunity of being heard to the assessee. Before closing this issue the Ld. Counsel for the assessee pointed out that the Ld. CIT(A) has held that the issue of interest expenditure is pending before the Hon ble Special Court. It is the say of the Ld. Counsel that the proceedings in which the said issue of interest was issued by the custodian have been already concluded which fact has already been recorded by the Ld. CIT(A) in the impugned order. We therefore direct the Ld. CIT(A) to consider this fact while deciding the issue afresh. Levy of interest u/s. 234A 234B and 234C - HELD THAT - Identical issue was decided in the cases of Topaz Holdings Pvt. Ltd. 2014 (6) TMI 998 - ITAT MUMBAI and Eminent Holdings Pvt. Ltd. 2014 (7) TMI 466 - ITAT MUMBAI that the Tribunal had upheld the levy of interest in principal that it had set aside the issue for calculating the interest to the file of the AO with direction that the tax deducted as source should be reduced while calculating the interest.Respectfully following the above order we restore back the issue to the file of the AO who would levy the interest as per the provisions of section 234 of the Act and give credit for the TDS amounts.

Summary

Issues:
1. Challenge to orders of CIT(A) and Assessing Officer for AY 2007-08.
2. Validity of notices issued by the Assessing Officer.
3. Compliance with principles of natural justice.
4. Assessment of income from attached assets.
5. Relief of liability for interest expenditure.
6. Disallowance of interest expenditure.
7. Levy of interest under sections 234A, 234B, and 234C.

Analysis:

1. The Appellate Tribunal addressed the cross-appeals filed by the assessee and the Assessing Officer for AY 2007-08, along with appeals filed by the assessee for other years. The issues raised were almost identical for all years, leading to a consolidated approach for convenience.

2. The Tribunal considered the validity of the notices issued by the Assessing Officer and the subsequent assessment order under section 143(3) of the Act. It was argued that the notices were invalid, rendering the assessment void ab initio. The Tribunal examined the legal sanctity of the notices and the assessment process.

3. The issue of compliance with the principles of natural justice was raised concerning the order passed by the Commissioner of Income-tax (Appeals). The Tribunal evaluated whether due process was followed in passing the order and considered the impact of any procedural irregularities on the assessment.

4. The Tribunal deliberated on the assessment of income from attached assets in the hands of the appellant. It analyzed the legal implications of assessing income from such assets and whether it aligns with the relevant provisions of the Income Tax Act.

5. The Tribunal reviewed the relief sought by the appellant concerning liability for interest expenditure. The Tribunal considered the specific amounts claimed by the appellant and assessed whether the relief should be granted based on the merits of the case.

6. Regarding the disallowance of interest expenditure, the Tribunal examined the grounds raised by the appellant. It referred to previous decisions related to similar issues within the HSM group and decided on the allowance of certain interest expenditure for statistical purposes.

7. Lastly, the Tribunal addressed the levy of interest under sections 234A, 234B, and 234C of the Act. It reviewed past decisions and legal precedents to determine the applicability of interest charges to the notified person under the Special Court Act. The Tribunal provided directions for the calculation and levy of interest, considering the TDS amounts and legal obligations.

In conclusion, the Appellate Tribunal's judgment encompassed a comprehensive analysis of various issues raised by the parties, providing detailed reasoning and decisions on each aspect of the appeals and cross-appeals for the relevant assessment years.