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2015 (10) TMI 583 - ITAT MUMBAI

2015 (10) TMI 583 - ITAT MUMBAI - TMI - Disallowance of discounting charges/ interest - FAA held that the assessee was not entitled to claim interest as loan was diverted to sister concern without charging interest - Held that:- While deciding the appeal for assessment year 1998-99 [2015 (10) TMI 581 - ITAT MUMBAI] the Tribunal decided the issue stating that first letter of the assessee in the fresh proceedings by which it furnished Fund flow statement, Balance sheet and profit and loss account .....

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ssed by the A. O. for the preceding year in which similar deduction was allowed. The present assessment order was passed by the AO after filing of the above referred documents by the assessee. It is surprising that the Assessing Officer did not make a whisper, in the assessment order of such details having been filed by the assessee - What to talk of adversely commenting, the A. 0. even did not bother to incorporate or discuss such facts in the assessment order.

On the appreciation of .....

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lta International & East West Corporation and other group concerns wherein the Tribunal had decided the identical issue in favour of the assessee[2013 (10) TMI 919 - ITAT MUMBAI] - Decided against revenue. - ITA No. 6301/Mum/2011 - Dated:- 1-6-2015 - I P Bansal, JM And Rajendra, AM, JJ. For the Petitioner : Ms Vasanti Patel For the Respondent : Shri Asghar Zain ORDER Per Rajendra, AM Challenging the order dt. 29. 01. 2009 of CIT(A)-35, Mumbai, the assessee has raised the following grounds of app .....

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that the CIT (A) failed to take into consideration the submission and the fund flow statement filed before him which would establish that the borrowed funds were utilized by the appellant for the purpose of its business activity. 3. The CIT (A) erred in arriving at the conclusion that there was no business activity carried out by the appellant and therefore the appellant was not entitled to claim deduction on account of said discounting charges I interest under section 36(1)(iii) of the Act. 4. .....

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ubsequent assessment year i. e. assessment year 1998-99 without giving any cogent reasons. 6. The Appellant craves leave to add, alter, amplify, modify or delete all or any of the aforesaid grounds at or before the hearing. " 2. Assessee-company, engaged in the business of trading and investments in shares and securities and financing filed its return of income on 02/11/1998 declaring loss of ₹ 89. 84 lacs. The Assessing Officer (AO) completed the assessment, u/s. 143(3) r. w. s. 254 .....

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Aggrieved by the order of the FAA the assessee preferred an appeal before the Tribunal. Vide its order ITA/5591/Mum/2004 dated 16. 8. 2007, the Tribunal restored the matter back to the file of the AO with following directions: "In view of the facts and circumstances we restore the issue involved interest he appeal here before us to the file of the AO to decide the same afresh in the light of the decision of the Tribunal in assessment year 1998-99. The Assessing Officer is directed to allow .....

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e. Finally, he refused to entertain the claim of the assessee of interest charges paid amounting to ₹ 96. 94 lacs that were claimed as bill discounting charges, as stated earlier. 3. Aggrieved by the order of the AO, the assessee again filed an appeal before the FAA in the second round. Before him, it was argued that for the assessment year 1998-99, the then FAA had allowed the claim and discounting charges. The FAA required the assessee to file P&L Account, Balance sheet for assessmen .....

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ding amount in case of LPL as on 31. 3. 1997 was ₹ 9. 07 crores, that the assessee had received interest income of ₹ 5. 26 lacs was from Central Bank of India, that it did not admit any interest from the following advances appearing in the balance sheet for the year under consideration: Lupin Agro Chemicals(I) Ltd. -(Rs. 1. 51 crores); Orgo Pharm Chemical -(Rs. 3. 89 crores); Synchem Chemicals (I) P. Rs. (1. 45 crores); and Sanoja Investment (P. ) Ltd. (Rs. 22. 90 lacs). It was also .....

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, that the perusal of the balance sheet as on 31/3/1997 showed that the loans were utilized only for making loans and advances, that there was no business activity, that the entire investment in the business was only ₹ 2. 00 lacs, that the assessee had not fulfilled the condition laid down in section 36(iii), that the interest can be allowed only if it was taken for the purpose of business. Finally, he held that the assessee was not entitled to claim interest as loan was diverted to sister .....

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tion of the Bench. 6. We have heard both the authorities and gone through the paper filed by the assessee . We find that while deciding the appeal for assessment year 1998-99 (supra), the Tribunal decided the issue as under :- "5. We have heard the rival submissions and perused the material before us. We find that the issue of discounting charges have been extensively deliberated upon by the Tribunal in the group cases and it had dismissed the appeals filed by the AO. s for the AY. 1997-98. .....

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bunal vide order dated 28. 11. 2006 passed in ITA No. 639/M/2004 restored the issue to the file of A. O. with a direction to examine as to whether such discount/interest was incurred by the assessee in carrying on of its business. This order was passed by the Tribunal by following another order by the Tribunal in the case of another group concern of the assessee the" Fellowship corporation vs. JCIT [ITA No. 4352/Mum/2001]. Pursuant to the direction given by the Tribunal, the Assessing Offic .....

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onvenience is reproduced as under: "From the body of the assessment order it can be seen that the Assessing Officer simply repeated the assessment and first appellate authority's order without discussing anything new about the matter on which the Tribunal gave direction. He simply noticed that the assessee did not produce any additional evidence to co-relate the financing charges with the business expenditure. As against that, the learned AR invited our attention towards various details .....

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of charges with discounting charges etc. Another letter was filed before the Assessing Officer on 24. 11. 2006 producing complete books of account, details of finance charges paid with bifurcation of parties and rate of interest and a copy of assessment order passed by the A. O. for the preceding year in which similar deduction was allowed. The present assessment order was passed by the AO on 18. 12. 2006 after filing of the above referred documents by the assessee. It is surprising that the Ass .....

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