Taha Wires Pvt.Ltd.,, Surat v. The Income tax Officer,Ward-4(4),, Surat

ITA 4507/AHD/2007 | 2003-2004
Pronouncement Date: 26-02-2010 | Result: Dismissed

Appeal Details

RSA Number 450720514 RSA 2007
Assessee PAN AAACT8700H
Bench Ahmedabad
Appeal Number ITA 4507/AHD/2007
Duration Of Justice 2 year(s) 2 month(s) 2 day(s)
Appellant Taha Wires Pvt.Ltd.,, Surat
Respondent The Income tax Officer,Ward-4(4),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 26-02-2010
Date Of Final Hearing 22-02-2010
Next Hearing Date 22-02-2010
Assessment Year 2003-2004
Appeal Filed On 24-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD - AHMEDABAD A BENCH (BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT AND SHRI T.K. SHARMA JUDICIAL MEMBER) ITA NO.4507/AHD/2007 [ASSTT.YEAR : 2003-2004] TAHA WIRES PVT. LTD.10 HAJOORI CHAMBERS SALABATPURA SURAT. PAN : AAACT 8700 H VS. ITO WARD-4(4) SURAT. ASSESSEE BY : NONE REVENUE BY : SHRI GOVIND SINGHAL DATE OF ORDER RESERVED : 22-02-2010 O R D E R PER SHRI G.D. AGARWAL VICE-PRESIDENT : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A)-I SURAT DATED 25-10- 2007 FOR A.Y.2003-2004. 2. THE APPEAL WAS FIXED FOR HEARING ON 22-2-2010 FO R WHICH NOTICE WAS ISSUED BY RPAD. HOWEVER NEITHER ANY BODY APPE ARED ON THE DATE OF HEARING NOR WAS THERE ANY REQUEST FOR ADJOURNMEN T. WE ALSO NOTICED THAT EARLIER THIS APPEAL WAS FIXED FOR HEARING ON 7 -4-2008 AND IT WAS ADJOURNED AT THE REQUEST OF THE ASSESSEE. IN THE L IGHT OF THE ABOVE CIRCUMSTANCES WE DEEM IT PROPER TO PROCEED TO DECI DE THE APPEAL EXPARTE QUA THE ASSESSEE. 3. IN THIS APPEAL OF THE ASSESSEE THE ONLY GROUND RAISED READS AS UNDER: PAGE - 2 ITA NO.4507/AHD/2007 -2- 1. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.AO HAS ERRED IN LAW AND IN FACTS IN DENYING THE BENEFI T OF S.80IA IN RESPECT OF THE INTEREST EARNED AND HENCE YOUR APPEL LANT PRAYS THAT THE LD.AO BE DIRECTED TO DENY THE EXEMPTION UNDER S ECTION 80IA ON THE NET OF THE INTEREST EARNED AND INTEREST PAID. 4. IT WAS POINTED OUT BY THE LEARNED DR THAT THE ON LY REQUEST MADE BY THE ASSESSEE IN THIS APPEAL IS FOR NETTING OF THE I NTEREST EARNED AND INTEREST PAID WHILE COMPUTING DEDUCTION UNDER SECTION 80IA. HE HAS SUBMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF THE S PECIAL BENCH OF THE TRIBUNAL IN THE CASE OF LAL SONS ENTERPRISES VS. DC IT 85 ITD 25. AS PER THE DECISION OF THE SPECIAL BENCH NETTING IS PE RMISSIBLE WHEN THERE WAS A NEXUS BETWEEN THE INTEREST EARNED AND THE INT EREST EXPENDITURE. IN THIS CASE THE CIT(A) HAS RECORDED THE FACTUAL FIND ING THAT THE ASSESSEE HAS NOT ESTABLISHED ANY SUCH NEXUS. ON THE OTHER H AND THE ASSESSEE ADMITTED THAT THE INTEREST FREE FUND WAS AVAILABLE WITH IT FROM WHICH INTEREST INCOME IS EARNED. HE THEREFORE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISI ON OF THE SPECIAL BENCH. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF TH E LEARNED DR AND ALSO PERUSED THE MATERIAL PLACED BEFORE US. IN THE CASE OF LALSONS ENTERPRISES VS. DCIT (DELHI)(SB) 85 ITD 25 THE SP ECIAL BENCH OF THE ITAT AHMEDABAD HAS HELD AS UNDER: (III) FOR THE PURPOSE OF APPLYING EXPLANATION (BAA) BELOW SUB-SECTION (4B) OF SECTION 80HHC AND WHILE REDUCING 90 PER CEN T OF THE RECEIPT BY WAY OF INTEREST FROM THE PROFITS OF THE BUSINESS I T IS ONLY THE 90 PER CENT OF THE NET INTEREST REMAINING AFTER ALLOWING A SET OFF OF INTEREST PAID WHICH HAS A NEXUS WITH THE INTEREST RECEIVED THAT C AN BE REDUCED AND NOT 90 PER CENT OF THE GROSS INTEREST. (EMPHASIS SUPPLIED) PAGE - 3 ITA NO.4507/AHD/2007 -3- THUS AS PER THE DECISION OF THE SPECIAL BENCH OF THE ITAT NETTING COULD BE ALLOWED ONLY IF THE ASSESSEE IS ABLE TO ES TABLISH THE NEXUS BETWEEN THE INTEREST EARNED AND THE INTEREST PAID B Y THE ASSESSEE. IN THIS CASE THE ASSESSEE COMPANY HAS ADMITTED THE AVAILAB ILITY OF SUFFICIENT INTEREST FREE FUNDS WITH IT. THE ASSESSEE HAS NOT ESTABLISHED THAT THE BORROWED MONEY HAS BEEN UTILIZED FOR EARNING OF INT EREST INCOME. THUS NO NEXUS IS ESTABLISHED BETWEEN THE INTEREST RECEIV ED AND INTEREST PAID. IN VIEW OF THE ABOVE WE FIND NO JUSTIFICATION TO INTE RFERE WITH THE ORDER OF THE CIT(A) THE SAME IS SUSTAINED AND THE APPEAL OF THE ASSESSEE IS REJECTED. 6. IN RESULT THE APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED ON 26 TH FEBRUARY 2010. SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 26-02-2010 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR ITAT AHMEDABAD