Cascade Holdings P. Ltd. 32, Madhuli, Dr. Annie Besant Road, Worli, Mumbai-400018 Vs DCIT Central Circle-31, R.No.409, Aayakar Bhavan, M.K.Road, Mumbai-400020
October, 09th 2014
INCOME TAX APPELLATE TRIBUNAL,MUMBAI - `C' BENCH.
Before S/Sh.Vijay Pal Rao, Judicial Member & Rajendra,Accountant Member
/.ITA No.2900/Mum/2013,[ [/Assessment Year-2010-11
Cascade Holdings P. Ltd. DCIT Central Circle-31,
32, Madhuli, Dr. Annie Besant Vs R.No.409, Aayakar Bhavan,
Road, Worli, Mumbai-400018 M.K.Road, Mumbai-400020
(/ Appellant) (× / Respondent)
[ / Assessee by : Shri Dharmesh Shah
/ Revenue by : Dr. P. Daniel
/ Date of Hearing : 29-09-2014
/ Date of Pronouncement : 29-09-2014
, 1961 ( 1 ) 254 Û[
Order u/s.254(1)of the Income-tax Act,1961(Act)
Per Rajendra,AM Û] :
Challenging the order dt.11.02.2013 of the CIT(A)-40,Mumbai,assessee-company has raised
following Grounds of Appeal:
"1.The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in passing the
order u/s. 250 of the Act.
2.The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in passing the
order without complying with the principles of natural justice.
3.The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in not
appreciating that no income from attached assets can be assessed in the hands of the appellant.
4.The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in not granting
relief of liability amounting to Rs. 86,15,970/-, towards interest expenditure claimed by the
appellant. The learned Commissioner of Income Tax (Appeals) ought to have held that the interest
expenses to the extent of Rs. 23,74,906/- need to be allowed while calculating income of the
5.The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in confirming
calculation of book profit u/s. 115JB amounting to Rs. 23,61,067/-.
6.The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming
interest charged u/s. 234A, 234B and 234C of the Act.
7.The Appellant craves leave of Your Honour to add to, alter, amend and/or delete all or any of
the foregoing grounds of appeal."
During the course of hearing before us Authorised Representative did not press grounds no.1 to 3.
Therefore,first three grounds raised for the year under appeal stand dismissed as not pressed.
2.Assessee-company,engaged in the business of trading and investing in securities,filed its return
of income on 11.09.2010 declaring total loss of Rs. 62.73 lakhs.Assessing Officer(AO) finalised
the assessment u/s.143(3) of the Act,on 30.12.2014,determining the income of the assessee at
Rs.23.62lakhs.During the assessment proceedings, certain additions were made by the AO and
same were challenged before the First Appellate Authority(FAA).Against the order of the
FAA,assessee has raised above mentioned seven grounds of appeal.
2.1.Grounds no.4 and 5 are interconnected and are about disallowance of interest expenditure of
Rs.86,15,970/-(GOA-4)and calculation of book profit u/s.115JB of the Act.Before us, AR stated
that identical issues had come up for adjudication before the Tribunal in one of the group cases
i.e. in the case of Eminent Holdings Pvt.Ltd. (ITA/8200/2010 dt. 12.02. 2014), that matter was
2 ITA No. 2900/M/2013 Cascade Holdings P. Ltd.
restored back to the file of the FAA.Departmental Representative(DR) left to the issue to the
discretion of the Bench.
2.2.After hearing the rival contentions,we are of the opinion that issues raised in the grounds no.
4 & 5 should be remanded back to the file of the FAA.We find that while deciding the appeal in
the case of Eminent Holdings Pvt.Ltd.,for the AY 2007-08(supra),E Bench of Tribunal has
decided the issue as under:
"4.Ground nos. 4 & 5 are inter-connected relating to the disallowance of interest expenditure of Rs.
5,14,455/-.In this regard, at the outset, Ld Counsel mentioned that an identical issue came up for
adjudication before the ITAT, Mumbai in the cased of Hitesh S. Mehta vs. DCIT vide ITA No. 7726 &
7727/M/2010 dated 26.04.2013, wherein the Tribunal set aside the issue to the files of CIT(A) for
adjudication of the issue afresh by adjudicating the respective ground relating to the
rejection/reliability of the books of account. Para 5 from the said order of the Tribunal (supra) is
relevant in this regard and the same reads as under:
"5. Ground no.4 relates to the action of the Ld CIT(A) in confirming the liabilities
amounting to Rs. 11,24,99,052/- and Rs. 12,61,36,245/- respectively for the AYs 2005-06
and 2006-07 towards interest expenditure claimed by the assessee. It is pertinent to note
that the findings given in para 3.3 above in respect of rejection/ reliability of the books of
accounts and the proposed adjudication of the Ld CIT(A) in view of the said direction may
have direct impact on the issue of the impugned liability, we set aside this issue to the files
of the CIT(A) to adjudicate afresh along with the adjudication of the respective ground
pertaining to the rejection/ reliability of the books of accounts."
5. On the other hand, Ld DR dutifully relied on the order of the AO/CIT(A).
6.We have heard both the parties and perused the orders of the Revenue Authorities as well as the
order of the Tribunal in the case of Hitesh S. Mehta (supra). Whether the interest liabilities of Rs.
5,14,455/- constitutes ascertained one or not is also linked to the issue of rejection of books of
accounts as the books of account is the basis for computation of book profits u/s 115JA of the Act.
This is common issue qua the issue adjudicated in the case of the Hitesh S. Mehta (supra) and
matter was set aside. Respectfully following the said order of the Tribunal, we are of the
considered opinion that the issue raised in ground no.4 should be set aside to the files of the
CIT(A) for fresh adjudication of the issue after granting a reasonable opportunity of being heard
to the assessee. The decision if any should be taken only after considering the decision in the case
of Hitesh S Mehta, (supra). Accordingly, ground nos. 4 & 5 are set aside."
Respectfully,following the above order,we are restoring back the matter to the file of the FAA for
fresh adjudication.He is directed to afford a reasonable opportunity of hearing to the assessee.
Ground no.4 is allowed in favour of the assessee,in part.
In view of the above discussion grounds no.4 and 5 are restored back to the file of the FAA and
the both the grounds are partly allowed in favour of the assessee.
3.Ground no.6 is about interest to be charged u/s.234A,234B and 234 C of the Act.At the time of
the hearing before us,it was agreed by the representatives of both the sides that the identical issue
was deliberated upon and decided by the Tribunal in the case of M/s. Topaz Holdings Pvt. Ltd.
(ITA No.2146/Mum/2013,AY.2001-02,dated 18.06.2014).We find that in the matter of Topaz
Holdings Pvt.Ltd.(supra),one of the group concerns,the Tribunal had decided the issue as under:
"3.Next ground of appeal is about levy of interest u/s. 234 of the Act.Before us, AR stated that the assessee
was a notified entity,that the provisions of s. 234A, 234B and 234C of the Act were deemed to have complied
with,that the assets were already in attachment of the Custodian appointed under the provisions of the
Special Courts Act,that the Tribunal in the case of the appellant and several other entities had held the view
in favour of the appellant,that the Hon'ble Bombay High Court in the case of Divine Holdings Pvt. Ltd. and
Cascade Holdings Pvt. Ltd. had held that the provisions of sections 234A,234B and 234C of the Act were
mandatory and were applicable to the notified entities also,that the assessee was in the process of filing an
appeal against the said order before the Hon'ble Supreme Court,that the income earned in the year under
3 ITA No. 2900/M/2013 Cascade Holdings P. Ltd.
consideration was subjected to provisions of TDS,that the changeability of the section 234A, 234B and 234C
of the Act should be after considering the amount of tax deductible at source on the income assessed. The
appellant relies in this regard on the following decisions. He relied upon the cases of Motorola inc. v. DCIT
[95 ITD 269 (Del.(SB)], Sedco Fores Drilling Co. Ltd. [264 ITR 320],NGC Network Asia LLC [313 ITR
187] ,Summit Bhatacharya [ 300 ITR (AT) 347 (Bom)(SB)], Vijal Gopal Jindal [ITA No. 4333/Del/2009] &
Emillo Ruiz Berdejo [320 ITR 190 (Bom)].DR relied upon the cases of Devine Holdings Pvt. Ltd.
3.1.We have heard the rival submissions and perused the material before us.We find that in the case of
Devine Holdings Pvt. Ltd. Hon'ble Bombay High Court has held that provisions of section 234A, 234B and
234C were applicable to the notified person also.Therefore, upholding the order of the FAA to that extent,we
hold that provisions of section 234 of the Act are applicable.As far as calculation part is concerned,we find
merits in the submission made by the assessee.Therefore, we are restoring back the issue to the file of the AO
for fresh adjudication who would decide the issue after considering the amount taxed deductible at source
on the income assessed and after affording a reasonable opportunity of hearing to the assessee. Ground no.5
is allowed in part in favour of the assessee."
Respectfully following the above ground no.6 is allowed in favour of the assessee,in part.
As a result, appeal filed by the assessee stands partly allowed.
Order pronounced in the open court on 29th September,2014.
Û 29 flracj,2014
( /Vijay Pal Rao) (Û]/Rajendra)
Û /JUDICIAL MEMBER /ACCOUNTANT MEMBER
/Copy of the Order forwarded to :
1. Assessee / 2. Respondent /×
3. The concerned CIT(A)/ ,4.The concerned CIT /
5. DR "C" Bench, ITAT, Mumbai / lh ,..Û.
6. Guard File/[ × //True Copy//
/ BY ORDER,
/ Dy./Asst. Registrar
, /ITAT, Mumbai