×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
03-01-2020, Asian Infra Projects, Section 37(1), 36(1)(iii), Tribunal Mumbai
1. Aforesaid appeals by revenue for Assessment Years [in short referred to as AY] 2009-10 & 2011-12 contest separate orders of learned first Appellate Authority. Since the findings in AY 2011-12 forms the basis for reopening of assessment in AY 2009-10, we take up appeal for AY 2011- 12, ITA No. 5583/Mum/2016 as the lead year and proceed to adjudicate the same.
Condonation of Delay
2.1 The registry has noted a delay of 251 days in filing of the appeal, the condonation of which has been sought by the revenue vide condonation petition dated 14/09/2016. It has been submitted that the appellate order for this year formed the basis to provide relief n AYs 2009-10 & 2012-13. While processing the appellate orders for AYs 2009-10 & 2012-13, it was observed that the decision not to file the appeal for AY 2011-12 was taken based on categorical report of lower authorities that there was nexus between funds borrowed and the funds advanced. However, there could not have been a complete nexus which was evident from quantum of interest earned and interest expanded, which fact was not brought to the notice and the same resulted into delay in filing of appeal. Another plea raised is the fact that Ld. CIT(A) failed to appreciate that neither the business had commenced not it was carried out during the year under consideration. In the above background, the Ld. DR pleaded for condonation of delay. The Ld. Authorized Representative for Assessee (AR), on the other hand,
opposed the condonation for want of sufficient cause for delay in filing of appeal. As per Ld. AR, limitation could not be condoned on the ground of compassion or equitable considerations or where the party seeking condonation appears to be callous or negligent. Reliance has been placed, inter-alia, on the decision of Hon’ble Supreme Court rendered in Office of the Chief Post Master General & or V/s Living Media India Ltd. & Anr. (348 ITR 7) for the plea that condonation of delay is an exception and should not be used as an anticipated benefit for Government Departments. Reliance has also been placed on the decision of Hon’ble Supreme Court rendered in P.K.Ramachandran V/s State of Kerala & Anr. (7 SCC 556).
The Ld. AR also drew attention to the fact that during appellate proceedings, the assessee had submitted that there was direct nexus between interest income and interest expenditure as the assessee had given interest yielding loans out of interes -bearing funds. The learned first appellate authority, allowed the same to be assessable under the head business income after categorical findings / observations and relying upon various judicial decisions.
2.2 We have carefully considered the rival arguments on condonation of delay. It is quite evident that the subject matter of dispute under appeal spread over multiple years and therefore, no useful purpose would be served by dismissing the appeal merely for want of condonation of delay. No doubt, the parties are expected to be vigilant in the matter of appellate proceedings, however, as per settled legal position, a liberal approach may be adopted by appellate authorities in the interest of justice. We are guided by the principles laid down by Hon’ble Supreme Court in the case of 167 ITR 471 (SC) Collector, Land Acquisition Vs. Katiji as under: -
1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.
2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common-sense pragmatic manner.
4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable o removing injustice and is expected to do so.
Keeping in mind the aforesaid principles, the bench formed an opinion that the delay was to be condoned and the appeal was to be proceeded with as per the merits of the case. Decision on Merits
3. The grounds raised by the revenue read as under: -
i) Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that there was a nexus between interest bearing borrowings and interest yielding advances ignoring that, at best, there was only partial nexus and not complete nexus as evidenced by the fact that interest earned was Rs.1,44,41,920/- whereas interest paid on borrowings made for making the interest yielding advances was Rs.2,38,56,459/-?
ii) Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that notwithstanding a partial nexus between interest paid on borrowings utilized for interest yielding advances, the entire interest attributable to borrowings not utilized for making interest yielding advances could not have been allowed as business loss in view of the fact that neither the business had commenced nor was it carried on during the year?" The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the DCIT 9(1)(2) be restored.”
4. We have carefully heard the rival submissions including written submissions and documents placed on record. We have also deliberated on