Andhra HC (Pre-Telangana)
Commissioner Of Income Tax vs Mahindra Nissan Allywin Ltd. on 20 April, 1998
Equivalent citations: [1999]233ITR493(AP), [1999]102TAXMAN162(AP)
JUDGMENT
Ms. S. V. Maruthi J.
This is an application filed under section 256 (2) of the Income Tax Act, 1961.
2. The facts in brief are as follows :
For the assessment year 1989-90, the asessing officer processed the return under section 143(1)(a) and sent an intimation after making an adjustment of Rs. 1,44,386 towards disallowance of guest house expenses and depreciation. Thereafter, the assessing officer noticed that the respondent-assessee had claimed a sum of Rs. 5,74,51,894 as interest on borrowings from financial institutions. He found that the total interest outstanding on 31-3-1989, towards interest accrued and due was Rs.5,94,81,774. Out of this an amount of Rs. 4,01,40,910 due up to 30-6-1988, was funded and the balance was not funded and was outstanding as the amount due to be paid to the financial institutions. He, therefore, issued notice under section 154 and disallowed the interest due and outstanding as on 31-3-1989, pertaining to the assessment year 1989-90 in respect of loans which were not paid and funded before the due date for filing the return of income under section 43 B. On appeal, the addition was confirmed by the Commissioner. The Income Tax Appellate Tribunal on a Tfurther appeal by the respondent-assessee cancelled the order under section 154 passed by the assessing officer holding that this was not a fit case for invoking the Provisions of section 154 as the issue involved was highly debatable. The revenue, sought a reference of the two questions :
"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in cancelling the order passed by the assessing officer under section 154, holding that it was not a fit case for invoking the provisions of section 154 and disallowing the amount under section 43B of the Income Tax Act ?
2. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in cancelling the order passed by the assessing officer under section 154 and allowing the appeal of the assessee ?"
which the Tribunal refused. Hence, the application under section 256(2) of the Income Tax Act.
3. Evidence was produced before it funding the balance of the amount also. In view of the funding of the balance of the amount, the question of wrongly allowing the deduction regarding interest does not arise, by virtue of the funding the amount is deemed to have been paid. In view of the above, the Tribunal is right in its finding that it is not a case where the assessing officer should have invoked the power under section 154 of the Income Tax Act.
4. It is true that the funding of the balance amount of interest was not available before the Income Tax Officer, and it was produced only before the Tribunal. The fact that it was produced before the Tribunal does not debar the Tribunal from giving effect to it. We may also refer in this context, to the circular issued by the Central Board of Direct Taxes No. 669 [see (1993) 204 ITR (St.) 105), dated 25-10-1993 ]. The relevant portion of the circular is extracted hereunder :
"Where the sums referred to in the first proviso under section 43B had in fact been paid on or before the due dates mentioned therein, but the evidence therefor had been omitted to be furnished along with the return, the assessing officers can entertain applications under section 154 for rectification of the intimation under section 143(1)(a) or orders under section 143(3), as the case may be, and decide the same on merits."
5. Circular No. 581 [see (1990) 186 ITR (St.) 2], dated 28-9-1990, stands modified to the above extent by Circular No. 669 [see (1993) 204 ITR (St.) 105], dated 25-10-1993.
6. In view of the above, the Tribunal is right in taking into account the subsequent evidence that was produced before it and holding that the Income Tax Officer is not justified in invoking the power under section 154 of the Act. Accordingly, the income-tax case is dismissed.