IN INCOME TAX APPELLATE TRIBUNAL, BENCH H ,MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No.597/Mum/2015 (Assessment Year : 2011-12) Harsh Estates Pvt. Ltd. ACIT, CC-31(7), 32, Madhuli, 3rd Floor, A.B. Road, [Now DCIT, CC-4(3)], 4th Floor, Worli, Mumbai-400018. Vs. Aayakar Bhavan, M. K. Road, Mumbai-400012. PAN: AAACH3480L (Appellant) (Respondent) Assessee by : Shri Dhaval Shah (AR) Revenue by Shri Dr. P. Daniel (Special : Counsel) Date of hearing : 05.10.2016 Date of Pronouncement : 07.10.2016 ORDER PER PAWAN SINGH, JM: 1. This appeal u/s 253 of Income-tax Act is directed by assessee against order of CIT(A)-40, Mumbai dated 21.10.2014. assessee has basically raised following ground of appeal:- (i) That ld. CIT(A) erred in confirming disallowance of interest expenses of Rs. 6,14,669/-. (ii) That ld. CIT(A) erred in confirming levy of interest u/s 234A, 234B and 234C of Act. (iii) That ld. CIT(A) erred in law and in facts in not appreciating that income assessed in hands of appellant was subjected to provisions of TDS and hence on said amount of tax, no interest can be levied u/s. 234B and 234C of Act. 2. Brief facts of case are that assessee filed its return of income for relevant AY on 29.09.2011. While framing assessment, Assessing Officer (AO) besides other addition and disallowance disallowed interest expenditure of Rs. 6,14,669/- in assessment order. Aggrieved by 2 ITA No. 597/M/2015- Harsh Estates Pvt. Ltd. order of AO, assessee filed appeal before CIT(A) wherein addition of interest expenditure was sustained. Further, aggrieved by order of CIT(A), assessee filed this appeal before us challenging confirmation of disallowance of interest expenses as well as levy of interest u/s 234A, 234B & 234C of Act. 3. At outset, hearing Authorized Representative (AR) of assessee argued that grounds of appeal raised in present appeal is covered in favour of assessee by decision of this Tribunal in Aatur Holding Pvt. Ltd. vs. ACIT in ITA No. 599/Mum/2015. Ld. Departmental Representative (DR) for Revenue argued that in ITA No. 599/Mum/2015, jurisdictional Court has restored this similar ground of appeal to file of ld. CIT(A) and he has no objection if this ground is restored to file of AO with similar direction. We have considered rival contentions of parties and seen that in ITA No. 599/Mum/2015 similar ground of appeal of assessee in that case was restored to file of ld. CIT(A) with following direction: 3. assessee is aggrieved for disallowance of interest expenses of Rs.6,14,669/-. Ld. AR placed on record order of Tribunal in assessee's own case for assessment year 2007-08, dated 23-9-2015, wherein similar issue was decided by Tribunal after observing as under :- 3: Ground No. 4 relates to disallowance of interest expense. Ld. Counsel for assessee 40ught to our notice that decision relied upon by Ld. CIT(A) while disposing this ground has been set aside by Tribunal to file of Ld. CIT(A). 4. Ld. Departmental Representative could not bring any distinguishing decision in favour of Revenue. 5. We have carefully perused orders of authorities below. While disposing ground relating to disallowance of interest, we find that Ld. CIT(A) has followed findings given in case of Eminent Holdings Pvt. Ltd. We find that Tribunal in case of Eminent Holdings in IT Nos. 2139, 2140 and 21411MumJ2013 have followed decision of Tribunal given in common group case of Hitesh S. Mehta at para 2.3 of order and restored matter to file of Ld. CIT(A) for fresh adjudication. Respectfully following findings of Co ordinate Bench, we restore this issue to files of Ld. CIT(A) for fresh adjudication after giving reasonable opportunity of being heard to assessee. 6. Before closing this issue, Ld. Counsel for assessee pointed out that Ld. CIT(A) has held that issue of interest expenditure is pending before Hon'ble Special Court. It is say of Ld. Counsel that proceedings in which said issue of interest was issued by custodian have been already concluded which fact 3 ITA No. 597/M/2015- Harsh Estates Pvt. Ltd. has already been recorded by Ld. CIT(A) in impugned order. We, therefore, direct Ld. CIT(A) to consider this fact while deciding issue afresh. Ld. CIT(A) may also direct for taxing of income in hands of recipient (family members) in accordance with method of accounting followed by them and as per provisions of law. Ground No. 4 is treated as allowed for statistical purpose." 3. Ld. Special Counsel did not controvert to such contention of Ld. AR that issue is covered by aforementioned decision. 4. In view of situation, after hearing both parties, we pass similar order and this ground is considered to be allowed for statistical purposes in manner aforesaid." Following above, we pass similar order. Ground No.4 is allowed for statistical purposes for both years. " Following above, we allow Ground No.5 for statistical purposes for year under appeal. Ground no.6 consequential in nature, hence is not being adjudicated." 4. As facts and circumstances during year under consideration are same, respectfully, following order of Tribunal in assessee's own case matter is restored back to file of CIT(A) for deciding afresh as per direction given by Tribunal in its order dated 23-9-2015. 5. With regard to charging of interest u/s.234B & 234C, I found that similar issue has been dealt with by Tribunal in assessee's own case and matter was restored back to file of AO. Tribunal have ITA No.599/2015 dealt with issue of charging of interest in its order dated 23-9-2015 as under :- "3.Next ground of appeal is about levy of interest u/s. 234 of Act. Before us, AR stated that assessee was notified entity, that provisions of s. 234A, 234B and 234C.of Act were deemed to have complied with, that assets were already in attachment of Custodian appointed under provisions of Special Courts Act that Tribunal in case of appellant and several other entities had held view in favour of appellant, that Hon'ble Bombay High Court in case of Divine Holdings Pvt. Ltd. and Cascade Holdings Pvt. Ltd. had held that provisions of sections 234A,234B and 234C of Act were mandatory and were applicable to notified entities also that assessee was in process of filing appeal against said order before Hon'ble Supreme Court that income earned in year under consideration was subjected to provisions of TDS, that changeability of section 234A, 234B and 234C of Act should be after considering amount of tax deductible at source on income assessed. appellant relies in this regard on following decisions. He relied upon cases of Motorola inc. v. DCIT [95 ITD 269 (Del. (SB)J, Sedco Fores Drilling Co. Ltd. [264 fTR 320J,NGC Network Asia LLC [3 f 3 ITR 187] Summit Bhatacharya [ 300 ITR (AJ) 341' (Bom)(SB)J, Vijal Gopal Jindal [ITA No. 4333/Del/2009] & Emillo Ruiz Berdejo [320 fTR 190 (Bom)].DR relied upon cases of Devine Holdings Pvt. Ltd. ' 3.1. We have heard rival submissions and perused material before us. We find that in case of Devine Holdings Pvt. Ltd. Hon'ble Bombay High Court has held that provisions of section 234A, 234B and 234Cwere applicable to notified person also. Therefore, upholding order of FAA to that extent, we hold that provisions of section 234 of Act are applicable. As far as calculation part is concerned, we find merits in submission made by assessee. Therefore, we are restoring back issue to file of AO for fresh adjudication who would decide issue after considering amount taxed deductible at source on income assessed and after affording reasonable opportunity of hearing to assessee. Ground no.5 is allowed in part in favour of assessee. 4 ITA No. 597/M/2015- Harsh Estates Pvt. Ltd. 4. We have seen that identical grounds were restored to file of AO in ITA No. 599/Mum/2015, thus respectfully following order of Tribunal, both grounds of present appeal are restored to file of AO for deciding afresh in accordance with direction contained in order dated 08.08.2016 (supra). 5. Ground No.3 in present appeal is consequential in nature and needs no specific adjudication when Ground No.2 is already restored to file of AO. 6. In result, appeal of assessee is allowed for statistical purpose. Order pronounced in open court on this 7th October, 2016. Sd/- Sd/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 07/10/2016 S.K.PS Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A), Mumbai. BY ORDER, 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. (Asstt.Registrar) //True Copy/ ITAT, Mumbai Harsh Estates Pvt. Ltd. v. ACIT, CC-31(7), Mumbai