ITA Nos. 231 and 464/PN/2014, (Assessment Year: 2009-2010). Case: Aqua Alloys Pvt. Ltd. Vs Asstt. Commissioner of Income Tax. ITAT (Income Tax Appellate Tribunal)

Case Number:ITA Nos. 231 and 464/PN/2014, (Assessment Year: 2009-2010)
Party Name:Aqua Alloys Pvt. Ltd. Vs Asstt. Commissioner of Income Tax
Counsel:For Appellant: Pramod Shingte and For Respondents: B.C. Malakar
Judges:G.S. Pannu, Member (A) and Sushma Chowla, Member (J)
Issue:Income Tax Act, 1961 - Section 143(3)
Judgement Date:January 30, 2015
Court:ITAT (Income Tax Appellate Tribunal)


G.S. Pannu, Member (A), (ITAT Pune 'B' Bench)

  1. The captioned are cross-appeals, each by the assessee and the Revenue, pertaining to the assessment year 2009-10, which were heard together and are being disposed-off by way of a consolidated order for the sake of convenience and brevity.

  2. The captioned cross-appeals are directed against the order of the Commissioner of Income Tax (Appeals), Kolhapur dated 18.12.2013 which, in turn, has arisen from an order dated 12.12.2011 passed by the Assessing Officer u/s. 143(3) of the Income Tax Act, 1961 (in short "the Act").

  3. First, we shall take-up the appeal of the assessee wherein the only Ground of Appeal raised reads as under:--

    On the facts and in the circumstances of the case and in law, the lower Authorities have erred in making the disallowance of Rs. 15,18,447/- being Guarantee Commission paid to the Directors of the Company by disregarding Appellant's contention in this regard and also erred in not following Hon'ble Pune Tribunal's order for AY 2007-08 in appellant's own case.

  4. In this appeal, the solitary issue relates to the action of the income-tax authorities in denying assessee's claim for deduction of Rs. 15,18,447/- represent Guarantee Commission paid to the Directors. The expenditure by way of Guarantee Commission was incurred on payment to the Directors for giving their personal guarantee towards availing credit limits by the assessee from the Banks. The stand of the assessee was that in order to avail the credit limits from the Bank, the Bank insisted on personal guarantees of the Directors as an additional security in case assets of the company are lost due to vicissitudes of business. It was claimed that personal guarantee given by the Directors in-fact involved pledge of the personal assets against contingency. The aforesaid expenditure paid to the Directors as commission was disallowed by the Assessing Officer as well as by the CIT(A). At the time of hearing, the Ld. Representative for the assessee pointed out that similar expenditure was disallowed by the Assessing Officer in assessment year 2007-08, which was then allowed by the CIT(A). The order of the CIT(A) for assessment year 2007-08 has since been affirmed by the Tribunal vide its order in ITA No. 1502/PN/2011 dated 15.07.2013; a copy of the said order was placed on record. The relevant discussion in the order of the Tribunal dated 15.07.2013 (supra) reads as under:--

    6. The next issue is with regards to...

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