COMMISSIONER OF INCOME TAX Vs. KAMAL INDUSTRY (HUF)

JUDGEMENT

(1.) THIS appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 31.8.2006 passed by the Income Tax Appellate Tribunal, Delhi Bench "D", Delhi (hereinafter referred to as "the Tribunal") for the assessment year 2001 -02, claiming the following substantial question of law: -

(2.) BRIEFLY stated, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee derived interest income and from sale and purchase of metals. The assessee filed its return for the assessment year 2001 -02 on 30.10.2001 declaring an income of Rs. 3,78,270/ - which was processed under Section 143(1) of the Act on 19.9.2002. During the course of assessment proceedings, the Assessing Officer found that the assessee had paid interest of Rs. 3,13,677/ - on unsecured loans of Rs. 19,55,603/ - and also given interest free loans to its relatives amounting to Rs. 1,11,85,750/ -. Accordingly, vide order dated 27.2.2004 (Annexure A -1), the Assessing Officer computed the income of the assessee at Rs. 7,01,450/ - by making an addition of Rs. 3,13,677/ - under Section 36(1)(iii) of the Act on account of diversion of interest free loans for non -business purposes. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity "the CIT(A)"] who vide order dated 10.6.2004 (Annexure A -2) while confirming the addition of Rs. 3,13,677/ - dismissed the appeal. Still dissatisfied, the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 31.8.2006 (Annexure A -3) allowed the appeal and deleted the said addition by relying on its earlier order for the assessment year 1998 -99. Hence, the present appeal by the revenue.

(3.) IT was submitted that the Tribunal while accepting the appeal had not discussed anything as to how the present case was similar with the case of the assessee for the assessment year 1998 -99. It was urged that allowance or disallowance under Section 36(1)(iii) of the Act is dependent upon the facts of each case and the reliance of the Tribunal on its earlier order for the assessment year 1998 -99 without referring to the similarity, the findings stand vitiated and the matter requires to be remanded for re -adjudication by the Tribunal after examining the factual matrix involved in the current assessment year.