M/s. Bhaskar Exxoils Ltd., Bhopal V. The ACIT-1(2), Bhopal

CO 1/IND/2014

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4311 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESH

Judgement Text

ACIT VS. M/S BHASKAR EXXOILS LTD. ITA NO. 392/IND/2013 & CO 1/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JM & SHRI O.P. MEENA, AM ITA NO. 392/IND/2013 A.Y.2009-10 ACIT 1(2) BHOPAL ::: APPELLANT VS M/S BHASKAR EXXOILS LTD. BHOPAL ::: RESPONDENT CO NO. 1/IND/2014 ARISING OUT OF ITA NO. 392/IND/2013 M/S BHASKAR EXXOILS LTD. BHOPAL ::: APPELLANT VS ACIT 1(2) BHOPAL ::: OBJECTOR ITA NO. 69/IND/2014 A.Y.2009-10 DECORE EXXOILS PVT. LTD. BHOPAL ::: APPELLANT VS ACIT 1(2) BHOPAL ::: RESPONDENT REVENUE BY SHRI MOHD. JAVED ASSESSEE BY SHRI S.S. DESHPANDE DATE OF HEARING 23.8.2016 DATE OF PRONOUNCEMENT 8 .9.2016 ACIT VS. M/S BHASKAR EXXOILS LTD. ITA NO. 392/IND/2013 & CO 1/IND/2014 2 O R D E R PER SHRI D.T. GARASIA, JM FOR THE ASSESSMENT YEAR 2009-10 THE REVENUE IS IN APPEAL WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTI ON AGAINST THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATE D 21.3.2013. FOR THE ASSESSMENT YEAR 2010-11 THE ASSESSE E HAS FILED THE APPEAL AGAINST THE ORDER OF THE LEARNED CI T(A)- I, BHOPAL, DATED11.12.2013. SINCE THE ISSUE INVOLVED IS COMMON IN THESE CASES, WE PROPOSE TO DISPOSE OF THE SAME BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENC E. ITA NO. 392/IND/2013 2. THE ONLY GROUND TAKEN BY THE REVENUE IN THE APPEAL RELATES TO CONFIRMATION BY THE LEARNED CIT(A) OF THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.2,91,74,537/- ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENDITURE. ACIT VS. M/S BHASKAR EXXOILS LTD. ITA NO. 392/IND/2013 & CO 1/IND/2014 3 3. WE HAVE HEARD BOTH THE SIDES. BRIEFLY STATED, THE F ACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED FR OM THE BALANCE SHEET OF THE ASSESSEE THAT THE ADVANCES (RECEIVABL E OR ADJUSTABLE) OF RS. 37,82,88,621/- WERE SHOWN UNDER THE HEAD LOANS AND ADVANCES. THE ASSESSING OFFICER, THEREFO RE, REQUIRED THE ASSESSEE TO FILE DETAILS THEREOF AND TO EX PLAIN WHETHER ANY MONEY HAD BEEN ADVANCED FREE OF INTEREST AND NECESSITY OF ADVANCES THE MONEY. IN RESPONSE, THE ASSE SSEE SUBMITTED A LIST OF PERSONS TO WHOM LOANS AND ADVANCES, ETC. WERE GIVEN BUT DID NOT EXPLAIN THE NECESSITY OF ADVANCING THESE LOANS AND ADVANCES AS ALSO AS TO WHY THE INTEREST SHOULD NOT BE DISALLOWED. THE ASSESSING OFF ICER, THEREFORE, DISALLOWED THE INTEREST IN PROPORTION TO THE INTEREST FREE ADVANCES GIVEN TO GROUP CONCERNS. THE ASSESSING OFFICER CALCULATED SUCH INTEREST AT THE RATE OF 12% ON THE TOTAL ADVANCES OF RS.28,91,79,503/- AS ON 31.3.2009 FOR THE YEAR AT RS. 3,47,01,540/- AND DISALL OWED ACIT VS. M/S BHASKAR EXXOILS LTD. ITA NO. 392/IND/2013 & CO 1/IND/2014 4 THE SAME U/S 36(1)(III) OF THE ACT BY HOLDING THAT TH IS AMOUNT OF INTEREST WAS NOT INCURRED WHOLLY AND EXCLUS IVELY FOR BUSINESS PURPOSES AND ADDED BACK THE SAME TO THIS TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LEARNED CI T(A) FOUND THAT OUT OF THE ABOVE AMOUNT, A SUM OF RS.55,27,003/- WAS NOT INCURRED WHOLLY AND EXCLUSIVEL Y FOR BUSINESS PURPOSES. THE LEARNED CIT(A), THEREFORE, CONFIRMED THE DISALLOWANCE TO THE EXTENT OF RS.55,27, 003/- BY GRANTING RELIEF OF RS.2,91,74,537/-. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LEARNED DR WHILE OPPOSING THE ORDE R OF THE LEARNED CIT(A), STRONGLY RELIED UPON THE ORDER O F THE ASSESSING OFFICER. ON THE OTHER HAND, THE LEARNED CO UNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SI DES. WE FIND THAT A PERUSAL OF THE BALANCE SHEET OF THE ASSESS EE SHOWS THAT THE ADVANCES (RECEIVABLE OR ADJUSTABLE) OF ACIT VS. M/S BHASKAR EXXOILS LTD. ITA NO. 392/IND/2013 & CO 1/IND/2014 5 RS.37,82,88,621/- WERE SHOWN UNDER THE HEAD LOANS AND ADVANCES. THE ASSESSING OFFICER, THEREFORE, REQUIRED THE ASSESSEE TO FILE DETAILS THEREOF AND TO EXPLAIN WHETHER ANY MONEY HAD BEEN ADVANCED FREE OF INTEREST AND NECESSITY OF ADVANCES THE MONEY, WHICH THE ASSESSEE COULD NOT EXPLAI N THE NECESSITY OF ADVANCING THESE LOANS AND ADVANCES AS ALSO AS TO WHY THE INTEREST SHOULD NOT BE DISALLOWED. THE LEARNED CIT(A) AFTER EXAMINING THE DETAILS FURNISHED BY THE ASSESSEE FOUND THAT THE ASSESSEE HAD NOT INCURRED THE INTEREST EXPENSES OF RS. 55,27,003/- WHOLLY AND EXCL USIVELY FOR THE PURPOSE OF ITS BUSINESS AND, THEREFORE, THE LEARNED CIT(A) DISALLOWED THE SAME AND THEREBY GRANTED RELIEF OF RS.2,91,74,537/- BY RESTRICTING THE DISALLOWANCE TO R.55,27,003/- OUT OF THE TOTAL DISALLOWANCE OF RS.3,47,01,540/-. SINCE THE LEARNED CIT(A) HAS GIVEN DETAILED FINDINGS BEFORE ARRIVING AT THE CONCLUSION, W E FIND ACIT VS. M/S BHASKAR EXXOILS LTD. ITA NO. 392/IND/2013 & CO 1/IND/2014 6 NO INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) AND CONFIRM THE SAME. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. CO NO. 1/IND/2014 7. IN VIEW OF OUR ABOVE FINDINGS, THE CROSS OBJECTIO N FILED BY THE ASSESSEE STANDS DISMISSED. ITA NO.69/IND/2014 8. IN THIS APPEAL, THE ONLY GROUND TAKEN BY THE ASSESSE E IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONF IRMING THE DISALLOWANCE OF INTEREST EXPENSES OF RS. 1,00,29, 456/- AS DISALLOWED BY THE ASSESSING OFFICER ON ADVANCES GIVE N TO GROUP CONCERN U/S 36(1)(III) OF THE ACT. 9. SINCE THE FACTS AND CIRCUMSTANCES INVOLVED IN THIS APPEAL ARE THE SAME EXCEPT THE AMOUNT OF DISALLOWANCE, WE, THEREFORE, FOR THE REASONS GIVEN ABOVE WHILE DECI DING ACIT VS. M/S BHASKAR EXXOILS LTD. ITA NO. 392/IND/2013 & CO 1/IND/2014 7 ITA NO. 392/IND/2013, DISMISS THIS APPEAL FILED BY T HE ASSESSEE. 8. FINALLY, THE REVENUES APPEAL AND THE ASSESSEES APPE AL AS WELL AS THE CROSS OBJECTION STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 8 TH SEPTEMBER, 2016 SD/ SD/- (O.P. MEENA) (D.T. G ARASIA) ACCOUNTANTMEMBER JUDICIAL MEMB ER 8 TH SEPTEMBER, 2016 DN/- ACIT VS. M/S BHASKAR EXXOILS LTD. ITA NO. 392/IND/2013 & CO 1/IND/2014 8