Shree Radheyshyam Sahani, UDAIPUR V. ITO, UDAIPUR

CO 10/JODH/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1244 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L MAURYA
• Keywords: Deemed to accrue or arise in india; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR JODHPUR BENCH, JODHPUR JODHPUR BENCH, JODHPUR JODHPUR BENCH, JODHPUR BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.C. GUPTA G.C. GUPTA G.C. GUPTA G.C. GUPTA, , , , HONBLE HONBLE HONBLE HONBLE VICE VICE VICE VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI R.C. SHARMA R.C. SHARMA R.C. SHARMA R.C. SHARMA, , , , HON'BLE ACCOUNTANT HON'BLE ACCOUNTANT HON'BLE ACCOUNTANT HON'BLE ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 101/JODH/2014 101/JODH/2014 101/JODH/2014 101/JODH/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009 - -- - 10 1010 10 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2(1), 2(1), 2(1), 2(1), UDAIPUR. UDAIPUR. UDAIPUR. UDAIPUR. VS. VS. VS. VS. SHR SHR SHR SHR I RADHEYSHYAM SAHANI, I RADHEYSHYAM SAHANI, I RADHEYSHYAM SAHANI, I RADHEYSHYAM SAHANI, 145 145 145 145- -- -B, SHAKTI NAGAR, B, SHAKTI NAGAR, B, SHAKTI NAGAR, B, SHAKTI NAGAR, UDAIPUR (RAJASTHAN). UDAIPUR (RAJASTHAN). UDAIPUR (RAJASTHAN). UDAIPUR (RAJASTHAN). PAN : ADAPS8950J. PAN : ADAPS8950J. PAN : ADAPS8950J. PAN : ADAPS8950J. (APPELLANT) (RESPONDENT) CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION NO. NO. NO. NO. 10/JODH/2014 10/JODH/2014 10/JODH/2014 10/JODH/2014 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009 - -- - 10 1010 10 SHRI RADHEYSHYAM SAHANI, SHRI RADHEYSHYAM SAHANI, SHRI RADHEYSHYAM SAHANI, SHRI RADHEYSHYAM SAHANI, 145 145 145 145- -- -B, SHAKTI NAGAR, B, SHAKTI NAGAR, B, SHAKTI NAGAR, B, SHAKTI NAGAR, UDAIPUR (RAJASTHAN). UDAIPUR (RAJASTHAN). UDAIPUR (RAJASTHAN). UDAIPUR (RAJASTHAN). P PP PAN : ADAPS8950J. AN : ADAPS8950J. AN : ADAPS8950J. AN : ADAPS8950J. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2(1), 2(1), 2(1), 2(1), UDAIPUR. UDAIPUR. UDAIPUR. UDAIPUR. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.L. MAURYA, D.R. ASSESSEE BY : NONE. DATE OF HEARING : 02.09.2015 02.09.2015 02.09.2015 02.09.2015 DATE OF PRONOUNCEMENT: 04.09.2015 04.09.2015 04.09.2015 04.09.2015 ORDER ORDER ORDER ORDER PER PER PER PER G.C. GUPTA, VICE PRESIDENT G.C. GUPTA, VICE PRESIDENT G.C. GUPTA, VICE PRESIDENT G.C. GUPTA, VICE PRESIDENT : :: : THE APPEAL BY THE REVENUE AND THE CROSS-OBJECTION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 ARE DIRECT ED AGAINST THE ORDER OF LEARNED CIT(A), UDAIPUR DATED 4 TH DECEMBER, 2013. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. 2. AT THE TIME OF HEARING, NOBODY APPEARED ON BEHAL F OF THE ASSESSEE. THE APPLICATION OF THE ASSESSEE DATED 28 TH AUGUST, 2015 FOR ITA-101/JODH/2014 & CO-10/JODH/2014 2 ADJOURNMENT OF THE HEARING WAS ALSO REJECTED BY THE BENCH AND, ACCORDINGLY, WE PROCEED TO DISPOSE OF THE APPEAL OF THE REVENUE AS WELL AS THE CROSS-OBJECTION OF THE ASSESSEE EX PARTE QUA THE ASSESSEE ON MERITS AFTER HEARING THE LEARNED DR. ITA NO.101/JODH/2014 ITA NO.101/JODH/2014 ITA NO.101/JODH/2014 ITA NO.101/JODH/2014 REVENUES APPEAL : REVENUES APPEAL : REVENUES APPEAL : REVENUES APPEAL :- -- - 3. GROUND NO.1 OF THE REVENUES APPEAL READS AS UND ER:- 1. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF IN TEREST OF RS.10,11,453/- MADE BY THE AO U/S 36(1)(III) OF THE I.T. ACT WITHOUT APPRECIATING THE FACTS THAT INTERE ST FREE LOAN TO HIS SISTER CONCERN WITHOUT ANY BUSINESS EXPEDIENCY WAS ADVANCED WHEREAS ASSESSEE IS PAYING INTEREST ON BORROWED FUNDS. 4. LEARNED DR HAS RELIED ON THE ORDER OF THE ASSESS ING OFFICER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR AND HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE FIND THAT THE LEARNED CIT(A) HAS GIVEN A FINDING TH AT THE ASSESSEES INTEREST FREE FUNDS EXCEEDED THE AMOUNT OF ADVANCE GIVEN TO ITS SISTER CONCERN M/S SAHANI CARS PVT.LTD. HE HAS FURTHER RE CORDED THAT THE GRANT OF INTEREST FREE LOAN TO THE SISTER CONCERN H AS BENEFITTED THE ASSESSEE ON GROUNDS OF COMMERCIAL EXPEDIENCY THEREB Y INCREASING THE SALE OF THE ASSESSEE. THESE FINDINGS OF THE LEARNE D CIT(A) COULD NOT BE CONTROVERTED ON BEHALF OF THE REVENUE. THE CIT(A) HAS FOLLOWED THE DECISION OF HON'BLE APEX COURT IN S.A. BUILDERS LTD . VS. CIT 158 TAXMAN 74 (SC) WHILE DELETING THE ADDITION. IN THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT SINCE THE ASSESSEES INTERE ST FREE FUNDS EXCEEDED THE AMOUNT OF ADVANCES GIVEN TO THE SISTER CONCERN ON ACCOUNT OF COMMERCIAL EXPEDIENCY RESULTING IN INCRE ASE OF SALE TO THE ASSESSEE, THE DISALLOWANCE OF INTEREST EXPENSES U/S 36(1)(III) COULD NOT BE MADE AND THE ORDER OF LEARNED CIT(A) ON THIS ISS UE IS CONFIRMED AND GROUND NO.1 OF THE REVENUES APPEAL IS DISMISSED. ITA-101/JODH/2014 & CO-10/JODH/2014 3 6. GROUND NO.2 OF THE REVENUES APPEAL READS AS UND ER:- 2. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,66,955/- U/S 41(1) OF THE I.T. ACT WITHOUT APPRECIATING THE FACTS THAT THE LIABILITY EXISTED F OR VERY LONG PERIOD AND THE ASSESSEE HAS FAILED TO FURNISH THE CONFIRMATION OF THE CREDITORS TO ESTABLISH THAT LIA BILITY STILL EXIST DESPITE SUFFICIENT OPPORTUNITIES GRANTE D TO THE ASSESSEE. 7. LEARNED DR HAS RELIED ON THE ORDER OF THE ASSESS ING OFFICER. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR AND HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE FIND THAT THE CREDIT ENTRIES TREATED AS INCOME U/S 41(1) OF THE ACT BY THE ASSESSING OFFICER WERE IN RESPECT OF LOANS/CAPI TAL ASSETS PURCHASED EARLIER AND NO PART OF THE SAME RELATED TO ANY EXPE NSES OR TRADING LIABILITY SO AS TO BE TREATED AS DEEMED INCOME. TH E CIT(A) HAS RECORDED IN HIS APPELLATE ORDER THAT THE ASSESSEE H AS PROVED THAT MAJORITY OF THESE CREDITS WERE REPAID IN THE SUBSEQ UENT FINANCIAL YEAR 2011-12. IN THESE FACTS OF THE CASE, WE HOLD THAT THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THESE AMOUNTS COULD N OT BE TREATED AS DEEMED INCOME U/S 41(1) OF THE ACT AND THE ORDER OF LEARNED CIT(A) ON THIS ISSUE IS CONFIRMED AND GROUND NO.2 OF THE REVE NUES APPEAL IS DISMISSED. ASSESSEES CROSS ASSESSEES CROSS ASSESSEES CROSS ASSESSEES CROSS- -- -OBJECTION OBJECTION OBJECTION OBJECTION NO.10/JODH/2014 : NO.10/JODH/2014 : NO.10/JODH/2014 : NO.10/JODH/2014 :- -- - 9. THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS- OBJECTION READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS), UDAIPUR WAS CORRECT IN DELETI NG THE DISALLOWANCE MADE BY AO IN RESPECT OF INTEREST CLAI M AMOUNTING TO RS.1011453 UNDER SECTION 36(I)(III) OF THE INCOME TAX ACT 1961. HENCE THE ORDER OF LD. ITA-101/JODH/2014 & CO-10/JODH/2014 4 CIT(APPEALS), UDAIPUR DESERVES TO BE UPHELD ON THIS ISSUE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(APPEALS), UDAIPUR WAS FAIR AND JUST IN DELETING THE ADDITION OF RS.2,66,955/- MADE BY A.O. U/S 41(1) OF THE I.T. ACT. HENCE THE ORDER OF LD. CIT (APPEALS), UDAIPUR DESERVES TO BE UPHELD ON THIS IS SUE. 10. WE HAVE HEARD THE LEARNED DR. THESE GROUNDS OF THE CROSS- OBJECTION OF THE ASSESSEE ARE MERELY SUPPORTIVE TO THE ORDER OF THE LEARNED CIT(A). SINCE WE HAVE ALREADY UPHELD THE O RDER OF THE LEARNED CIT(A) WHILE DISPOSING OF THE APPEAL OF THE REVENUE , THE CROSS- OBJECTION OF THE ASSESSEE IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 04.09.2015 . SD/- SD/- ( (( ( R.C. SHARMA R.C. SHARMA R.C. SHARMA R.C. SHARMA ) )) ) (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD- -- -2(1), UDAIPUR. 2(1), UDAIPUR. 2(1), UDAIPUR. 2(1), UDAIPUR. 2. RESPONDENT : SHRI RADHEYSHYAM SAHANI, SHRI RADHEYSHYAM SAHANI, SHRI RADHEYSHYAM SAHANI, SHRI RADHEYSHYAM SAHANI, 145 145 145 145- -- -B, SHAKTI NAGAR, UDAIPUR (RAJASTHAN). B, SHAKTI NAGAR, UDAIPUR (RAJASTHAN). B, SHAKTI NAGAR, UDAIPUR (RAJASTHAN). B, SHAKTI NAGAR, UDAIPUR (RAJASTHAN). 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR