M/s Stelco Strips Ltd., Ludhiana V. ACIT, CC-II, Ludhiana

CO 49/CHANDI/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7230 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-03-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 06-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH; G S PHANI KISHORE
• Keywords: Proportionate interest; Reasonable cause; Tax effect; Condonation of delay
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , ! '# $ % & '# , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.1041/CHD/2017 / ASSESSMENT YEAR : 2008-09 THE A.C.I.T., CENTRAL CIRCLE II, LUDHIANA. M/S STELCO STRIPS LTD., C-122, FOCAL POINT, PHASE-V, LUDHIANA. ./PAN NO: AACCS5084K & CO NO.49/CHD/2017 IN ./ ITA NO.1041/CHD/2017 / ASSESSMENT YEAR : 2008-09 M/S STELCO STRIPS LTD., C-122, FOCAL POINT, PHASE-V, LUDHIANA. THE A.C.I.T., CENTRAL CIRCLE II,LUDHIANA. ./PAN NO: AACCS5084K ./ ITA NO.1531/CHD/2017 / ASSESSMENT YEAR : 2011-12 THE A.C.I.T., CENTRAL CIRCLE II, LUDHIANA. M/S STELCO STRIPS LTD., PHASE-V, FOCAL POINT, LUDHIANA. ./PAN NO: AACCS5084K & CO NO.33/CHD/2018 IN ./ ITA NO.1531/CHD/2017 / ASSESSMENT YEAR : 2008-09 M/S STELCO STRIPS LTD., PHASE-V, FOCAL POINT, LUDHIANA. THE A.C.I.T., CENTRAL CIRCLE II,LUDHIANA. ./PAN NO: AACCS5084K ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 2 /ASSESSEE BY : SHRI ASHWANI KUMAR CA / REVENUE BY : SHRI G.S. PHANI KISHORE, CIT DR & SHRI MANJIT SINGH, SR.DR ! /DATE OF HEARING : 14.03.2019 '#$% ! /DATE OF PRONOUNCEMENT:30.04.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER BOTH THE CAPTIONED APPEALS RELATE TO THE SAME ASSES SEE AND HAVE BEEN FILED BY THE REVENUE AGAINST THE SEPA RATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 2, CHANDIGARH (IN SHORT CIT(A) DATED 10.6.2016 AND 2 3.8.2017 RELATING TO ASSESSMENT YEARS 2008-09 AND 2011-12 RESPECTIVELY, PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). THE ASSESSEE HA S FILED CROSS OBJECTIONS AGAINST THE SAME. IT WAS COMMON GROUND THAT THE ISSUES INVOLVED IN BOTH THE APPEALS WERE IDENTICAL. THEY WERE THEREFOR E TAKEN UP TOGETHER FOR HEARING AND ARE BEING DEALT BY WA Y OF THIS COMMON CONSOLIDATED ORDER. THE APPEAL OF THE REVENUE IN ITA NO.1041/CHD/2017 WAS DELAYED FOR FILING BY 284 DAYS . AN APPLICATION FOR CONDONING THE DELAY WAS FILED BE FORE US DATED 15.10.2019, WHICH IS REPRODUCED HEREUNDER: F.NO.DCIT/CC-II/LDH./MISC./2018-19/1256 DATED 15.01 .2019 TO, THE ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH, KENDRIYA ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 3 SADAN,SEC-9-A , CHANDIGARH- 160009. SIR. SUB: FILING OF APPLICATION FOR CONDONATION OF DELAY IN APPEAL FILED BEFORE THE ITAT IN THE CASE OF M/S STELCO STRIPS LIMITED, C-122, FOCAL POINT , LUDHIANA FOR THE A.Y. 2008- 09 IN ITA NO. 1041/CHD/2017 - REG- KINDLY REFER TO THE ABOVE. IN THIS REGARD, IT IS INFORMED THAT APPEAL IN THE A BOVE SAID CASE WAS REQUIRED TO BE FILED WITHIN 60 DAYS FROM THE RE CEIPT OF THE CIT(A)'S ORDER I.E. TILL 12.09.2016 BEFORE THE HON'BLE ITAT CHANDIGARH BENCH, CHANDIGARH IN ITA NO. 1041/CHD/2017. HOWEVER APPEAL IN THE ABOVE SAID CASE WAS FILED ON 21 .06.201 7 WHICH IS DELAYE D BY 282 DAYS, DUE TO INADVERTENT MISTAKE IN CALCULATION OF TAX EFFECT . INADVERTENTLY THE MISTAKE WAS OCCURRED BECAUSE OF WRONGLY MENTIONING THE TAX EFFECT IN CIT(A) ORDER DATED 10.06.2016 AND THEREFORE THE APP EAL WAS NOT FILED WITHIN TIME. BUT AS SOON AS THE MISTAKE WAS FOUND, THE APPEAL WAS FILED IN ITAT ON 21 .06.2017. THEREFORE, IT IS HUMBLY REQUESTED THAT THE DELAY IS CONDONED. THE CASE IS LISTED FOR HEARING ON 17.01.2 019. SD/- (BHUPINDER SINGH, I.R.S.) ACIT, CENTRAL CIRCLE-II, LUDHIANA. 2. REFERRING TO THE SAME, THE LD. DR CONTENDED THA T THE APPEAL WAS NOT FILED EARLIER SINCE IT WAS MISTAKENLY NOTED THAT THE TAX EFFECT INVOLVED IN TH E IMPUGNED APPEAL WAS BELOW THE LIMIT PRESCRIBED BY T HE CBDT FOR FILING APPEALS TO THE ITAT VIDE CIRCULAR NO.3/2018 DATED 11.07.2018. IT WAS POINTED OUT THAT THE MISTAKE OCCURRED BECAUSE OF WRONG MENTIONING OF THE TAX EFFECT IN THE CIT(A)S ORDER, FROM WHERE THE CALCULATION WAS WORKED OUT. BUT WHEN THE MISTAKE WA S DISCOVERED LATER, APPEAL WAS IMMEDIATELY FILED TO T HE I.T.A.T. ON 21.6.2017. HENCE, THE DELAY IN FILING T HE PRESENT APPEAL. THE LD. DR CONTENDED THEREFORE, THA T THE DELAY BE CONDONED AND THE APPEAL BE HEARD. ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 4 3. THE LD. COUNSEL FOR ASSESSEE VEHEMENTLY OBJECTED TO THE SAME. 4. CONSIDERING THE CONTENTION OF THE LD. DR WE FIND THAT THERE WAS A REASONABLE CAUSE FOR THE DELAY IN FILIN G THE APPEAL BEFORE US BY THE DEPARTMENT, AND THE SAME CO ULD NOT BE ATTRIBUTED TO THE ASSESSING OFFICER(A.O) INVOLVE D, WHO FILED THE APPEAL, SINCE IT ALL RESULTED FROM THE IN CORRECT MENTIONING OF THE TAX EFFECT IN THE ORDER OF THE CI T(A),WHICH FACT HAS REMAINED UNCONTROVERTED BEFORE US. WE, THE REFORE, CONDONE THE DELAY AND ADMIT THE APPEAL OF THE REVEN UE FOR HEARING. THE ORDER WAS PRONOUNCED IN OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES. WE SHALL FIRST BE TAKING UP THE APPEAL OF THE REVE NUE PERTAINING TO ASSESSMENT YEAR 2011-12 IN ITA NO.1531/CHD/2017 . 5. THE GROUND NO.1 RAISED BY THE REVENUE READS AS U NDER: 1. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.2,16,57,987/- TO RS.12,21,415/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES BY IGNORING THE FACT THAT THE SALES OF THE COMPANY HAS REDUCED TO ROUGHLY FIVE TIMES AS COMPARED TO THE SALES OF PRECEDING YEAR I.E. FROM RS.2,16,97,18,651/- TO RS.44,26,43,269/- WHEREAS THE PERSONAL EXPENSES I.E. EXPENSES ON SALARY & WAGES HAVE REDUCED VERY NEGLIGIBLY AS COMPARED TO PRECEDING YEAR (FROM RS.2,92,17,403/- TO RS. 2,76,20,723/-). 6. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A .O. NOTED THAT THE ASSESSEE WAS CLAIMING VERY HIGH EXPENSES V IZ-A-VIZ ITS SALE AND ALSO IN COMPARISON TO PRECEDING YEAR. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF THE EXPE NSES ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 5 SPECIALLY THE 'SALARY AND THE WAGES'. IN REPLY, THE ASSESSEE SUBMITTED THAT DURING THE YEAR THE ASSESSEE COMPAN Y INCURRED EXPENSES OF RS. 2,40,79,161/- ON 'SALARY A ND WAGES' AS COMPARED TO EXPENSES OF RS. 2,52,38,593/- INCURR ED DURING THE PRECEDING YEAR. IT WAS SUBMITTED THAT TH E COMPANY HAD TO BEAR SALARY AND WAGES COST THOUGH TH E PRODUCTION WAS DOWN DUE TO FINANCIAL CRUNCH, BUT TH E COMPANY COULD NOT NEGOTIATE WITH WORKERS TO ACCEPT LOWER WAGES AS VARIOUS LAWS WERE APPLICABLE TO THIS ISSUE . IT WAS ALSO SUBMITTED THAT TOTAL EXPENDITURE OF SALARY AND WAGES WAS DULY ACCOUNTED IN THE BOOKS AND ESI AND PROVIDE NT FUND LAW WERE ALSO APPLICABLE AND PROPER AND REGULA R RETURNS UNDER THOSE PROVISION WERE BEING FILED WITH THE RESPECTIVE DEPARTMENT WHICH WOULD JUSTIFY THE SALAR Y AND WAGES PAID TO THESE WORKERS. THE REPLY OF THE ASSES SEE WAS NOT FOUND CONVINCING BY THE A.O. THE A.O. MENTIONED THAT THE SALES OF THE PRECEDING YEAR WERE ALMOST 5 TIMES OF THE SALE OF CURRENT YEAR BUT THE PERSONAL EXPENSES WERE ONLY 1.05 TIMES. HENCE, THE RATIO OF 4.9 WAS APPLIED ON THE PERSONAL EXPENSES CLAIMED BY THE ASSESSEE AND DISAL LOWANCE WAS WORKED OUT AT RS. 2,16,57,987/-. THE LD.CIT(A) DELETED THE ADDITION MADE AFTER HIMSELF VERIFYING THE GENUI NENESS OF THE SALARY AND WAGES EXPENSES CLAIMED BY THE ASSESS EE WITH THE HELP OF THE INSPECTOR OF THE INCOME TAX, WHO RE PORTED THAT OUT OF THE TOTAL AMOUNT OF EXPENSES CLAIMED AM OUNTING TO RS.2.40 CRORES, RS.12,21,415/- WERE NOT VERIFIAB LE AND WHICH WHEN CONFRONTED TO THE ASSESSEE, NO EXPLANATI ON WAS ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 6 OFFERED. HE, THEREFORE, UPHELD THE ADDITION ONLY TO THIS EXTENT DELETING THE BALANCE, HOLDING AS UNDER: THE FACTS OF THE CASE, THE BASIS OF ADDITION/DISAL LOWANCE MADE BY THE A.O. AND THE ARGUMENTS OF THE AR DURING THE APPELLATE PROCEEDINGS HAVE BEEN CONSIDERED. THE AR HAS REPEATE D THE ARGUMENTS THAT THE COMPANY CANNOT RETRENCH ITS WORK FORCE ARBITRARILY WITHOUT CLEARING THEIR DUES AND IT WAS ALSO ARGUED THAT THERE IS ALWAYS SHORTAGE OF SKILL AND TRAINED WORKERS IN THE MARKET SO THE COMPANY NEEDS TO KEEP THEM EVEN IF SC ALE OF OPERATION HAS COME DOWN. THE AR ARGUED THAT COMPANY IS MAINTAINING PROPER AND COMPLETE RECORD OF THE WORK FORCE AS THE PROVISIONS OF PROVIDENT FUND AND ESI ARE ALSO APPLI CABLE SO THERE IS NO REASON TO DISALLOW THE SALARY AND WAGES WHICH IS PAID IN REGULAR COURSE OF ITS BUSINESS. THERE APPEARS TO BE MERIT IN THE ARGUMENTS OF THE AR THAT THE WORKERS CAN BE DISCHAR GE ONLY AS PER THE PROVISIONS UNDER THE LABOR LAWS. SOME LABOR HAS TO BE MAINTAINED EVEN IF THE PRODUCTION IS STOPPED OR RED UCED DRASTICALLY AND THE ESI AND PF EXPENSES ARE TO BE M ADE IRRESPECTIVE OF THE PRODUCTION BY THE COMPANY. THE AR ARGUED THAT THE BOOKS OF ACCOUNTS AND VOUCHERS ARE MAINTAI NED ON DAY TO DAY BASIS AND SAME WERE PRODUCED BEFORE THE AO A LSO. DURING THE APPELLATE PROCEEDINGS, THE AR WAS ASKED T O SHOW THE LEDGER AND VOUCHERS FOR THE EXPENSES CLAIMED UND ER SALARY & WAGES. THE SAME WERE GOT EXAMINED IN THIS O FFICE WITH THE HELP OF THE INSPECTOR OF INCOME TAX AND IT HAS BEEN REPORTED THAT FROM THE REGISTERS AND VOUCHERS AN EX PENDITURE AMOUNTING TO RS. 12,21,415/- WAS NOT VERIFIABLE BECA USE NEITHER THE REVENUE STAMP WAS AFFIXED NOR THERE WERE SIGNATURE OF THE RECIPIENTS. THIS FACT WAS CONFRONT ED TO THE AR ALSO BUT NO SATISFACTORY EXPLANATION WAS GIVEN. IT IS A FACT THAT THE FACTORY WAS NOT LOCKED OUT AND ALL THE LABOR COULD NOT BE LAID OFF SUDDENLY. HOWEVER, THE ASSESSEE IS REQUI RED TO MAINTAIN THE PROPER VOUCHERS FOR CLAIMING THE EXPENS ES. DURING THE APPELLATE PROCEEDINGS, THE AR WAS REQUIRED TO PRODUCE THE PROPER VOUCHERS IN SUPPORT OF CLAIM OF SA LARY & WAGES EXPENSES COULD NOT FULLY SHOW THE VOUCHERS FOR T HE PAYMENTS AMOUNTING TO RS. 12,21,415/-, THEREFORE THIS AMOUNT IS HELD TO BE NOT ALLOWABLE. HENCE THE DISALLOW ANCE TO THE EXTENT OF RS. 12,21,415/- FOR WHICH PROPER VOUCHE RS WERE NOT SHOWN IS UPHELD AND THE APPELLANT GETS A RELIEF OF THE BALANCE AMOUNT. 7. BEFORE US THE LD. DR ARGUED THAT THE A.O. HAD RI GHTLY MADE DISALLOWANCE OF EXPENSES ON FINDING THAT DESPI TE DROP IN SALES BY FIVE TIMES IN THE IMPUGNED YEAR AS COMP ARED TO THE PRECEDING YEAR, THE EXPENSES INCURRED BY THE AS SESSEE HAD REMAINED THE SAME. ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 7 8. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND, POINTED OUT THAT THE DISALLOWANCE RELATED ONLY TO S ALARY AND WAGES EXPENSES WHICH HAD ALL BEING GOT VERIFIED AND CHECKED BY THE LD.CIT(A) HIMSELF WITH THE HELP OF THE INSPE CTOR OF INCOME TAX AND, THEREFORE, THE ORDER OF THE CIT(A) DELETING THE EXPENSES TO THE EXTENT OF RS.2,16,57,987/- WAS CORRECT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF BOTH THE PARTIES. WE DO NOT FIND ANY REASON TO I NTERFERE IN THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. UNDISPUTE DLY, THE DISALLOWANCE MADE BY THE A.O. RELATED TO ONLY SALAR Y AND WAGES EXPENSES THAT TOO FOR THE REASON THAT THOUGH THE SALES HAD REDUCED FIVE TIMES IN THE IMPUGNED YEAR AS COMP ARED TO THE PRECEDING YEAR, THESE EXPENSES HAD REMAINED MOR E OR LESS THE SAME. THE ASSESSEE, WE FIND, HAD EXPLAINED THE STAGNANCY IN THESE EXPENSES BY STATING THAT IT WAS NOT EASY TO RETRENCH THE WORKERS AND BUSINESSES WERE REQUIRE D TO KEEP SKILLED AND TRAINED WORKERS EVEN IF THE SCALE OF OPERATION CAME DOWN BECAUSE THERE WAS ALWAYS A SHOR TAGE OF SKILLED AND TRAINED WORKERS. THE ASSESSEE HAD ALSO GOT ALL ITS BOOKS OF ACCOUNT AND DOCUMENTS AND OTHER REGISTERS RELATING TO SALARY AND WAGES VERIFIED BY THE CIT(A), WHO HAD FOUND NO DISCREPANCY IN THE SAME EXCEPT TO THE EXTENT SALARY AND WAGES PAID AMOUNTING TO RS.12,21,415/-. THE ABOVE F ACTS HAVE NOT BEEN CONTROVERTED BY THE REVENUE, NOR ANY INFIRMITY POINTED OUT IN THE SAME. 10. IN VIEW OF THE SAME, WE AGREE WITH THE LD.CIT(A ) THAT THE GENUINENESS OF THESE EXPENSES HAD BEEN DEMONSTR ATED ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 8 BY THE ASSESSEE AND EVEN THE EXPLANATION OF THE AS SESSEE FOR NON REDUCTION OF SALARY AND WAGES EXPENSES WAS REAS ONABLE . WE, THEREFORE, UPHOLD THE ORDER OF THE LD.CIT(A) RE STRICTING THE DISALLOWANCE OF EXPENSES TO RS.2,16,57,987/-. THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IS, THEREFORE, DISMISSED. 11. GROUND NO.2 RAISED BY THE REVENUE READS AS UNDE R: 2. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. C1T(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,80,000/- ON ACCOUNT OF DISALLOWANCE OF INTEREST U/S 36(L)(III) OF THE INCO ME TAX ACT, 1961 BY IGNORING THAT THE ASSESSEE HAS ADVANCED RS.40,00,000/- INTEREST FREE TO 'SUNDRY ASSETS' AND IN CONTRARY CLAIMING RS.15,32,722/- AS INTEREST ON LOANS. MOREOVER, THE IDENTITY OF SUNDRY ASSETS HAS NOT BEEN ESTABLISHED BY ASSESSEE NEITHER BEFORE AO NOR BEFORE THE LD. CIT(A). 12. THIS GROUND IS AGAINST DELETION OF DISALLOWANC E MADE OF INTEREST U/S 36(L)(III) OF THE ACT AMOUNTING TO RS.4,80,000/-.BRIEF FACTS RELATING TO THE SAME ARE THAT THE A.O. HAD NOTED THAT THE ASSESSEE HAD ADVANCED SUM OF RS.92,66,629/- TO FOUR PERSON S I.E. SUNDRY ASSETS RS.40,00,000/- ; ABHISHEK JINDAL RS.19,13,249/-, BMJ REAL ESTATE PVT. LTD. RS.33,18, 000/- AND B.B. JINDAL HUF RS. 35,380/- WITHOUT CHARGING O F INTEREST WHILE ON THE OTHER HAND, IT WAS CLAIMING INTEREST OF RS.15,32,722/- ON LOANS. ACCORDINGLY HE DISALLOWED PROPORTIONATE INTEREST @ 12% ON THE SAME ,WHICH CAM E TO RS.10,46,007/-. THE LD.CIT(A) DELETED THE DISALLOWA NCE OF INTEREST MADE VIS--VIS SUNDRY RECEIVABLE OF RS. 40 LACS ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 9 WHILE HE UPHELD THE BALANCE PERTAINING TO THE REMAI NING ADVANCES HOLDING AS UNDER: THE FACTS OF THE CASE, THE BASIS OF ADDITION/DISALLOWANCE MADE BY THE A.O. AND THE ARGUMENTS OF THE AR DURING THE APPELLATE PROCEEDINGS HAVE BEEN CONSIDERED. THE AR HAS SUBMITTED THAT THE A.O. DISALLOWED INTEREST IN RESPECT OF VARIOUS ITEMS INCLUDING THE SUNDRY RECEIVABLES OF RS. 40,00,000/- ALSO. AS PER AR, THERE WAS A SURVEY U/S 133A IN THIS CASE AND THE ASSESSEE COMPANY SURRENDERED A SUM OF RS.40,00,0007- AS SUNDRY RECEIVABLES BUT NO DIFFERENCE IN STOCK OR ANY OTHER DOCUMENT WAS FOUND. AS PER AR DISALLOWANCE ON ACCOUNT OF SUNDRY DEBTORS IS NOT COVERED U/S 36(L)(III). UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE ARGUMENTS OF THE AR APPEAR ACCEPTABLE AND THE DISALLOWANCE OF RS.4,80,000/-, CALCULATED IN RESPECT OF SUNDRY ASSETS OF RS. 40,00,000/-IS NOT FOUND SUSTAINABLE AND HENCE DELETED. AS REGARDS THE OTHER DISALLOWANCES IN RESPECT OF ADVANCES TO SH. ABHISHEK JINDA!, M/S. BMJ REAL ESTATE PVT. LTD. AND SH. BB JINDAL HUF AMOUNTING TO RS. 59,694/-, RS. 3,96,980/- AND RS. 1,09,333/- RESPECTIVELY THE AR COULD NOT SUBSTANTIATE THE BUSINESS PURPOSE. THE NEXUS BETWEEN INTEREST FREE FUNDS FOR GIVING AS LOAN COULD ALSO NOT BE ESTABLISHED BY THE AR AND HENCE THE DISALLOWANCE IN RESPECT OF THESE THREE PERSONS/PARTIES IS FOUND SUSTAINABLE AND HENCE CONFIRMED. 13. BEFORE US THE LD. DR RELIED UPON THE ORDER OF T HE A.O. WHILE THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE ORDER OF THE CIT(A). 14. WE HAVE GONE THROUGH THE ORDER OF THE CIT(A) ON THIS ISSUE. WE DO NOT FIND ANY INFIRMITY IN THE SAME. TH E LD.CIT(A) HAS DELETED THE DISALLOWANCE OF INTEREST WITH RESPECT TO A SUM OF RS.40 LACS ON FINDING THAT THE SAME PERTAINED TO SUNDRY RECEIVABLES/SUNDRY DEBTORS. THE REVENUE HAS NOT CONTROVERTED THIS FINDING OF THE LD .CIT(A) BEFORE US. IN VIEW OF THE SAME, THEREFORE, WE AGREE WITH THE ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 10 LD.CIT(A) THAT THE INTEREST PERTAINING TO THE SAME CANNOT BE DISALLOWED U/S 36(1)(III) EVEN ON PROPORTIONATE BAS IS BECAUSE SUNDRY DEBTORS EVEN IF CONSIDERED TO BE LOANS AND A DVANCES, ARE FOR THE PURPOSE OF BUSINESS ONLY AND, THEREFORE , CANNOT BE DISALLOWED AS ON ACCOUNT OF NON BUSINESS PURPOSE U/S 36(1)(III) OF THE ACT. THE ORDER OF THE LD.CIT(A) O N THIS ISSUE IS, THEREFORE, UPHELD. GROUND NO.2 RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. IN EFFECT THE APPEAL OF THE REVENUE IS DISMISSED. C.O.NO.33/CHD/2018: 15. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT THE RELIEF ALLOWED BY THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS- 5) LUDHIANA ON ACCOUNT OF RESTRICTING THE DISALLOWANCE OF EXPENSES TO RS.12,21,414/- AS AGAIN ST DISALLOWANCES MADE BY THE ASSESSING OFFICER AT RS.2 , 16, 57,987/- BEING BASED ON THE REDUCED TURNOVER OF THE ASSESSEE COMPANY. 2. THAT THE RELIEF ALLOWED BY THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS 5,) LUDHIANA ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 4, 80,000/- ON THE AMOUNT OF RS.40,00,000/- SURRENDERED BY THE ASSESSEE COMPANY AS SUNDRY RECEIVABLE DURING THE COURSE OF SURVEY UNDE R SECTION 133 A OF THE IT ACT 1961. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL ON OR BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 16. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE CROSS OBJECTION WAS ONLY IN SUPPORT OF THE ORDER OF THE L D.CIT(A). SINCE NO GRIEVANCE HAS BEEN RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION, THE SAME IS NOT MAINTAINABLE A ND IS, THEREFORE, DISMISSED. ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 11 WE SHALL NOW TAKE UP THE REVENUES APPEAL IN ITA NO.1041/CHD/2017 PERTAINING TO A.Y 2008-09: 17. GROUND NO.(I) TO GROUND NO.(III)(A) & (B) ,IT W AS URGED, RELATED TO THE SAME ISSUE AND READ AS UNDER: (I) THAT LD.CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN DIRECTING THE AO TO RECOMPUTE THE INCOME OF THE ASSESSEE AFTER TAKING REVISED VALUE OF CLOSING STOC K AS ON 31.03.2008 TO BE THE SAME AS WAS TAKEN FOR CALCULATING THE VALUE OF STOCK OF DIFFERENT ITEMS A S ON 01.04.2008, RELEVANT FOR A.Y.2009-10 (AS PER ORDER OF CIT(A) FOR THE A.Y.2009-10 WHICH WAS CONFIRMED BY THE HON'BLE ITAT AND THE DEPARTMENT HAS CHALLENGED THE ORDER OF ITAT IN PUNJAB AND HARYANA HIGH COURT IN ITA NO.200 OF 2016),THEREBY THE ASSESSEE REDUCED THE CLOSING STOCK AND RETURNED INCOME BY RS.27,60,00,000/- ON ACCOUNT OF RE- VALUATION OF THE CLOSING STOCK, IGNORING THE SPECIF IC FINDINGS GIVEN IN THE ASSESSMENT ORDER OF A.Y.2008- 09. (II) THAT THE LD.CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ORIGINAL RETURN WAS FILED ON THE BASIS OF DATA VERIFIED BOTH BY THE MANAGEMENT AND THE AUDITORS OF THE ASSESSEE COMPANY WHEREAS NO REVISED AUDIT REPORT WAS FILED. (III) THAT THE LD.CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT APPRECIATING THE FACTS THAT VALUATION OF CLOSING STOCK IN THE REVISED COMPUTATION OF INCOME CANNOT BE ACCEPTED INTER ALIA ON ACCOUNT OF FOLLOWI NG REASONS: (A) THE ASSESSEE HAS DULY VERIFIED PARTICULARS OF INCOME SHOWN IN THE INCOME TAX RETURN FILED BY IT ON 08.10.2008 UNDER SIGNATURE OF MANAGING DIRECTOR, AS CORRECT AND PARTICULARS SHOWN THEREIN AS TRULY STATED AND IN ACCORDANCE WITH THE PROVISION OF THE I.T. ACT 1961. ALSO THE ACCOUNTS OF THE ASSESSEE WERE SUBJECTED TO STATUTORY AUDIT. (B) THE ASSESSEE HAS REVISED ITS COMPUTATION OF INCOME BY SUBMITTING RE-COMPUTATION DURING THE ASSESSMENT PROCEEDINGS ON 24.12.2010 WHICH IS ALMOST AFTER 26 MONTHS AND THE ASSESSEE HAD NOT FILED ANY PROOF IN TERMS OF ANY BILLS TO JUSTIF Y THE REVISION OF VALUATION OF STOCK BY GIVING ITS QUANTITY AND RATES EITHER WITH THE REVISED COMPUTATION OF INCOME OR DURING THE ASSESSMENT PROCEEDINGS. EVEN REVISED AUDIT REPORT WAS NOT FILED. ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 12 18. THE ISSUE, IT WAS CONTENDED, PERTAINED TO REVIS ION OF COMPUTATION OF INCOME MADE DURING ASSESSMENT PROCEE DINGS BY THE ASSESSEE, ON ACCOUNT OF DISCREPANCY IN VALUA TION OF STOCK OF 'WORK IN PROCESS'. BRIEFLY STATED THE A.O. NOTED THAT A SURVEY U/S 133A WAS CONDUCTED IN THIS CASE ON 11. 09.2007 AND DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH THE 'MANUFACTURING AND TRADING ACCOUNT' FOR THE PRE-SURVEY AND POST-SURVEY PERIODS. THE ASSESSEE FI LED THE MANUFACTURING/TRADING ACCOUNT FOR THE PRE-SURVEY AN D POST- SURVEY PERIOD AND FURTHER SUBMITTED THAT THE PERUSA L OF THE MANUFACTURING/TRADING ACCOUNT SHOWED A DIFFERENCE O F RS.27,60,00,000/- IN CLOSING STOCK OF 'WORK-IN-PROG RESS' (WIP). AS PER ASSESSEE, THE ACTUAL VALUATION OF 261 1.941 TONS OF 'WORK-IN-PROGRESS' WAS RS. 11,60,58,856/- ( I.E. @ RS. 44,434/- PER TON) INSTEAD OF VALUE WRONGLY TAKEN IN THE BALANCE SHEET FOR 2611.941 TONS AT RS. 39,20,58,857 /- (I.E. @ RS. 1,50,102/- PER TONS) AS PER THE DETAILED WORK ING MADE BY THE ASSESSEE COMPANY ON THE BASIS OF MONTH WISE PURCHASE OF RAW MATERIAL AS WELL AS SALES OF FINISH ED GOODS. THE ASSESSEE SUBMITTED THAT ON THE BASIS OF ACTUAL STOCK POSITION WHICH WAS PREPARED BY THE SURVEY PARTY DUR ING SURVEY CONDUCTED ON 11.09.2007; THE REVISED COMPUTA TION OF TAXABLE INCOME ON ACCOUNT OF DISCREPANCY OF STOCK O F WORK- IN-PROGRESS' HAD BEEN PREPARED WHICH MAY BE CONSIDE RED INSTEAD OF THE INCOME DECLARED IN THE RETURN OF INC OME. THE ASSESSEE CONTENDED THAT IT MAY BE APPRECIATED THAT THE QUANTITY MENTIONED IN THE TAX AUDIT REPORT IN QUANT ITATIVE AS WELL AS FINANCIAL STATEMENT WERE CORRECT AND ONLY V ALUATION ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 13 HAD WRONGLY BEEN TAKEN BY MISTAKE. THE CONTENTION O F THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE A.O. AND T HE SAME WAS REJECTED. 19. THE LD.CIT(A) ALLOWED THE REVISION , ON FINDIN G THAT IN THE SUCCEEDING ASSESSMENT YEAR IDENTICAL ISSUE WITH RESPECT TO THE OPENING STOCK OF THE WIP WAS THERE, WHICH WA S ADJUDICATED BY THE I.T.A.T. IN FAVOUR OF THE ASSESS EE. THE LD.CIT(A) HELD THAT THE OPENING STOCK OF THE SUCCEE DING YEAR WAS TO BE TREATED AS THE CLOSING STOCK OF THE IMPUG NED YEAR AND ACCORDINGLY, DIRECTED THE A.O. TO DO THE SAME. THE RELEVANT FINDINGS OF THE CIT(A) ARE AS UNDER: THE FACTS OF THE CASE, THE BASIS OF REJECTION OF THE REQUEST OF THE ASSESSEE BY THE A.O. AND THE ARGUMENTS OF THE AR DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS HAVE BEEN CONSIDERED. THE AR HAS FILED A COPY OF THE APPELLATE ORDER DATED 02.11.2012 PASSED BY MY LD. PREDECESSOR IN THE CASE OF THE ASSESSEE ITSELF FOR THE A.Y. 2009-10 WHERE THE SAME ISSUE OF REVISION OF THE VALUATION OF CLOSING STOCK OF 'WORK-IN- PROGRESS' WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE DEPARTMENT'S APPEAL AGAINST THE ORDER OF THE CIT(A) [FOR A.Y. 2009-10 IN THE CASE OF THE ASSESSEE] HAS BEEN DISMISSED BY THE HON'BLE 1TAT CHANDIGARH BENCH CHANDIGARH IN ITA NO. 89/CHD/2013 VIDE ORDER DATED 05.01.2016, HOLDING AS UNDER- '9. CONSIDERING THE ABOVE DISCUSSION IN THE LIGHT OF THE MATERIAL ON RECORD, PARTICULARLY WHEN THE ASSESSING OFFICER DID NOT OBJECT TO THE EVIDENCE OF THE ASSESSEE IN REMAND REPORT, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE, THE SAME IS ACCORDINGLY DISMISSED.' THE ISSUE INVOLVED IN THE PRESENT APPEAL FOR A.Y. 2008-09 IS THE SAME AS WAS THERE IN THE A.Y. 2009-10. FURTHER, THE OPENING STOCK FOR A.Y. 2009- 10 I.E. AS ON 01.04.2008 WOULD HAVE TO BE THE SAME AS THE CLOSING STOCK FOR A.Y. 2008-09 I.E AS ON 31.03.2008. THEREFORE, IF THE REVISION OF VALUE OF STOCK AS ON 01.04.2008 IS HELD TO BE VALID AND ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 14 ACCEPTABLE THEN THE SAME FIGURE WOULD HAVE TO BE ADOPTED AS THE VALUE OF CLOSING STOCK AS ON 31.03.2008( I.E. THE FIGURE ON THE BASIS OF REVISIO N OF VALUE OF STOCK). ACCORDINGLY, THE CONTENTION OF THE ASSESSEE THAT THE OPENING STOCK OF THE ASSESSEE COMPANY AS ON 01.04.2008 WAS THE CLOSING STOCK AS ON 31.03.2008 WHICH WAS DULY BEEN ACCEPTED BY THE FINAL FACT FINDING AUTHORITY I.E. INCOME TAX APPELLATE TRIBUNAL, AND THE REQUEST THAT THE REVISE D COMPUTATION OF TAXABLE INCOME OF THE ASSESSEE COMPANY ON THE BASIS OF REVISED CLOSING STOCK, IS FOUND ACCEPTABLE AS PER THE DECISION OF MY LD. PREDECESSOR IN APPEAL NO. 358/CLT(A)-L/LDH/2011- 12 PASSED IN THE CASE OF THE ASSESSEE FOR A.Y. 2009-10 (WHICH HAS BEEN UPHELD BY THE HON'BLE 1TAT AS MENTIONED ABOVE). IT IS A SETTLED PRINCIPLE THAT THE VALUE OF CLOSING STOCK OF THE PRECEDING YE AR HAS TO BE TAKEN AS THE VALUE OF OPENING STOCK OF TH E SUCCEEDING YEAR. THEREFORE, THE ASSESSEE IS ENTITLE D FOR TAKING THE REVISED VALUE OF THE CLOSING STOCK A S ON 31.03.2008 AT THE SAME RATE AS WAS ADOPTED FOR CALCULATING THE OPENING STOCK AS ON 01.04.2008. THE AO IS ACCORDINGLY DIRECTED TO RECOMPUTED THE INCOME OF THE ASSESSEE AFTER TAKING THE REVISED VALUATION OF CLOSING STOCK AS ON 31.03.2008 TO BE THE SAME AS WAS TAKEN FOR CALCULATING THE VALUE OF STOCKS OF DIFFERENT ITEMS AS ON 01.04.2008, RELEVAN T FOR A.Y. 2009-10 (AS PER THE ORDER OF CIT(A) FOR A. Y. 2009-10 WHICH WAS CONFIRMED BY THE HON'BLE ITAT). A REASONABLE OPPORTUNITY OF COURSE' MAY BE PROVIDED TO THE ASSESSEE AT THE TIME OF CARRYING OU T THIS EXERCISE AND THE INCOME OF THE A.Y. 2008-09 BE RECOMPUTED BY TAKING THE VALUE OF CLOSING STOCK AS ON 31.03.2008 TO BE THE SAME FIGURE AS HAS BEEN TAKEN BY THE ASSESSEE AS OPENING STOCK ON 01.04.2008 FOR COMPUTING THE REVISED INCOME FOR A.Y. 2009-10. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 20. THE ONLY CONTENTION RAISED BY THE LD. DR AGAINS T THE DIRECTIONS AND FINDINGS OF THE LD.CIT(A) WAS THAT S INCE THE REVENUE HAD GONE IN APPEAL BEFORE THE HON'BLE HIGH COURT AGAINST THE ORDER OF THE I.T.A.T. IN THE SUCCEEDING YEAR, THE DIRECTION OF THE CIT(A) IN THIS REGARD WAS INCORREC T. 21. HAVING GONE THROUGH THE ORDER OF THE LD.CIT(A) AND TAKING NOTE OF THE CONTENTION OF THE LD. DR, WE DO NOT FIND ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 15 ANY MERIT IN THE PRESENT GROUND RAISED BEFORE US. T HERE IS NO DISPUTE VIS--VIS THE FACT THAT THE VALUATION OF WI P WAS AN ISSUE OF DISPUTE IN THE SUCCEEDING YEAR WHICH HAD T RAVELLED UPTO THE I.T.A.T. AND THE SAME HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE. SINCE THE OPENING STOCK OF THE SUCCEE DING YEAR HAS BEEN DECIDED BY THE I.T.A.T., IT AUTOMATICALLY FOLLOWS THAT THE SAME FIGURE IS TO BE TREATED AS THE CLOSIN G STOCK OF THE IMPUGNED YEAR, BEING THE IMMEDIATELY PRECEDING YEAR. WE, THEREFORE, FIND NO INFIRMITY IN THE DIRECTIONS OF THE LD.CIT(A) FOR TREATING THE OPENING STOCK OF THE SUC CEEDING YEAR AS THE CLOSING STOCK OF THE IMPUGNED YEAR. THE RE IS NO MERIT IN THE ARGUMENT OF THE LD. DR THAT THE REVEN UE HAS GONE IN APPEAL AGAINST THE ORDER OF THE I.T.A.T., S INCE PENDING ADJUDICATION OF THE ISSUE BY THE HON'BLE HI GH COURT, THE ORDER OF THE I.T.A.T. STANDS AND IS TO BE FOLLO WED BY ALL LOWER AUTHORITIES. THE GROUND OF APPEAL NOS.(I) TO (III) (A) & (B) RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED . 22. GROUND NO.(IV) RAISED BY THE REVENUE READS AS U NDER: (IV) THAT THE LD.CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5,55,913/- MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENDITURE ON ACCOUNT OF INTEREST FREE LOAN GIVEN TO SMT. KAMAL KANTA JINDAL IGNORING THE FACT THAT THE ASSESSEE HAS NOT MAINTAINED ANY SEPARATE ACCOUNT%>R INTEREST FREE / INTEREST BEARING FUNDS. 23. THIS GROUND PERTAINS TO DELETION OF DISALLOWANC E OF INTEREST EXPENDITURE OF RS. 5,55,913/- ,ON ACCOUNT OF INTEREST FREE LOAN GIVEN TO SMT. KAMAL KANTA JINDAL . THE A.O. HAD MENTIONED THAT THE ASSESSEE HAD GIVEN INTE REST FREE LOAN TO SMT. KAMAL KANTA JINDAL AND THE BALANCE IN THIS ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 16 ACCOUNT WAS RS. 46,32,609/-. THE A.O. OBSERVED THAT THE ASSESSEE HAD NOT CHARGED ANY INTEREST ON THIS LOAN AMOUNT WHEREAS ON THE OTHER HAND THE ASSESSEE WAS CLAIMING EXPENDITURE ON ACCOUNT OF INTEREST PAID. A.O. MENTI ONED THAT THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY PROP ORTIONATE AMOUNT OF INTEREST MAY NOT BE DISALLOWED AS WAS DON E FOR A.Y. 2007-08 AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE, DISALLOWANCE OF RS. 5,55,913/- WAS MADE BY THE AO A S WAS DONE FOR THE A.Y. 2007-08. 24. THE LD.CIT(A) DELETED THE DISALLOWANCE MADE ON FINDING THAT THE ASSESSEE HAD PAID NO INTEREST ON OUTSTANDI NG LOANS TAKEN AND THAT IT HAD SUFFICIENT OWN INTEREST FREE FUNDS FOR MAKING THE IMPUGNED ADVANCES. THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER: THE FACTS OF THE CASE, THE BASIS OF DISALLOWACE & ADDITION MADE BY THE A.O. AND THE ARGUMENTS OF THE AR DURING THE COURSE OF APPELLATE PROCEEDINGS HAVE BEE N CONSIDERED. THE AO HAS DISALLOWED THE PROPORTIONATE AMOUNT OUT OF THE INTEREST EXPENSES BECAUSE THE ASSESSEE DID NOT CHARGE ANY INTEREST ON THE OUTSTAN DING AMOUNT IN THE NAME OF SMT. KAMAL KANTA JINDAL. THE A R HAS ARGUED THAT THIS AMOUNT WAS GIVEN IN THE EARLIER YE ARS AND THE BALANCE DURING THE YEAR WAS RS. 46,32,609/-. THE AR HAS ARGUED THAT THIS LOAN WAS GIVEN DURING THE F.Y. 200 5-06 OUT OF INTEREST FREE FUNDS RECEIVED FROM VARIOUS PA RTIES DURING THAT PERIOD. IN SUPPORT OF THIS THE AR HAS F ILED THE COPY OF ACCOUNTS OF SMT. KAMAL KANTA JINDAL, M/S ALL IED STEELS, M/S ALLIED AGRO IMPLEMENTS WORK, M/S STELCO LTD. AND M/S B.M.J. REAL ESTATES PVT. LTD. THE AR HAS FU RTHER ARGUED THAT THERE IS NO NEXUS BETWEEN THE BORROWED FUNDS AND THE AMOUNT ADVANCED TO SMT. KAMAL KANTA JINDAL AND THEREFORE THERE WAS NO VALID BASIS FOR MAKING THE DISALLOWANCE/ADDITION. A PERUSAL OF THE RECORDS AND DOCUMENTS FILED DURING THE APPELLATE PROCEEDINGS SHOWS THE ASSESSEE HAS NO T PAID ANY INTEREST ON THE AMOUNT OUTSTANDING IN THE NAME OF VARIOUS PARTIES FROM WHOM MONEY WAS RECEIVED DURING TH E F.Y. 2005-06. THE FACTS OF THIS CASE ARE SIMILAR TO THE FACTS FOR A.Y. 2007-08 WHICH HAS BEEN DECIDED IN FAVOUR OF TH E ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 17 ASSESSEE ON THIS ISSUE. THE CONTENTION OF THE ASSESS EE THAT IT HAS SUFFICIENT INTEREST FREE FUNDS TO GIVE AS LOAN T O SMT. KAMAL KANTA JINDAL, WAS FOUND TO BE CORRECT, THEREFORE THE A RGUMENT OF THE AR IS FOUND ACCEPTABLE. THE AO WAS NOT CORRE CT IN DISALLOWING ANY INTEREST AS THERE IS NO NEXUS BETWEE N THE INTEREST BEARING BORROWED FUND AND THE SUM ADVANCED T O SMT. KAMAL KANTA JINDAL. THE DISALLOWANCE MADE BY THE A.O. IS THEREFORE DELETED. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. 25. BEFORE US, THE LD. DR RELIED UPON THE ORDER OF THE A.O. AND THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE OR DER OF THE CIT(A). 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE ORDER OF THE LOWER AUTHORITIES. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A). THE FACTUA L FINDINGS OF THE CIT(A) THAT THERE WERE NO INTEREST BEARING B ORROWINGS BY THE ASSESSEE AND IT HAD SUFFICIENT OWN INTEREST FREE FUNDS FOR MAKING ADVANCES HAVE REMAINED UNCONTROVERTED BE FORE US. IN VIEW OF THE SAME, WE HOLD THAT THE LD.CIT(A) HAD RIGHTLY DELETED THE DISALLOWANCE MADE OF INTEREST E XPENDITURE OF RS.5,55,913/-. GROUND OF APPEAL NO.(IV) IS, THER EFORE, DISMISSED. THE APPEAL OF THE REVENUE IS DISMISSED. C.O.NO.49/CHD/20187 27. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT THE RELIEF ALLOWED BY THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS-5) LUDHIANA ON ACCOUNT OF RECOM PUTING THE INCOME OF THE ASSESSEE AFTER TAKING THE REVISED CAL CULATION OF CLOSING STOCK AS ON 31.03.2008BEING BASED ON THE FA CTS AND CIRCUMSTANCES AS WELL AS JUDGMENT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-2010 BY THE HON'BLE ITAT CHA NDIGARH BENCH CHANDIGARH IN APPEAL NO ITA 89/CHD/2013 DATED 5 TH DAY OF JANUARY 2016 AND OTHER VARIOUS JUDGMENTS AS DISCUSSED IN THE SAID ORDER. 2. THAT THE RELIEF ALLOWED BY THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS 5) LUDHIANA ON ACCOUNT OF DISAL LOWANCE OF INTEREST EXPENDITURE ON ACCOUNT OF INTEREST FREE LOA N GIVEN TO SMT KAMAL KANTA JINDAL BEING BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND JUDGMENT OF ITAT CHAN DIGARH BENCH CHANDIGARH IN ASSESSEE'S OWN CASE. ITA NOS. 1041& 1531/CHD/2017 C.O.NO.49/CHD/2017 &C.O. NOS.33-CHD/ 2018 A.YS.2008-09 & 2011-12 18 3. THAT THE APPEAL HAS BEEN FILED BY THE DEPARTMENT AFTER THE EXPIRY OF STATUTORY PERIOD AS PROVIDED UNDER TH E INCOME TAX ACT 1961 AS IS APPARENT FROM THE FORM NO 36 FILED B Y THE DEPARTMENT, THE ORDER OF THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS 5) LUDHIANA WAS RECEIVED ON 13.07.2016 WHERE AS THE APPEAL HAS BEEN FILED ON 22.06.2017 JUST AFTER A PERIOD OF ABOUT ONE YEAR. HENCE IT IS REQUESTED THAT NO BENEF IT OF DELAY IN FILING THE APPEAL BE GIVEN TO THE APPELLANT. IT IS REQU ESTED THAT THE APPEAL OF THE DEPARTMENT MAY KINDLY BE CONSIDERED L ATE AND FILED. 28. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE CROSS OBJECTION WAS ONLY IN SUPPORT OF THE ORDER OF THE L D.CIT(A). SINCE NO GRIEVANCE HAS BEEN RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION, THE SAME IS NOT MAINTAINABLE A ND IS, THEREFORE, DISMISSED. 29. IN THE RESULT, THE APPEALS OF THE REVENUE IN IT A NO.1041/CHD/2017 & ITA NO.1531/CHD/2017 AND THE CRO SS OBJECTIONS FILED BY THE ASSESSEE IN CO NO.33/CHD/20 18 & CO/49/CHD/2017 ARE ALL DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- $ % & '# (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER () /ACCOUNTANT MEMBER +$ /DATED: 30 TH APRIL, 2019 * # * #&' ()*) / COPY OF THE ORDER FORWARDED TO : 1. + / THE APPELLANT 2. ',+ / THE RESPONDENT 3. - / CIT 4. - ( )/ THE CIT(A) 5. )./' 0 , !0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35 / GUARD FILE #& / BY ORDER, / ASSISTANT REGISTRAR