M/s ATC Logistics Pvt. Ltd., Kolkata V. DCIT, Circle-14(1), Kolkata, Kolkata

CO 57/KOL/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 4000 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 23-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Capital asset; Salary income; Competent authority
• Section: 43B; 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 1619/KOL/20 16 ASSESSMENT YEARS : 2012- 13 ACIT, CIRCLE-14(1),KOLKATA -VS- M/ S ATC LOGISTICS PVT. LTD. [PAN: AAHCA 3020 A ] (APPELLANT) (RESPONDENT) C.O. NO. 57/KOL/2016 (ARISING OUT OF I.T.A NO. 1619/KOL/2016) ASSESSMENT YEARS : 2012- 13 M/S ATC LOGISTICS PVT. LTD. -VS- DC IT, CIRCLE-14(1),KOLKATA [PAN: AAHCA 3020 A ] (CROSS OBJECTOR) (RESPONDENT) FOR THE APPELLANT : SHRI G. HANGSHING, CIT FOR THE RESPONDENT : SHRI S.M SURANA, ADVOCAT E DATE OF HEARING : 03.07.2018 DATE OF PRONOUNCEMENT : 11.07.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTI ON OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)-5, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO. 11/CIT(A)-5/CIR.14(1)/15-16 D ATED 20.05.2016 AGAINST THE ORDER PASSED BY THE ITO, WARD-4(4), KOLKATA [ IN SHORT T HE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATE D 29.03.2015 FOR THE ASSESSMENT YEAR 2012-13. 2 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 2 FIRST LET US TAKE UP THE REVENUE APPEAL 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF LOGISTICS AND WAREHOUSIN G AND HAD FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2012-13 ON 23.8.2012 DECLARING TO TAL INCOME OF RS 1,67,79,745/-. LATER THIS RETURN WAS REVISED ON 17.12.2012 DECLARI NG TOTAL INCOME OF RS 1,79,79,750/-. THE LD AO ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT NOTICED THAT ASSESSEE COMPANY HAD CLAIMED EXPENDITURE ON TRANSPORTATION AND HANDLING CHARGES AMOUNTING TO RS 5,57,26,122/-. THE LD AO ASKED THE ASSESSEE TO FUR NISH THE DETAILS OF THE SAME TOGETHER WITH COMPLIANCE OF TDS PROVISIONS THEREON. THE AS SESSEE REPLIED BEFORE THE LD AO VIDE ITS LETTER DATED 16.3.2013 AS UNDER:- PAID WITH DEDUCTION OF TDS AS PER TDS RETURN - RS 83,27,377/- TRANSPORTATION PAYMENT TO VARIOUS TRANSPORTERS FOR HIRE OF VEHICLE AND INCLUDING TRANSPORTER HAVING PAN AND REIMBURSEMENT OF FUEL CHARGES - RS 4,73,9 8,745/- ---------------------- TOTAL RS 5,57,26,122/- ---------------------- 2.2. THE LD AO OBSERVED THAT EVEN THOUGH THE ASSESS EE HAD OBTAINED THE PAN FROM THE TRANSPORTERS IN TERMS OF SECTION 194C(6) OF THE ACT , IT IS BOUND TO SUBMIT THE SAME BEFORE THE PRESCRIBED INCOME TAX AUTHORITY IN TERMS OF SECTION 194C(7) OF THE ACT WITHIN THE PRESCRIBED TIME WHICH WAS NOT DONE IN THE INSTA NT CASE. THE LD AO ALSO OBSERVED THAT THE ASSESSEE IS OBLIGATED TO REPORT THE SAME A S NIL PAYMENT TO TRANSPORTER IN FORM 26Q AS PER AMENDMENT IN RULE 31A OF THE INCOME TAX RULES VIDE NOTIFICATION NO. 16/2011 DATED 29.3.2011, WHICH WAS ALSO NOT DONE BY THE ASSESSEE IN THE INSTANT CASE. 3 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 3 ACCORDINGLY, THE LD AO DID NOT ACCEPT THE ASSESSEE S CONTENTION THAT TAX WAS NOT DEDUCTIBLE ON THE AMOUNTS PAID TO TRANSPORTERS IF T HEY HAD FURNISHED THEIR PAN AND PROCEEDED TO DISALLOW THE SUM OF RS 4,73,98,745/- I N THE ASSESSMENT U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON-COMPLIANCE WITH THE PROVISION S OF SECTION 194C(6) / (7) OF THE ACT. 2.3. THE LD CITA DELETED THE DISALLOWANCE BY OBSERV ING AS UNDER:- THE APPELLANTS PLEA IS THAT SECTION 194C(6) PREVE NTS THE APPELLANT FROM EFFECTING TDS ON PAYMENTS TO TRANSPORTERS ONCE THE PAYEES FURNISH THEIR PANS. IT IS FURTHER ARGUED THAT THE DEFAULT, IF ANY, IN TERMS OF SECTION 194C( 7) CANNOT RESULT IN HOLDING THE APPELLANT AS ASSESSEE IN DEFAULT AS THE SAID DEFAUL T ARISES MUCH AFTER THE DATE OF DEDUCTIBILITY. THE APPELLANT HAS TO DECIDE WHETHER TDS IS TO BE EFFECTED OR NOT IMMEDIATELY WHEN IT RECEIVES PAN DETAILS AND WHEN T HE PAYMENT ARE BEING MADE OR CREDITED. ON FURNISHING OF PANS GOING AHEAD WITH DE DUCTIONS BY WAY OF TDS WOULD HAVE BEEN ILLEGAL. THE CONDUCT U/S 194C(7) IS COMPL ETELY EXTRANEOUS TO THE REQUIREMENT OF SECTION 194C(6). DECISION WHETHER TO DEDUCT OR NOT HAS TO BE TAKEN ONLY U/S 194C(6). THE AOS ACTION, THEREFORE, CANNOT BE UPHE LD. THIS GROUND [GROUND NO. IX] IS THUS ALLOWED. 2.4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 2.5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF THE LD AO. WE FIND THAT THE LD CITA HAD DELETED TH E DISALLOWANCE ON THE GROUND THAT AT THE TIME OF MAKING PAYMENT OR CREDIT TO THE ACCOUNT OF THE PAYEE, THE COMPLIANCE TO TDS PROVISIONS ARE TO BE CONSIDERED AND LOOKED FROM THIS PERSPECTIVE, THE ASSESSEE IN THE INSTANT CASE HAD INDEED OBTAINED PAN FROM ALL T HE TRANSPORTERS AND ACCORDINGLY NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE IN TERMS OF S ECTION 194C(6) OF THE ACT. WE FIND THAT THIS WOULD PROVE THE COMPLIANCE OF THE ASSESSE E IN RESPECT OF PROVISIONS OF SECTION 194C(6) OF THE ACT. HOWEVER, WE FIND THAT THE LEGIS LATURE LAYS DOWN FURTHER CONDITION TO THE ASSESSEE U/S 194C(7) OF THE ACT REQUIRING THE A SSESSEE TO FILE THOSE PAN BEFORE THE CONCERNED AUTHORITY WITHIN THE PRESCRIBED TIME. IN OUR CONSIDERED OPINION, THE PROVISIONS OF SECTION 194C(6) AND 194C(7) OF THE AC T ARE TO BE READ TOGETHER IN ORDER TO 4 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 4 SERVE THE PURPOSE OF THE LEGISLATURE. WE FIND THAT THE PURPOSE BEHIND THE PROVISIONS OF SECTION 194C(7) OF THE ACT IS TO ENABLE THE REVENUE TO TAKE CORRESPONDING ACTION WITH THE PAYEES (I.E TRANSPORTERS) AND MAKE VERIFICATION AS TO WHETHER THEY HAD FILED THEIR RETURNS IN THE FIRST INSTANCE AND IF SO, WHETHER TH EY HAD DULY DISCLOSED THE SUBJECT MENTIONED TRANSACTIONS IN THEIR RETURNS . THIS VER IFICATION WOULD BE PART AND PARCEL OF THE ACTION PLAN OF THE CBDT TO TRACK THE NON-FILERS OF INCOME TAX RETURNS OR ASSESSEES TRYING TO CONCEAL THEIR INCOME FOR A PARTICULAR YEA R. WE CANNOT MAKE THE PURPOSE OF THESE LEGISLATIVE PROVISIONS OTIOSE. WE FIND THAT THERE IS NO EVIDENCE ON RECORD TO PROVE AS TO ON WHICH DATE THE ASSESSEE HEREIN HAD SUBMITT ED THE PAN BEFORE THE COMPETENT AUTHORITY AS MANDATED IN SECTION 194C(7) OF THE ACT , WHICH ASPECT REQUIRES FACTUAL VERIFICATION BY THE LD AO. IT IS ALSO NOT CLEAR FR OM THE RECORDS AS TO WHETHER THE ASSESSEE HAD INDEED SUBMITTED THE PAN OF TRANSPORTE RS BEFORE THE COMPETENT AUTHORITY AS PRESCRIBED IN SECTION 194C(7) OF THE ACT, WHICH ALSO REQUIRES FACTUAL VERIFICATION. IN THE ABSENCE OF THESE FACTS ON RECORD, WE ARE NOT AB LE TO APPRECIATE THE VARIOUS CASE LAWS RELIED UPON BY THE LD AR WITH REGARD TO SECTION 194 C(6) AND 194C(7) OF THE ACT IN AS MUCH AS IN ALL THOSE CASES, THE PAN WAS INDEED SUBM ITTED TO THE COMPETENT AUTHORITY BUT BELATEDLY. HENCE IN THE INTEREST OF JUSTICE A ND FAIRPLAY, WE DEEM IT FIT AND APPROPRIATE TO REMAND THIS ISSUE TO THE FILE OF THE LD AO FOR VERIFICATION OF THIS ASPECT AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. ACCOR DINGLY, THE GROUND NO. 1 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE LD AO ON ACCOU NT OF UNDISCLOSED RECEIPT BASED ON DIFFERENCE IN RECEIPT AS PER FORM 26AS AND PROFIT A ND LOSS ACCOUNT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO ASKED THE ASSESSEE TO RECONCILE THE TURNOVER REFLECTED IN THE PROFIT AND LOSS ACCOUNT W ITH THAT REFLECTED IN FORM 26AS. THE 5 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 5 LD AO OBSERVED THAT THE ASSESSEE COMPANY ITSELF HAD ACCEPTED THE FOLLOWING DIFFERENCE TOTALING RS 90,10,087/- BETWEEN TURNOVER DECLARED A ND TURNOVER AS PER FORM 26AS AS UNDER:- SL. NO. PARTICULARS AMOUNT CREDITED AS PER FORM 26AS DETAILS OF TURNOVER DIFFERENCE 3. DISHNET WIRELESS LTD. 3,20,41,467/ - 2,33,70,765/ - 86,70,702/ - 5. ENVIRON ENERGY CORPORATION INDIA PVT. LTD. 19,81,396/ - 18,35,659/ - 1,45,737/ - 7. IDEA CELLULAR LTD. 58,16,487/ - 57,60,109/ - 56,378/ - 8. OUTOTEC INDIA PVT. LTD. 12,92,385/ - 12,83,615/ - 8,770/ - 11. TRANSCEND INFRASTRUCTURE PVT. LTD. 1,28,500/ - 0 1,28,500/ - TOTAL DIFFERENCE 90,10,087/- ACCORDINGLY, THE LD AO ADDED THE DIFFERENCE IN TURN OVER OF RS 90,10,087/- , WHICH HAS BEEN SUBJECTED TO DEDUCTION OF TAX AT SOURCE, TO TH E TOTAL INCOME OF THE ASSESSEE. 3.2. THE ASSESSEE PLEADED BEFORE THE LD CITA THAT T HE TOTAL TURNOVER SHOWN BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT WAS RS 13,1 3,15,108/- , WHEREAS THE TOTAL TURNOVER REFLECTED IN FORM 26AS WAS ONLY RS 8,25,48,615/-. SINCE THE TURNOVER REFLECTED IN THE PROFIT AND LOSS ACCOUNT IS MUCH MORE THAN WHAT IS R EFLECTED IN FORM 26AS, IT WAS PLEADED THAT THERE WAS NO UNDISCLOSED TURNOVER AS A LLEGED BY THE LD AO. THE LD CITA OBSERVED THAT THE LD AO HAS BEEN VERY SELECTIVE AND HAS PICKED UP ONLY CASES WITH HIGHER 26AS FIGURES, AT THE SAME TIME , IGNORING MU CH HIGHER FIGURES OF RETURNED TURNOVER AGAINST MANY OTHER PARTIES. NO REASON HAS BEEN GIVEN BY THE LD AO AS TO WHY HE IGNORED CASES OF MUCH HIGHER TURNOVERS THAN 26AS FIGURES WHEN HE PICKED UP FOR ADDITION 26AS FIGURES IN CASES IT WAS HIGHER THAN T HE OFFERED FIGURES. THE LD CITA OBSERVED THAT FIGURES MENTIONED IN FORM 26AS WERE A T VARIANCE WITH FIGURES MENTIONED IN PROFIT AND LOSS ACCOUNT IN RESPECT OF MOST OF TH E PARTIES. SINCE THE OVERALL TURNOVER DISCLOSED BY THE ASSESSEE WAS MORE THAN WHAT IS REF LECTED IN 26AS, HE DELETED THE ADDITION MADE IN THE SUM OF RS 90,10,087/-. 6 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 6 3.3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF THE LD AO. WE FIND THAT NO EFFORT HAS BEEN MADE BY THE ASSESSEE TO RECONCILE THE BASIC DIFFERENCE IN TURNOVER BETWEEN WHAT IS REPORTED IN ITS LEDGERS AND THAT REPORTED IN FORM 26AS. IT IS THE DUTY OF THE ASSESSEE TO RECONCILE THE TURNOVER IN RESPECT OF EACH PARTY VIS A VIS FORM 26AS AND GIVE PROPER EXPLANATION THEREON . BUT WE FIND THAT THE LD AO HAD DONE CHERRY PICKING OF THE PARTIES WHEREIN, HE HAD CONSIDERED ONLY THOSE PARTIES WHERE THE FIGURES IN 26AS ARE MORE THAN WHAT IS REFLECTED BY THE ASSESSEE . THIS ACTION IS NOT TENABLE AS PER LAW. IT IS NOT BORNE OUT FROM THE R ECORDS BEFORE US AS TO WHETHER THE ASSESSEE HAD CLAIMED THE FULL TDS CREDIT IN THE RET URN AND ASSESSMENT AS REFLECTED IN FORM 26AS. IT IS WELL SETTLED THAT TDS IS RELATED TO INCOME OFFERED THEREON I.E THE TDS COULD BE CLAIMED IN THE YEAR IN WHICH THE CORRESPON DING INCOME IS OFFERED TO TAX BY THE ASSESSEE. NO FINDING IN THIS REGARD IS GIVEN BY BO TH AO AND THE LD CITA FOR BETTER APPRECIATION OF THE FACTS. IN OUR CONSIDERED OPINI ON, THIS REQUIRES FACTUAL VERIFICATION BY THE LD AO. IN THESE FACTS AND CIRCUMSTANCES, WE DEE M IT FIT AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIRPLAY, TO REMAND THIS IS SUE TO THE FILE OF THE LD AO FOR DENOVO ADJUDICATION IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO FURNISH PROPER RECONCILIATION WITH FORM 26AS IN RESPECT OF EACH OF THE PARTY AND ALSO GIVEN LIBERTY TO FURNISH FURTHER EVIDENCES IN SUPPORT OF ITS CONTENT IONS. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PU RPOSES. 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS SHARE CAPITAL AS UNEXPLAINED CASH CREDIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO NOTICED THAT THE ASSESSEE COMPANY HAD INTRODUCED FRESH SHARE CAPITAL OF RS 50,00,000/ - AND SHARE PREMIUM OF RS 7 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 7 50,00,000/- DURING THE YEAR UNDER CONSIDERATION. T HE ASSESSEE FURNISHED THE DETAILS BEFORE THE LD AO AS UNDER:- NAME OF THE SHARE HOLDER AS ON 31.03.2011 AS ON 31.03.2012 SHARE CAPITAL SHARE PREMIUM SHARE CAPITAL SHARE PR EMIUM TUTUL CHOWDHURY 3,70,00,000 86,66,000 3,90,00,000 1,06,66,000 ANUSHREE CHOWDHURY 15,00,000 6,67,000 30,00,000 21,67,000 BIPUL CHOWDHURY 15,00,000 6,67,000 30,00,000 21,67,000 TOTAL 4,00,00,000 1,00,00,000 4,50,00,000 1,50,00, 000 4.2. THE ASSESSEE STATED THAT THE EXISTING SHAREHO LDERS/ DIRECTORS OF THE ASSESSEE COMPANY HAVE INTRODUCED ADDITIONAL SHARE CAPITAL AN D SHARE PREMIUM TOTALING TO RS 1,00,00,000/- DURING THE YEAR. THE LD AO ISSUED SU MMONS U/S 131 OF THE ACT TO SHRI TUTUL CHOWDHURY, THE DIRECTOR WHO HAS SIGNED THE I NCOME TAX RETURN FOR THIS YEAR TO ATTEND AND EXPLAIN THE SERVICE OF MAKING FRESH INVE STMENTS IN THE ASSESSEE COMPANY AND ALSO PRODUCE OTHER INVESTORS / SHAREHOLDERS TO EXPL AIN THEIR INVESTMENTS IN THE ASSESSEE COMPANY. SUMMONS U/S 131 OF THE ACT REMAINED UNCOM PLIED WITH UNTIL 9.3.2015 . LATER WHEN SHOWCAUSED IN THIS REGARD FOR DRAWING AD VERSE INFERENCE, SHRI TUTUL CHOWDHURY APPEARED ON 19.3.2015 AND ALSO PRODUCED S HRI BIPUL CHOWDHURY AND SMT ANUSHREE CHOWDHURY (OTHER SHAREHOLDERS) AND SUBMITT ED COPY OF THEIR INCOME TAX RETURNS, BALANCE SHEETS AND BANK STATEMENTS FOR ASS T YEAR 2012-13. THE LD AO ALSO RECORDED INDIVIDUAL STATEMENTS FROM THEM ON OATH U/ S 131 OF THE ACT AND FOUND THAT THESE SHAREHOLDERS HAD MADE INVESTMENTS IN THE ASSE SSEE COMPANY TOWARDS SHARE CAPITAL AND SHARE PREMIUM BOTH IN CASH AS WELL AS I N CHEQUE AND ALSO HAD UNSECURED LOANS OUTSTANDING IN THEIR PERSONAL BALANCE SHEETS AS UNDER:- 8 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 8 NAME TOTAL SHARE CAPITAL/PREMIUM INVESTED DURING THE YEAR BY CHEQUE BY CASH UNSECURED LOANS IN PERSONAL BALANCE SHEET TUTUL CHOWDHURY 40,00,000 14,15,000 25,85,000 2,05,52,056 BIPUL CHOWDHURY 30,00,000 4,50,000 25,50,000 44,25,000 ANUSHREE CHOWDHURY 30,00,000 9,50,000 20,50,000 65,97,000 4.3. WHEN ALL THESE SHAREHOLDERS WERE SPECIFICALLY ASKED TO EXPLAIN THE SOURCE OF THEIR INVESTMENTS IN THE ASSESSEE COMPANY , ALL OF THEM R EPLIED THAT INVESTMENTS WERE MADE OUT OF OWN SAVINGS / INCOME FROM SALARY AND OWN BUS INESS INCOME AND ALSO FROM SOME AMOUNT OF UNSECURED LOANS AND AS THESE LOANS HAD SI NCE BEEN REPAID IN APRIL 2014, THEY WERE UNABLE TO RECOLLECT THE LENDERS NAME. THE L D AO BASED ON THESE REPLIES OBSERVED THAT THE THREE SHAREHOLDERS COULD NOT SATISFACTORIL Y PROVE THE SOURCE FOR MAKING INVESTMENTS IN CASH TOWARDS THE SHARE CAPITAL AND S HARE PREMIUM TO THE TUNE OF RS 71,85,000/- AND ACCORDINGLY TREATED THE SAME AS UNE XPLAINED CASH CREDIT U/S 68 OF THE ACT. HOWEVER, THE LD AO ACCEPTED THE INVESTMENTS MADE BY THESE THREE PARTIES IN CHEQUE TO THE TUNE OF RS 28,15,000/- DURING THE YEA R UNDER CONSIDERATION. 4.4. THE LD CITA OBSERVED THAT THE LD AO HAVING AC CEPTED THE CONTRIBUTIONS MADE BY THESE THREE SHAREHOLDERS BY CHEQUES OUGHT NOT TO HA VE QUESTIONED THEIR CASH CONTRIBUTIONS IN AS MUCH AS THEY ARE REGULARLY ASSE SSED TO INCOME TAX AND THEY HAD CONFIRMED THE FACT OF MAKING INVESTMENTS BOTH IN CA SH AND CHEQUE IN THE ASSESSEE COMPANY. ACCORDINGLY, HE DELETED THE ADDITION MADE IN THE SUM OF RS 71,85,000/-. 4.5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US . 4.6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS STATED HEREINABOVE ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT T HE THREE SHAREHOLDERS HAD DULY CONFIRMED THE FACTUM OF MAKING INVESTMENTS IN CASH AS WELL AS CHEQUES IN THE ASSESSEE 9 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 9 COMPANY. THEY HAD ALSO FILED THEIR RESPECTIVE BALA NCE SHEETS AND INCOME TAX RETURNS TO PROVE THEIR CREDIT WORTHINESS. WE FIND THAT NO FIN DING IS GIVEN BY THE AUTHORITIES BELOW TO EXPLAIN THE SOURCES OF THREE SHAREHOLDERS TO MAK E INVESTMENTS IN CASH WITH FACTS AND FIGURES BY CLEARLY PROVING THAT AS ON THE DATE OF M AKING THE INVESTMENTS IN ASSESSEE COMPANY, WHETHER THE THREE SHAREHOLDERS HAD SUFFICI ENT CASH BALANCES AS PER BOOKS. THIS HAS TO BE VERIFIED FROM THEIR CASH BOOK OR FRO M THEIR CASH FLOW STATEMENT. THE LD AO IS ACCORDINGLY DIRECTED TO MAKE FACTUAL VERIFICA TION OF THE SAME IN THE MANNER KNOWN TO LAW TO ASCERTAIN THE VERACITY OF THEIR CRE DITWORTHINESS. ACCORDINGLY, WE DEEM IT FIT TO REMAND THIS GROUND TO THE FILE OF THE LD AO. ACCORDINGLY, THE GROUND NO. 3 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PU RPOSES. 5. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS SERVICE TAX U /S 43B OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO NOTICED THAT THE SERVICE TAX OUTSTANDING AS ON 313.2012 IN THE SUM OF RS 23,23,3 80/- WAS ACTUALLY PAID ON 28.3.2013 I.E AFTER THE DUE DATE OF FILING THE RETU RN U/S 139(1) OF THE ACT. THE LD AO OBSERVED THAT WHEN ASSESSEE WAS SHOW CAUSED IN THIS REGARD AS TO WHY THE SAME SHOULD NOT BE DISALLOWED U/S 43B OF THE ACT, THE ASSESSEE ACCEPTED FOR THE DISALLOWANCE . ACCORDINGLY THE LD AO ADDED THE SUM OF RS 23,23,380 /- TO THE TOTAL INCOME OF THE ASSESSEE. 5.2. BEFORE THE LD CITA, THE ASSESSEE STATED THAT I T HAD NOT CLAIMED ANY DEDUCTION TOWARDS SERVICE TAX AND HENCE THE PROVISIONS OF SEC TION 43B OF THE ACT CANNOT BE MADE APPLICABLE AT ALL IN THE FIRST INSTANCE. IT EXPLAI NED THAT SERVICE TAX IS TO BE PAID WHEN COLLECTED FROM THE SUNDRY DEBTORS ON WHOM THE BILLS WERE RAISED. THE AMOUNT WAS REALIZED FROM THE SUNDRY DEBTORS IN THE NEXT YEAR A ND ACCORDINGLY THE SERVICE TAX PORTION 10 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 10 THEREON WAS ALSO PAID IN THE NEXT YEAR. THE ASSESS EE PLACED RELIANCE ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF OVIRA LOGISTIC P LTD REPORTED IN 232 TAXMAN 240 (BOM) AMONG OTHER DECISIONS IN SUPPORT O F ITS CONTENTIONS. THE LD CITA FOLLOWING THE VARIOUS JUDGEMENTS ON THE IMPUGNED IS SUE ALLOWED THE GROUND OF THE ASSESSEE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFOR E US. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LD DR WAS NOT ABLE TO PROVIDE ANY CONTRARY CASE LAW BEFORE US NOR WAS HE ABLE TO CONTROVERT THE CLAIM OF THE ASSESSEE THAT NO DEDUCTION PER SE WAS CLAIMED BY TH E ASSESSEE TOWARDS SERVICE TAX SO AS TO FALL OUTSIDE THE AMBIT OF SECTION 43B OF THE ACT . THE LD AR ARGUED THAT SERVICE TAX PORTION IS KEPT AS A LIABILITY IN THE BOOKS AND AS AND WHEN THE SAME IS PAID , THE LIABILITY ACCOUNT GETS KNOCKED OFF. HENCE IT DOES NOT ENTER THE PROFIT AND LOSS ACCOUNT AT ALL. WE FIND NO INFIRMITY IN THE ORDER OF THE LD CITA GRANT ING RELIEF TO THE ASSESSEE BY PLACING RELIANCE ON VARIOUS DECISIONS. ACCORDINGLY, THE GR OUND NO. 4 RAISED BY THE REVENUE IS DISMISSED. 6. THE LD AR AT THE TIME OF HEARING STATED THAT IN VIEW OF SMALLNESS OF THE AMOUNT INVOLVED IN GROUND NO. 5 RAISED BY THE REVENUE, HE IS NOT WILLING TO PRESS THE SAME. ACCORDINGLY, THE GROUND NO. 5 RAISED BY THE REVENUE IS DISMISSED AS NOT PRESSED IN VIEW OF SMALLNESS OF THE AMOUNT INVOLVED THEREIN. 7. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF INTEREST U/S 36(1)( III) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO OBSERVED THAT ASSESSEE HAD GRANTED INTEREST FREE LOANS OF RS 2,21,46,138/- TO ITS RELA TED PARTIES ON ONE HAND , BUT ON THE OTHER HAND HAD PAID INTEREST ON ITS BORROWINGS. AC CORDINGLY, HE OBSERVED THAT THE 11 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 11 LENDING TO RELATED PARTIES IS NOT PART OF THE BUSIN ESS AND PROCEEDED TO DISALLOW THE INTEREST PAID ON A PROPORTIONATE BASIS IN THE SUM O F RS 29,67,423/-. THE ASSESSEE SUBMITTED THAT IT HAD NOT TAKEN UNSECURED LOANS BUT ALL THE LOANS WERE SECURED TERM LOANS WHICH WERE GRANTED FOR THE ACQUISITION OF THE CAPITAL ASSETS. TERM LOAN IS IN FACT PAID DIRECTLY BY THE LENDER TO THE SUPPLIER OF THE CAPITAL ASSETS. THE TERM LOAN CONTINUED FROM EARLIER YEAR. HENCE THERE CANNOT BE A SITUATI ON WHEREIN TERM LOANS COULD BE USED FOR LENDING TO RELATED PARTIES FREE OF INTEREST. I T WAS SUBMITTED THAT THE ASSESSEE HAS SUFFICIENT OWN FUNDS IN THE FORM OF SHARE CAPITAL A ND RESERVES AND SURPLUS WHICH IS SEVERAL TIMES MORE THAN THE INTEREST FREE ADVANCES MADE AND PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F RELIANCE UTILITIES AND POWER LTD REPORTED IN 313 ITR 340 (BOM), AMONG OTHER DECISION S. THE LD CITA OBSERVED THAT OWN FUNDS OF THE ASSESSEE COMPANY AS PER THE BALANC E SHEET WAS RS 9.20 CRORES AND INTEREST FREE LOANS GIVEN TO RELATED PARTIES WAS RS 2.25 CRORES. SINCE THE INTEREST FREE LOANS OF RS 2.25 CRORES WAS LESS THAN OWN FUNDS OF RS 9.20 CRORES, HE HELD THAT IT WOULD BE INCORRECT TO STATE THE BORROWED FUNDS WERE DIVER TED FOR NON-BUSINESS PURPOSES. ACCORDINGLY , HE DELETED THE DISALLOWANCE OF INTERE ST IN THE SUM OF RS 29,67,423/-. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 7.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND T HAT THE LD CITA HAD DELETED THE DISALLOWANCE AFTER RECORDING A FACTUAL FINDING THAT THE ASSESSEE WAS HAVING SUFFICIENT OWN FUNDS TO ADVANCE INTEREST FREE FUNDS TO RELATED PARTIES. THIS FACTUAL FINDING REMAIN UNCONTROVERTED BEFORE US BY THE REVENUE. HENCE WE FIND NO INFIRMITY IN THE ORDER OF THE LD CITA APPLYING THE DECISION OF HONBLE BOMBAY HIG H COURT SUPRA TO THE FACTS OF THE INSTANT CASE. ACCORDINGLY, THE GROUND NO. 6 RAISED BY THE REVENUE IS DISMISSED. 8. THE GROUND NO. 7 RAISED BY THE REVENUE IS GENERA L IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 12 ITA NO.1619/KOL/2016& CO NO.57/KOL/2016 M/S ATC LOGISTICS PVT. LTD. A.YR.2012-13 12 9. THE LD AR AT THE TIME OF HEARING STATED THAT THE GROUNDS RAISED IN THE CROSS OBJECTIONS OF THE ASSESSEE ARE ONLY SUPPORTIVE OF T HE ORDER OF THE LD CITA AND HENCE NOT PRESSED. ACCORDINGLY THE CROSS OBJECTIONS OF THE A SSESSEE ARE DISMISSED AS NOT PRESSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE COURT ON 11.07 .2018 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.07.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-14(1), KOLKATA, AAYAKAR BHAWAN POOR VA, 110, SHANTIPALLY, E.M. BYE PASS, 6 TH FLOOR, KOLKATA-700107. 2. M/S ATC LOGISTICS PRIVATE LIMITED, BADU ROAD, RA NI PARK, MADHYAMGRAM, KOLKATA- 700129. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S