Appeal details
Counselvise Citation
[2014] 122 COUNSELVISE.COM (IT) 9806 (ITAT-AMRITSAR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
07-08-2014
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
05-08-2014
Assessment Year
2009-2010
Appeal Filed On
11-04-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 53(ASR)/2014 ASSESSMENT YEAR: 2009-10 PAN: AADFS4066K DEPUTY COMMISSIONER OF INCOME VS. M/S SHIVAM METAL SHAPER TAX, CENTRAL CIRCLE, JAMMU INDUSTRIES, PLOT NO. 12-13, G.T. ROAD, GANGYAL, JAMMU (APPELLANT) (RESPONDENT) WITH C.O. NO. 07(ASR)/2014 (IN I.T.A. NO. 53(ASR)/2014) ASSESSMENT YEAR: 2009-10 PAN: AADFS4066K DEPUTY COMMISSIONER OF INCOME VS. M/S SHIVAM METAL SHAPER TAX, CENTRAL CIRCLE, JAMMU INDUSTRIES, PLOT NO. 12-13, G.T. ROAD, GANGYAL, JAMMU (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. TARSEM LAL, DR ASSESSEE BY: SH. S.K. BANSAL, ADVOCATE DATE OF HEARING: 05.08.2014 DATE OF PRONOUNCEMENT: 07.08.2014 ORDER PER A.D. JAIN, J.M. 1. THE DEPARTMENTS APPEAL HAS BEEN FILED AGAINST TH E ORDER DATED 21.11.2013 PASSED BY LEARNED CIT(A)-I, LUDHIANA, FO R THE ASSESSMENT YEAR 2009-10. THE DEPARTMENT HAS RAISED TWO CHALLEN GES. THE FIRST IS 2 I.T.A. NO. 53(ASR)/2014 & C.O. NO. 07(ASR)/2014 AGAINST THE CIT(A)S ACTION OF DELETING THE DISALLO WANCE OF RS. 13,84,730/- UNDER SECTION 80IB OF THE INCOME-TAX AC T, 1961 (IN SHORT THE ACT), ON ACCOUNT OF EXCISE DUTY REFUND. THE S ECOND CHALLENGE IS AGAINST THE CIT(A)S ACTION OF DELETING THE ADDITIO N OF RS. 74,439/-, MADE ON ACCOUNT OF INTEREST. 2. THE FIRST ISSUE STANDS DECIDED BY THE LEARNED CIT (A) IN FAVOUR OF THE ASSESSEE, FOLLOWING M/S SHREE BALAJI ALLOYS AND ORS. VS. CIT, 333 ITR 335 (J&K). THE DEPARTMENT CONTENDS TH AT THE LEARNED CIT(A) HAS ERRED IN RELYING ON THE CASE OF M/S SHREE BALAJI ALLOYS (SUPRA), IGNORING THE HONBLE SUPREM E COURT DECISIONS IN SAHNEY STEEL AND PRESS WORKS LTD. VS. CIT , 228 ITR 253 (SC) AND CIT VS. PONNY SUGARS AND CHEM ICALS LTD. , 306 ITR 392 (SC). 3. THIS CONTENTION OF THE DEPARTMENT IS INCORRECT, INASMUCH AS, A READING OF M/S SHREE BALAJI ALLOYS (SUPRA) SHOWS THAT IT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AFTER DULY CONSID ERING THE CASES OF PONNY SUGARS AND CHEMICALS LTD. (SUPRA) AND SAHN EY STEEL AND PRESS WORKS LTD. (SUPRA). M/S SHREE BALAJI ALLOYS (SUP RA) HAS NOT BEEN SHOWN TO HAVE BEEN SET ASIDE, OR EVEN STAYED, AN AP PEAL. NO DECISION CONTRARY TO M/S SHREE BALAJI ALLOYS, (SUPRA) HAS BEEN CITED BY THE DEPARTMENT BEFORE US. BESIDES, RECENTLY, VIDE OUR O RDER DATED 05.08.2014, 3 I.T.A. NO. 53(ASR)/2014 & C.O. NO. 07(ASR)/2014 PASSED IN THE CASE OF M/S T.K. PAPER MILLS, PATHAN KOT, IN ITA NO. 106(ASR)/2014, FOR THE ASSESSMENT YEAR 2010-11, WE HAVE DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE, FOLLOWING M/S SHR EE BALAJI ALLOYS (SUPRA), AS BELOW: 6. HAVING CONSIDERED THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD, WE FIND THAT, IN THE ASSESSEES OWN CASE VIDE ORDER DATED 06.03.2012, FO R ASSESSMENT YEARS 2007-08 AND 2009-10, PASSED IN ITA NO. 326 AND 327(ASR)/2011, THIS BENCH, WHILE DECIDING T HE ISSUE AT HAND IN FAVOUR OF THE ASSESSEE, HAS FOLLOW ED SHREE BALAJI ALLOYS (SUPRA), RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT OF JAMMU AND KASHMIR, SO FAR AS THE PRESENT CASE IS CONCERNED. SHREE BALAJI ALLOYS (SUPRA) HOLDS, INTER ALIA, THAT EXCISE DUTY REFUND IS A CAP ITAL RECEIPT. THIS JUDGMENT, IT IS SEEN, HAS BEEN PASSED AFTER DULY TAKING INTO CONSIDERATION THE CASES OF SAHNEY STEEL AND PRESS WORKS LTD.(SUPRA) AND PONNY SUGARS AND CHEMICALS LTD.(SUPRA). THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE FOLLOWING THE CASE OF MEPCO INDUSTRIES LTD. VS. CIT, 319 ITR 208 (SC), WHEREIN , BOTH SAHNEY STEEL AND PRESS WORKS LTD.(SUPRA) AND PON NY SUGARS AND CHEMICALS LTD. (SUPRA) WERE CONSIDERED. 7. AS SUCH, THE DEPARTMENT IS WRONG IN CONTENDING THAT THE LEARNED CIT(A) HAS ERRED IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION (SUPRA) O F THE ITAT, AMRITSAR BENCH IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007-08 AND 2009-10, AND THAT THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE CA SES OF SAHNEY STEEL AND PRESS WORKS LTD.(SUPRA) AND PON NY SUGARS AND CHEMICALS LTD. (SUPRA). 4. FOR THE ABOVE DISCUSSION, THE CIT(A)S ORDER IN THIS REGARD IS CONFIRMED AND THE DEPARTMENTS GRIEVANCE ON THIS IS SUE STANDS REJECTED. 4 I.T.A. NO. 53(ASR)/2014 & C.O. NO. 07(ASR)/2014 5. APROPOS THE SECOND ISSUE, THE ASSESSING OFFICER MADE THE ADDITION OF RS. 74,439/- ON ACCOUNT OF INTEREST, HA VING FOUND THAT AN AMOUNT OF RS. 7,44,386/- STOOD DEBITED IN THE NAME OF SH. SAHIL BANSAL IN THE ASSESSEES UNIT NO. 1 AND THAT NO INTEREST HAD BEEN CHARGED FROM SH. SAHIL BANSAL ON THIS ACCOUNT. THE ASSESSING OFFICER CALCULATED THE INTEREST @ 10% PER ANNUM. 6. THE LEARNED CIT(A) DELETED THE ADDITION HOLDING AS FOLLOWS: I HAVE CONSIDERED THE FACTS OF THE CASE AND THE AR GUMENTS OF THE AR ON THE ISSUE. IT IS SEEN THAT THE ASSESSING OFFI CER HAS NOT EXAMINED THE ENTIRE SET OF FACTS IN RESPECT OF AMOU NTS ADVANCED TO SHREE SAHIL BANSAL. IT IS CLEAR FROM THE SUBMISSION OF THE APPELLANT THAT THERE WERE TWO CAPITAL ACCOUNTS IN TWO SEPARAT E UNITS OF THE ASSESSEE FIRM IN WHICH THERE WAS AMOUNT DUE TO SHRE E SAHIL BANSAL TO THE TUNE OF RS. 11,20,360/- AND DUE FROM SHREE S AHIL BANSAL TO THE TUNE OF RS. 7,44,386/- MEANING THEREBY THAT THE FIRM IN FACT OWED RS. 3,75,974/- TO SHREE SAHIL BANSAL ON WHICH NO INTEREST WAS PAID BY THE ASSESSEE FIRM. THE ASSESSING OFFICE R THEREFORE DID NOT APPRECIATE THE FACTS OF THE CASE IN RIGHT PERS PECTIVE BY ONLY LOOKING AT THE AMOUNT DUE TO THE FIRM AND IGNORING THE AMOUNT DUE FROM THE FIRM. EVEN OTHERWISE, THERE IS NO PROVISIO N IN THE INCOME TAX ACT, 1961 TO CHARGE NOTIONAL INTEREST ON AMOUNT S ADVANCED FREE OF INTEREST. THE ASSESSING OFFICER WAS IN FACT REQUIRED TO ESTABLISH CONNECTION BETWEEN THE INTEREST DEBITED I N THE PROFIT AND LOSS ACCOUNT AND NON USAGE OF THE SAME FOR THE PURP OSES OF BUSINESS, SO AS TO MAKE THE DISALLOWANCE IF AT ALL WARRANTED IN THE FACTS OF THE CASE. THEREFORE, ASSESSING OFFICERS A CTION IS WRONG ON FACTS AS WELL AS IN LAW. THE ADDITION MADE IS THERE FORE DIRECTED TO BE DELETED. 7. THE LEARNED DR HAS CONTENDED THAT THE LEARNED CI T(A) HAS WRONGLY DELETED THE ADDITION CORRECTLY MADE BY THE ASSESSING OFFICER. 5 I.T.A. NO. 53(ASR)/2014 & C.O. NO. 07(ASR)/2014 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 9. HAVING HEARD THE PARTIES IN THE LIGHT OF THE MAT ERIAL PLACED ON RECORD, WE FIND THAT THE FOLLOWING FACTS REMAINED U NDISPUTED: SH. SAHIL BANSAL WAS AN OLD PARTNER OF THE ASSESSEE FIRM. HE RETIRED FROM THE PARTNERSHIP FIRM ON 30.06.2006. THE ASSESSEE FI RM WAS KEEPING TWO SEPARATE CAPITAL ACCOUNTS OF EACH PARTNER IN EACH O F ITS UNITS. AT THE TIME OF RETIREMENT OF SH. SAHIL BANSAL FROM THE PARTNERS HIP FIRM, THERE WAS A DEBIT OF RS. 7,44,386.76 AGAINST SH. SAHIL BANSAL I N UNIT NO. 1, WHEREAS IN UNIT NO. 2, THERE WAS A CREDIT OF RS. 11,20,360.31 IN THE NAME OF SH. SAHIL BANSAL, COMING FROM EARLIER ASSESSMENT YEAR 2008-09 . AT THE TIME OF HIS RETIREMENT, THE ACCOUNT OF SH. SAHIL BANSAL WAS NOT CLEARED AND THE AMOUNT DUE FROM HIM WAS SHOWN AS DEBIT IN UNIT NO. 1 AND THE AMOUNT DUE TO HIM WAS SHOWN AS CREDIT IN UNIT NO. 2. THE A SSESSEE FIRM DID NOT PAY ANY INTEREST TO SH. SAHIL BANSAL ON THE AMOUNT OF RS. 11,20,360.31, NOR WAS ANY INTEREST ON RS. 7,44,386.76 CHARGED, EI THER IN ASSESSMENT YEAR 2008-09, OR IN ASSESSMENT YEAR 2009-10.THUS, T HE AMOUNT OF RS. 11,20,360.31, LYING WITH THE ASSESSEE FIRM FREE OF INTEREST, WAS MUCH MORE THAN THAT OF RS. 7,44,386.76 DUE FROM SH. SAHI L BANSAL, ON WHICH, NO INTEREST HAD BEEN CHARGED. 6 I.T.A. NO. 53(ASR)/2014 & C.O. NO. 07(ASR)/2014 10. THE ASSESSING OFFICER, AS CORRECTLY OBSERVED BY THE LEARNED CIT(A), REMAINED OBLIVIOUS OF THE ENTIRETY OF THES E FACTS. THE ASSESSEE FIRM, IN FACT, OWED AN AMOUNT OF RS. 3,75,974/- (TH E DIFFERENCE OF RS. 11,20,360/- AND RS. 7,44,386/-) TO SH. SAHIL BANSAL AND ON THIS AMOUNT, NO INTEREST WAS PAID BY THE ASSESSEE FIRM. THE ASSE SSING OFFICER ERRONEOUSLY TOOK INTO CONSIDERATION ONLY THE AMOUNT DUE TO THE ASSESSEE FIRM, WHILE NOT TAKING INTO ACCOUNT THE AMOUNT DUE FROM THE ASSESSEE FIRM. 11. MOREOVER, THE ASSESSING OFFICER DID NOT ESTABLIS H ANY NEXUS WHATSOEVER BETWEEN THE INTEREST DEBITED IN THE ASSE SSEES PROFIT AND LOSS ACCOUNT AND THE NON-USAGE THEREOF FOR THE PURPOSES OF BUSINESS OF THE ASSESSEES FIRM. WITHOUT SUCH NEXUS, IT CANNOT BE D ISPUTED, NO DISALLOWANCE WAS CALLED FOR. 12. THE DEPARTMENT HAS ALSO CONTENDED THAT THE LEARN ED CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE CLAIMED EXPE NDITURE OF RS. 2,30,000/- TOWARDS INTEREST PAYMENT, WHILE AT THE S AME TIME HAVING GIVEN INTEREST FREE ADVANCE OF RS. 7,44,366/- TO SH. SAHI L BANSAL. HERE, IT NEEDS BE REITERATED THAT THE DIFFERENCE BETWEEN THE AMOUN T DUE TO SH. SAHIL BANSAL (RS. 11,20,360/-) AND THE AMOUNT DUE FROM SH . SAHIL BANSAL (RS. 7,44,386/-) WAS RS. 3,75,974/-, WHICH IN ITSELF, IS MORE THAN THE SAID CLAIM OF RS. 2,30,000/-, REPRESENTING EXPENDITURE T OWARDS INTEREST PAID. 7 I.T.A. NO. 53(ASR)/2014 & C.O. NO. 07(ASR)/2014 13. FOR THE ABOVE DISCUSSION, FINDING NO ERROR THERE IN, WE HEREBY CONFIRM THE ORDER OF THE LEARNED CIT(A) IN THIS REG ARD ALSO, REJECTING THE GRIEVANCE OF THE DEPARTMENT. 14. THE CROSS-OBJECTION FILED BY THE ASSESSEE IS MER ELY SUPPORTIVE OF THE CIT(A)S ORDER. 15. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSE SSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2014 SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH AUGUST, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S SHIVAM METAL SHAPER INDUSTRIES, PLOT NO. 12-13, G.T. ROAD, GANGYAL, JAMMU 2. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, JAMMU 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.
