Appeal details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 2994 (ITAT-RAJKOT)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 1 month(s) 24 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
30-08-2022
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
27-07-2022
Assessment Year
2010-2011
Appeal Filed On
06-07-2016
Judgement Text
IT(SS)A Nos.125 & 126/Ahd/2016 & C.O. Nos.98 & 99/Ahd/2016 Assessment Years: 2009-10 & 2010-11 Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER IT(SS)A Nos.125 & 126/Ahd/2016 Assessment Years: 2009-10 & 2010-11 The D.C.I.T., Central Circle – 2(3) vs. Arvind V. Joshi & Co., Ahmedabad. Plot No.18, Maitri Bhavan, Sector-8, Gandhidham – Kutch – 370 201 [PAN – AABFA 6236 D] C.O. Nos.98 & 99/Ahd/2016 (In IT(SS)A Nos.125 & 126/Ahd/2016 respectively) Assessment Years: 2009-10 & 2010-11 Arvind V. Joshi & Co., vs. The D.C.I.T., Central Circle – 2(3) Plot No.18, Maitri Bhavan, Ahmedabad. Sector-8, Gandhidham – Kutch – 370 201 [PAN – AABFA 6236 D] (Appellants) (Respondents) Revenue by : Ms. Bhavna Yashroy, Ld. CIT(DR) Assessee by : Shri K. C. Thacker, Ld. AR Date of hearing : 28.07.2022 Date of pronouncement : 31.08.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : These appeals by the Revenue and Cross Objections by the assessee are filed against the consolidated order dated 28.12.2015 passed by the CIT(A)-12, Ahmedabad for the Assessment Years 2009-10 & 2010-11. 2. The Revenue in its Appeals have raised the following grounds: IT(SS)A Nos.125 & 126/Ahd/2016 & C.O. Nos.98 & 99/Ahd/2016 Assessment Years: 2009-10 & 2010-11 Page 2 of 6 IT(SS)A No.125/Ahd/2016 – A.Y. 2009-10 “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.2,55,51,604/- on account of warehouse rent being excessive payment to persons covered u/s.40A(2)(b) and not expedient to business expenditure. 2. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O. 3. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the AO be restored to the above extent.” IT(SS)A No.126/Ahd/2016 – A.Y. 2010-11 “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.2,86,59,222/- on account of warehouse rent being excessive payment to persons covered u/s.40A(2)(b) and not expedient to business expenditure. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.4,84,052/- on account of interest payment u/s.36(1)(iii). 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.18,10,538/- on account of Repairs & Maintenance. 4. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the AO be restored to the above extent.” The assessee in its Cross Objections have raised the following grounds: C.O. No.98/Ahd/2016 – A.Y. 2009-10 “1. The learned CIT(A) has erred in law and on facts in refusing to expunge the AO’s unwarranted observation in the assessment order imputing “non- cooperative attitude” on the part of the appellant holding that there is no positive evidence on record justifying expungement thereof and in holding that no prejudice is caused to the appellant on account of the same, disregarding the material placed on record in the appellate proceedings. IT(SS)A Nos.125 & 126/Ahd/2016 & C.O. Nos.98 & 99/Ahd/2016 Assessment Years: 2009-10 & 2010-11 Page 3 of 6 2. The learned CIT(A) has further erred in law and on facts in disregarding the material placed before him and holding that the action u/s.142(2A) of the Act for assigning the case for special audit at the fag end of limitation for completion of assessment was not to unlawfully extend the limitation and that the assessment was not barred by limitation due to illegal exercise of invoking S.142(2A) of the Act” C.O. No.99/Ahd/2016 – A.Y. 2010-11 “1. The learned CIT(A) has erred in law and on facts in refusing to expunge the AO’s unwarranted observation in the assessment order imputing “non-cooperative attitude” on the part of the appellant holding that there is no positive evidence on record justifying expungement thereof and in holding that no prejudice is caused to the appellant on account of the same, disregarding the material placed on record in the appellate proceedings. 2. The learned CIT(A) has further erred in law and on facts in disregarding the material placed before him and holding that the action u/s.142(2A) of the Act for assigning the case for special audit at the fag end of limitation for completion of assessment was not to unlawfully extend the limitation and that the assessment was not barred by limitation due to illegal exercise of invoking S.142(2A) of the Act” 3. The assessee is a partnership firm engaged in the business of Stevedoring, Clearing & Forwarding and Handling of Import & Export Cargo at Kandla Port. The assessee was also running facility called Container Freight Station at Village Mithi Rohar, Taluka Gandhidham. In the case of Friends Group, search operation under Section 132 of the Act was carried out on 15.06.2011. The assessee’s case was also covered in the search action. Thus, the assessee is governed by the provisions of Section 153A of the Act. Notice under Section 153A issued on 02.01.2013 and served upon the assessee. The assessee filed the return of income in response to notice under Section 153A for A.Y. 2009-10 declaring total income at Rs.6,69,18,955/- and Rs.5,38,20,900/- for A.Y. 2010-11. In A.Y. 2009-10 the Assessing Officer made disallowance of Rs.2,55,51,604/- being warehouse rent charges and added the said amount to the income of the assessee company. In respect of A.Y. 2010-11 the Assessing Officer made addition of Rs.2,86,59,222/- towards warehouse rent charges and Rs.18,10,538/- as disallowance towards Repairs & Maintenance as well as disallowance of interest expenses on sourced loan of Rs.41,08,110/- under Section 36(1)(iii) of the Act. IT(SS)A Nos.125 & 126/Ahd/2016 & C.O. Nos.98 & 99/Ahd/2016 Assessment Years: 2009-10 & 2010-11 Page 4 of 6 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. DR submitted that the CIT(A) erred in deleting the addition on account of warehouse rent being excessive payment to persons covered under Section 40A(2)(b) and not expedient to business expenditure. 6. The Ld. DR submitted that it is an admitted fact by the assessee that there is no agreement in writing for the rent with Sister Concern and others. The assessee has not submitted any documentary evidence regarding its claim of such expenses. The assessee has not furnished any reasons for increasing of warehouse rent as compared to the earlier year. Thus, this is nothing but accommodation entry just to avoid the legitimate payment of tax. As regards ground no.2 in A.Y. 2010-11, the Ld. DR submitted that the interest payment under Section 36(1)(iii) of the Act was not justifiable as for verification of the genuineness, notice under Section 133(6) of the Act was issued to the Contractor in which the response of one of the party was placed before the Assessing Officer but the said response was limited to the ledger of the assessee and has not furnished any documentary evidence such as bank statement or copy of bill. Thus, the genuineness was not established by the assessee. The Ld. DR further submitted that the advances were not due to commercial expediency and for the purpose of business and no nexus was proved by the assessee that non- interest bearing fund has been utilised for the purpose of giving non-interest bearing loans and advances. As regards ground no.3 for A.Y. 2010-11, Ld. DR submitted that assessee has not given details in respect of Repairs & Maintenance from the parties and, therefore, the appeal of the Revenue be allowed. 7. Ld. AR submitted that both the Cross Objections are not pressed and relied upon the decision of the CIT(A). 8. We have heard both the parties and perused all the relevant material available on record. As regards ground no.1 for A.Y. 2009-10 & 2010-11 related to 40A(2)(b) of the Act, the disallowance on account of warehouse rent being excessive payment was rightly deleted by the CIT(A) as the assessee has given the details related to IT(SS)A Nos.125 & 126/Ahd/2016 & C.O. Nos.98 & 99/Ahd/2016 Assessment Years: 2009-10 & 2010-11 Page 5 of 6 warehouse expenditure on rent thereby filing the details of related to entry/payment of the corresponding receipts along with cheques. The CIT(A) has taken cognisance of the same referring to the bills and invoices towards warehouse rent and recipient as party has already paid due tax thereon. Therefore, ground no.1 for A.Y. 2009-10 and 2010-11 of Revenue’s appeals are dismissed. 9. As regards ground no.2 of Revenue’s appeal in A.Y. 2010-11 the CIT(A) has rightly observed that CFS bill account shows that sizable amount of payables by the assessee to GFPL, thus the assessee was having sufficient fund and the assessee has established the nexus between the interest-free advance and the interest-bearing loans. The books of account of the assessee also show this fact. In fact, the assessee earned positive income of more than Rs.5 Crores which in any case should necessarily be considered available for making interest-free advances. As per observation of the CIT(A) the deployment of fund available with one concern of the group for the purpose of business has been taken into account while deleting this addition by the CIT(A). There is no need to interfere with the same and hence ground no.2 of Revenue’s appeal for A.Y. 2010-11 is dismissed. 10. As regards ground no.3 of Revenue’s appeal in A.Y. 2010-11 related to Repairs & Maintenance, as per the copy of the account of the said party and the assessee’s books certain repair and maintenance was carried out as per bill dated 01.03.2010 and 11.03.2010. The payments were made after deducting TDS. The parties directly confirmed the said charges while replying notice under Section 133(6) of the act. Thus, the Assessing Officer has totally ignored the evidences placed before him and, therefore, the CIT(A) rightly deleted this addition. Ground no.3 of Revenue’s appeal for A.Y. 2010-11 is dismissed. IT(SS)A Nos.125 & 126/Ahd/2016 & C.O. Nos.98 & 99/Ahd/2016 Assessment Years: 2009-10 & 2010-11 Page 6 of 6 11. In the result, both the appeals of the Revenue are dismissed as well as Cross Objections of the assessee are dismissed. Order pronounced in the open Court on this 31 st day of August, 2022. Sd/- ` Sd/- (ANNAPURNA GUPTA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 31 st day of August, 2022 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Rajkot Bench, Rajkot
Mehul