Ashok Kumar & Co. Mercantile Pvt. Ltd., Ludhiana V. ACIT, C-VII, Ludhiana

ITA 1003/CHANDI/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6619 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 27-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH SR DR
• Assessee Lawyers: ASHOK KUMAR JUNEJA
• Keywords: Opportunity of being heard

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC,CHANDIGARH , BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 1003/CHD/2018 / ASSESSMENT YEAR : 2014-15 M/S ASHOK KUMAR & CO. MERCANTILE PVT. LTD., RAJPURA ROAD, CIVIL LINES, LUDHIANA. THE ACIT, CIRCLE VII, LUDHIANA. ./ PAN NO: AAECA7622H / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI ASHOK KUMAR JUNEJA # ! ' / REVENUE BY : SHRI MANJIT SINGH, SR.DR $ % ! &/ DATE OF HEARING : 24.12.2018 '()* ! &/ DATE OF PRONOUNCEMENT : 21.01.2018 !/ ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 22.05.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS)-3, LUDHIANA [HEREINAFTER REFER RED TO AS CIT(A)]. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: I) THAT THE LEARNED CIT (A) HAS ERRED IN LAW & FACTS B EING UNJUSTIFIABLY UPHELD THE ADDITIONS WRONGLY MADE BY LD. A.O. II) THAT THE ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST AMOUTING TO RS. 701500/- IS WRONG AND ILLEGAL, SINCE THE FACTUAL PO SITION HAS TOTALLY BEEN IGNORED BY THE A.O AS WELL AS BY THE LD. CIT (A). III) THAT THE INTEREST U/S 234A HAS WRONGLY BEEN C HARGED BY LD. A.O. SINCE THE RETURN HAS BEEN FILED BEFORE THE DUE DATE OF FILING OF RETURN I.E. ON 29.11.2014. HENCE, NO INTEREST U/S 234A CAN BE LEVIED. IV) THAT THE APPELLANT CRAVES TO AMEND, ALTER, CH ANGE ANY OF THE GROUND(S) OF APPEAL. 3. A PERUSAL OF THE GROUNDS OF APPEAL SHOWS THAT TH E MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST THE CONFIRMATI ON OF DISALLOWANCE OF INTEREST AMOUNTING TO RS. 7,01,500/ -. THE ITA-1003/CHD/2018 PAGE 2 OF 3 AO DURING THE ASSESSMENT PROCEEDINGS NOTICED THAT T HE ASSESSEE HAD MADE INVESTMENT IN EQUITY SHARES OF IT S SISTER CONCERN NAMELY M/S AKC MOTORS PVT. LTD., LUDHIANA. HE FURTHER NOTED THAT THE ASSESSEE HAD USED BORROWED F UNDS FOR THE AFORESAID INVESTMENT. HE HELD THAT SINCE THE AF ORESAID INVESTMENT IN THE SHARE OF THE SISTER CONCERN WAS N OT RELEVANT TO THE BUSINESS ACTIVITY OF THE ASSESSEE, THEREFORE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF THE INTER EST EXPENDITURE INCURRED FOR THE SAID PURPOSE. HE, ACC ORDINGLY, INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF TH E ACT MADE THE IMPUGNED DISALLOWANCE OF RS. 7,01,500/- OUT OF INTEREST EXPENDITURE CLAIMED. 4. THE ASSESSEE PREFERRED THE APPEAL AGAINST THE SA ID DISALLOWANCE BEFORE THE CIT(A) BUT REMAINED UNSUCCE SSFUL. 5. AS PER THE WRITTEN SUBMISSIONS, THE CONTENTION O F THE ASSESSEE HAS BEEN THAT THE AFORESAID INVESTMENT IN SISTER CONCERN WAS MADE OUT OF BUSINESS EXPEDIENCY. FURTH ER THAT THE ASSESSEE DID NOT USE THE BORROWED FUNDS FOR THE SAME. THAT THE AFORESAID INVESTMENT WAS MADE OUT OF OWN F UNDS OF THE ASSESSEE. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HERO CY CLES (P) LTD. VS CIT (2015) 63 TAXMANN 308 (S.C) 6. THE LD. DR HAS SUBMITTED THAT THE ASSESSEE COULD NOT BRING RELIABLE EVIDENCE BEFORE THE LOWER AUTHORITIE S TO PROVE THAT THERE WAS ANY BUSINESS EXPEDIENCY FOR THE AFOR ESAID INVESTMENT MADE IN THE SHARES OF SISTER CONCERN AND FURTHER THAT THE ASSESSEE HAD USED ITS OWN/SURPLUS FUNDS FO R MAKING THE AFORESAID INVESTMENT. ITA-1003/CHD/2018 PAGE 3 OF 3 7. ON GOING THROUGH THE ORDERS OF THE LOWER AUTHORI TIES, THIS BENCH IS OF THE VIEW THAT THE MATTER NEEDS A F RESH EXAMINATION BY THE AO. THE IMPUGNED ORDER OF THE C IT(A) IS, THEREFORE, SET ASIDE. THE MATTER IS RESTORED TO TH E FILE OF THE AO TO EXAMINE THE AFORESAID PLEAS OF THE ASSESSEE A ND PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- ( ) (SANJAY GARG) / JUDICIAL MEMBER DATED: 21.01.2019 POONAM (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ( )/ THE CIT(A) 5. -01 2 , & 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7% / GUARD FILE (+ $ / BY ORDER, 8 # / ASSISTANT REGISTRAR