Win Printers, Ahmedabad V. The Income Tax Officer, Ward-6(2), Ahmedabad

ITA 1030/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 3555 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 26-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KR VERMA
• Assessee Lawyers: M J SHAH
• Keywords: Commercial expediency; Set aside
• Section: 143(3); 201; 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHRI AMARJIT SINGH , ACCOUNTANT MEMBER AND MS. MADHUMITA ROY , JUDICIAL MEMBER WIN PRINTS, H - 903 - 904, SARJAN TOWER, DRIVE - IN - ROAD, MEMNAGAR, GURUKUL ROAD, AHMEDABAD - 380054 PAN: AAAFW4084A (APPELLANT) VS THE ITO, WARD - 6(2), AHMEDABAD (RESPONDENT) REVENUE BY : S H RI SUMIT KR. VERMA , SR. D . R. ASSESSEE BY: SHRI M.J. SHAH, A.R. DATE OF HEARING : 27 - 07 - 2 018 DATE OF PRONOUNCEMENT : 27 - 09 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT M EMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , AR ISES FROM ORDER OF THE CIT(A) - 3 , AHMEDABAD DATED 2 9 - 02 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. YOUR APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY LEARNED C.I.T. (APPEALS) - III, AHMEDABAD, DATED 29.02.2016, PRESENTS THIS APPEAL ON FOLLOWING GROUNDS. 2. THE LEARNED C.I.T. (APPEALS) - III, AHMEDABAD HAS ERRED IN ADDITION OF INTEREST OF RS. 2 ,12,338/ - THOUGH FULLY EXPLAINED. THE DISALLOWANCE MADE TO BE DELETED. 3. THE SOLE GROUND OF APPEAL IS PERTAINED TO ADDITION OF INTEREST OF RS. 2 , 12 , 338/ - MADE BY THE ASSESSING OFFICER. THE FACT IN BRIEF OF THE CASE IS THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, U/S. 143(3) OF THE ACT IN THE CASE I T A NO . 1030 / A HD/2 0 16 A SSESSMENT YEAR 2011 - 12 I.T.A NO. 1030 /AHD/20 16 A.Y. 2011 - 12 PAGE NO WIN PRINTS VS. ITO 2 OF THE ASSESSEE, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAD DEBI T ED AN AMOUNT TO RS. 3 , 40 , 827/ - BEING INTEREST O N DEPOSITS. T THE ASSESSING OFFICER FURTHER NOTICED THAT AN AMOUNT OF RS. 17,69,4 81/ - REFLECTED UNDER THE HEAD LOAN AND ADVANCES IN THE BALANCE SHEET ON WHICH THE ASSESSEE HAS NOT SHOWN ANY INTEREST RECEIVED DURING THE YEAR UNDER CONSIDERATION. T HE ASSESSING OFFICER SHOW CAU S E THE ASSESSEE TO EXPLAIN WHY THE INTEREST @ 12% ON THE LOA N & ADVANCES OF RS. 17,69,481/ - SHOULD NOT BE COMUTED WHICH COMES TO RS. 2 , 12 , 338/ - AND THE CLAIM OF INTEREST TO THAT EXTENT SHOULD NOT BE DISALLOWED U/S. 36(1)(III ) OF THE ACT. THE ASSESSEE EXPLAINED THAT IN THE PAST YEAR ALSO NO SUCH INTEREST HAS BEEN C HARGED AND DEPARTMENT HAS ALSO ACCEPTED THE SAME IN T HE PRECEDING YEARS. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLA NA TION OF THE ASSESSEE ON THE GROUND THAT ON THE ONE HAND , THE ASSESSEE PAY S T HE INTEREST ON THE LOAN/ADVANCES BUT ON THE OTHER HAND, IT HAS BEEN ADVANCING LOAN S AND ADVANCES WITHOUT CHARGING ANY INTEREST ON SUCH LOAN AND ADVANCES. THEREFORE, HE OBSERVED THAT THE ASSESSEE SHOULD HAVE CHARGED NORMAL INTEREST @ 12% ON LOAN AND ADVANCES. ACCORDINGLY, HE HAS MADE ADDITION OF RS. 2 , 12 , 338/ - IN THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE T HE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE ADDITION MADE BY T HE ASSESSING OFFICER BY STATING THAT THE ASSESSEE HAS FAILED TO PROVE HOW SUCH AN INTEREST FREE ADVANCES T O THE SISTER CONCERN IS COMMERCIALLY EXPEDIENT. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS STATED THAT THE SAID ADVANCES TO THE SISTER CONCERN WAS ADVANCED OUT OF BUSINESS EXPEDIENCY. IN THIS CONNECTION, HE HAS REFERRE D BALANCE SHEET OF THE ASSESSEE AND STATED THAT AS PER SCHEDULE OF THE BALANCE SHEET SUCH ADVANCES WERE MADE TO THE SISTER CONCERN NAMED WIN - F L E X LTD. AS ADVANCES AGAINST PURCHASES OF GOODS. HE HAS FURTHER REFERRED ANNEXURE C OF THE BALANCE SHEET WHICH REFL ECTS THE DETAILS ON PAYMENT MADE FOR PURCHASES TO THE P ERSONS SPECIFIED U/S 40 I.T.A NO. 1030 /AHD/20 16 A.Y. 2011 - 12 PAGE NO WIN PRINTS VS. ITO 3 A2(B) OF THE ACT. HE HAS ALSO PROVIDED COPY OF LEDGER ACCOUNT SHOWING DETAILS OF SHARE/DEBENTURE H ELD BY THE ASSESSEE IN THE WINFLEX L T D . HE HAS ALSO PLACED RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF SA BUILDERS LTD. VS. CIT 2007 158 TAXMAN 64 (SC). ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON REC ORD. THE SOLITARY ISSUE IN THE GROUND OF APPEAL IS DISALLOWANCE OF INTEREST OF R S. 212338 / - U/S. 36(1)(III) OF THE ACT. ON SCRUTINY, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESS EE HAD DEBITED AN AMOUNT OF RS. 3,40,827/ - BEING INTEREST IN DEPOSITS. HOWEVER, THE ASSESEE HAS NOT CHARGED ANY INTEREST ON LOAN ADVANCES OF RS. 17,69,481/ - . THEREFORE, THE ASSESSING OFFICER HAS CHARGED INTEREST @ 12% ON SUM ADVANCES AMOUNTING TO RS. 2123 38/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE D. CIT(A) HAS SUSTAINED THE IMPUGNED ADDITION OF INTEREST IN RESPECT OF AFORESAID INTEREST FREE ADVANCES PROVIDED TO THE SISTER CONCERN. DURING THE APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS CONTENDED T HAT THESE INTEREST FREE ADVANCES W E RE PROVIDED TO THE S ISTER CONCERN OF THE ASSESSEE NAMED W IN FLE X LTD OUT OF BUSINESS EXIGENCIES. HE HAS RE FERRED SCHEDULE TO THE BALANCE S HEET IN WHICH IT WAS REFLECTED THAT ASSESEE HAS GIVEN AN AMOUNT OF RS. 40,40,481/ - AS ADVANCE AGAINST GOODS TO THE SISTER CONCERN WIN FLE X LTD. HE CONTENDED THAT INTEREST WAS CHARGED ON THE GROUND OF COMMERCIAL EXPEDIENCY. HE HAS ALSO PLACED RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF S.A. BUILDERS V. CIT(A) CHANDIGARH (20 07) 158 TAXMAN 74 (SC). ON THE OTHER HAND, TH E LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF THE LD. CIT(A). WE HAVE PERUSED THE S CHEDULE H SHOWING ADVANCES MADE TO THE SISTER CONCERN WIN - FLEX LTD. AGAINST GOO D S TO THE AMOUNT OF RS. 40 ,40,481/ - DURING THE YEAR UNDER CONSIDERATION . TH E LD. COUNSEL CLAIM THAT THE ADVANCES WAS MADE AGAINST GOODS WITHOUT CHARGING ANY INTEREST DEMONSTRATE THAT THESE ADVANCES WERE MADE ON ACCOUNT OF BUSINESS EXPEDIENCY WHICH JUSTIFY FOR NOT CHARGING OF AN INTEREST. WE HAVE OBSERVED THAT THESE DETAILS AND F ACTS HAVE NOT BEEN VERIFIED I.T.A NO. 1030 /AHD/20 16 A.Y. 2011 - 12 PAGE NO WIN PRINTS VS. ITO 4 AND EXAMINE D BY THE ASSESSING OFFICER AND L D. CIT(A). THEREFORE, TO ADJUDICATE THIS CASE, WE ARE OF THE OPINION THAT IT WILL BE APPROPRIATE TO RESTORE THIS CASE TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AFTER VERIFIC ATION AND EXAMINATION OF THE INFORMATION . ACCORDINGLY, THE CASE IS SET ASIDE TO THE FILE OF ASSESSING OFFICER AS DIRECTED ABOVE FOR DECIDING AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 27 - 09 - 201 8 SD/ - S D/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 27 /09 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,