DCIT CEN CIR 9, MUMBAI V. RAWASSA CONSTRUCTION, MUMBAI

ITA 1065/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2398 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 02-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-02-2014
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Assessee Lawyers: R C JAIN
• Section: 143(3); 2

Judgement Text

, , D, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.1065/MUM/2014 ASSESSMENT YEAR: 2009-10 DCIT CEN CIR 9 9 TH FLOOR, OLD, CGO BLDG. M.K. RD. MUMBAI-400020 / VS. RAWASSA CONSTRUCTION 638, GORI HOUSE, TPS-III, 8 TH ROAD, KHAR (W) MUMBAI-400052 ( REVENUE ) ( RESPON DENT ) P.A. NO. AAAFR6170N REVENUE BY SHRI OMPRAKASH MEENA (DR) RESPONDENT BY SHRI R.C. JAIN (AR) ! ' # / DATE OF HEARING : 30/06/2016 ' # / DATE OF ORDER: 22/07/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST O RDER OF LD. ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-37 MUMBAI, {(IN SHORT CIT(A)}, PASSED AGAINST ASSESS MENT ORDER RAWASSA CONSTRUCTION 2 U/S 143(3) OF THE ACT, FOR THE A.Y 2009-10 ON THE F OLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RE LIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED. 1.WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) WAS RIGHT IN DELETING ADDITION O F INTEREST TO THE EXTENT OF RS. 89,72,725/- COMPUTED BY THE AO ON LOANS/ADVANCES MADE TO SISTER CONCERNS. 2.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) WAS RIGHT IN STATING T HAT LOAN / ADVANCE WAS PERTAINING TO EARLIER YEAR AND AS SUCH NO DISALLOWANCE IS WARRANTED. 3.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) WAS RIGHT IN INVOKING PRINCIPLE LAID DOWN IN THE CASE OF RADHASWAMI SATSANG VS. CIT (1991) 100 CIR (SC) 267 AND JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF H .A. SHAH & CO. VS. CIT / CEPT 1956) 30 ITR 618 (BOM). 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI OMPRAKASH MEENA, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI R.C. JAIN, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH TH E ORDERS PASSED BY THE LOWER AUTHORITIES. THE ONLY EF FECTIVE ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE MADE BY THE AO OUT OF INTEREST TO THE EXTENT OF RS.89,72,725/- WHICH HAS BEEN DELETED BY THE LD. CI T(A). 3.1. THE BRIEF BACKGROUND OF THE CASE IS THAT DURING TH E YEAR UNDER CONSIDERATION. IT WAS NOTED BY THE AO THAT TH E ASSESSEE HAD GIVEN INTEREST FREE LOANS AND ADVANCES TO ITS S ISTER CONCERN AND ON THE OTHER HAND, THE ASSESSEE PAID INTEREST E XPENDITURE RAWASSA CONSTRUCTION 3 AGGREGATING TO RS.1.72 CRORES AND THEREFORE, HE MAD E DISALLOWANCE @ 12% ON PRORATE BASIS FOR AN AGGREGAT E AMOUNT OF RS.93,92,725/-. 3.2. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT(A) WHEREIN DETAILED SUBMISSION WERE FILED S UBMITTING THAT THE ADVANCES WERE GIVEN FOR COMMERCIAL EXPEDIE NCY AND IN ANY CASE THE ASSESSEE HAD AVAILABILITY OF SUFFIC IENT AMOUNT OF INTEREST FREE FUNDS, OUT OF WHICH THE IMPUGNED A DVANCES WERE GIVEN AND IT WAS ALSO SUBMITTED THAT NO DISALL OWANCE HAS BEEN MADE IN ANY OF THE PAST YEARS AND THEREFORE, N O DISALLOWANCE SHOULD BE MADE IN THE YEAR UNDER CONSI DERATION. 3.3. THE LD. CIT(A) CONSIDERED THE ENTIRE SUBMISSIONS O F THE ASSESSEE AND FOUND THAT ASSESSEE HAD SUFFICIENT FUN DS OF INTEREST FREE FUNDS OUT OF WHICH ADVANCES COULD HAV E BEEN GIVEN. HOWEVER, IT WAS ALSO NOTED BY THE LD. CIT(A) THAT SINCE THE ASSESSEE HAD PAID INTEREST UPON THE PARTNERS C APITAL, THEREFORE, TO THE EXTENT OF ADVANCES GIVEN OUT OF P ARTNERS CAPITAL, THE DISALLOWANCE OF INTEREST WAS UPHELD PROPORTIONATELY. THUS, HE RESTRICTED THE DISALLOWAN CE TO RS.4,20,000/- AND DELETED THE BALANCE AMOUNT FOR WH ICH REVENUE IS AGGRIEVED BEFORE US. IT WAS STATED THAT THE ASSESSEE ACCEPTED THE ORDER OF LD. CIT(A). 3.4. IT IS NOTED THAT LD. CIT(A) HAS MADE FACTUAL ANALYS IS OF FINANCIAL STATEMENTS OF THE ASSESSEE AND FOUND THAT ASSESSEE HAD INTEREST-FREE FUNDS IN THE FORM OF CURRENT LIAB ILITIES TO THE EXTENT OF RS.7.42 CRORES WHEREAS INCREASE IN CURREN T ASSETS WAS NOT MORE THAN RS.5.48 CRORES. IT WAS FURTHER NO TED THAT THERE WAS NO INCREASE IN SECURED LOANS AND UNSECURE D LOANS RAWASSA CONSTRUCTION 4 DURING THE YEAR UNDER CONSIDERATION ON WHICH INTERE ST HAS BEEN PAID BY THE ASSESSEE. IN THE EARLIER YEARS, NO DISALLOWANCE WAS MADE. UNDER THESE CIRCUMSTANCES, I T WAS CLEARLY NOTED THAT THE ADVANCES TO THE SISTER CONCE RNS WERE GIVEN OUT OF NON- INTEREST BEARING FUNDS. IT WAS FU RTHER NOTED THAT THE AO HAD MADE NO NEXUS BETWEEN THE INTEREST BEARING BORROWED FUNDS AND INTEREST FREE ADVANCES. THUS, TA KING INTO ACCOUNT TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT LD. CIT(A) HAS RIGHTLY DELETED THE INTEREST DI SALLOWANCE ON PROPORTIONATE BASIS. THE ORDER OF LD. CIT(A) IS QUI TE FAIR AND JUSTIFIED AND NO INTERFERENCE IS CALLED FOR THEREIN AND THEREFORE, APPEAL OF THE ASSESSEE IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2016. SD/- (JOGINDER SINGH) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER ! MUMBAI; % DATED: 22/07 /2016 CTX? P.S/. . . #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. '() / THE APPELLANT 2. *+() / THE RESPONDENT. 3. , , - ( ' ) / THE CIT, MUMBAI. 4. , , - / CIT(A)- , MUMBAI 5. 01 *2 , , '# 23 , ! / DR, ITAT, MUMBAI 6. 45 6! / GUARD FILE. / BY ORDER, RAWASSA CONSTRUCTION 5 +0' * //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI