JCIT, (OSD), CIR-2(1), KOLKATA, Kolkata V. M/s Axsys Technologies Ltd., Kolkata

ITA 1120/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1920 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN CIT DR REVEN
• Assessee Lawyers: ABHIJIT AGARWAL
• Keywords: Proportionate interest; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, A CCOUNTANT M EMBER & SRI S. S. VISWANETHRA RAVI , JUDICIAL MEMBER ] I.T.A. NO. 1120 /KOL/201 6 ASSESSMENT YEAR: 20 11 - 12 J .C.I.T. (OSD) CIRCLE - 2 (1), KOLKATA ..... . . ... APPELLANT AAYAKAR BHAWAN P - 7, CHOWRINGHEE SQUARE 7 TH FLOOR KOLKATA 700 069 M/S. AXSYS TECHNOLOGIES... . .. ... RESPONDENT BLOCK - EP SECTOR - V, SALT LAKE KOLKATA - 700 091 [PAN : AAGCA 4666 F ] APPEARANCES BY: SHRI ABHIJIT AGARWAL , APPEAR ED ON BEHALF OF THE ASSESSEE. SHRI SALLONG YADEN , ADDL. CIT , DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : NOVEMBER 30 TH , 2017 DATE OF PRONOUNCING THE ORDER : JANUARY 5 TH , 201 8 O R D E R PER J. SUDHAKAR REDDY : - THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 9 , KOLKATA , (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 1 6 / 02 /201 6 , FOR THE ASSESSMENT YEAR 20 11 - 12, ON THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF LD. CIT(A) WAS ERRONEOUS BECAUSE WITHOUT CONSIDERING THE MERIT OF THE CASE, ON THE BASIS OF THE ORDER OF THE EAR LIER YEARS, ALLOWED THE CLAIM OF EXEMPTION U/S 10A OF THE ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF PROPORTIONATE INTEREST OF RS.20,63,644/ - WITHOUT CONSIDERING THE F ACT THAT IN SPITE OF SUFFICIENT OWN FUND, THE ASSESSEE HAD TAKEN INTEREST BORROWING LOAN AND ADVANCED THE SAME TO THE HOLDING COMPANIES. 2 I.T.A. NO. 1120/KOL/2016 ASSESSMENT YEAR: 2011 - 12 M/S. AXSYS TECHNOLOGIES 3. THE REVENUE SHALL ALWAYS CRAVE FOR ADDING OR ALTERING ANY GROUND ON OR BEFORE THE DATE OF HEARING. 2. THERE IS A DELAY OF 3 DAYS IN FILING OF THE APPEAL. THE ASSESSEE HAS FILED A PETITION FOR CONDONATION OF DELAY. AFTER PERUSAL OF THE SAME WE ARE OF THE OPINION THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM NOT FILING THE APPEAL IN TIME. HENCE WE CONDONE THE DELAY AND ADMIT THIS APPEAL. 3 . AFTER HEARING THE RIVAL CONTENTIONS, WE FIND THAT THE VERY SAME ISSUE ON THE VERY SAME FACTS WAS ADJUDICATED BY THE C BENCH OF THE KOLKATA TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 1639/KOL/2012, FOR THE ASSESSME NT YEAR 2009 - 10, WHEREIN THE BENCH AT PARA 4.1. HAS HELD THAT, THE ASSESSEE CANNOT BE DENIED BENEFIT U/S 10A OF THE ACT. SIMILARLY ON THE ISSUE OF DISALLOWANCE OF INTEREST, THE BENCH HELD THAT THE DISALLOWANCE WAS MADE ON SURMISES AND CONJECTURES OF THE AS SESSING OFFICER. IT HELD THAT THE DEBIT BALANCES APPEARING IN THE LEDGER ACCOUNT IN THE NAME OF VCIL, CANNOT BE REGARDED AS MONEY ADVANCED OUT OF BORROWED FUNDS AND THAT THE ASSESSEE HAD INTEREST FREE FUNDS TO THE TUNE OF RS.1,53,56,168/ - . SIMILARLY FOR TH E ASSESSMENT YEAR 2010 - 11, THE B BENCH OF THE KOLKATA TRIBUNAL IN ITA NO. 827/KOL/2015, ORDER DT. 25/08/2017, HAD FOLLOWED THE DECISION OF THE TRIBUNAL IN THE EARLIER YEAR AND DIRECTED THE ASSESSING OFFICER TO ALLOW EXEMPTION TO THE ASSESSEE U/S 10A OF T HE ACT. ON THE ISSUE OF DISALLOWANCE OF INTEREST, AT PARA 17, IT WAS HELD AS FOLLOWS: - 17. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. THE FINDINGS OF CIT(A) REGARDING THE AVAILABILITY OF OWN FUNDS IN THE FORM OF PROCEEDS IS NOT DISPUTED BY THE REVENUE. BESIDES THE ABOVE IT IS ALSO NOT DISPUTED THAT THE ENTITY TO WHICH LOANS WERE GIVEN WERE SISTER CONCERNS AND THERE WAS COMMERCIAL EXPEDIENCY IN GIVING INTEREST FREE LOANS TO THE SISTER CONCERNS. THESE FACTS ARE NOT BEING DISPUTED B Y THE REVENUE BEFORE THE TRIBUNAL NOR ANY OTHER ARGUMENTS ADVANCED ON BEHALF OF THE REVENUE. IN THIS CIRCUMSTANCE, WE ARE OF THE VIEW THAT THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CI T VS RELIANCE UTILITIES & POWER LTD . (SUPRA) WOULD BE APPLICABLE. IT HAS BEEN HELD BY THE HON'BLE BOMBAY HIGH 3 I.T.A. NO. 1120/KOL/2016 ASSESSMENT YEAR: 2011 - 12 M/S. AXSYS TECHNOLOGIES COURT IN THE AFORESAID DECISION THAT WHERE INTEREST FREE FUNDS ARE AVAILABLE WITH AN ASSESSEE WHICH ARE MORE THAN INTEREST FREE ADVANCES MADE TO T HE SUBSIDIARY COMPANIES THEN THEPRESUMPTION SHOULD BE THAT INTEREST FREE ADVANCES WERE GIVEN OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. BESIDES THE ABOVE, IN THE CASE OF S.P.JAISWAL ESTATE S (P)LTD VS ACIT (SUPRA) IT HAS BEEN HELD BY THE TRIBUNAL THAT WHERE LOANS HAVE BEEN ADVANCED OWING TO COMMERCIAL EXPEDIENCY ESPECIALLY TO SISTER CONCERNS, IT CANNOT BE SAID THAT BORROWED FUNDS HAVE NOT BEEN USED FOR THE PURPOSE OF BUSINESS BY THE ASSESSEE. IN THE ABOVE F ACTUAL AND LEGAL POSITION, WE ARE OF THE VIEW THAT THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. THE ORDER OF THE CIT(A) IS THEREFORE CONFIRMED AND GROUND NO.2 RAISED BY THE REVENUE IS ALSO DISMISSED. 4. RESPECTFULLY FOLLOWING T HE SAME, WE UPHOLD THE CONTENTION OF THE ASSESSEE AND DISMISS BOTH THESE GROUNDS OF THE REVENUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 5 TH DAY OF JANUARY , 201 8 . SD/ - SD/ - [ S.S. VISWANETHRA RAVI ] [ J. SUDHAKAR REDDY ] J UDICIAL MEMBER ACCOUNTANT MEMBER DATED : 05 . 01 .201 8 {SC SPS} 4 I.T.A. NO. 1120/KOL/2016 ASSESSMENT YEAR: 2011 - 12 M/S. AXSYS TECHNOLOGIES COPY OF THE ORDER FORWARDED TO: 1. J.C.I.T. (OSD)CIRCLE - 2(1), KOLKATA AAYAKAR BHAWAN P - 7, CHOWRINGHEE SQUARE 7 TH FLOOR KOLKATA 700 069 2. M/S. AXSYS TECHNOLOGIES BLOCK - EP SECTOR - V, SALT LAKE KOLKATA - 700 091 3. CIT(A) - 4. CIT - , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES 5 I.T.A. NO. 1120/KOL/2016 ASSESSMENT YEAR: 2011 - 12 M/S. AXSYS TECHNOLOGIES