The DCIT, Circle-8, Ahmedabad V. Sampat Alluminium Pvt. Ltd., Ahmedabad

ITA 1186/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1225 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 24-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N SHAH
• Keywords: Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1186/AHD/2013 / ASSTT. YEAR: 2008-2009 DCIT, CIR.8 AHMEDABAD. VS M/S.SAMPAT ALUMINUM PVT. LTD. 5/A, DEORA AVENUE, NR.RASHMI CO-OP. SOCIETY LTD. NR. MITHAKALI SIX ROADS NAVRANGPURA, AHMEDABAD 380 009. PAN : AAECS 3524 Q ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR.DR ASSESSEE BY : SHRI S.N. SHAH / DATE OF HEARING : 24/06/2016 / DATE OF PRONOUNCEMENT: 13/07/2016 $%/ O R D E R THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF THE LD.CIT(A)-XIV, AHMEDABAD DATED 25.2.2013 PASSED FOR THE ASSTT.YEAR 2008- 09. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.36,15,661/- WHICH W AS MADE BY THE AO OUT OF INTEREST EXPENDITURE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ELECTRONICALLY ON 29.9.2008 DECLARING NIL INCOME. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS DEBITED EXPENDITURE OF RS.46,77,511/-. ON SCRUTINY OF THIS CLAIM, IT REVEALED TO THE AO THAT A SUM OF RS.36,15,661/- OUT ITA NO.1186/AHD/2013 2 OF TOTAL INTEREST EXPENDITURE WAS INCURRED ON ACCOU NT LATE PAYMENT MADE AGAINST PURCHASES. IN OTHER WORDS, THERE WERE VARI OUS SUNDRY CREDITORS FROM WHOM THE ASSESSEE HAS MADE PURCHASES. THE ASSESSEE HAD MADE PAYMENT OF INTEREST ON SUCH LATE PAYMENT OF PURCHASES COST. T HE AO FURTHER FOUND THAT ONE OF THE SISTER CONCERNS, THE ASSESSEE HAD EXTEND ED CREDIT LIMIT AND DID NOT CLAIM INTEREST ON THE BALANCE REQUIRED TO BE PAID B Y THE SISTER CONCERN. ACCORDING TO THE AO, HAD THE ASSESSEE CHARGED INTER EST, ON SUCH OUTSTANDING PAYMENTS FROM THE SISTER CONCERN, THEN THE INTEREST COULD BE COMPUTED AT RS.72,03,109/-. ON ACCOUNT OF THIS, THE LD.AO DID NOT GRANT DEDUCTION OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE TOWARD S LATE PAYMENT TO THE SUNDRY CREDITORS. 4. ON APPEAL, THE LD.CIT(A) HAS DELETED THE DISALLO WANCE. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD SUMMARY LEDGER ACCOUNT WITH REGARD TO THE SISTER CO NCERN, WHICH READS AS UNDER: SR. NO. MONTH OPENING BALANCE (RS.) AMOUNT RECEIVED (RS.) BALANCE OUTSTANDING AGAINST OP. BAL.(RS.) SALES (RS.) PURCHASES CLOSING BALANCE (1) (2) (3) (4) ( 5) (6) [1+2-4-5] 1 APR-07 74,083,385 DR. 24,850,000 49,233,385 16,392,301 65,625,686 DR. 2 MAY-07 65,625,686 DR. 4,400,000 44,833,385 18,859,329 183,163 79,901,852 DR. 3 JUN-07 79,901,852 DR. 20,450,000 24,383,385 10,504,722 - 69,956,574 DR. 4 JUL-07 69,956,574 DR. 11,500,000 12,883,385 19,683,417 - 78,139,991 DR. 5 AUG-07 78,139,991 DR. 14,800,000 8,020,406 - 71,360,397 DR. 6 SEP-07 71,360,397 DR. 20,500,000 16,530,841 - 67,391,238 DR. 7 OCT-07 67,391,238 DR. 14,000,000 12,003,091 - 65,394,329 DR. 8 NOV-07 65,394,329 DR. 28,960,000 4,781,261 241,322 40,974,268 DR. ITA NO.1186/AHD/2013 3 9 DEC-07 40,974,268 DR. 2,075,000 9,480,154 48,379,422 10 JAN-08 48,379,422 DR. 7,800,000 3,523,197 - 44,102,619 DR. 11 FEB-08 44,102,619 DR. 13,000,000 - - 31,102,619 DR. 12 MAR-08 31,102,619 DR. 13,850,000 - 212,796 17,039,823 DR. TOTAL. 176,185,000 119,778,719 637,281 6. THE STAND OF THE ASSESSEE BEFORE THE LD.REVENUE AUTHORITIES WAS THAT IT GOT VOLUME OF BUSINESS FROM THE SISTER CONCERN, THE REFORE, IN THE INTEREST OF BUSINESS, IT WAS NOT ADVISABLE AT THE END OF THE AS SESSEE TO CHARGE INTEREST FROM THE SISTER CONCERN ON THE OUTSTANDING BALANCE. SIMILARLY, THE INTEREST WAS PAID ON THE PURCHASE COST TO THE ALLEGED SUPPLIERS, BECAUSE, THEY INSISTED FOR THE PAYMENT OF INTEREST AND IT WAS A BUSINESS COST TO THE ASSESSEE. THE LD.CIT(A) HAS ACCEPTED THIS CONTENTION OF THE ASSES SEE ON THE GROUND THAT THESE WERE BUSINESS TRANSACTION WHICH WERE TAKEN BY THE ASSESSEE ACCORDING TO THE REQUIREMENTS. IT WAS DECIDED BY THE ASSESSEE N OT TO CHARGE INTEREST FROM THE SISTER CONCERN, MORE PARTICULARLY, IN THIS YEAR , THE ASSESSEE HAD MADE SALES OF RS.11,97,78,719/- TO THE SISTER CONCERN, WHEREA S IT HAS RECEIVED PAYMENT OF RS.17,61,85,000/-. IT SUGGESTS THAT IN THIS YEAR N O FRESH CREDIT FACILITY WAS EXTENDED BY THE ASSESSEE TO THE SISTER CONCERN. TH EREFORE, AFTER TAKING INTO CONSIDERATION WELL REASONED ORDER OF THE LD.CIT(A), I DO NOT FIND ANY REASON TO INTERFERE IN IT. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 13 TH JULY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 13 /07/2016