Dilipkumar C Patel, CHENNAI V. ITO, CHENNAI

ITA 1197/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8653 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Keywords: Commercial expediency

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL B SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER !./ ITA NO.1197/MDS/2016 # $%# / ASSESSMENT YEAR : 2011-12 SHRI DILIPKUMAR C PATEL, NEW NO.9, OLD NO.6, DHANAMMAL STREET, CHETPET, CHENNAI - 600 031. PAN : AALPP 6619 B V. THE INCOME TAX OFFICER, BUSINESS WARD XV (3), THE INCOME TAX OFFICER, NON-CORPORATE WARD 3(2), CHENNAI - 600 034. ('(/ APPELLANT) ()*'(/ RESPONDENT) '( + , / APPELLANT BY : NONE )*'( + , / RESPONDENT BY : SHRI SUPRIYO PAL, JCIT - $ + ./ / DATE OF HEARING : 17.06.2016 01% + ./ / DATE OF PRONOUNCEMENT : 18.08.2016 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 4, CHENN AI, DATED 08.01.2016 AND PERTAINS TO ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF INTEREST TO THE EXTENT OF ` 21,82,905/-. 2 I.T.A. NO.1197/MDS/16 3. NO ONE APPEARED FOR THE ASSESSEE INSPITE OF SERV ICE OF NOTICE. THEREFORE, I HEARD THE LD. DEPARTMENTAL RE PRESENTATIVE AND PROCEED TO DISPOSE OF THE APPEAL ON MERIT. 4. SHRI SUPRIYO PAL, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ASSESSEE BORROWED LOAN AT THE RA TE OF 1.74% AND PAID INTEREST TO THE EXTENT OF ` 41,69,629/-. THE ASSESSEE HAS ADVANCED THE BORROWED FUNDS TO M/S INJECT CARE PARE NTERALS PVT. LTD. AT THE RATE OF 0.87% AND RECEIVED INTEREST TO THE EXTENT OF ` 20,30,302/-. THE LOAN WAS BORROWED FROM DCP TRADIN G CO. AND ADVANCED TO M/S INJECT CARE PARENTERALS PVT. LTD. ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED THAT THE LOAN WAS AD VANCED TO M/S INJECT CARE PARENTERALS PVT. LTD. AS A MEASURE OF C OMMERCIAL EXPEDIENCY. THE ASSESSEE CLAIMED BEFORE THE ASSESS ING OFFICER THAT M/S INJECT CARE PARENTERALS PVT. WAS A SICK IN DUSTRY. THEREFORE, IN ORDER TO PROTECT THE INTEREST OF THAT COMPANY, T HE LOAN WAS ADVANCED AT LOWER RATE. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE ENTIRE TRANSACTION WAS ROUTE D THROUGH THE ASSESSEE, WHICH IS A TAILOR MADE ONE IN ORDER TO EV ADE PAYMENT OF ADDITIONAL TAX. ACCORDING TO THE LD. D.R., HAD THE RE BEEN GENUINE COMMERCIAL EXPEDIENCY FOR ADVANCING MONEY, THEN M/S DCP TRADING CO. COULD HAVE DIRECTLY ADVANCED MONEY TO M /S INJECT CARE 3 I.T.A. NO.1197/MDS/16 PARENTERALS PVT. LTD. THIS IS A METHOD, ACCORDING TO THE LD. D.R., TO EVADE TAX BY REDUCING THE TAX LIABILITY. THEREFORE , ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED TH E ORDER OF THE ASSESSING OFFICER. 5. I HAVE CONSIDERED THE SUBMISSION MADE BY THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RELEVAN T MATERIAL AVAILABLE ON RECORD. THE ASSESSEE APPARENTLY BORRO WED LOAN FROM DCP TRADING CO. AND ADVANCED THE SUBSTANTIAL AMOUNT TO M/S INJECT CARE PARENTERALS PVT. LTD. THE RATE OF INTEREST PA ID BY THE ASSESSEE TO DCP TRADING CO. WAS 1.74%. HOWEVER, THE INTERES T RECEIVED FROM M/S INJECT CARE PARENTERALS PVT. IS AT THE RAT E OF 0.87%. EVEN THOUGH THE ASSESSEE CLAIMED BEFORE THE LOWER AUTHOR ITIES THAT THE MONEY WAS ADVANCED DUE TO COMMERCIAL EXPEDIENCY, IT IS NOT KNOWN WHAT IS THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE COMPANY TO WHICH THE MONEY WAS ADVANCED. THE ASSES SEE IS AN INDIVIDUAL AND THE MONEY WAS ADVANCED TO A PVT. LTD . COMPANY. SO, AT THE BEST, THE ASSESSEE CAN BE A SHAREHOLDER OF THAT COMPANY TO WHICH THE MONEY WAS ADVANCED. THE SHAREHOLDING PATTERN OF THE COMPANY TO WHICH THE LOAN WAS ADVANCED BY THE ASSES SEE, IS NOT AVAILABLE ON RECORD. IT IS ALSO NOT AVAILABLE ON R ECORD THE SHAREHOLDING PATTERN OF M/S DCP TRADING CO. FROM WH ICH THE 4 I.T.A. NO.1197/MDS/16 ASSESSEE BORROWED THE LOAN. THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT FOR THE PURPOSE OF DECIDING THE COMMER CIAL EXPEDIENCY, THE SHAREHOLDING PATTERN AND INTEREST OF THE ASSESS EE HAVE TO BE EXAMINED. 6. SINCE THE ASSESSEE HAS NOT APPEARED BEFORE THIS TRIBUNAL AND NO MATERIAL EVIDENCE IS AVAILABLE ON RECORD, TH IS TRIBUNAL IS OF THE CONSIDERED OPINION THAT GIVING ONE MORE OPPORTU NITY TO THE ASSESSEE TO PRODUCE ALL THE NECESSARY MATERIAL BEFO RE THE ASSESSING OFFICER MAY GO A LONG WAY IN DISPENSATION OF JUSTICE. GIVING SUCH AN OPPORTUNITY WOULD NOT PREJUDICE THE INTEREST OF REVENUE IN ANY WAY. THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO PROD UCE ALL THE NECESSARY MATERIAL WOULD DEFINITELY PROMOTE THE CAU SE OF JUSTICE. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW AR E SET ASIDE AND THE ISSUE OF DISALLOWANCE OF INTEREST TO THE EXTENT OF ` 21,82,905/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH IN THE LI GHT OF THE MATERIAL THAT MAY BE PRODUCED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW, AFTER GIVING A REASON ABLE OPPORTUNITY TO THE ASSESSEE. 5 I.T.A. NO.1197/MDS/16 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 TH AUGUST, 2016 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 3! /DATED, THE 18 TH AUGUST, 2016. KRI. + ).45 65%. /COPY TO: 1. '( /APPELLANT 2. )*'( /RESPONDENT 3. - 7. () /CIT(A)-4, CHENNAI-34 4. PRINCIPAL CIT-5, CHENNAI 5. 5$8 ). /DR 6. 9# : /GF.