M/s. Umiya Automobiles, Mehsana V. The Deputy Commissioner of Income Tax, Mehsana Circle, Mehsana

ITA 1252/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3445 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 23-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1252/AHD/2017 (ASSESSMENT YEAR: 2014-15) M/S. UMIYA AUTOMOBILES, STATE HIGHWAY, NAGALPUR, MEHSANA-384002 V/S DY.CIT, MEHSANA CIRCLE, MEHSANA (APPELLANT) (RESPONDENT) PAN: AAAFU 4428Q APPELLANT BY : SHRI MEHUL THAKKAR, AR RESPONDENT BY : MS. SOMOGYAN PAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 06 -02-201 9 DATE OF PRONOUNCEMENT : 26-04-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 11.04.2017 PER TAINING TO A.Y. 2014- 15 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 1252 /AHD/2017 . A.Y. 2014-1 5 2 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING DISALLOWANCE OF RS. 13,32,000/- AS MADE BY LD. DCIT FROM ADMISSIBLE INTEREST EXPENSES. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS. 47,171/- OUT OF TOTAL DISALLOWANCE MADE OF R S. 3,57,807/- BY LD. DCIT ON GROUND OF PAYMENT OF EMPLOYEE'S CONTRIBUTION TO P.F S. & ESIC MADE AFTER DUE DATE AS PRESCRIBED UNDER RELEVANT ACT. 3. IT IS PRAYED THAT ABOVE DISALLOWANCES MADE BY LD . ACIT AND CONFIRMED BY LD. CIT(A) MAY PLEASE BE DELETED. 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE A NY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT FIRM HAD GIVEN SHORT TERM LOAN/ADVANCES TO ONE NON RELATIVE PERSON NAMED CHAN DRAKANT T. PATEL IN FINANCIAL YEAR 2011-12 OF RS. 1,10,00,000/- @ 12% P .A. BUT LATER ON CHANDRAKANT T. PATEL TO WHOM APPELLANT FIRM HAD GIV EN LOAN COULD NOT PAY INTEREST ALONG WITH PRINCIPAL AMOUNT. 3. APART FROM ABOVE SAID INTEREST FREE LOAN OF RS. 1,0 0,000/- WAS GIVEN IN EARLIER YEAR TO ONE NGO NAMED UTTAR GUJARAT VIPASSAYANA KEN DRA, ON WHICH NO INTEREST WAS CHARGED OR ACCRUED. FURTHER, NO DISALL OWANCE WAS MADE IN EARLIER YEAR COMPLETED SCRUTINY ASSESSMENT. 4. BUT LD. A.O. DISALLOWED THE INTEREST EXPENSES OF RS . 13,32,000/- ON THE GROUND THAT APPELLANT HAD FAILED TO CHARGE INTEREST ON THE AMOUNT OF RS. 1.10 CRORE AND MADE ADDITION OF RS. 13,32,000/- . ITA NO. 1252 /AHD/2017 . A.Y. 2014-1 5 3 5. ON PERUSAL OF BALANCE SHEET, IT IS FOUND THAT ASSES SEE HAS NOT DEPOSITED EMPLOYEES CONTRIBUTION TO PF AND ESI BEFORE THE DU E DATE AND MADE DISALLOWANCE OF RS. 357807/- U/S 36(1)(VA). 6. AGAINST THE SAID ADDITION, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE DISALLOWANCE OF RS. 13,,32 ,000/- AND GIVEN PARTLY ALLOWED WITH REGARD TO SECOND GROUND U/S 36(1)(VA) AND CONFIRMED AN AMOUNT OF RS. 47171 OUT OF TOTAL DISALLOWANCE MADE OF RS. 357807/- BY THE LD.A.O. 7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN THIS CASE, REVENUE HAS DOUBTED EFFORTS OF THE APPELLANT FOR NO T TAKING ENOUGH STEPS TO RECOVER INTEREST FROM SHRI CHANDRAKANT T. PATEL TO WHOM A LOAN OF RS. 1.10 CRORE. 8. AT THE OUTSET, LD. A.R. CITED AN ORDER OF CO-ORDINA TE BENCH IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR 2013-14 WHEREAS CO -ORDINATE BENCH HAS GIVEN RELIEF TO THE APPELLANT WITH FOLLOWING OBSERVATION: 4. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. APART FROM OTHER SUBMISSIONS; THA T LOANS WERE GIVEN FOR THE PURPOSE OF BUSINESS, IN THE PAST INTEREST WAS CHARG ED BY THE ASSESSEE FOR F.Y.2010-11 AND 2011-12, THIS YEAR IT WAS NOT CHARG ED ON ACCOUNT WEAK FINANCIAL POSITION OF SHRI CHANDRAKANT TULSIBHAI PATEL. IT WA S POINTED OUT THAT A SUM OF RS.2,95,84,048/- WAS AVAILABLE IN THE SHAPE OF INTE REST FREE CAPITAL. OUR ATTENTION WAS DRAWN TO PAGE NO.46 OF THE PAPER BOOK WHEREIN C APITAL CONTRIBUTION BY SHRI JASWANTBHAI N. PATEL, MANUBHAI N. PATEL AND RAJENDR AKUMAR N. PATEL IS AVAILABLE. IT IS ALSO DEMONSTRATED THAT THE ACCOUNT S OUT OF WHICH SUCH ADVANCES WERE GIVEN, HAD NEVER BEEN A NEGATIVE BALANCE EXCEP T ON THE FIRST ADVANCES OF ITA NO. 1252 /AHD/2017 . A.Y. 2014-1 5 4 RS.351AKHS GIVEN ON 27.4.2010. IT WAS A CASH CREDIT ACCOUNT AND INTEREST LIABILITY IN THIS ACCOUNT WAS OF RS.1.00 LAKH. THUS, IT WAS D EMONSTRATED BEFORE US THAT INTEREST BEARING FUNDS WERE NOT USED BY THE ASSESSE E FOR MAKING SUCH ADVANCES. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES. 5. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS AVAILABLE, OUT O F WHICH IT COULD BE ASSUMED THAT THESE ADVANCES WERE GIVEN TO SHRI CHANDRAKANT TULSI BHAI PATEL. HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIE S P. LTD. REPORTED IN 313 ITR 340 HAS CONSIDERED ALMOST SIMILAR SITUATION AND HELD TH AT IF AN ASSESSEE DEMONSTRATES AVAILABILITY OF SUFFICIENT INTEREST FREE FUNDS WHIC H CAN TAKE CARE OF ALLEGED ADVANCEMENT OF INTEREST FREE LOANS, THEN IT IS TO B E ASSUMED THAT SUCH ADVANCES WERE GIVEN OUT OF INTEREST FREE FUNDS. CONSIDERING THE ABOVE DETAILS, WE ARE OF THE VIEW THAT NO DISALLOWANCE OUT OF INTEREST EXPENDITU RE IS TO BE MADE IN THE CASE OF ASSESSEE. WE ALLOW FIRST GROUND OF APPEAL AND DELET E DISALLOWANCE OF RS.13,20,000/-. 9. THUS, IN PARITY WITH THE CO-ORDINATE BENCH DECISION , WE ALLOW THIS GROUND OF APPEAL. 10. NOW WE COME TO GROUND NO. 2, THERE IS NOT DISPUTE T HAT CONTRIBUTION OF EMPLOYEES TO THE TUNE OF RS. 47,171/- WAS NOT DEPOS ITED ON TIME BEFORE THE DUE DATE AND IN THESE CIRCUMSTANCES, HONBLE GUJARA T HIGH COURT IS AGAINST THE APPELLANT WHEREIN IN THE MATTER OF CIT VS. GSRTC 26 5 CTR 64 (GUJ.) WHEREIN IT IS HELD THAT IF EMPLOYEES' CONTRIBUTION TOWARDS PF AND ESIC ARE NOT DEPOSITED WITHIN TIME LIMIT PROVIDED IN THE RESPECT IVE ACTS, I.E. PROVIDENT FUND AND ESI ACT, THEN DEDUCTION WILL NOT BE ADMISSIBLE TO THE ASSESSEE. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIGH COURT CITED (SUPRA), WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL. IT IS R EJECTED. ITA NO. 1252 /AHD/2017 . A.Y. 2014-1 5 5 11. IN THE VIEW OF THE HONBLE GUJARAT HIGH COURT JUDGM ENT, WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26 - 04- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 26/04/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD