Abhyudaya Pharmaceutivals , Ghaziabad V. DCIT, Circle- 1, Ghaziabad

ITA 1271/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1217 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 22-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: AKHILESH KUMAR SH VIPIN GARG
• Keywords: Proportionate interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE S H. N. K. BILLAIYA , ACCOUNTANT MEMBER ITA NO. 1271 /DEL/201 8 ASSESSMENT YEAR: 20 14 - 15 M/S ABHYUDAYA PHARMACEUTICALS, C - 85, LOHIYA NAGAR, GHAZIABAD PAN AABF A 6816F VS DCIT CIRCLE - 1 GHAZIABAD (APPELLANT) (RESPONDENT) APPELLANT BY SH. AKHILESH KUMAR, ADVOCATE SH. VIPIN GARG, ADVOCATE RESPONDENT BY SH. S.L. ANURAGI, SR. DR DATE OF HEARING: 26 /11 /2 0 18 DATE OF PRONOUNCEMENT: 28 / 1 1 /2018 ORDER PER N . K. BILLAIYA, AM: T HIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE CIT(A), GHAZIABAD DATED 0 3 . 1 1 .2017 PERTAINING TO A. Y. 20 14 - 15 . 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE READ : - 1 . BECAUSE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF INTEREST OF RS.4,46,346/ - AGAINST THE FACTS ON THE RECORD IN AS MUCH AS AMOUNTS CONSIDERED AS INTT. FREE LOANS WERE NOT IN THE NATURE OF LOANS, BESIDE ADDITION IS AGAINST THE SETTLED LAW ON THE ISSUE. 2 2 . BECA USE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE AD - HOC DISALLOWANCE OF 20% RS.30,827/ - UNDER THE HEAD TRAVELLING & CONVEYANCE WITHOUT APPRECIATING THAT EXP. ARE 100% SUPPORTED, ACCOUNTS ARE AUDITED/ ACCEPTED BY ASSESSING OFFIC ER AND NO SINGLE DEFECT IN ANY SPECIFIC ITEM IS FOUND. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF THE SCRUTINY OF A SSESSMENT PROCEEDINGS , T HE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID INTEREST OF RS.11.78 LACS ON U NSECURED LOANS. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS EXTENDED A SUM OF RS.2.03 LACS ON WHICH NO INTEREST WAS CHARGED. THE ASSESSING OFFICER FURTHER FOUND THAT SUM OF RS. 32 .30 LACS WAS SHOWN AS ADVANCE IN SUPPLIER. THE ASSESSING OFFICER WAS OF THE FIRM BELIEF THAT PROPORTIONATE INTEREST SHOULD BE DISALLOWED OUT OF THE INTEREST EXPENSES CLAIMED BY THE ASSESSEE ACCORDINGLY THE ASSESSING OFFICER COMPUTED THE ALLOWABLE EXPENSES AS UNDER : - S. NO. DESCRIPTION AMOUNT 1 INTEREST EXPENSES ON U NSECURED LOANS @13% 11,78,934 A 2 TOTAL ADVANCES GIVEN (INTEREST FREE) 34,34,127 B 3 INTEREST INCOME TO BE EARNED (B@13%) 4,46,436 C 4 ALLOWABLE INTEREST EXPENSES (A - C) 7,32,498 3 4. THE ASSESSING OFFICER MADE ADDITION OF RS.4,46,4 3 6/ - . PROCEEDING FUR THER THE ASSESSING OFFICER FOUND THAT THE ASSESSEE CLAIMED SALARY EXPENSES OF RS. 10.48 LACS AND 1.54 LACS RESPECTIVELY. THE ASSESSING OFFICER DISALLOWED 10% AND MADE ADDITION OF RS. 3,49 , 600/ - AND 30 , 827/ - . 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. 6. BEFORE ME THE COUNSEL FOR THE ASSESSEE STATED THAT ADVANCES TO SUPPLIERS ARE COMING FROM EARLIER YEARS AND PAID ADVANCES CANNOT BE CONSIDERED AS INTEREST FREE LOANS AND ADVANCES. THE COUNSEL FURTHER POINTED OUT THAT T HE LOAN OF RS. 2 , 03 , 173/ - HAS GIVEN OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE, THEREFORE, NO DISALLOWANCE IS CALLED FOR. 7. THE COUNSEL FURTHER STATED THAT AD - HOC DISALLOWANCE IS UNWARRANTED AS THE EXPENSES ARE FULLY SUPPORTED BY BILLS AND V OUCHERS. PER CONTRA THE DR STRONGLY SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER. 8. I HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. I FIND FROM THE BALANCE SHEET OF 31.03.2013 ADVANCE TO SUPPLIERS WAS OF RS.29 LACS. THE SAME IS RS .32.30 LACS ON 31.03.2014. IN MY CONSIDERED OPINION ADVANCES TO SUPPLIERS ARE GIVEN IN THE NORMAL COURSE OF BUSINESS AND THEREFORE NOT TO BE CONSIDERED INTEREST FREE LOANS AND ADVANCES . T O THIS EXTENT I DO 4 NOT FIND ANY REASON FOR DISALLOWING PROPORTIONATE INTEREST. FURTHER I FIND THAT ASSESSEE S OWN CAPITAL IS RS.31.17 LACS THEREFORE, LOAN OF RS.2.03 LACS CAN BE SAFELY CONCLUDED TO B E COMING O UT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. I, THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE THE DI SALLOWANCE OF RS.44,45346/ - THE GROUND IS ALLOWED. 9. WHILE MAKING AD - HOC DISALLOWANCE THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN ANY BILLS/ VOUCHERS SUBMITTED BY THE ASSESSEE. IN MY CONSIDERED OPINION WITHOUT POINTING OUT ANY DEFE CT IN THE BOOKS OF ACCOUNT , T HE ASSESSING OFFICER CANNOT MAKE AD - HOC DISALLOWANCE ACCORDINGLY I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.349600/ - AND RS. 30827/ - THIS GROUND IS ALSO ALLOWED. 10. IN THE RESULT, THE APPEAL IS FILED BY THE A SSESSEE IS ALLOWED. ORDER P RONOUNCED IN THE OPEN COURT ON 28 . 1 1 . 2 018. SD/ - ( N. K. BILLAIYA ) A CCOUNTANT MEMBER * NE HA* DATE: - 28 . 1 1 .2018 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 DA TE OF DICTATION 2 7 .11.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DI CTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDE R COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SI GNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 6