M/s. Taloja Agro Foods Pvt.Ltd, Navi Mumbai V. Income-tax Officer, Ward - 3, Panvel

ITA 1291/PUN/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3379 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-11-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 08-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . ., . / ITA NO. 1291/PUN/2018 / ASSESSMENT YEAR : 2014-15 M/S. TALOJA AGRO FOODS PVT. LTD., PLOT NO.12, TALOJA INDUSTRIAL ESTATE, MIDC, TALOJA, PENDHER VILLAGE, PANVEL, NAVI MUMBAI - 400 705 PAN : AADCT 2545B VS. ITO, WARD-3, PANVEL (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, THANE O N 01-06-2018 IN RELATION TO THE ASSESSMENT YEAR 2014-15. 2. THE FIRST TWO GROUNDS AGAINST THE CONFIRMATION OF ADDITIO N OF RS.5,22,670/- U/S. 41(1) OF THE INCOME-TAX ACT, 19 61 APPELLANT BY SHRI SUNIL VAKHARIA RESPONDENT BY SHRI ABHIJIT CHAUDHURI DATE OF HEARING 15-11-2019 DATE OF PRONOUNCEMENT 15-11-2019 ITA NO.1291/PUN/2018 M/S. TALOJA AGRO FOODS PVT. LTD., 2 (HEREINAFTER CALLED `THE ACT) WERE NOT PRESSED BY THE LD. A R. THE SAME, THEREFORE, STAND DISMISSED. 3. THE ONLY OTHER ISSUE WHICH SURVIVES IN THE APPEAL IS AGAINST THE CONFIRMATION OF ADDITION U/S. 40A(2) OF THE ACT ON ACCOUNT OF INTEREST PAID ON UNSECURED LOANS TO THE DIRECTORS . 4. SUCCINCTLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE P AID INTEREST OF RS.40,70,119/- TO ITS DIRECTORS @15%. THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE OBTAINE D BANK LOANS AT 11.50% INTEREST RATE. THE DIFFERENTIAL RATE OF 3.50% WAS TREATED AS DISALLOWABLE IN TERMS OF SECTION 40A(2) OF THE ACT. THE LD. CIT(A) SUSTAINED THE ADDITION AT 3% BY ACCEPTING THE LEGITIMATE RATE OF INTEREST AT 12%. THE ASSESSEE IS AGGRIEVED BY THE CONFIRMATION OF THE ADDITION. 5. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD, IT IS OBSERVED FROM THE IMPUGNED ORDER ITSELF THAT THE AO REFERRED TO BANK INTEREST RATE WHICH WAS A SECUR ED LOAN AS AGAINST THE LOANS RAISED FROM DIRECTORS WHICH WERE UNSECURED. IT IS FURTHER OBSERVED FROM PARA 9.1 OF THE IMPUGNED ORDER THAT THE BANK HAD GIVEN CONCESSION OF 2.90% FOR CA SH CREDIT FACILITY AND 3.40% FOR TERM LOAN. IF BOTH THE CONCESS IONS ITA NO.1291/PUN/2018 M/S. TALOJA AGRO FOODS PVT. LTD., 3 ARE FACTORED IN, THE EFFECTIVE RATE OF INTEREST COMES TO 14.4 0%. IN VIEW OF THE FACT THAT THE ASSESSEE DID NOT PROVIDE ANY S ECURITY IN RESPECT OF LOANS TAKEN FROM THE DIRECTORS AT 15%, I AM SATISFIED THAT THE PROVISIONS OF SECTION 40A(2) ARE NOT ACTIVA TED IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. I, TH EREFORE, ORDER TO DELETE THE ADDITION AS SUSTAINED IN THE FIRST APPEAL O N THIS SCORE. THIS GROUND IS ALLOWED. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER, 2019. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 15 TH NOVEMBER, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-2, THANE 4. THE PR.CIT- 2, THANE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.1291/PUN/2018 M/S. TALOJA AGRO FOODS PVT. LTD., 4 DATE 1. DRAFT DICTATED ON 15-11-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15-11-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -- JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -- JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *