ACIT, Erode V. Maharaja Sathyam Industries (P) Limited, Erode

ITA 1334/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3954 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S NATARAJA
• Assessee Lawyers: S SRIDHAR
• Keywords: Charitable institution
• Section: 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1334/MDS/2016 & '& / ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, NO.15, GANDHIJI ROAD, ERODE 638 001. V. M/S MAHARAJA SATHYAM INDUSTRIES (P) LIMITED, NO.119, BAHWANI ROAD, ERODE 638 004. PAN : AACCS 9484 P ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI S. NATARAJA, JCIT +,)* - . / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / - 0' / DATE OF HEARING : 06.07.2017 12' - 0' / DATE OF PRONOUNCEMENT : 27.07.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 3, COIMB ATORE, DATED 29.02.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. SHRI S. NATARAJA, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ASSESSEE AVAILED A LOAN OF ` 15,23,50,925/- FROM M/S PARAMASIVAM PALANISWAMY CHARITABLE TRUST AND PA ID INTEREST 2 I.T.A. NO.1334/MDS/16 OF ` 2,70,13,135/-. ADMITTEDLY, THE LOAN WAS TRANSFERRE D TO M/S MAHARAJA INDUSTRIES AT FREE OF INTEREST. ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED THE ENTIRE AMOUNT OF ` 2,70,13,135/- AS EXPENDITURE UNDER SECTION 37 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE ASSESSING OFFICER, AFTER VERIFYING THE BALANCE SHEET, FOUND NO NON-INTEREST BEARING FUNDS WERE AVAILABLE WITH THE ASSESSEE. HOWEVER, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) FOUND THAT THERE WAS OPENING BALANCE AVAILABLE TO T HE EXTENT OF ` 5,94,39,110/-. ACCORDING TO THE LD. D.R., IT IS NO T KNOWN HOW THE CIT(APPEALS) CAME TO KNOW THAT THE OPENING BALANCE WAS AVAILABLE TO THE EXTENT OF ` 5,94,39,110/- WHEN THE ASSESSING OFFICER SPECIFICALLY FOUND AFTER REFERRING TO THE BALANCE S HEET THAT NO NON- INTEREST BEARING FUNDS WERE AVAILABLE WITH THE ASSE SSEE. 3. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE OPENING BALANCE AVAILA BLE WITH THE ASSESSEE TO THE EXTENT OF ` 5,94,39,110/- WAS NOT CONSIDERED BY THE ASSESSING OFFICER. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY FOUND THAT TO THE EXTENT O F OPENING BALANCE, THERE CANNOT BE ANY DISALLOWANCE OF INTERE ST. ON A QUERY FROM THE BENCH WHEN THE ASSESSING OFFICER SAYS NO N ON-INTEREST 3 I.T.A. NO.1334/MDS/16 BEARING FUNDS WERE AVAILABLE WITH THE ASSESSEE AFTE R VERIFYING THE BALANCE SHEET, HOW THE CIT(APPEALS) SAYS THAT THERE WAS OPENING BALANCE OF ` 5,94,39,110/- AVAILABLE WITH THE ASSESSEE? THE LD.COUNSEL SUBMITTED THAT THE CIT(APPEALS) AFTER VE RIFYING THE BOOKS OF ACCOUNT, FOUND THAT THERE WAS AN OPENING BALANCE OF ` 5,94,39,110/-. ON A QUERY FROM THE BENCH, THE LD.C OUNSEL SUBMITTED THAT COPY OF BALANCE SHEET IS NOT READILY AVAILABLE FOR EXAMINATION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT AN OPENING BALANCE OF ` 5,94,39,110/- WAS AVAILABLE WITH IT, THEREFORE, TO THE EXTENT, INTEREST CANNOT BE DI SALLOWED. HOWEVER, A COPY OF THE BALANCE SHEET IS NOT AVAILABLE ON REC ORD OF THIS TRIBUNAL. THEREFORE, WE ARE UNABLE TO EXPRESS ANY OPINION REGARDING AVAILABILITY OF OPENING BALANCE. THEREFO RE, THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER AF TER VERIFYING THE BALANCE SHEET, PROFIT & LOSS ACCOUNT, ETC. ACCORDI NGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTI RE DISALLOWANCE OF INTEREST IS REMITTED BACK TO THE FILE OF THE ASSESS ING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFTER FINDING OUT THE 4 I.T.A. NO.1334/MDS/16 AVAILABILITY OF OPENING BALANCE, NON-INTEREST BEARI NG FUNDS, ETC. AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 27 TH JULY, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 27 TH JULY, 2017. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-3, COIMBATORE 4. PRINCIPAL CIT- 2, COIMBATORE 5. 69 +0 /DR 6. :& ; /GF.