The Dy. Commissioner of Income Tax, Circle-4(1)(2), Ahmedabad V. Vyom Tradelink Pvt. Ltd., Ahmedabad

ITA 1340/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7904 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 19-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Business expenditure; Source of fund

Judgement Text

, CH CHCH CH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD LOZJH LOZJH LOZJH LOZJH EGKOHJ EGKOHJ EGKOHJ EGKOHJ IZLKN IZLKN IZLKN IZLKN] U; ] U;] U; ] U;KF KFKF KF;D LNL; , ;D LNL; , ;D LNL; , ;D LNL; ,OA OAOA OA OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK LNL; ] YS[KK LNL; ] YS[KK LNL; ] YS[KK LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO.1340/AHD/2016 & CROSS OBJECTION NO.82/AHD/2016 (IN ITA NO.1340/AHD/2016) ( / ASSESSMENT YEAR : 2010-11) DCIT, CIRCLE 4(1)(2), AHMEDABAD. / VS. VYOM TRADELINK PVT. LTD., 8 TH FLOOR, SHIKHAR, NR. ADANI HOUSE MITHAKHALI SIX ROADS, NAVRANGPURA AHMEDABAD. ./ ./ PAN/GIR NO. : AAACV 0124 D ( / APPELLANT ) .. ( / RESPONDENT )/ CROSS OBJECTOR REVENUE BY : SHRI MUDIT NAGPAL, SR. D.R. ASSESSEE BY : SHRI P. M. MEHTA, A.R. / DATE OF HEARING 11/06/2018 !' / DATE OF PRONOUNCEMENT 11/07/2018 #$ / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL ALONG WITH CROSS OBJECTION HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AND THE ASSESSEE AGAINST TH E APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-9, AHMEDABA D [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-9/498/14-15 DATED 03/ 03/2016 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE I NCOME TAX ACT, 1961 ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 2 - (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 25/03 /2013 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11. 2. FIRST, WE TAKE UP THE GROUNDS OF APPEAL RAISED B Y THE REVENUE IN ITA NO.1340/AHD/2016 FOR A.Y. 2010-11, WHICH ARE AS UNDER:- 1. WHETHER THE CIT(A) HAS ERRED IN DELETING THE D ISALLOWANCE OF RS.61,04,713/- OUT OF RS.61,26 , 411/- MADE BY AO, HOLDING THAT RS.16 CRORES RECEIVED BACK FROM M/S ADANI POWER LTD . WAS ADVANCED TO M/S MIDEX OVERSEAS LTD. WHICH WAS EXCES S FUND AVAILABLE WITH THE COMPANY, IGNORING THE FACT THAT THE COMPANY CHARGED INTEREST FROM M/S ADANI POWER LTD. AS PER A DMISSION. 2. WHETHER THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE SURPLUS FUND IS AVAILABLE WITH THE ASSESSEE WHEN THE ASSESS EE FAILED TO PROVE THAT THE SAID AMOUNT OF RS.16 CRORE IS COMING OUT OF RESERVES AND SURPLUS BY WAY OF FUND-FLOW STATEMENT, PARTICULARLY WHEN THERE IS NO SEPARATE BANK ACCOUNT FOR INTEREST FREE OWN FUNDS AND THERE IS INTER-MINGLING OF OWN FUNDS AND BORROWED FUNDS. 3. THE SOLITARY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS THAT LD CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A O FOR RS.61,04,753/- ON ACCOUNT OF INTEREST EXPENSES ARISING ON ACCOUNT OF DIVERSION OF FUNDS. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF COAL TRADING AND STEVEDORING. THE ASSESSEE IN THE EARLIER YEARS HAS GIVEN THE ADVANCE TO M/S. ADANI POWERS LTD FOR RS.16 CRORES ONLY. THI S ADVANCE WAS GIVEN BY THE ASSESSEE TO M/S. ADANI POWERS LTD. ON AN INT EREST BASIS. THE ASSESSEE DURING THE YEAR HAS RECEIVED BACK THE ABOV E ADVANCE AND FURTHER GIVEN THIS AMOUNT OF RS.16 CRORES TO M/S MIDEX OVER SEAS LTD. ( FOR SHORT MOL) WITHOUT CHARGING ANY INTEREST. ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 3 - THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS CLAI MED THAT THE AMOUNT WAS ADVANCED OUT OF ITS OWN FUNDS. THEREFORE, NO IN TEREST WAS CHARGED. HOWEVER, THE AO IN ASSESSMENT PROCEEDINGS OBSERVED CERTAIN FACTS AND DETAILS AS UNDER: I. NO PRUDENT BUSINESSMAN WILL DIVERT THE INTEREST BEA RING FUNDS TO NON-INTEREST BEARING LOANS AND ADVANCES. THE ASS ESSEE PAID INTEREST ON ITS BORROWED FUNDS, THEREFORE, THE ARGU MENT OF THE ASSESSEE THAT IT WAS PROVIDED OUT OF OWN FUNDS IS W ITHOUT ANY MERIT. II. NO DOCUMENTARY EVIDENCE WAS FILED BY THE ASSESSEE T O JUSTIFY THAT THE MONEY WAS ADVANCED TO MOL FOR ITS BUSINESS PURPOSES. III. THE ASSESSEE WAS CHARGING INTEREST FROM OTHER PARTI ES BUT NOT FROM MOL. IV. THERE WAS NO FUND FLOW STATEMENT FILED BY THE ASSES SEE JUSTIFYING THAT THE NO BORROWED FUND WAS DIVERTED T O NON- INTEREST BEARING ADVANCES/LOANS. IN VIEW OF ABOVE, THE AO WORKED OUT THE INTEREST EX PENSE OF RS.61,04,753/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. C IT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT INTER EST-FREE LOANS/ADVANCES WERE PROVIDED OUT OF ITS FUNDS AVAILABLE WITH IT. T HE ASSESSEE IN SUPPORT OF HIS CLAIM HAS FURNISHED THE DETAILS OF FUNDS AVA ILABLE WITH IT WHICH IS REPRODUCED AS UNDER: ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 4 - INTEREST FREE FUNDS AS ON 31/03/2010 AS ON 31/03/20 09 SHARE CAPITAL 5,00,000 5,00,000 RESERVES & SURPLUS 24,130,404 2,862,563 CURRENT LIABILITIES 5,996,733,636 1,184,471,368 TOTAL 6,021,364,040 1,187,833,931 THE ASSESSEE ALSO SUBMITTED THAT THERE WAS A DIRECT NEXUS BETWEEN THE AMOUNT RECEIVED FROM M/S. ADANI POWERS LTD AND EXTE NDED TO MOL WHICH EVIDENCES THAT NO BORROWED FUND HAS BEEN UTIL IZED FOR THE PURPOSE OF SUCH INTEREST-FREE LOANS AND ADVANCES. THE LD. C IT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 7.3 DURING THE APPELLATE PROCEEDINGS, APPELLANT HA S RELIED ON VARIOUS CASE LAWS SUCH AS MUNJAL SALES CORPORATION 298 ITR 298 (S.C.), TORRENT FINANCIERS V/S. ACIT 73 TTJ 624 (AH D. ITAT), CIT V/S. RAGHUVIR SYNTHETICS LTD. 36 TAXMANN.COM 275 (GUJ) A ND OTHER DECISIONS. APPELLANT HAS ALSO SUBMITTED THAT IT HAD SHARE CAPITAL AND RESERVES & SURPLUS AMOUNTING TO RS.2.46 CRORES AS O N 31/3/2010 AND CURRENT LIABILITIES AMOUNTING TO RS.599.67 CRORES A S ON 31/3/2010. CONSIDERING SUBMISSION OF THE APPELLANT IN RESPECT OF AVAILABILITY OF ITS OWN FUNDS AS WELL AS RELIANCE PLACED BY THE APPELLA NT ON VARIOUS JUDGMENTS MENTIONED ABOVE, I AM OF THE CONSIDERED O PINION THAT A.O. WAS NOT JUSTIFIED IN DISALLOWING INTEREST OF RS.61, 26,411/- U/S.36(1)(III) OF THE ACT ON ACCOUNT OF INTEREST FREE ADVANCE TO M IDEX OVERSEAS LTD. HOWEVER, AS THE APPELLANT ITSELF SUBMITTED DURING T HE ASSESSMENT PROCEEDINGS THAT INTEREST ON RS.88 LACS AMOUNTING T O RS.21,698/- CAN BE DISALLOWED FOR THE REASON THAT THESE FUNDS WERE BOR ROWED ON INTEREST FROM ADITYA CORPEX @ 10%. ACCORDINGLY, A.O. IS DIRE CTED TO VERIFY THE CALCULATION MADE BY THE APPELLANT AT PARA 6.2 OF TH E ASSESSMENT ORDER AND I HEREBY DIRECT THE A.O. TO DISALLOW THE INTERE ST AS CALCULATED ON RS.88 LACS AS THE DISALLOWANCE U/S.36(1)(III) OF TH E ACT REST OF THE AMOUNT I.E. RS.61,04,713/- (61,26,411-21,698) STAND S DELETED, SUBJECT TO CORRECT CALCULATION OF INTEREST ON RS.88 LACS BY TH E A.O. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. BEING AGGRIEVED BY ORDER OF LD. CIT(A) REVENUE IS I N APPEAL BEFORE US. ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 5 - THE LD. DR BEFORE US SUBMITTED THAT THE OWN FUNDS O F THE ASSESSEE WERE LESS THAN RS. 16 CRORES. THEREFORE, THE INTEREST-BE ARING FUNDS HAVE BEEN DIVERTED TO NON-INTEREST BEARING LOAN/ADVANCES. THE LD. D.R. FURTHER SUBMITTED THAT THE PROPORTIONA TE INTEREST ON THE AMOUNT OF ADVANCES WITHOUT CHARGING ANY INTEREST IN EXCESS OF OWN FUNDS OF THE ASSESSEE SHOULD BE DISALLOWED UNDER THE PROV ISION OF SECTION 36(1)(III) OF THE ACT. THE ASSESSEE WAS EARNING INTEREST ON THE SAME MONEY WHEN IT WAS ADVANCED TO M/S. ADANI POWERS LTD BUT NO INTEREST I NCOME WAS EARNED WHEN THE SAME WAS ADVANCED TO MOL. THUS, THE AMOUNT OF INTEREST EXPENSES DESERVES TO BE DISALLOWED. ON THE OTHER HAND, THE LD. AR BEFORE US FILED A PAP ER BOOK, WHICH IS RUNNING PAGES 1 TO 38 AND DREW OUT ATTENTION ON ASS ESSEES BALANCE SHEET SHOWING THE AVAILABILITY OF FUNDS. THE SAME IS REPR ODUCED AS UNDER: INTEREST-FREE FUNDS AS ON 31/03/2010 AS ON 31/03/20 09 SHARE CAPITAL 5,00,000 5,00,000 RESERVES & SURPLUS 24,130,404 2,862,563 CURRENT LIABILITIES 5,996,733,636 1,184,471,368 TOTAL 6,021,364,040 1,187,833,931 THE LD. AR FOR THE ASSESSEE CLAIMED THAT THE CURREN T LIABILITY FOR RS,599.67 CRORES WAS AVAILABLE WITH THE ASSESSEE AS ITS OWN FUNDS. THEREFORE, THERE IS NO QUESTION OF DISALLOWING ANY INTEREST EXPENSES. THE LD. AR IN SUPPORT OF HIS CLAIM HEAVILY RELIED ON TH E ORDER OF THIS TRIBUNAL ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 6 - IN THE CASE OF TORRENT FINANCIERS V/S. ACIT REPORTE D IN 73 TTJ 624. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: WE UPHOLD THE ABOVE VIEW OF CIT(APPEALS) WITH AN E XCEPTION ABOUT THE INTEREST-FREE LOANS AVAILABLE WITH THE ASSESSEE , INSTEAD OF IT WE ARE OF THE VIEW THAT ENTIRE INTEREST-FREE FUNDS AVAILABLE WITH THE ASSESSEE IS TO BE CONSIDERED, WITH THIS MODIFICATION, THE FINDING OF COMMISSIONER (APPEALS) IS CONFIRMED. THE ENTIRE INTEREST-FREE FU NDS INCLUDE OWNERS OWN CAPITAL, ACCUMULATED PROFITS AND OTHER INTEREST -FREE CREDITORS AND LOANS, IF TOTAL INTEREST-FREE ADVANCES INCLUDING DE BIT BALANCES OF PARTNERS DO NOT EXCEED THE TOTAL INTEREST-FREE FUND S AVAILABLE WITH THE ASSESSEE, NO INTEREST IS DISALLOWABLE ON ACCOUNT OF UTILISATION OF FUND FOR NON-BUSINESS PURPOSES AND IF IT EXCEEDS, THE PROPOR TIONATE DISALLOWANCE CAN BE MADE. THE SOURCE OF FUNDS ADVANCED TO MOL WAS DULY EXPLAI NED IN THE ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT THE L OANS AND ADVANCES WERE GIVEN TO MOL OUT OF MONEY RECEIVED FROM ADANI POWERS LTD THUS, THERE WAS A NEXUS BETWEEN THE MONEY RECEIVED FROM A DANI POWERS LTD AND THE LOANS AND ADVANCES EXTENDED TO MOL. THE LD. AR VEHEMENTLY SUPPORTED THE ORDER OF LD. CI T(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THERE IS NO DISPUTE IN THE FAC TS OF THE CASE AS DISCUSSED IN THE PRECEDING PARAGRAPH. THEREFORE, WE ARE NOT INCLINED TO REPEAT THE SAME FOR THE SAKE OF BREVITY. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE WAS PAYI NG INTEREST ON THE BORROWING FUNDS. THE OWN CAPITAL OF THE ASSESSEE IN ITS BALANCE SHEET AS ON 31-03-2010 WAS SHOWN FOR RS.2,46,30,404/- ONLY. THUS FROM THE ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 7 - ABOVE, THERE REMAINS NO DOUBT THAT INTEREST-FREE AD VANCE WAS MADE BY THE ASSESSEE BESIDES THE OWN FUNDS. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US CLAIMED THAT THERE WAS AN INTEREST-FREE FUND AVA ILABLE WITH THE ASSESSEE IN THE FORM OF CURRENT LIABILITIES TO THE TUNE OF R S.599.67 CRORES OUT OF WHICH SUCH ADVANCES WERE MADE TO MOL. NOW THE LIMITED ISSUE BEFORE US ARISES FOR OUR ADJU DICATION WHETHER THE CURRENT LIABILITY AVAILABLE WITH THE ASSESSEE CAN B E UTILIZED FOR THE PURPOSE OF MAKING AN ADVANCE TO M/S MOL IN THE GIVEN FACTS AND CIRCUMSTANCES. IN OUR VIEW, THERE CAN BE VARIOUS KINDS OF CURRENT LIABILITIES SUCH AS CREDITORS FOR THE GOODS, PROVISIONS, AND EXPENSES, ETC. THESE CURRENT LIABILITIES NORMALLY ARISE OUT OF THE EXPENSES INCU RRED BY THE ASSESSEE. THESE EXPENSES CAN BE DIRECT EXPENSES AS WELL AS IN DIRECT EXPENSES. NORMALLY UNDER THE HEAD CURRENT LIABILITY NO LIAB ILITY ON ACCOUNT OF RECEIPT OF CASH IS SHOWN UNLESS SOME ADVANCE MONEY RECEIVED FROM THE DEBTORS OR SIMILAR PARTIES. THEREFORE THESE CURRENT LIABILITIES ARISE TO THE ASSESSEE ON ACCOUNT OF DAY TO DAY BUSINESS ACTIVITI ES. THEREFORE, IN OUR VIEW, THE SAME CANNOT BE DIVERTED FOR MAKING THE LO ANS AND ADVANCES. INDEED ON PERUSAL OF THE OPERATIVE PORTION OF THE O RDER OF THIS TRIBUNAL IN THE CASE OF TORRENT FINANCIERS (SUPRA) , WE NOTE THAT THIS TRIBUNAL HAS GIVEN A FINDING THAT OTHER INTEREST-FREE CREDITORS AVAILABLE WITH THE ASSESSEE CAN FORM PART OF OWN FUNDS OF THE ASSESSEE . HOWEVER, WE NOTE THAT THIS FINDING RELIED UPON BY THE LD. COUNSEL FO R THE ASSESSEE DOES NOT SUPPORT THIS CASE. IT IS BECAUSE ON PERUSAL OF THE FACTS OF THE CASE, I.E. TORRENT FINANCIERS (SUPRA,) WE NOTE THAT THE ASSESSEE WAS ENGAGED IN FINANCING ACTIVITIES AND NOT IN THE TRADING AND MAN UFACTURING ACTIVITIES. NORMALLY IN CASE OF FINANCING ACTIVITIES, THERE WOU LD NOT BE ANY QUESTION ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 8 - OF HAVING INTEREST FREE SUNDRY CREDITOR UNLIKELY IN THE BUSINESS OF MANUFACTURING/ TRADING. MOREOVER, THERE IS NO INFOR MATION IN THE FACTS OF THE CASE, I.E. TORRENT FINANCIERS (SUPRA) THAT THERE WAS ANY FUND AVAILABLE WITH THE ASSESSEE IN THE FORM OF INTEREST-FREE CRED ITORS. THE AO MADE THE DISALLOWANCE OF INTEREST EXPENSES ON THE BASIS AS R EPRODUCED BELOW: THE ASSESSING OFFICER REJECTED THE ARGUMENT OF THE ASSESSEE ON FOLLOWING REASONING : '(I) THE BUSINESS OF THE ASSESSEE IS FINANCING I.E. TO TAKE DEPOSITS FROM THE VARIOUS PARTIES AND THEN ADVANCED WITH HIGHER INTEREST TO THE OTHER PARTIES. (II) IF INTEREST IS NOT CHARGED THE CORRECT INCOME OF THE ASSESSEE CANNOT BE COMPUTED. (III) IN PROFIT & LOSS ACCOUNT THE ASSESSEE HAS CL AIMED INTEREST PAYMENT OF RS.1,01,19,996 AS AN ADMISSIBLE BUSINESS EXPENDITURE. THUS IN VIEW OF THE FACTS AND IN VIEW OF THE REASON S GIVEN FOR THE EARLIER ASSESSMENT YEAR INTEREST PAYMENT AT THE RATE OF 12 PER CENT WILL BE DISALLOWED WHICH WORKS OUT TO RS.1,74,123 AS PER TH E WORKING FILED WHICH INCLUDES INTEREST CHARGEABLE FROM KUMAR B. PA RIKH. FROM THE ABOVE DETAILS, WE ALSO NOTE THAT THERE WAS NO INFORMATION GIVEN THAT THERE WAS ANY SUNDRY CREDITOR AVAILABLE WITH T HE ASSESSEE. IN ADDITION TO THE ABOVE WE ALSO NOTE THAT THE HON BLE ITAT IN THE CASE OF TORRENT FINANCIERS HAS ALSO RECORDED THE FINDING AS REPRODUCED BELOW: IT CAN BE SAID THAT PROFITS EARNED, OWN CAPITAL AN D INTEREST-FREE LOANS RECEIVED CAN BE GIVEN ADVANCES AS INTEREST-FREE ADV ANCES, TO THAT EXTENT QUESTION OF DISALLOWANCE OF INTEREST ON BORROWED FU NDS DOES NOT ARISE . ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 9 - FROM THE ABOVE FINDING OF THE TRIBUNAL AND THE FIND ING RELIED UPON BY THE LD. AR OF THE ASSESSEE, WE NOTE THAT TRIBUNAL HAS G IVEN TWO FINDINGS. IN ONE FINDING AS RELIED ON BY THE LD. AR FOR THE ASSE SSEE IT WAS OBSERVED THAT THE OWNED FUND INCLUDES INTEREST-FREE CREDITOR S AND IN ANOTHER FINDING, AS OBSERVED ABOVE THERE IS NO MENTIONED OF THE INTEREST-FREE SUNDRY CREDITORS. THEREFORE, WE ARE OF THIS VIEW THAT SUNDRY CREDITOR S CANNOT FORM PART OF AN INTEREST-FREE FUND AVAILABLE WITH THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS JUST RELIED ON THE FINDING OF THIS HON BLE ITAT IN THE CASE OF TORRENT FINANCIERS (SUPRA) WITHOUT BRINGING FACTS ON RECORD SUGGESTING THAT THERE WERE SUNDRY CREDITORS WHICH HAVE BEEN TR EATED OWN FUNDS OF THE ASSESSEE. THERE WAS NO CASH FLOW STATEMENT FILE D BY THE ASSESSEE TO PROVE THAT THE SUNDRY CREDITORS FUND WAS USED IN AD VANCING THE LOAN TO MOL. NOW COMING TO THE CASE ON HAND, WE NOTE THAT THE AS SESSEE HAS SHOWN CURRENT LIABILITIES WORTH OF RS.599.67 CRORES COMPR ISING OF SUNDRY CREDITORS AND OTHER LIABILITIES OF RS.517.38 CRORES AND 82.28 CORES RESPECTIVELY. WE ALSO NOTE THAT THE COURTS HAVE HELD THAT THE SUN DRY CREDITORS CANNOT FORM PART OF THE OWN FUNDS OF THE ASSESSEE. IN THIS CONNECTION, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HIGH COUR T OF BOMBAY IN THE CASE OF CIT VS. DOCTOR & CO. REPORTED IN 180 ITR 62 7 WHEREIN IT WAS HELD AS UNDER : ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 10 - NO PART OF THE AMOUNTS STANDING TO THE CREDIT OF V ARIOUS SUNDRY CREDITORS COULD BE AVAILABLE TO THE ASSESSEE FOR TH E PURPOSE OF ADVANCING LOANS TO ITS SISTER CONCERNS FOR MORE THA N ONE REASON. IN THE FIRST PLACE, JUST AS THERE WERE SUNDRY CREDITORS TO WHOM NO INTEREST WAS PAID, THERE WOULD BE SUNDRY DEBTORS FROM WHOM NO IN TEREST WAS RECEIVED. SECONDLY, THE AMOUNTS ADVANCED TO ITS SIS TER CONCERNS, ON THE ASSESSEE'S OWN ADMISSION, WERE AT LEAST PARTLY OUT OF BORROWED FUNDS. THEREFORE, THE TRIBUNAL WAS NOT JUSTIFIED IN DELETI NG THE DISALLOWANCE OF INTEREST MAINTAINED BY THE AAC. THE VIEW TAKEN BY T HE AAC IN THIS REGARD WAS CORRECT. IN VIEW OF THE ABOVE, WE HOLD THAT THE AMOUNT OF SU NDRY CREDITORS AVAILABLE TO THE ASSESSEE CANNOT FORM PART OF OWN F UND. THEREFORE, THE AMOUNT OF INTEREST ON THE BORROWED FUNDS DIVERTED T O THE NON-INTEREST BEARING ADVANCES SHOULD BE DISALLOWED. ACCORDINGLY, WE ARE INCLINED TO REVERSE THE ORDER OF LD. CIT(A) AND RESTORE THE ORD ER OF AO HENCE, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 7. SO FAR AS CO NO.82/AHD/2016 IS CONCERNED, THE AS SESSEE DOES NOT WISH TO PRESS, AND THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 8. IN THE RESULT, THE APPEAL BY THE REVENUE IS ALLO WED AND CROSS OBJECTION IS DISMISSED AS NOT PRESSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 11/07/2018 SD/- SD/- EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; YKS[KK LNL; U;KF;D LNL; YKS [KK LNL; U;KF;D LNL; YKS [KK LNL; U;KF;D LNL; YKS [KK LNL; (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 11/07/2018 PRITI YADAV, SR.PS ITA NO.3140/AHD/2016 & CO NO.82/AHD/16 DCIT VS. M/S VYO M TRADELINK PVT. LTD. ASST.YEAR 2010-11 - 11 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. % &' ( / CONCERNED CIT 4. ( () / THE CIT(A)-9, AHMEDABAD. 5. +,- ..&' , &'' , 01#%# / DR, ITAT, AHMEDABAD 6. -23 4 / GUARD FILE. % & / BY ORDER, + . //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 29/06/2018(DICTATION PAD 6 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04/07/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 10/07/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER