The Dy. CIT, Circle-4(1)(1), Ahmedabad V. M/s. Swagat Infrastructure Ltd., Ahmedabad

ITA 1435/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6004 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained cash credit; Depreciation
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1435/AHD/2016 & C.O. NO. 93/AHD/16 (ASSESSMENT YEAR: 2011-12) DY. COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), AHMEDABAD M/S. SWAGAT INFRASTRUCTURE LIMITED 307-308, SARTHIK SQUARE, NR. GNFC INFO TOWER, S.G. HIGHWAY, BODAKDEV, AHMEDABAD V/S V/S M/S. SWAGAT INFRASTRUCTURE LIMITED 307-308, SARTHIK SQUARE, NR. GNFC INFO TOWER, S.G. HIGHWAY, BODAKDEV, AHMEDABAD DY. COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AACCS1351H APPELLANT BY: SHRI MUDIT NAGPAL, SR. D.R. RESPONDENT BY: SHRI S.N.SOPARKAR & URVASHI SHODHA N ( )/ ORDER DATE OF HEARING : 27 -02-201 8 DATE OF PRONOUNCEMENT : 28 -02-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 1435 & C.O. 93/AHD/2016 . A.Y. 2011-1 2 2 1. ITA NO. 1435/AHD/2016 & C.O. NO. 93/AHD/2016 ARE AP PEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-7, AHMEDABAD DATED 18.03.2016 PERTAINING TO A.Y. 2011-12. 2. GROUND NO. 1 RELATES TO DELETION OF THE ADDITION MA DE BY THE A.O. ON ACCOUNT OF DISALLOWANCE U/S. 36(1)(III) OF THE ACT AMOUNTIN G TO RS. 2,05,06,086/-. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS SHOWN HUGE LOANS AND ADVANCES TO VARIOUS PERSONS. THE ASSESSEE WAS ASKED TO EXPLAIN WHY DISALLOWANCE SHOU LD NOT BE MADE U/S. 36(1)(III) OF THE ACT OF INTEREST FREE LOANS AND AD VANCES MADE BY IT. IN ITS REPLY, THE ASSESSEE STRONGLY CONTENDED THAT IT HAS SUFFICI ENT INTEREST FREE FUNDS FOR MAKING INTEREST FREE ADVANCES. IT WAS FURTHER POINT ED OUT THAT INTEREST AND FINANCE CHARGES PAID TO BANK WERE TOWARDS SPECIFIC BORROWINGS AND NONE OF THE BORROWED CAPITALS HAS BEEN UTILIZED MAKING INTEREST FREE ADVANCES. THE REPLY OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO COMPUTED THE DISALLOWANCE OF RS. 2,05,06,086/-. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) FOUND THAT IN THE EARLIER ASSESSMENT YEAR, THE TRIBUNAL HAS DELET ED A SIMILAR DISALLOWANCE VIDE ORDER DATED 28.06.2013 IN ITA NO. 2084/AHD/2012. TH E RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READS AS UNDER:- '......WE DO NOT FIND ANY MERIT INTO THE LOGIC GIVE N BY THE AUTHORITIES BELOW AS BOTH THE AO AS WELL AS LD. C1T (A) HAS NOT GIVEN A FINDING AS TO HOW TH E ASSESSEE IS REQUIRED TO CAPITALIZE THE INTEREST EXPENSES. AT ON E HAND, THE AO AS WELL AS LD. CIT (A) HAVE GIVEN A FINDING THAT NON-INTEREST BEAR ING ADVANCES WERE GIVEN OUT OF ITA NO. 1435 & C.O. 93/AHD/2016 . A.Y. 2011-1 2 3 INTEREST BEARING FUND AND IT WAS ALSO OBSERVED THAT ASSESSEE COULD NOT PROVE THE NEXUS BETWEEN THE INTEREST FREE FUNDS AND ADVANCES. THE REASONING FAR DISALLOWANCE IS SELF-CONTRADICTORY. THEREFORE THE F ACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT THE DISALLOWANCE MADE B Y THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT (A) IS NOT JUSTIFIED. IN VIEW OF THE FACT THAT ASSESSEE HAS POINTED OUT THAT IT HAS SUFFICIENT INTEREST FREE FU ND AND THIS IS NOT CONTRADICTED BY THE AUTHORITIES BELOW EVEN BEFORE THE TRIBUNAL NO M ATERIAL HAS BEEN PLACED ON RECORD SUGGESTING THAT THE ASSESSEE WAS NOT HAVING INTEREST FREE FUNDS AVAILABLE FOR SUCH ADVANCES. IN VIEW OF THIS, AND RESPECTFULL Y FOLLOWING JUDGMENT OF HON'BLE SUPREME COURT RENDERED IN THE CASE OF MUNJAL SALES CORPORATION [SUPRA) WE ALLOW THIS GROUND OF ASSESSEE'S APPEAL AND DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS. 92,17,379/-... 5. SINCE THE FIRST APPELLATE AUTHORITY HAS FOLLOWED TH E DECISION OF THE CO- ORDINATE BENCH IN ASSESSEES OWN CASE, THEREFORE, N O INTERFERENCE IS CALLED FOR. GROUND NO. 1 IS ACCORDINGLY DISMISSED. 6. GROUND NO. 2 RELATES TO THE DELETION OF THE ADDITIO N MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF INTEREST AND DEPRECIATIO N ON VEHICLES AMOUNTING TO RS. 14,23,070/-. 7. A PERUSAL OF THE ORDER SHOWS THAT THE FIRST APPELLA TE AUTHORITY HAS ONCE AGAIN FOLLOWED THE ORDER OF THE CO-ORDINATE BENCH IN ASSE SSEES OWN CASE FOR EARLIER ASSESSMENT YEAR WHERE A SIMILAR DISALLOWANCE WAS DE LETED BY THE TRIBUNAL. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READS AS UNDER:- ... WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE WOULD BE ENTITLED FOR THE ALLOWANCE DEPRECIATION AS WELL AS INTEREST EXPENDIT URE IF THE ASSESSEE IS ABLE TO PROVE THAT THE VEHICLES WERE UNDER THE DOMINION CON TROL OF THE ASSESSEE-COMPANY AND WERE UTILIZED FOR ITS BUSINESS PURPOSE, THE CON TENTION OF THE ASSESSEE IS THAT ITA NO. 1435 & C.O. 93/AHD/2016 . A.Y. 2011-1 2 4 THE VEHICLES WERE UTILIZED FOR BUSINESS PURPOSE AND THE ASSESSEE-COMPANY HAS SHOWN IT IN BLOCK OF ASSETS, WE FIND THAT THIS CONT ENTION OF THE ASSESSEE IS NOT CONSIDERED BY THE AUTHORITIES BELOW IN THE LIGHT OF THE RATIO LAID BY HON'BLE SUPREME COURT RENDERED IN THE IN THE CASE OF MYSORE MINERALS LTD. (SUPRA). RESPECTFULLY FOLLOWING THE RATIO LAID BY THE HON'BL E SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. (SUPRA) WE ALLOW THIS GROUND O F ASSESSEE'S APPEAL AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION .....' 8. SINCE THE LD. CIT(A) HAS FOLLOWED THE DECISION OF T HE CO-ORDINATE BENCH, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. 10. COMING TO THE CROSS OBJECTION OF THE ASSESSEE, THE ASSESSEE IS AGGRIEVED BY THE ADDITION OF RS. 1,00,000/- MADE BY THE A.O. AS UNEX PLAINED CASH CREDIT U/S. 68 OF THE ACT. 11. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED THAT THE ASSESSEE HAS RECEIVED RS. 1,00,000/- FROM MAMTABEN. SINCE THE AS SESSEE HAS NEITHER FURNISHED PAN NOR ADDRESS, THE A.O. ADDED THE SAME AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 12. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT(A), THOUGH, THE LD. CIT(A) OBSERVED THAT RS. 1,00,000/- HAS BEEN ACCOUNTED IN THE BOOKS OF ACCOUNTS TOWARDS BOOKING OF FLAT AND THE SAME IS RECEIVED BY CHEQUE NO. 590443 DRAWN ON UCO BANK BUT UPHELD THE ADDITION MADE BY THE A.O . ITA NO. 1435 & C.O. 93/AHD/2016 . A.Y. 2011-1 2 5 13. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT THE AMOUNT HAS BEEN RECEIVED TOWARDS BOOKING OF FLAT AND IS NO T IN THE NATURE OF UNSECURED LOAN. IT IS THE SAY OF THE LD. COUNSEL THAT THE BOO KING AMOUNT WOULD BE ADJUSTED AS AND WHEN THE SALE IS AFFECTED. THE LD. COUNSEL C ONCLUDED BY STATING THAT IF THE ADDITION IS SUSTAINED, THEN IT WOULD AMOUNT TO DOUB LE ADDITION BECAUSE IF THE SALE OF FLAT IS EXECUTED THE SAME WILL BE PART OF T HE SALE CONSIDERATION. 14. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE SUB MISSIONS OF THE LD. COUNSEL. IT IS TRUE THAT THE ASSESSEE HAS SHOWN ADVANCE RECE IVED AGAINST BOOKING OF FLAT. IT IS EQUALLY TRUE THAT AS AND WHEN THE SALE IS AFF ECTED, THE SAME WILL BECOME PART OF THE SALE CONSIDERATION. SINCE NO DETAILS OF SALE OF FLATS TO MAMTABEN HAS BEEN FURNISHED BEFORE US, IN THE INTEREST OF JUSTIC E, WE RESTORE THIS ISSUE TO THE FILES OF THE A.O. THE ASSESSEE IS DIRECTED TO DEMO NSTRATE THAT THE ADVANCE OF RS. 1,00,000/- RECEIVED FROM SMT. MAMTABEN HAS BEEN ADJUSTED TOWARDS SALE CONSIDERATION AND FURNISHED THE DETAILS OF THE SALE OF FLATS. THE A.O. IS DIRECTED TO VERIFY THE DETAILS AND IF FOUND CORRECT THE ADDI TION WILL BE DELETED. HOWEVER, WE WOULD LIKE TO MAKE IT CLEAR THAT IF THE ASSESSEE FAILS TO FURNISH SATISFACTORY DETAILS/EXPLANATION, THE ADDITION WILL REMAIN SUSTA INED. CROSS OBJECTION IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 28 - 02- 2018 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 28 /02/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.