M/s Vectra Investments Private Limited , Bangalore V. Assistant Commissioner of Income Tax Circle-7(1)(2), Bangalore

ITA 146/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1072 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 25-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: SHAILESH KUMAR
• Keywords: Depreciation; TDS
• Section: 201; 13; 6

Judgement Text

S IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH ES : C , BANGALORE BEFORE S HRI A.K.GARODIA, A CCOUNTANT MEMBER AND SHRI P.K.GADALE, JUDICIAL MEMBER ITA NO.146(BANG)/2019 ( A SSESSMENT YEAR: 2013 - 14) M/S VECTRA INVESTMENTS PVT.LTD., NO.15, 1 ST MAIN ROAD, 6 TH CROSS, GANDHINAGAR, BA NGALORE - 560 0 09 PAN NO.AA ACV4971C APPELLANT VS THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 7 ( 1 )(2 ) , BANGALORE RESPONDENT APPELLANT BY : SHRI S HAILESH KUMAR, C A REVENUE BY : SMT. R.P REMI, J C IT DATE OF HEARING : 2 4 - 0 2 - 2020 DAT E OF PRONOUNCEMENT : O R D E R PER A.K.GARODIA, AM : THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED BY THE ORDER OF THE LD. CIT(A) - BANGALORE DATED 07 - 12 - 2018 F OR THE ASSESSMENT YEAR : 201 3 - 14 . 2. THE GROUNDS RA I SED BY THE ASSESS E E ARE AS UN D ER; 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER PASSED BY LD. AO, IN DISALLOWING DEPRECIATION CLAIMED BY THE APPELLANT AMOUNTING TO RS. 4,49,100 IN ITA NO . 1 4 6 (B)/2019 2 RESPECT OF PLANT & MACHINERY GIVEN ON LEASE BY APPELLANT IN COURSE OF ITS BUSINESS. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST ON BORROWING AMOUNTING TO RS. 1,66,92,985 UNDER SECTION 36(1)(III) OF THE ACT I NCURRED BY THE APPELLANT, UNDER THE PRESUMPTION THAT THESE HAVE NOT BEEN INCURRED FOR THE PURPOSES OF THE BUSINESS OF THE APPELLANT, WITHOUT APPRECIATING THE NATURE OF BUSINESS CARRIED OUT BY THE APPELLANT AND PRINCIPLES LAID DOWN UNDER VARIOUS JUDICIAL PR ECEDENTS. 3. ALL OF THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO ONE ANOTHER. FURTHERMORE, THE APPELLANT CRAVES LEAVE TO ADD TO OR ALTER, BY DELETION, SUBSTITUTION OR OTHERWISE, ANY OR ALL OF THE FOREGOING GROUNDS OF APPEAL AT OR BEFORE THE HEARING, AND TO SUBMIT SUCH STATEMENTS, DOCUMENTS AND PAPERS AS MAY BE CONSIDERED NECESSARY EITHER AT OR BEFORE THE APPEAL . IN THE COURSE OF HE A RING, IT WAS SUBMITT E D BY LEARNED A R OF THE ASSES S EE THAT GROUND NO.1 OF APPEAL REGARDING DEPRECIA TION CLAIMED BY THE ASSE S SEE AND DISALLOWED BY THE AO IN RESPECT OF PLANT & MACHINERY GIVEN ON LE ASE BY THE ASSES S EE IN THE COURSE OF BUSINESS IS COVERED IN FAVOUR O F THE ASSE S SEE BY THE TRIBUNAL ORDER IN ASSESS E ES OWN C A SE FOR THE ASSESSMENT YEAR 2010 - 1 1, 2011 - 12 & 2012 - 13 IN ITA NOS.1429 TO 1431(BANG)/2018 BY ORDER DATED 31 - 07 - 2019. HE SUBMITTED A COPY OF THE TRIBUNAL ORDER AND DRAWN OUR ATTENTION TO PARA - 10 OF THIS TRIBUNAL ORDER AND POINTED OUT THAT AS PER THIS PARA THE TRIBUNAL HAS REJECTED THIS CLAIM IN THE EARLIER YEAR AND IN THE PRESENT YEAR ALSO THE ASSES S EES CLAIM MAY BE REJECTED ON SIMILAR LINE . ACCORDINGLY, GROUND NO.1 OF THE ITA NO . 1 4 6 (B)/2019 3 ASSE S SEE IS REJECTED BY RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER IN ASSESSEES OW N C A SE. 3 REGARDING GROUND NO.2 IT WAS SUBMITTED THAT THIS ISSUE WAS ALSO BEFORE THE TRIBUNAL IN EARLIER YEARS AND PARA - 2 8 OF THIS TRIBUNAL ORDER IS RELEVANT IN THIS REGARD. HE POINTED OUT THAT AS PER THIS PARA THE TRIBUNAL HELD IN THAT YEAR THE ASSESSE E HAD BORROWED LOAN @14% AND THE SBI RATE WAS 12% AND THEREFORE, THE TRIBUNAL HAD CONFIRMED THE DISALLOWANCE TO THE EXTENT OF 2% OF THE LOAN ADVANCED BY THE ASSESS E E TO M/S VECTRA ADVANCED ENGINEERING PVT.LTD., HE SUBMITTED THAT IN THE PRESENT YEAR ALSO D ISPUTE IS REGARDING ADVANCEMENT OF LOAN BY THE ASSESSEE TO THE SAME SISTE R CONCERN M/S VECTRA ADVANCED ENGINEERING PVT.LTD., AT THE RATE OF 9% EXIST ED AS AGAINST 15.5% PAID BY THE ASSESSEE ON ITS BORROWINGS AND THE AO DISALLOWED INTEREST TO THE EXTENT OF DIFFERENCE OF 15.5% AND 9%. HE SUBMITTED THAT IN THE PRESENT YEAR ALSO DISALLOWANCE IS TO BE RESTRICTED TO 2% OF THE MONEY ADVANCED BY THE ASSES S EE COMPA N Y TO THE SISTER CONCERN M/S VECTRA ENGINEERING PVT. LTD., AS IN EARLIER YEARS . I N THE RETURN SUBMISSIONS FILED BY THE ASSE S SEE IT HAS BEEN SUBMITTED THAT SBI LENDING RATE IN THE PRESENT YEAR WA S 14.5% AS AGAINST 12% IN AY: 2012 - 13 AND THEREFORE, DISALLOWANCE SHOULD BE RESTRICTED TO 1% BEING THE DIFFERENCE BETWEEN INTEREST PAID BY THE ASSE SS EE AT15.5% ON ITS BORROWING AND SBI LENDING RATE AT 14.5% . THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF LD.CIT(A). WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE EARLIER TRIBUNAL ORDER IN ASSESSEES OWN CASE THE ISSUE WAS DECIDED ON THIS BASIS THAT THE DISALLOWANCE OF INTEREST SHOULD BE RESTRICTED TO THE EXTENT OF DIFFERENCE THE RATE AT WHICH THE ASSESSEE BORROWED FUNDS AND 12% BEING SBI DURING THE RELEVANT PERIOD. IN THAT YEAR , ASSESSEE ITA NO . 1 4 6 (B)/2019 4 BORROWED LOAN AT 14% AND HENCE, THE DISALLOWANCE WAS RESTRICTED TO 2% OF THE MONEY ADVANCED BY THE ASSESSEE TO ITS SISTER CONCERN. I N THE PRESENT YEAR THIS IS THE CLAIM OF THE ASSESSEE PREVIOUSLY LENDING RATE OF SBI WAS . A S AGAINST 12% IN AY: 2012 - 1 3, BUT NO EVIDENCE IN THIS REGARD WAS MADE AVAILABLE BEFORE US. HENCE, WE FEEL IT PROPER TO RE STORE THE MATTER BACK TO THE FILE OF LD. CIT(A) FO R A FAIR DECISION IN THE LIGHT OF THE TRIBUNAL ORDER FOR : 2013 - 14 IN ASSESSEES OWN CASE AS PER WHICH IT WAS HELD THAT THE DISALLOWANCE SHOULD BE RESTRICTED TO DIFFERENCE BETWEEN THE RATE AT WHICH THE ASSESSEE COMPANY BORROWED FUNDS ON SBI LENDING RATE DURING THE RELEVANT PERIOD. THE ASSESSEE SHOULD BRING ON RECORD BEFORE THE LD.CIT(A) EVIDENCE REGARDING SBI LE NDING RATE IN THE PRESENT YEAR AND THEREAFTER, THE ISSUE SHOULD BE DECIDED BY THE LD.CIT(A) BY FOLLOWING THE TRIBUNAL ORDER IN ASSESSEES OWN CASE. IN THE RESULT, THE APPEAL FILED BY THE ASES S SEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNC ED IN THE OPEN COURT ON (P.K.GADALE) (A.K.GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FILE BY ORDER ASST. REGISTRAR ITA NO . 1 4 6 (B)/2019 5 ITA NO . 1 4 6 (B)/2019 6