Asian Poultry Feed, Anand V. The Income tax Officer, Ward-2, Anand

ITA 1493/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9047 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 25-05-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 31/08/09 DRAFTED ON: 02/09 /09 ITA NO.1493/AHD/2005 ASSESSMENT YEAR : 2001-02 ASIAN POULTRY FEED NEAR WATER TANK NAVLI, ANAND VS. THE INCOME TAX OFFICER WARD-2 ANAND PAN/GIR NO. : AADFL 0751 D (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ASEEM THAKKAR, CA RESPONDENT BY: SHRI MAHESH KUMAR, SR.DR O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED CIT(APPEALS)-V, BARODA DATED 11/03/2005 PA SSED FOR ASSESSMENT YEAR 2001-02, BY RAISING FOLLOWING GROUN D(S):- 1. THE LEARNED CIT(APPEALS)-V, BARODA ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF TURNOVER DI SCOUNT OF RS.15,68,829/- MADE BY ASSESSING OFFICER. 2. THE LEARNED CIT(APPEALS)-V, BARODA ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF INTEREST OF RS.7,125/- MADE BY ASSESSING OFFICER. THE APPELLANT CRAVES LIBERTY TO ADD, ALTER, DELETE, AMEND OR MODIFY ANY OF THE GROUNDS MENTIONED HEREINABOVE. ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 2 - 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PARTNERSHIP-FIRM CONSISTING OF 15 DIFFERENT CONCERN S ENGAGED IN THE DEVELOPMENT OF POULTRY. THESE FIRMS HAVE JOINED TO GETHER TO FORM A PARTNERSHIP-FIRM FOR SELLING CHICKEN-FEED TO THE FI FTEEN CONCERNS AND ALSO TO OUTSIDERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED A DEDUCTION OF RS.15,68,829/- ON ACCOUNT OF TURNOVER DISCOUNT. THIS DISCOUNT WAS GIVEN TO THE ASSOCIATE-CONCERNS OF THE PARTNERS OF THE ASSESSEE-FIRM. OUT OF 15 PARTNERS, 13 PARTNERS ARE ENGAGED IN THE BUSINESS OF POULTRY FARMING AND ARE PURCHASING CHICKEN-FEED FROM THE AS SESSEE-FIRM. THE TURNOVER DISCOUNT WAS GIVEN FOR THE FIRST TIME. I T WAS EXPLAINED TO THE ASSESSING OFFICER THAT THIS DISCOUNT IS GIVEN AT THE END OF THE YEAR ON THE BASIS OF FEED PURCHASED BY THE PARTNERS AND REGULAR PAYMENTS RECEIVED FROM THEM. SUCH DISCOUNT IS GIVEN ONLY T O THE PARTNERS AND NO OUTSIDER IS BENEFITED WITH THIS DISCOUNT. HOWEV ER, NO AGREEMENT WAS FURNISHED BEFORE THE ASSESSING OFFICER TO THIS EFFECT. IT WAS NOTED BY THE ASSESSING OFFICER THAT NO UNIFORM FORM ULA FOR OFFERING DISCOUNT WAS APPLIED. THE DISCOUNT VARIED FROM RS. 27 PER PACK GIVEN TO VIKALP POULTRY FARM & RS.45/- PER PACK GIVEN TO SEEMA POULTRY FARM. NO BASIS FOR GIVING THIS DISCOUNT WAS CLARI FIED. IT WAS ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 3 - EXPLAINED TO THE ASSESSING OFFICER THAT THERE WAS L IQUIDITY PROBLEM AND, THEREFORE, THEY ARE CHARGING MORE FOR CHICKE N FEED SOLD TO THE PARTNERS, BUT THIS WAS NOT SUBSTANTIATED. THE ASS ESSING OFFICER DID NOT ACCEPT THE EXPLANATION AND, ACCORDINGLY, DISALL OWED THE TURNOVER DISCOUNT. 3. THE LEARNED CIT(APPEALS) NOTED THAT THE ASSESSEE HAS NOT FURNISHED ANY LOGICAL METHOD OF CALCULATION OF TURN OVER AND IT WAS VARIED FROM PERSON TO PERSON WITHIN THE PARTNERS OF THE FIRM. THE LEARNED CIT(APPEALS) DID NOT FIND THE CLAIM OF THE ASSESSEE ACCEPTABLE THAT IT IS GIVING DISCOUNT AT A UNIFORM RATE TO THE PARTNER FIRMS. IT WAS NOTED BY HIM THAT THE ASSESSEE IS GI VING DISCOUNT AT A VARYING RATES. FOR EXAMPLE, DISCOUNT IS GIVEN AT A RATE OF RS.35/- PER BAG TO ARPAN POULTRY FARM ON PURCHASE OF 7093 BAGS , WHEREAS IT WAS GIVEN AT RS.45/- PER BAG ON PURCHASE OF 5757 BAGS B Y SEEMA POULTRY FARM. DISCOUNT AT A RATE OF RS.45/- PER BAG WAS G IVEN TO KAJAL POULTRY FARM WHICH PURCHASED 3268 BAGS, WHEREAS IT WAS GIVEN AT A RATE OF RS.35/- TO JALARAM POULTRY FARM WHICH PURCH ASED 3643 BAGS. THUS, THE LEARNED CIT(APPEALS) DID NOT FIND ANY COR RELATION-SHIP OF PURCHASES MADE BY THE PARTNER-FIRMS AND ON THE DI SCOUNT GIVEN. THE LEARNED CIT(APPEALS) ACCORDINGLY CONFIRMED THE ADDITION. ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 4 - 4. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT TURNOVER OF DISCOUNT IS GI VEN TO THE PARTNER- FIRMS ON THE BASIS OF A ORAL AGREEMENT. THIS DISCO UNT REPRESENTS DISCOUNT ON PURCHASES AS WELL AS COMPENSATION FOR K EEPING CAPITAL IN THE FIRM. FURTHER, THE PARTNERS DISCOUNT IS AN AL LOWABLE EXPENDITURE U/S.37 OF THE I.T. ACT, 1961. HE REFERRED TO THE AGREEMENT BETWEEN THE PARTNERS WHOSE ENGLISH VERSION WAS PROVIDED IN THE PAPER-BOOK AT PAGE NOS.4 TO 6. THIS AGREEMENT IS DATED 21/01/199 9. IT PROVIDED THAT FOR SELLING CHICKEN-FEED TO THE PARTNER FIRMS, HIGHER AMOUNT OF DISCOUNT WILL BE ALLOWED TO THEM AT THE END OF THE YEAR. IT ALSO PROVIDED SALARY TO PARTNERS; NAMELY, (I) S/SHRI ASH WINBHAI I.PATEL (II) ALPESHBHAI J.PATEL AND (III) MAHENDRABHAI C.PATEL. THE LD.AR WAS, HOWEVER, NOT ABLE TO SHOW WHETHER THE PAYMENT OF I NTEREST TO THE PARTNERS ON THEIR CAPITAL WAS PROVIDED IN THE PARTN ERSHIP-DEED OR HOW THE CHICKEN-FEED SOLD TO THE PARTNERSHIP-FIRMS WAS AT THE HIGHER RATES AS COMPARED TO THE FEED SOLD TO OUTSIDERS OR WHAT W AS THE BASIS OF WORKING OUT OF THE PARTNERS DISCOUNT. 5. THE DR, ON THE OTHER HAND, SUBMITTED THAT THE TU RNOVER DISCOUNT IS NOTHING BUT SHARING OF THE PROFIT WITHO UT PAYING TAXES BY ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 5 - THE FIRM. THE ASSESSEE-FIRM IS PAYING INTEREST TO THE INDIVIDUAL PARTNERS. HE DREW OUR ATTENTION TO PAGE NO.20 OF THE PAPER-BOOK SHOWING INTEREST PAID TO THE PARTNERS. THE DR, FU RTHER, SUBMITTED THAT PAYMENT OF TURNOVER DISCOUNT IS NEITHER A DED UCTION FROM THE SALES MADE BY THE FIRM TO THE PARTNERS NOR IT IS A CHARGE ON SUCH SALE, BUT IT IS A DIVISION OF PROFITS AT THE END OF THE Y EAR. THEREFORE, THE SAME CANNOT BE ALLOWED AS A DEDUCTION WHILE COMPUTI NG INCOME OF THE FIRM. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE-FIRM IS SELL ING CHICKEN-FEED TO THE PARTNERS FIRM AND AT THE END OF THE YEAR, IT I S WORKING OUT DISCOUNT TO BE GIVEN TO THEM ON THE SALES MADE TO T HEM. THE RATE OF DISCOUNT AND THE AMOUNT TO BE PARTED AWAY TO EACH P ARTNER IS TO BE DECIDED AT THE END OF THE YEAR. THE ARGUMENT OF T HE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT TURN OVER DISCOUNT COVERS UP CERTAIN INTEREST BEING PAID TO THE PARTNE RS ON THE CAPITAL INTRODUCED BY THEM OR ON THE MONEY PAID BY THEM ON PURCHASES OF FEED FROM THE FARM IS NOT ACCEPTABLE BECAUSE INTERE ST HAS BEEN ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 6 - SEPARATELY PAID TO THE PARTNERS AS PER PAGE NO.20 O F THE PAPER-BOOK. THE SALARY IS GIVEN ONLY TO THREE PARTNERS AS NOTED ABOVE. THE QUESTION NOW EMERGES, BEFORE US, IS WHETHER THE TUR NOVER DISCOUNT GIVEN BY THE ASSESSEE-FIRM TO ITS PARTNERS IS A CHA RGE ON SALES MADE BY IT TO THE PARTNERS OR IT IS ONLY A DIVISION OF PROF ITS AT THE END OF THE YEAR. IN OUR CONSIDERED VIEW, IF IT IS A DISCOUNT ON SALES OR IS A CHARGE ON SALES, THEN A DEFINITE BASIS MUST BE AVAILABLE I N THE BEGINNING OF THE YEAR OR PRIOR TO SALE OR ATLEAST BEFORE THE TRA NSACTIONS OF THE SALES ARE CLOSED. THE RATE AT WHICH SUCH DISCOUNT IS T O BE GIVEN OR THE AMOUNT ON WHICH THE DISCOUNT RATE IS TO BE APPLIED SHOULD BE FIXED PRIOR TO THE CONCLUSION OF THE SALE AGREEMENT. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS UNABL E TO SUBMIT, BEFORE US, THE BASIS OF THE DISCOUNT AND HOW IT HAS BEEN GIVEN TO VARIOUS PARTNERS. IT APPEARS THAT IT WAS LEFT TO B E DECIDED BY THE PARTNERS THEMSELVES AT THE END OF THE YEAR. BUT T HE BASIS OR AN AGREEMENT PROVIDING VARIATION IN THE RATES OF DISC OUNT TO DIFFERENT PARTNERS AS NOTED BY THE LEARNED CIT(APPEALS) WAS N OT EXPLAINED. THOUGH ITEM NO.5 FROM THE AGREEMENT FOR PROFIT & LO SS AND RATE DIFFERENCE (TURNOVER DISCOUNT) INDICATES THAT PARTN ERS WILL BE GIVEN TURNOVER DISCOUNT, BUT IT DOES NOT LEAD TO ANY INFE RENCE THAT THIS ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 7 - DISCOUNT WAS CHARGE ON THE SALE. FOR THE SAKE O F CONVENIENCE, WE REPRODUCE THE RELEVANT PARAGRAPH NO.5 OF THE AGREEM ENT AS UNDER:- 5. WE THE PARTNERS OF ASIAN POULTRY FEED, (POULTR Y FARMERS) SHALL GIVEN DAAN FIRST TAKING HIGHER AMOUNT FROM TH EM PER CARTOON AND THEN AT THE END OF THE YEAR RATE DIFFER ENCE (TURNOVER DISCOUNT) SHALL BE DECIDED AFTER KEEPING IN MIND MONEY TRANSACTIONS AND ITS REGULARITY IN THE DAAN A CCOUNT OF EACH PARTNER. AND FOR THAT NO POULTRY FARMER) PART NER SHALL TAKE ANY OBJECTION. THE OBJECT OF TAKING MORE AT T HE BEGINNING PER CARTOON SHALL BE TO MAINTAIN CASH LIQUIDITY (FI NANCIAL LIQUIDITY) IN THE SAID BUSINESS. WHICH SHALL BE GI VEN BY CREDIT NOTE OR BY CHEQUE. 7. THOUGH IT IS MENTIONED IN THIS THAT THIS FIRM IS TAKING MORE FROM THE PARTNERS, BUT IT IS NOT SPELT OUT WHAT WE RE THE RATES AT WHICH CHICKEN-FEED WAS SOLD TO OTHERS AND WHAT RATES IT WAS SOLD TO THE PARTNERS OF THE FIRM. THE HEADING OF THE AGREEMENT SHOWS AGREEMENT FOR PROFIT & LOSS AND RATE DIFFERENCE (TU RNOVER DISCOUNT) IT IS A PART OF PROFIT SHARING AGREEMENT. ORIGIN AL PARTNERSHIP-DEED WAS NOT PROVIDED. IT IS NOT A CAS E WHERE AN INDEPENDENT ENTITY IS DECIDING TO GIVE DISCOUNT ON THE SALES MADE TO AN UNCORRECTED CUSTOMER. IT IS THE PARTNERS OF TH E FIRM JOINING TOGETHER DECIDING AT THE END OF THE YEAR HOW MUCH D ISCOUNT THEY SHOULD GET EACH OTHER. IN OUR CONSIDERED VIEW, IT IS NOTHING BUT DIVISION OF PROFITS AMONG THE PARTNERS AND NOT A CH ARGE ON THE SALES. ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 8 - HAD IT BEEN A BUSINESS POLICY TO PROVIDE DISCOUNT O N SALES, THEN IT SHOULD HAVE ALSO BEEN GIVEN TO OTHER CUSTOMERS WHIC H, IN FACT, HAS NOT BEEN GIVEN. THEREFORE, WHATEVER PARTNERS ARE DECI DING TO GIVE TO EACH OTHER AT THE END OF THE YEAR IS ONLY THE PART OF THE PROFIT EARNED BY THE FIRM AND NOT A DEDUCTIBLE EXPENSE INCURRED F OR EARNING PROFIT. THOUGH THE NOMINATION GIVEN TO THE AMOUNT PARTED A WAY IS DISCOUNT BASED ON TURNOVER, BUT THE NATURE OF PAYMENT IS ONL Y A PROFIT SHARING ARRANGEMENT AND NOT CHARGE ON THE PROFIT OR DIVERSI ON OF PROFIT BEFORE IT ACCRUES. THE ARGUMENT OF THE LEARNED AUTHORISE D REPRESENTATIVE OF THE ASSESSEE IS THAT THE PARTNERS HAVE OFFERED T HIS SUM IN THEIR INDIVIDUAL RETURN IS OF NO CONSEQUENCE BECAUSE INCO ME HAS TO BE TAXED IN THE HANDS OF THE PERSON WHO HAS EARNED IT. THE HON'BLE SUPREME COURT IN THE CASE OF ITO VS. CH. ATCHAIAH ( 1966) 218 ITR 239 HELD AS UNDER:- HELD UNDER THE PRESENT ACT, THE ITO HAS NO OPTION LIKE THE ONE HE HAD UNDER THE 1922 ACT. HE CAN, AND HE MUST, TAX THE RIGHT PERSON AND THE RIGHT PERSON ALONE. BY 'RIGHT PERSON', IS MEANT THE PERSON WHO IS LIABLE TO BE TAXED, ACCORDI NG TO LAW, WITH RESPECT TO A PARTICULAR INCOME. THE EXPRESSION 'WRONG PERSON' IS OBVIOUSLY USED AS THE OPPOSITE OF THE EX PRESSION 'RIGHT PERSON'. MERELY BECAUSE A WRONG PERSON IS TA XED WITH ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 9 - RESPECT TO A PARTICULAR INCOME, THE AO IS NOT PRECL UDED FROM TAXING THE RIGHT PERSON WITH RESPECT TO THAT INCOME . THIS IS SO IRRESPECTIVE OF THE FACT WHICH COURSE IS MORE BENEF ICIAL TO THE REVENUE. THE LANGUAGE OF THE RELEVANT PROVISIONS OF THE PRESENT ACT IS QUITE CLEAR AND UNAMBIGUOUS. SEC. 18 3 SHOWS THAT WHERE THE PARLIAMENT INTENDED TO PROVIDE AN OP TION, IT PROVIDED SO EXPRESSLY. WHERE A PERSON IS TAXED WRON GFULLY, HE IS NO DOUBT ENTITLED TO BE RELIEVED OF IT IN ACCORD ANCE WITH LAW BUT THAT IS A DIFFERENT MATTER ALTOGETHER. THE PERS ON LAWFULLY LIABLE TO BE TAXED CAN CLAIM NO IMMUNITY BECAUSE TH E AO (ITO) HAS TAXED THE SAID INCOME IN THE HANDS OF ANOTHER P ERSON CONTRARY TO LAW. XXXXXXXXX SEC. 4 OF THE PRESENT ACT SAYS THAT INCOME TAX SHAL L BE CHARGED ON THE TOTAL INCOME 'OF EVERY PERSON' AND THE EXPRE SSION 'PERSON' IS DEFINED IN CL. (31) OF S. 2. THE DEFINI TION MERELY SAYS THAT EXPRESSION 'PERSON' INCLUDES, INTER ALIA, A FIRM AND AN AOP OR A BOI WHETHER INCORPORATED OR NOT. THERE ARE NO WORDS IN THE PRESENT ACT WHICH EMPOWER THE ITO OR G IVE HIM AN OPTION TO TAX EITHER THE AOP OR ITS MEMBERS INDI VIDUALLY OR FOR THAT MATTER TO TAX THE FIRM OR ITS PARTNERS IND IVIDUALLY. IF IT IS THE INCOME OF THE AOP IN LAW, AOP ALONE HAS TO B E TAXED; THE MEMBERS OF THE AOP CANNOT BE TAXED INDIVIDUALLY IN RESPECT OF THE INCOME OF THE AOP. CONSIDERATION OF THE INTEREST OF REVENUE HAS NO PLACE IN THIS SCHEME. WHEN S. 4(1 ) OF THE PRESENT ACT SPEAKS OF LEVY OF INCOME TAX ON THE TOT AL INCOME OF EVERY PERSON, IT NECESSARILY MEANS THE PERSON WHO I S LIABLE TO PAY INCOME TAX IN RESPECT OF THAT TOTAL INCOME ACCO RDING TO LAW. THE TAX HAS TO BE LEVIED ON THAT PERSON, WHETH ER AN INDIVIDUAL, HUF, COMPANY, FIRM, AOP/BOI, A LOCAL AU THORITY OR AN ARTIFICIAL JURIDICAL PERSON. ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 10 - 8. FROM THIS, IT IS CLEAR THAT EVEN IF THE INCOME IS ASSESSED ELSEWHERE, IT WILL NOT AFFECT THE ASSESSMENT IN TH E HANDS OF THE RIGHT PERSON. IT IS FOR THE ASSESSEE TO MOVE AN APPROPRI ATE APPLICATION TO THE ASSESSING OFFICER IN THE CASE OF PARTNERS OF TH E FIRM TO GET THE ASSESSMENT CORRECTED. ACCORDINGLY, WE HOLD THAT T HE LEARNED CIT(APPEALS) WAS JUSTIFIED IN CONFIRMING THE ADDITI ON. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 9. THE NEXT GROUND OF APPEAL IS REGARDING DISALLOWA NCE OF INTEREST OF RS.7,125/-. 10. WHILE EXAMINING THE BALANCE-SHEET, THE ASSESSIN G OFFICER NOTED THAT THE ASSESSEE HAS ADVANCED INTEREST-FREE LOANS TO TWO PARTNERS, VIZ. (I) S/SHRI ASHWIN I.PATEL & SANJAY B .PATEL AMOUNTING TO RS.22,500 AND RS.25,000/- RESPECTIVELY. THE ASS ESSEE HAS PAID INTEREST TO THE PARTNERS ON THEIR CAPITAL AT 15% BU T IT IS NOT CHARGING INTEREST ON THE ADVANCES MADE TO THE TWO PARTNERS. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED PAYMENT OF INTEREST AT RS.7,125/-, EQUIVALENT TO INTEREST CHARGEABLE AT THE RATE OF 15 % ON THE INTEREST- FREE ADVANCES OF RS.47,5000/-. IT WAS EXPLAINED TO THE LEARNED CIT(APPEALS) THAT CREDIT OF RS.22,500/- IS PART OF CREDIT BALANCE OF ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 11 - RS.73,500/- IN THIS CURRENT ACCOUNT ON WHICH NO INT EREST IS PAID. HOWEVER, A SUM OF RS.22,500/- WAS A TEMPORARY LOAN AND WAS NOT DEBITED TO THE CURRENT ACCOUNT OF PARTNER. REGARD ING OTHER SUM OF RS.25,000/-, IT WAS EXPLAINED THAT IT WAS ADVANCED TO SHRI SANJAYBHAI R. PATEL AND NOT TO THE PARTNER SHRI SANJAY B.PATE L. THE LEARNED CIT(APPEALS) OBSERVED THAT IF THERE IS A CREDIT BAL ANCE OF RS.73,500/- IN THE ACCOUNT OF PARTNER ON WHICH NO INTEREST IS C HARGED, THEN DISALLOWANCE OF INTEREST ON INTEREST-FREE ADVANCE O F RS.22,500/- WILL NOT BE JUSTIFIED. REGARDING OTHER ADVANCE, THE LE ARNED CIT(APPEALS) NOTED THAT IT IS IMMATERIAL WHETHER TH E ADVANCE IS GIVEN TO PARTNER OR TO SOME OTHER PERSON. THE FACT BEF ORE US IS THAT INTEREST-FREE ADVANCE WAS GIVEN. ACCORDINGLY, HE C ONFIRMED THE DISALLOWANCE OF RS.3,750/- ONLY AND NOT OF RS.7,125 /- AS MENTIONED IN THE GROUNDS OF APPEAL. 11. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE V IEW THAT THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN RESTRICTING THE ADDITIONS TO RS.3,750/-. IT WAS NOT POINTED OUT AS TO WHETHER THE ADVANCE GIVEN TO SHRI SANJAY B. PATEL WAS FOR THE BUSINESS PURPOSE O R WAS OUT OF ITA NO.1493/AHD /2005 ASIAN POULTRY FEED VS. ITO ASST.YEAR - 2001-02 - 12 - INTEREST-FREE FUNDS OF THE FIRM. ACCORDINGLY, DISA LLOWANCE IS CONFIRMED. 12. AS A RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11/09/2009. SD/- SD/- ( MAHAVIR SINGH ) ( D.C. AGRAWAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 11/ 09 /2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-V, BARODA 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD