VINAY CARGO MOVERS LTD, NAVI MUMBAI V. DCIT CIR 7(3), MUMBAI

ITA 1529/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0510 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Corroborative evidences; Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.1529 /MUM/2015 (ASSESSMENT YEAR: 2011-12) M/S. VINAY CARGO MOVERS LTD. VS. DCIT, CIRCLE 7(3) PLOT NO. 33, VINAY HOUSE SECTOR 19-C, VASHI NAVI MUMBAI 400705 AAYAKAR BHAVAN, M.K. MARG MUMBAI 400020 PAN AABCV2487L APPELLANT RESPONDENT APPELLANT BY: SHRI DINKLE HARIYA RESPONDENT BY: SHRI T.A. KHAN DATE OF HEARING: 05.07.2017 DATE OF PRONOUNCEMENT: 08.08.2017 O R D E R PER D.T. GARASIA, J.M THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-14, MUMBAI DATED 31.12.2014 FOR A.Y. 2011-12 . 2. THE ONLY GROUND RAISED BY THE ASSESSEE PERTAINS TO THE CONFIRMATION BY THE CIT(A) OF THE DISALLOWANCE OF ` 12,81,570/- MADE BY THE AO ON ACCOUNT OF NOTIONAL INTEREST ON INTEREST FREE DEPOS ITS. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED FROM THE DETAILS THAT TH E ASSESSEE HAS GIVEN SEVERAL DEPOSITS. ON ASKING HE INFORMED THAT IN THE REGULAR COURSE OF BUSINESS THE ASSESSEE FILES TENDERS AND ON THOSE TE NDERS IT HAS TO MAKE SOME DEPOSITS AND THE DEPOSITS NAMED AS DEPOSITS GI VEN TO CUSTOMERS AS TENDER DEPOSIT AMOUNTS. THE AO NOTICED THAT DURING YEAR UNDER REFERENCED THE ASSESSEE HAS TAKEN LOAN AND IS PAYING INTEREST ON SUCH LOANS. HOWEVER, IT WAS NOTICED THAT THE ASSESSEE HAS ADVAN CED DEPOSITS/LOANS AMOUNTING TO ` 1,09,06,978/- (APPEARING AS CLOSING BALANCE) ON WHI CH NO ITA NO. 1529/MUM/2015 M/S. VINAY CARGO MOVERS LTD. 2 INTEREST HAS BEEN CHARGED. THEREFORE, THE AO ASKED TO EXPLAIN AS TO WHY INTEREST ON THE ABOVE LOANS GIVEN TO M/S. VINAY LOG ISTICS PVT. LTD. MAY NOT BE CALCULATED AT THE RATE OF INTEREST PAID TO OTHER LOANS TAKEN AND DISALLOWED FROM THE INTEREST EXPENSES CLAIMED. SINC E THE ASSESSEE HAS NOT PROVED THAT THE ASSESSEE HAS GIVEN THESE LOANS FOR BUSINESS PURPOSES. THEREFORE, CONSIDERING THE REPLY THE AO HAS DISALLO WED THE INTEREST EXPENSES OF ` 12,81,570/- ON ADVANCE GIVEN TO M/S. VINAY LOGISTIC PVT. LTD. THE MATTER WAS CARRIED TO THE CIT(A) AND THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 4. DURING THE COURSE OF HEARING THE LEARNED A.R. HAS DRAWN OUR ATTENTION TO PAGE 54 OF THE PAPER BOOK AND SUBMITTE D THAT THE ASSESSEE HAS GIVEN DEPOSITS OF ` 73.61 LAKHS IN FY 2007-08 AND FY 2008-09 OUT OF WHICH AN AMOUNT OF ` 63.61 LAKHS WAS DEPOSITED IN FY 2007-08 (TOTAL DEPOSIT OF ` 1.10 CRORES MINUS REFUND AMOUNT OF ` 46.53 LAKHS) WHICH IS CARRIED FORWARD IN THE YEAR UNDER CONSIDERATION. TH E LEARNED A.R. HAS ALSO DRAWN OUR ATTENTION TO THE TOTAL SUMMARIZED MAJOR T RANSACTIONS OF DEPOSITS WITH M/S. VINAY LOGISTIC PVT. LTD. AND IMM EDIATE SOURCES OF FUNDS. AS THE IMMEDIATE SOURCES OF FUNDS WHICH ARE USED TO KEEP DEPOSIT WITH M/S. VINAY LOGISTIC PVT. LTD. ARE FROM INTERNA L ACCRUALS AND NOT FROM BORROWED FUNDS DISALLOWANCE OF INTEREST EXPENSES CO -RELATING BORROWED FUNDS TOWARDS DEPOSITS WITH M/S. VINAY LOGISTIC PVT . LTD. IS UNCALLED FOR. MOREOVER, HE HAS ALSO DRAWN OUR ATTENTION TO PAGES 57, 58 AND 59 OF THE PAPER BOOK AND TRIED TO PROVE THAT THE ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS AND WHEN THE ASSESSEE HAS SUFFICIENT INTEREST FUNDS NO DISALLOWANCE CAN BE MADE. HE ALSO RELIED UPON THE DECISION OF TH E HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GOLDERN TOBACCO LTD. 8 2 TAXMANN.COM 11. ON BEING ASKED BY THE BENCH WHETHER THE ASSESSEE CAN P ROVE THAT THE ASSESSEE HAD SUFFICIENT FUND ON THE DATE OF THE FUN DS GIVEN TO THE SISTER CONCERN AND WHETHER THE ASSESSEE IS HAVING BANK PAS S BOOK TO SHOW THAT THE ASSESSEE HAD SUFFICIENT DEPOSIT IN THE BANK ACC OUNT, ASSESSEE COULD NOT PROVE THE SAME. 5. THE LEARNED D.R. RELIED UPON THE ORDER OF THE TAX AUTHORITIES BELOW. ITA NO. 1529/MUM/2015 M/S. VINAY CARGO MOVERS LTD. 3 6. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FA CTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE ASSESSEE HAS GIVEN THE DETAILS OF DEPOSITS GIVEN TO VARIOUS PARTIES. MOREOVER, THE AS SESSEE HAS ALSO GIVEN VARIOUS SOURCES OF FUNDS AND SUPPORTING EVIDENCES O N PAGES 57, 58 AND 59 OF THE PAPER BOOK BUT IT REQUIRES VERIFICATION AT T HE END OF THE AO. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO AND THE AO IS DIRECTED TO DEC IDE THE MATTER AFRESH AS PER THE FLOW OF FUNDS AND STATEMENT GIVEN ON PAGES 57, 58 AND 59 OF THE PAPER BOOK AFTER GIVING OPPORTUNITY OF HEARING TO T HE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2017. SD/ - SD/ - (P.K. BANSAL) (D.T. GARASIA) VICE PRESIDENT JUDICIAL MEMBER MUMBAI, DATED: 8 TH AUGUST, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -14, MUMBAI 4. THE CIT - 8, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.