M/s Lotus Texpark Ltd., Barnala V. DCIT, C-6, Ludhiana

ITA 1540/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9208 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Chandigarh
• Assessment Year: 2014-2015
• Appeal Filed On: 10-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , !' # $ % &' , '( BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 1540/CHD/2018 / ASSESSMENT YEAR : 2014-15 M/S LOTUS TEXPART LTD., LITL TEXTILE PARK, MANSA ROAD, DHAULA, BARNALA THE DCIT, CIRCLE-6 LUDHIANA ./PAN NO. AABCL2655E / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI ASHWANI KUMAR, CA ' ! / REVENUE BY : SMT. CHANDRAKANTA, SR.DR # $ % /DATE OF HEARING : 29.04.2019 &'() % / DATE OF PRONOUNCEMENT : 02.07 .2019 ')/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 01.09.2018 OF THE. COMMISSIONER OF INCO ME TAX-3, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A) ] 2. THE SOLE GROUND TAKEN BY THE ASSESSEE IN THIS A PPEAL READS AS UNDER:- 1. THE LD. CIT(A) WAS NOT JUSTIFIED TO UPHOLD THE DISALLOWANCE OF RS. 67,24,132/- THE PROPORTIONATE ITA NO. 1540/C/2018 M/S LOTUS TEXPARK LIMITED, BARNALA 2 AMOUNT OF INTEREST ON INTEREST-FREE ADVANCES TO SUBSIDIARY. 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE INTEREST F REE ADVANCES TO ITS SISTER CONCERN, HE, THEREFORE, INVOKED THE PROV ISIONS OF SECTION 36(1)(III) OF THE INCOME TAX ACT, 1961 (IN SHORT 'T HE ACT') AND COMPUTED THE DISALLOWANCE OUT OF INTEREST EXPENDITU RE AND ADDED THE SAME INTO THE INCOME OF THE ASSESSEE. 4. THE LD. CIT(A) CONFIRMED THE ADDITIONS SO MADE BY THE ASSESSING OFFICER. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUBM ITTED THAT THE INTEREST FREE ADVANCES TO SUBSIDIARIES WERE MADE OU T OF THE BUSINESS EXPEDIENCY AS THE ASSESSEE WAS INTERESTED IN THE GROWTH OF ITS SUBSIDIARIES. THE LD. COUNSEL HAS FURTHER SU BMITTED THAT EVEN OTHERWISE THE AFORESAID ADVANCES WERE MADE OUT OF T HE OWN / INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. T HAT THE TOTAL SHARE CAPITAL OF THE ASSESSEE WAS AT RS. 21.56 CRORES AND THE BALANCE IN RESERVES AND SURPLUSES WERE OF RS. 114.56 CRORES, W HEREAS, THE ADVANCES TO SISTER CONCERNS WERE ONLY OF THE AMOUNT OF 39.19 CRORES WHICH SHOWED THAT THE ASSESSEE HAD SUFFICIEN T FUNDS AVAILABLE WITH IT TO MEET THE INVESTMENT. THAT THE ISSUE IS NOW SQUARELY COVERED BY THE RECENT DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF CIT (LTU) VS. RELIANCE INDUSTRIES L TD. [2019] 410 ITA NO. 1540/C/2018 M/S LOTUS TEXPARK LIMITED, BARNALA 3 ITR 466 (SC), WHEREIN, THE HON'BLE SUPREME COURT HA S AFFIRMED THE PROPOSITION OF LAW THAT IF THE OWN FUNDS / INTEREST FREE FUNDS ARE AVAILABLE WITH THE ASSESSEE TO MEET THE INVESTMENT, PRESUMPTION WILL BE THAT THE ASSESSEE HAS USED ITS OWN / INTEREST FREE FUNDS FOR THE SAID INVESTMENT. 6. THE LD. DR, HOWEVER, HAS ARGUED THAT THE PROPOSI TION OF LAW LAID DOWN IN THE LATEST DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF CIT (LTU) VS. RELIANCE INDUSTRIES LT D. (SUPRA) CANNOT BE APPLIED AS THE HON'BLE SUPREME COURT HAS NOT FINALLY DECIDED THE MATTER AS ON SOME OTHER ISSUES, THE MAT TER HAS BEEN REMANDED BACK TO THE HON'BLE HIGH COURT. 7. WE ARE NOT CONVINCED BY THE ABOVE ARGUMENTS OF T HE LD. DR. SO FAR AS THE PROPOSITION OF LAW SAID DOWN BY THE H ON'BLE SUPREME COURT IN THE CASE OF RELIANCE INDUSTRIES LTD. (S UPRA) IS CONCERNED, WE FIND THAT THE ISSUE HAS BEEN FINALLY SETTLED BY THE HON'BLE SUPREME COURT IN CLEAR TERMS VIDE PARA 7 & 8 OF THE ORDER WHICH READS AS UNDER:- 7. IN SO FAR AS THE FIRST QUESTION IS CONCERNED, THE ISSUE RAISES A PURE QUESTION OF FACT. THE HIGH COURT HAS NOTED THE FINDING OF THE TRIBUNAL THAT THE INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE WERE SUFFICIENT TO MEET ITS INVESTMENT. HENCE, IF COULD BE PRESUMED THAT THE INVESTMENTS WERE MADE FROM THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. THE TRIBUNAL HAS ALSO ITA NO. 1540/C/2018 M/S LOTUS TEXPARK LIMITED, BARNALA 4 FOLLOWED ITS OWN ORDER FOR ASSESSMENT YEAR 2002-03. 8. IN VIEW OF THE ABOVE FINDINGS, WE FIND NO REASON TO INTERFERE WITH THE JUDGEMENT OF THE HIGH COURT IN REGARD TO THE FIRST QUESTION. ACCORDINGLY, THE APPEALS ARE DISMISSED IN REGARD TO THE FIRST QUESTION. 8. A PERUSAL OF THE ABOVE FINDINGS REVEALS THAT THE HON'BLE SUPREME COURT HAS AFFIRMED THE AFORESAID PROPOSITIO N. THUS, THE ABOVE ARGUMENTS OF THE LD. DR ON THIS ISSUE ARE MIS CONCEIVED. THE ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE A SSESSEE AND THE DISALLOWANCE MADE U/S 36(1)(III) OF THE ACT IS ORDERED TO BE DELETED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.07.2019 SD/- SD/- ( # $ % &' / ANNAPURNA GUPTA) '( / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 02.07.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR ITA NO. 1540/C/2018 M/S LOTUS TEXPARK LIMITED, BARNALA 5