DCIT, Bhubaneswar V. M/s. A.K.Das & Associates Ltd., Bhubaneswar

ITA 155/CTK/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3808 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A TIGGA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ( CUTTACK BENCH, CUTTACK ) BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH , JUDICIAL MEMBER I TA N O . 155 / CTK/2015 (ASSESSMENT YEAR : 20 11 - 1 2 ) DCIT, CIRCLE 1 (1), VS. M/S. A.K. DAS & ASSOCIATES LTD., BHU BANESWAR. PLOT NO.H 1, SATYA NAGAR, BHUBANESWAR. ( PAN : AACCA9617J ) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI A. TIGGA , DR D ATE OF HEARING : 2 7 . 0 4 .2017 DATE OF PRONOUNCEMENT : 29 . 0 5 .2017 O R D E R PER KULDIP SINGH , JUDICIAL MEMBER : THE APPELLANT, DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 1 (1), BHUBANESWAR (HEREINAFTER REFERRED TO AS THE ASSESSEE ) BY FILING THE AFORESAID APPEAL SOUGHT TO SET ASIDE THE ORDER DATED 2 8 .0 1 .201 5 PASSED BY THE COMMISSIONER O F INCOME - TAX (APPEALS) - 2 , BHUBANESWAR QUA THE ASSESSMENT YEAR 20 11 - 1 2 ON THE GROUNDS INTER ALIA THAT : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS BY DELETING ADDITION OF RS.36,97,718/ - MADE ITA NO . 1 55 / CTK ./2015 2 BY THE AO U/S 36(1)(III) TOWARDS DEDUCTION OF INTEREST. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN LAW IN NOT ACCEPTING THE EXAMINATION OF FINDINGS MADE BY THE AO ON THE ISSUES. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : DURING THE SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS TAKEN CASH CREDIT LOAN FROM FEDERAL BANK AND ADVANCED THE SAME AS INTEREST FREE LOAN TO HOTEL SEA PEARLS ORISSA PVT. LTD.. ASSESSEE PAID AN AMOUNT OF RS.2,50,19,121/ - TO HOTEL SEA PEARLS AS AN ADVANCE BUT HAS NOT CHARGED ANY INTEREST DESPITE THE FACT THAT THE ASSESSEE HAD ITSELF PAID INTEREST TO THE FEDERAL BANK ON THE LOAN TAKEN BY THEM AND THEREBY DISALLOWED THE INTEREST AMOUNTING TO RS.36,97,718/ - AND MADE ADDITION THEREOF TO THE TOTAL INCOME OF THE ASSESSEE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY ALLOWING THE APPEAL . FEELING AGGRIEVED, T HE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY FILING THE PRESENT APPEAL. 4. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE OF 01.0 3 .201 7 AND CONSEQUENTLY, WE PROCEEDED TO DECIDE THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. DR AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. ITA NO . 1 55 / CTK ./2015 3 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY , THE ASSESSEE HAS TAKEN CASH CREDIT LOAN FROM FEDERAL BANK DURING THE YEAR UNDER ASSESSMENT AND HAS ADVANCED THE LOAN TO HOTEL SEA PEARLS AS UNDER : - DATE PARTICULARS DEBIT DAYS INT. DISALLOWED 31 .03.2010 FEDERAL BANK LTD. 2,60,30,575 31 3,09,514 0 1.0 5 .2010 FEDERAL BANK LTD. 2,6 1 ,0 5 ,575 1 4 1,40,183 15 .0 5 .2010 FEDERAL BANK LTD. 2,6 1 , 55 ,575 2 20,064 17 .0 5 .2010 FEDERAL BANK LTD. 2,6 1 , 95 ,575 2 20,095 19 .0 5 .2010 FEDERAL BANK LTD. 2,6 6 , 35 ,575 38 3,88 ,223 26 .0 6 .2010 FEDERAL BANK LTD. 2,6 6 , 35 ,575 19 1,94,111 15 .0 7 .2010 FEDERAL BANK LTD. 2,6 4 , 35 ,575 11 1,11,536 26 .0 7 .2010 FEDERAL BANK LTD. 2,6 4 , 39 , 4 75 23 2,33,247 18 .0 8 .2010 FEDERAL BANK LTD. 2,6 3 , 39 , 4 75 13 1,31,337 31 .0 8 .2010 FEDERAL BANK LTD. 2,6 2 , 14 , 4 75 3 30,165 03 .0 9 .2010 FEDERAL BANK LTD. 2,6 3 , 39 , 4 75 119 12,02,235 31 . 12 .2010 FEDERAL BANK LTD. 2,6 6 , 69 , 121 77 7,87,652 18 .0 3 .2010 FEDERAL BANK LTD. 2,6 2 , 19 , 121 7 70,397 25 .0 3 .2010 FEDERAL BANK LTD. 2, 5 6, 19 , 121 6 59,959 TOTAL 36,97,718 7. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS DEBITED THE INTEREST AMOUNT OF RS.2,37,31,348/ - FROM ITS P&L ACCOUNT. IT IS ITA NO . 1 55 / CTK ./2015 4 ALSO NOT IN DISPUTE THAT HOTEL SEA PEARLS IS A SISTER CONCERN OF THE ASSESSEE. 8. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACTS A ND CIRCUMSTANCES OF THE CASE, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS : - AS TO WHETHER LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.36,97,718/ - MADE BY THE AO U/S 36(1)(III) OF THE INCOME - TAX ACT, 1961? 9. WHEN THE ASSESSEE H AS ADVANCED INTEREST FREE LOAN TO HOTEL SEA PEARLS, ITS SISTER CONCERN, WITH OBJECTIVE OF DIVERSIFYING ITS BUSINESS INTO HOTEL INDUSTRY, THE BUSINESS INTEREST OF THE ASSESSEE AS WELL AS ITS SISTER CONCERN HOTEL SEA PEARLS HAS BECOME SAME. MOREOVER, THE FU NDS AVAILABLE WITH THE ASSESSEE ARE TO BE USED BY THE ASSESSEE TO THE BEST OF ITS BUSINESS ACUMEN AND THE REVENUE CANNOT DIRECT THE ASSESSEE TO UTILIZE THE FUNDS AVAILABLE IN A PARTICULAR MANNER. EVEN OTHERWISE, IT IS NOT THE CASE OF THE REVENUE THAT THE FUNDS AVAILABLE WITH THE ASSESSEE HAVE BEEN SIPHONED OF FOR THE ACTIVITIES OTHER THAN THE BUSINESS ACTIVITIES. FURTHERMORE, THE ASSESSEE WAS HAVING NON - INTEREST BEARING FUNDS TO THE TUNE OF RS.16,00,00,000/ - WHICH IS FAR MORE THAN THE AMOUNTS ADVANCES TO HOTEL SEA PEARLS. SO, WE ARE OF THE CONSIDERED VIEW THAT ADVANCING INTEREST FREE LOANS TO A SISTER CONCERN BY THE ASSESSEE IS A BUSINESS EXPEDIENCY AND IN THE GIVEN CIRCUMSTANCES, INTEREST ITA NO . 1 55 / CTK ./2015 5 CANNOT BE DISALLOWED AS HAS BEEN DONE BY THE AO U/S 36(1)(III) OF THE ACT. 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), THE PRESENT APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY O F MAY , 201 7 . SD/ - SD/ - ( N.S. SAINI ) ( KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF MAY , 201 7 TS COPY OF THE ORDER FORWARDED TO: 1.APPELLANT - DCIT, CIRCLE 1 (1), BHUBANESWAR. 2.RESP ONDENT - M/S. A.K. DAS & ASSOCIATES LTD., PLOT NO.H 1, SATYA NAGAR, BHUBANESWAR. 3.CIT 4.CIT (A) , BHUBANESWAR. 5.DR (ITAT), CUTTACK . 6. GUARD FILE //TRUE COPY// BY ORDER SR. PRIVATE SECRETARY , ITAT , CUTTACK