The ACIT, (OSD)Range-8, Ahmedabad V. M/s. Suzlon Infrastructure Limited, Ahmedabad

ITA 1628/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2056 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TUSAR P HEMANI
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM ) ITA NO.1628/AHD/2008 A. Y.: 2005-06 THE A. C. I. T. (OSD), CIRCLE-8, AHMEDABAD, 4 TH FLOOR, AJANTA COMMERCIAL CENTRE, A WING, ASHRAM ROAD, AHMEDABAD VS SUZLON INFRASTRUCTURE LTD., SUZLON HOUSE, 05, SRIMALI SOCIETY, NAVRANGPURA, AHMEDABAD PA NO. AACC 6871 Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI DARSI SUMAN RATNAM, DR RESPONDENT BY SHRI TUSAR P. HEMANI, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XI V, AHMEDABAD DATED 03 RD MARCH, 2008 FOR ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME-TAX (A) XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.25,03,817/- ON ACCOUNT OF INTEREST EXPENDITURE. 2. THE LD. COMMISSIONER OF INCOME-TAX (A)- XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO GIVE RELIEF OF RS.1,89,062/- UNDER SECTION 43B OF THE ACT IN RESPECT OF EMPLOYEES P. F. & ESI AS THE SAME FALLS UNDER SECTION 36 (1)(VA) OF THE ACT. ITA NO.1628/AHD/2008 ACIT (OSD), CIR 8, AHMEDABAD VS SUZLON INFRASTRUCTU RE LTD. 2 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. ON GROUND NO.1 OF THE APPEAL, THE AO NOTED THAT THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTED FOR THE REASONS REC ORDED IN THE ASSESSMENT ORDER FOR PRECEDING ASSESSMENT YEAR 2004 -05 AND THE ORDER OF THE LEARNED CIT(A) IS NOT ACCEPTED BECAUSE SECOND APPEAL IS PENDING BEFORE THE TRIBUNAL. ACCORDINGLY, INTEREST TO THE EXTENT OF RS.25,03,817/- BEING INTEREST ATTRIBUTABLE TO INTER EST BEARING FUNDS DIVERTED AS INTEREST FREE FUNDS FOR NON-BUSINESS PU RPOSES WAS DISALLOWED. THE LEARNED CIT(A) NOTED THE SUBMISSION OF THE ASSESSEE IN WHICH IT WAS PLEADED THAT THE ASSESSEE IS HAVING ITS OWN INTEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL OF RS.2.2 C RORES AND RESERVE AND SURPLUS OF RS.7.10 CRORES WHEREAS THE ADVANCE G IVEN TO M/S. AZURE TECHNOLOGIES PVT. LTD. IS RS.2.74 CRORES. THE LEARNED CIT(A) CONSIDERING THE FACTS IN THE LIGHT OF THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF TORRENT FINANCERS 73 TTJ 624 H ELD THAT NO DISALLOWANCE CAN BE MADE IF THE ASSESSEE IS HAVING SUFFICIENT INTEREST FREE FUNDS AVAILABLE. THE LEARNED CIT(A) ALSO NOTED THAT SIMILAR RELIEF IS ALLOWED IN PRECEDING ASSESSMENT YEAR 2004-05 VID E ORDER DATED 29-03-2006. THE LEARNED CIT(A) CONSIDERING THE ABOV E HELD THAT THE ASSESSEE HAS OWN SUFFICIENT FUNDS AND THERE WAS NO NEXUS BETWEEN THE INTEREST BEARING FUNDS AND THE ADVANCE GIVEN TO M/S. AZURE TECHNOLOGIES PVT. LTD. ADDITION WAS ACCORDINGLY DEL ETED. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT WHEN THE ASSESSEE WAS HAVING SUFFICIENT FUNDS, THERE WAS NO ITA NO.1628/AHD/2008 ACIT (OSD), CIR 8, AHMEDABAD VS SUZLON INFRASTRUCTU RE LTD. 3 REASON TO TAKE INTEREST BEARING LOANS AND THE ASSES SEE SHOULD NOT HAVE PAID INTEREST ON INTEREST BEARING FUNDS. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE DEPARTMENTAL APPEAL IS DISMISSED IN PRECEDING ASSESSMENT YEAR 2004-05 ON THE SAME GROUND IN ITA NO.1359/AHD/2006 VIDE ORDER DATED 07-11-2008. COPY OF THE ORDER IS PLACED ON RECORD. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE ARE OF THE VIEW NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE FINDI NGS OF THE AO ARE BASED ON THE FINDINGS GIVEN IN ASSESSMENT YEAR 2004 -05 FOR MAKING THE DISALLOWANCE. THE LEARNED CIT(A) IN ASSESSMENT YEAR 2004-05 DELETED THE ADDITION AND THE ORDER OF THE LEARNED C IT(A) HAS BEEN CONFIRMED BY THE TRIBUNAL IN ITA NO.1359/AHD/2006. IT WOULD, THEREFORE, SHOW THAT NO BASIS IS LEFT FOR CONSIDERA TION. THE FINDINGS OF THE AO ARE BASED ON THE FINDINGS GIVEN IN THE PRECE DING ASSESSMENT YEAR AND FURTHER THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BECAUSE THE DEPARTMENTAL APPEAL WAS PENDING BEFORE THE TRIB UNAL. THE TRIBUNAL HOWEVER, VIDE ORDER DATED 07-11-2008 DISMI SSED THE DEPARTMENTAL APPEAL BY HOLDING THAT THERE IS NO NEX US BETWEEN THE AMOUNT BORROWED AND THE ADVANCES GIVEN. THE FINDING OF FACT RECORDED BY THE TRIBUNAL WOULD PROVE THAT REVENUE H AS NO CASE FOR INTERFERENCE. WE ACCORDINGLY, DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL ON GROUND NO.1. THE SAME IS ACC ORDINGLY DISMISSED. ITA NO.1628/AHD/2008 ACIT (OSD), CIR 8, AHMEDABAD VS SUZLON INFRASTRUCTU RE LTD. 4 7. ON GROUND NO.2 OF THE APPEAL, THE LEARNED CIT(A) NOTED THAT THE AO HAS DISALLOWED THE PAYMENT MADE TO PF AND ES I BECAUSE THE SAME WAS PAID AFTER THE DUE DATE. IT WAS SUBMIT TED THAT THE ENTIRE AMOUNT WAS PAID WELL BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THEREFORE, ADDITION SHOULD BE DELETED. THE LEARNED CIT(A) ACCORDINGLY DELETED THE ADDITION. 8. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSION MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO T HE ASSESSMENT ORDER WHERE ACTUAL DATE OF PAYMENT ARE RECORDED WHI CH WERE PRIOR TO THE DUE DATE OF FILING OF THE RETURN OF INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE ORDER OF THE ITAT AHMEDABAD BENCH IN THE CASE OF M/S. CONSULTECH VS ACIT IN ITA NO.2162/AHD/2007 DATED 09-07-2010 ON WHICH ON IDENT ICAL GROUND, THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWED. COPY O F THE ORDER IS PLACED ON RECORD. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. THE SIMILAR ISSUE IS CONSIDERE D BY THE TRIBUNAL IN THE CASE OF CONSULTECH (SUPRA) IN WHICH THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWED. THE FINDINGS GIVEN IN PARA 3 ARE REPRODUCED AS UNDER: 3. WE FIND THAT THE HONBLE DELHI HIGH COURT IN TH E CASE OF P. M. ELECTRONICS LTD. (SUPRA) HAS DECIDED THIS ISSUE OF PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AFTER CONSIDERING THE DECISION OF HO NBLE APEX COURT IN THE CASE OF VINAY CEMENT (SUPRA) AND ALSO DISTINGUISHED THE CASE LAW REFERRED BY THE LD. DR O F ITA NO.1628/AHD/2008 ACIT (OSD), CIR 8, AHMEDABAD VS SUZLON INFRASTRUCTU RE LTD. 5 BOMBAY HIGH COURT IN PAMWI TISSUES LTD. (SUPRA). EV EN NOW THIS ISSUE HAS BEEN CONSIDERED BY HONBLE APEX COURT IN THE CASE OF CIT VS. ALOM /EXTRUSIONS LTD. (2009) 319 ITR 306 (SC) / (2009) 185 TAXMAN 416 (SC), WHEREIN, IT IS HELD THAT CONTRIBUTION TO PROVIDENT FUND, MADE BEFORE DUE DATE OF FILING OF RETURN ALLOWABLE AS DEDUCTION. THE DELETION OF THE SECOND PROVISO TO SE CTION 43B, AND THE AMENDMENT TO THE FIRST PROVISO, BY THE FINANCE ACT, 2003 WAS TO OVERCOME IMPLEMENTATION PROBLEMS. CONSEQUENTLY, THE AMENDMENTS, THOUGH MAD E APPLICABLE BY PARLIAMENT ONLY WITH EFFECT FROM 1-4- 2004, WERE CURATIVE IN NATURE AND WOULD APPLY RETROSPECTI VELY8 W. E. F. 1-4-1988. ACCORDINGLY, FOLLOWING APEX COUR T IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA) AND DELHI HIGH COURT IN P. M. ELECTRONICS LTD. (SUPRA), WE ALLOW THE CLA IM OF THE ASSESSEE. THE ISSUE IS, THEREFORE, COVERED IN FAVOUR OF THE A SSESSEE. ACCORDINGLY, THE DEPARTMENTAL APPEAL IS DISMISSED O N GROUND NO.2 AS WELL. 10. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMI SSED. ORDER PRONOUNCED ON 18-02-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 18- 02-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: ITA NO.1628/AHD/2008 ACIT (OSD), CIR 8, AHMEDABAD VS SUZLON INFRASTRUCTU RE LTD. 6 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD