DCIT,Circle-1, Kolkata, Kolkata V. M/S AXSYS TECHNOLOGIES Ltd, Kolkata

ITA 1639/KOL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4859 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SNEHOTPAL DUTTA
• Assessee Lawyers: VARSHA JAL
• Keywords: Benefit of exemption
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 1639 / KOL / 2012 ASSESSMENT YEAR :2009-10 DCIT, CIRCLE-1, AAYAKAR BHAVAN, 7THFLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 V/S . M/S AXSYS TECHNOLOGIES LTD., 35, C.R.AVENUE, 1 ST FLOOR, KOLKATA-700 012 [ PAN NO.AAGCA 4666F ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SNEHOTPAL DUTTA, JCIT, DR /BY RESPONDENT SHRI SUBASH AGARWAL, ADVOCATE & MS VARSHA JALAN, ADVOCATE /DATE OF HEARING 08-04-2016 /DATE OF PRONOUNCEMENT 11-05-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATA DATED 09.08.2012. A SSESSMENT WAS FRAMED BY ITO WARD-1(1), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28.1 2.2011 FOR ASSESSMENT YEAR 2009-10. GROUNDS RAISED BY REVENUE ARE REPRODUCED B ELOW:- 1. THE LD. CIT(A) HAS ERRED AND NOT JUSTIFIED IN D ELETING THE ADDITION OF RS.74,16,576/- AS ADDED BY THE AO ON ACCOUNT OF DI SALLOWANCE OF EXEMPTION U/S 10A ON ACCOUNT OF INCOME FROM EXPORT OF SOFTWA RE AND IT ENABLED SERVICES. 2. THE LD. CIT(A) HAS ERRED AND NOT JUSTIFIED IN DE LETING THE ADDITION OF RS.17,30,808 U/S 36(I)(III) OF THE IT ACT. ITA NO.1639/KOL/2012 A.Y. 2009-10 DCIT, CIR-1 KOL. V. M/S AXSYS TECHNOLOGIES LTD. PAGE 2 2. FIRST ISSUE IS REGARDING THAT LD. CIT(A) ERRED I N DISALLOWING OF RS.74,16,576/- U/S 10A OF THE ACT. FACTS IN BRIEF ARE THAT ASSESSEE IN THE PRESENT CAS E IS A PRIVATE LIMITED COMPANY AND INCORPORATED ON 03.08.2007. THE ASSESSE E IS ENGAGED IN THE BUSINESS OF SALE & EXPORT OF SOFTWARE AS WELL AS IT ENABLED SERVICES AND TRADING OF HARDWARE AND COMPUTER ACCESSORIES. THE A SSESSEE-COMPANY IS A REGISTERED UNIT UNDER THE SOFTWARE TECHNOLOGY PARK UNDER THE SCHEME OF GOVERNMENT OF INDIA AND CERTIFICATE OF STP REGISTRA TION WAS ISSUED ON 05.12.2007 AND STARTED ITS COMMERCIAL MANUFACTURING AND PRODUCTION FROM 23.11.2007. DURING THE YEAR UNDER CONSIDERATION ASS ESSING OFFICER OBSERVED THAT ASSESSEE HAS CLAIMED EXEMPTION AMOUNTING TO RS .74,16,576/- U/S 10A OF THE ACT. HOWEVER, AO OBSERVED THAT ASSESSEE-COMPANY HAS BEEN FORMED AFTER SPLITTING OFF/RECONSTRUCTION OF OLD BUSINESS IN THE NAME OF VISION COMPTECH INTEGRATORS LTD. (VCIL FOR SHORT) BY OBSER VING FOLLOWING FACTS:- 1. VCIL IS ALSO A COMPANY DOING THE SAME BUSINESS A ND LOT OF SOFTWARE PERSONNEL HAS BEEN TRANSFERRED FROM VCIL TO THE ASS ESSEE. FURTHER, THE ASSESSEE COMPANY HAS BEEN INCORPORATED ON 03/08/200 7 AND IN ITS FIRST YEAR OF RETURN IT HAS DEBITED ITS PROFIT AND LOSS A CCOUNT WITH THE PAYMENT OF GRATUITY AND LEAVE ENCASHMENT PAID TO THE EMPLOY EES. THE PAYMENT OF THESE EXPENSES IS NOT POSSIBLE IN THE FIRST YEAR OF COMMENCEMENT OF BUSINESS. SO IT WAS A CLEAR CUT CASE OF SHIFTING OF BUSINESS FROM VCIL TO THE ASSESSEE TO AVAIL THE BENEFIT OF EXEMPTION UNDE R SECTION 10A OF THE ACT. 2. ASSESSEE-COMPANY HAS GIVEN INTEREST FREE LOAN TO VCIL AMOUNTING TO RS.1.70 CRORES. 2.1 AS PER THE CONDITIONS LAID DOWN UNDER SECTION 10A(2) OF THE ACT FOR CLAIMING EXEMPTION THE UNDERTAKING SHOULD NOT BE FO RMED BY SPLITTING UP OR RECONSTRUCTION OF A BUSINESS WHICH IS ALREADY IN EXISTENCE. ACCORDINGLY THE AO SOUGHT THE CLARIFICATION FROM THE ASSESSEE W HO SUBMITTED THAT THE ITA NO.1639/KOL/2012 A.Y. 2009-10 DCIT, CIR-1 KOL. V. M/S AXSYS TECHNOLOGIES LTD. PAGE 3 NATURE OF BUSINESS OF THE ASSESSEE AND VCIL IS AKIN BUT THEIR BUSINESS IS TOTALLY DISTINCT FROM EACH OTHER AS DETAILED UNDER: 1. THE PLACE OF BUSINESS FOR BOTH COMPANIES IS DIFF ERENT. 2. THE ASSESSEE COMPANY HAS ITS OWN PLANT & MACHINE RY, STAFF ETC. AMOUNTING TO RS.2,88,46,000/- 3. THE BOARD OF DIRECTORS OF BOTH THE COMPANIES ARE DIFFERENT. 4. THE ASSESSEE COMPANY HAS ITS OWN SEPARATE STP LI CENSE. HOWEVER THE AO WAS NOT SATISFIED WITH THE EXPLANATI ON GIVEN BY THE ASSESSEE AND DISALLOWED THE EXEMPTION AVAILED BY THE ASSESSE E U/S 10A OF THE ACT. 3. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE CI T(A) WHERE IT WAS SUBMITTED BY THE AR THAT MERELY TRANSFER OF SOME EM PLOYEES FROM OLD UNIT TO NEW UNIT DOES NOT RESULTS INTO RECONSTRUCTION OF TH E COMPANY. AS THERE IS NO CONDITION FOR PERSONNEL EMPLOYMENT LAID DOWN U/S 10 A OF THE ACT FOR CLAIMING THE EXEMPTION. FURTHER THE LD. AR REITERATED THE FA CTS THAT THE ASSESSEE A SEPARATE FROM VCIL IN TERMS OF ENTITY, BOARD OF DIR ECTORS AND PLACE OF BUSINESS. MOREOVER, NO PLANT & MACHINERY HAS BEEN T RANSFERRED FROM VCIL TO THE ASSESSEE AND LD. CIT (A) DELETED THE ADDITION B Y OBSERVING AS UNDER:- AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, IT IS NOTICED THA T THE ASSESSING OFFICER DISALLOWED THE CLAIM OF ASSESSEE COMPANY AMOUNTING TO RS.74,16,576/- U/S 10A OF THE ACT, SINCE THE APPELLANT COMPANY WAS FOR MED BY SPLITTING UP OR BY RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE IN THE NAME VISION COMPTECH INTEGRATORS LTD. (VCIL) AND SOME SOFTWARE PERSONNEL WERE SHIFTED FROM VCIL TO ASSESSEE COMPANY AND ACCORDINGLY IT DID NOT FULF ILL THE CONDITIONS LAID DOWN IN SECTION 10A(2)(II) OF THE I.T. ACT. ASSESSEE IS A REGISTERED UNIT UNDER SOFTWARE TECHNOLOGY PARK SCHEME OF GOVT. OF INDIA AS PER CERTIFICATE ISSUED ON 05.12.2007 AND ACQUIRED FIXED ASSETS TO THE TUNE OF RS.2.57 CRORES INCLUDING COMPUTER HARDWARE IN THE 1 ST YEAR OF OPERATION ENDING ON 31.03.2008 AND IN THE FINANCIAL YEAR UNDER CONSIDER ATION FURTHER ACQUIRED FIXED ASSETS OF RS.31,08,215/- AND TOTAL EXPORTS FROM SAL E OF SOFTWARE AND IT ENABLED SERVICES IN THE YEAR WERE RS.11.56 CRORES AND IT CLAIMED DEDUCTION U/S 10A AS PER AUDIT REPORT IN FORM NO.56. ASSESSI NG OFFICER DID NOT DISPUTE WITH THE FACT THAT NO PLANT & MACHINERY WAS TRANSFE RRED TO THE ASSESSEE COMPANY FROM VCIL AND THE PHYSICAL PLACE OF BUSINES S AND THE BOARD OF DIRECTORS IN THE TWO COMPANIES ARE DIFFERENT. THESE TWO COMPANIES WERE COMPLETELY SEPARATE AND DISTINCT. THERE IS NO RESTR ICTION ON SEC 10A(2)(II) REGARDING USE OF HUMAN RESOURCES . SUCH USE OF HUMA N RESOURCES BY THIS ITA NO.1639/KOL/2012 A.Y. 2009-10 DCIT, CIR-1 KOL. V. M/S AXSYS TECHNOLOGIES LTD. PAGE 4 APPELLANT OF THE EMPLOYEES WHO ARE WORKING EARLIER WITH VCIL DOES NOT AMOUNT TO SPLITTING UP OR RECONSTRUCTION OF A BUSIN ESS ALREADY IN EXISTENCE AS PER SECTION 10A(2)(II). BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US LD. DR SUBMITTED THAT THE CONTENTION O F THE ASSESSEE IS THAT THE DIRECTORS OF BOTH THE COMPANIES ARE DIFFERENT B UT SHAREHOLDERS OF BOTH THE COMPANIES I.E., ASXYS TECHNOLOGIES PVT. LTD. AS WEL L AS VCIL ARE SAME. THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF AO. ON THE CONTRARY, LD.AR HAS SUBMITTED BEFORE US THE FINANCIAL STATEMENTS OF VCI L FOR THE ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12 TO CONTRADICT THE ALLE GATION OF THE AO THAT MAJOR PART OF BUSINESS OF VCIL HAS BEEN TRANSFERRED TO AXSYSTECNOLOGIES PVT. LTD. AND FINANCIAL STATEMENTS SHOW THE TURNOVER OF VCIL IN ALL THE FOLLOWING ASSESSMENT YEARS AND HE RELIED ON THE ORDER OF LD. CIT(A). 4.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. THE ISSUE BEFORE US IS THAT WHETHER THE AXSYS TECHNOLOGIES PVT. LTD HAS BEEN FORMED BY RECONSTRUC TION OR NOT. THIS IS BECAUSE SOME EMPLOYEES WERE TRANSFERRED FROM VCIL T O THE ASSESSEE ALONG WITH SOME LIABILITY WHICH WAS SHARED BY THE ASSESSE E COMPANY TOGETHER. THE AO ACCORDINGLY TREATED THAT THE ASSESSEE COMPANY WA S RECONSTRUCTED AFTER SPLITTING THE VCIL. HOWEVER IN MANY CASES THE COURT S HAVE HELD THE TRANSFER OF EMPLOYEES AND SHARING THE LIABILITY OF ONE COMPANY DOES NOT AMOUNT TO RECONSTRUCTION. HERE WE ARE REPRODUCING THE CITATIO N OF SOME CASE LAWS DEALING WITH SIMILAR ISSUES AS UNDER:- I) TEXTILE MACHINERY CORP. LTD. VS. CIT (1977)107 I TR 173 (SC) IT WAS HELD THAT NEW UNDERTAKING MAY MANUFACTURE THE SAME ARTIC LES AS MANUFACTURED BY THE EXISTING UNIT. SO CONTENTION OF DR THAT BOTH TH E COMPANIES HAVING SAME NATURE OF BUSINESS AND SO THE ASSESSEE COMPANY HAS BEEN FORMED BY RECONSTRUCTION DOES NOT HOLD GOOD. ITA NO.1639/KOL/2012 A.Y. 2009-10 DCIT, CIR-1 KOL. V. M/S AXSYS TECHNOLOGIES LTD. PAGE 5 II) CIT VS.MODI SPINNING AND MANUFACTURING 125 ITR 361 (ALL) IT WAS HELD THAT EVERY CREATION IN BUSINESS IS SOME KIND OF EXPANSIO N AND ADVANCEMENT. IF THE UNDERTAKING IS NEW AND IDENTIFIABLE UNDERTAKING, SE PARATE AND DISTINCT, FROM THE EXISTING BUSINESS THEN IT WILL NOT BE RECONSTRU CTION OF BUSINESS ALREADY IN EXISTENCE. III) CIT VS. QUALITY STEEL TUBES (P) LTD. (2006) 28 0 ITR 254 (ALL), WHERE HEAD NOTE AS UNDER:- DEDUCTION UNDER SS. 80HH AND 80JRECONSTRUCTION OF OLD BUSINESS MANUFACTURE OF NEW PRODUCT PARTLY USING EXISTING IN FRASTRUCTURETRIBUNAL HAS FOUND THAT THE ASSESSEE HAS SET UP A NEW PROJECT FO R MANUFACTURING 4 INCH DIAMETER BLACK PIPE WHICH IS DIFFERENT FROM 2 INCH DIAMETER PIPE WHICH WAS ALREADY BEING MANUFACTURED BY ITMERELY BECAUSE SOM E OF THE MANUFACTURING FACILITIES ARE COMMON, IT DOES NOT ME AN THAT THE NEW PROJECT IS SET UP BY RECONSTRUCTION OR SPLITTING UP OF THE EXI STING BUSINESSDEDUCTION UNDER SS. 80HH AND 80J ADMISSIBLE IN RESPECT OF THE NEW PROJECTTEXTILE MACHINERY CORPORATION LTD. VS. CIT 1977 CTR (SC) 151 : (1977) 107 ITR 195 (SC) APPLIED. IN THE CASE OF QUALITY STEEL TUBE LTD. (SUPRA), IT WAS HELD THAT EVEN IF SUBSTANTIAL PERSONS HAVE STARTED THE UNIT THEN IT C ANNOT BE CONSIDERED AS RECONSTRUCTION OF THE COMPANY. THERE IS SUBSTANTIAL INVESTMENT IN THE PLANT & MACHINERY IN THE COMPANY. WE ALSO FIND FROM THE REC ORDS THAT VCIL WAS STILL FUNCTIONING AND IN SUPPORT OF IT THE LD. AR HAS SUB MITTED THE COPIES OF THE FINANCIAL STATEMENTS AND COPIES OF ITR WHICH ARE PL ACED ON RECORD. WE ARE RELYING ON THE ABOVE JUDGMENTS OF HON'BLE SUPREME C OURT AND HON'BLE ALLAHABAD HIGH COURT AND ACCORDINGLY CONCLUDE THAT EVEN THOUGH EMPLOYEES WERE TRANSFERRED FROM VCIL TO ASSESSEE WERE SHARING SOME COMMON LIABILITIES AND THE SHAREHOLDERS OF BOTH THE COMPANIES ARE SAME , IT CANNOT BE TAKEN AS A GROUND FOR DENYING THE BENEFIT U/S 10A OF THE ACT B Y HOLDING THE ASSESSEE AS RECONSTRUCTION COMPANY. THE ASSESSEE I.E. ASXYS TEC NOLOGIES PVT. LTD. IS A SEPARATE LEGAL ENTITY WHICH IS NEWLY FORMED AND HAV ING ITS OWN PLANT & MACHINERY. HENCE, WE UPHOLD THE ORDER OF LD. CIT(A) AND THIS GROUND OF REVENUE IS DISMISSED. ITA NO.1639/KOL/2012 A.Y. 2009-10 DCIT, CIR-1 KOL. V. M/S AXSYS TECHNOLOGIES LTD. PAGE 6 5. THE NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR RS. 17,30,808/ - ON ACCOUNT OF INTEREST FREE LOAN PROVIDED TO VCIL. THE ASSESSEE HAS GIVEN AN INTEREST FREE LOAN AMOUNT ING TO RS.1,73,00,808/- TO VCIL. WHEREAS THE TOTAL OWN FUN D OF THE ASSESSEE WAS RS.2,40,48,038/- WHICH WAS INVESTED IN THE FIXE D ASSETS OF THE COMPANY. AS SUCH THERE WAS NO SURPLUS FUND AVAILABL E TO THE ASSESSEE OUT OF ITS OWNED FUND. AS PER THE RETURN FILED, THE ASSESSEE HAS BOUGHT ASSET WORTH RS. 2,88,46,000/-. ASSESSEE WAS ALSO HA VING LOAN FUND. DURING THE YEAR UNDER CONSIDERATION AO OBSERVED THA T THE LOAN FUND WAS USED FOR GIVING INTEREST FREE LOAN TO VCIL. SIN CE THIS LOAN AMOUNT WAS NOT UTILIZED FOR THE BUSINESS OF THE ASSESSEE T HE AO DISALLOWED A SUM OF RS 17,30,808/- AS INTEREST EXPENSE U/S 36(1) (III) BY TAKING INTEREST RATE @ 10% PER ANNUM OF RS. 1,73,00,808.00 . THE CALCULATION FOR THE LOAN GIVEN TO VCIL AS PER AO WAS MADE AS UN DER: OPENING BALANCE (CR) 1,04,81,769.00 AMOUNT RECEIVED DURING THE YEAR 1,74,38,446.00 TOTAL AMOUNT 2,79,20,215.00 AMOUNT REPAID (4,45,21,023.00) BALANCE AMOUNT OUTSTANDING AT YEAR END (1,73,00,808.00) THE AO WORKED THE INTEREST ON THE AFORESAID AMOUNT AND DISALLOWED THE SAME BY ADDING TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE C IT(A) WHERE LD.CIT(A) HAS DELETED THE ADDITION MADE BY AO AS UN DER: ASSESSING OFFICER MADE ADDITION OF RS. 17,30,808/ - U/S 36(1)(III) OF THE I.T ACT FOR INTEREST FREE LOAN GIVEN TO VCIL FOR AN AMO UNT OF RS.1,73,00,808/- AS ON 31.03.2009. ASSESSEE HAD PRODUCED THE COPY OF LE DGER A/C BEFORE ASSESSING OFFICER AND TRANSACTIONS HAVE BEEN TAKEN NOTE OF AS PER 3CD TAX AUDIT REPORT. AS ON 1 ST APRIL, 2008 THERE WAS OPENING CREDIT BALANCE OF ITA NO.1639/KOL/2012 A.Y. 2009-10 DCIT, CIR-1 KOL. V. M/S AXSYS TECHNOLOGIES LTD. PAGE 7 RS.1,04,81,769/- AND DURING THE FINANCIAL YEAR ASSE SSEE COMPANY PROVIDED IT ENABLED SERVICES TO THE VCIL AND ACCORDINGLY A SUM OF RS. 1,14,24,898/- WAS OUTSTANDING AS ON 31 ST MARCH 2009 ON ACCOUNT OF SUNDRY DEBTORS. ACCORDINGLY, THERE WAS A CLOSING BALANCE OF RS.58,7 5,910/- WITH VCIL AS ON 31 ST MARCH 2009.ASSESSEE HAD SUBMITTED THAT THERE WAS C REDIT BALANCE ON ACCOUNT OF VCIL IN THE MONTH OF APRIL, 2008 AND THE APPELLANT DID NOT PAY ANY INTEREST TO VCIL FOR THIS CREDIT BALANCE OF RS.1,04 ,81,769/- AND ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS INCLUDING SHARE CAPI TAL AND RESERVE & SURPLUSES TO COVER FOR LOAN AND ADVANCE OF RS.58,75,910/-. AS PE R SCHEDULE 20 OF THE PROFIT & LOSS A/C, ASSESSEE HAD DEBITED INTEREST OF RS.33, 32,790/- ON ACCOUNT OF EXPORT PACKING CREDIT AND INTEREST ON TERM LOAN. AS PER SCHEDULE 13 ASSESSEE HAD RECEIVED INTEREST OF RS.5,91,434/-. KEEPING IN VIEW THESE FACTS AND CIRCUMSTANCES, ADDITION OF RS. 17,30,808/- MADE BY ASSESSING OFFICER IS DELETED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 7. BEFORE US BOTH THE PARTIES RELIED ON THE ORDERS OF AUTHORITIES BELOW AS FAVOURABLE TO THEM. LD. AR HAS FILED A PAPER BOOK R UNNING FROM PAGES 1 TO 32 AND DREW OUR ATTENTION ON PAGE NO. 31 & 32 OF IT. T HERE WERE TWO LEDGERS MAINTAINED BY THE ASSESSEE NAMING VISION COMPUTECH INTEGRATORS LTD AND VISION COMPUTECH INTEGRATORS LTD- DEBTORS REFLECTING THE LOAN TRANSACTION AND BUSINESS TRANSACTION AND HE STATED THAT ISSUE MAY B E DECIDED ON MERIT. 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE BEFORE US. WE FIND THAT ACTION O F AO WAS STERN AND BASED ON HIS OWN SURMISE AND CONJECTURE. THERE WAS OPENIN G CREDIT BALANCE OF VCIL. DURING THE YEAR THE THERE WERE LOT DEBITS IN THE ACCOUNTS OF VCIL ON ACCOUNT OF SEVERAL EXPENSES WHICH WERE INCURRED BY THE ASSESSEE ON ITS BEHALF. THE ASSESSEE ALSO RECEIVED LOT OF PAYMENTS FROM VCIL DURING THE YEAR. AT THE END OF THE YEAR THERE WAS DEBIT BALANC E OF VCIL IN THE BOOKS OF THE ASSESSEE FOR RS. 58,85,910.310 AS PER THE LEDGE R PLACED ON PAGE 31 OF THE PB. THE FUND OF THE ASSESSEE WAS SUFFICIENT ENO UGH TO COVER THE MONEY ADVANCED TO VCIL. SO THE MONEY ADVANCED TO VCIL WAS NOT OUT OF THE BORROWED FUND. BESIDES THE ABOVE THE ASSESSEE DEBI TED THE ACCOUNT OF THE VCIL FOR THE SERVICES RENDERED FOR RS. 1,14,24898.4 2 AS EVIDENCED FROM THE ITA NO.1639/KOL/2012 A.Y. 2009-10 DCIT, CIR-1 KOL. V. M/S AXSYS TECHNOLOGIES LTD. PAGE 8 LEDGER PLACED ON PAGE 32 OF THE PAPER BOOK. THESE B ILLS WERE RAISED WITH THE SERVICE TAX TO VCIL BY THE ASSESSEE AND VCIL HAS DE DUCTED THE TDS FROM THE BILLS. ACCORDINGLY THE DEBIT BALANCE APPEARING IN T HE LEDGER OF THE VCIL IN THE BOOKS OF THE ASSESSEE CANNOT BE REGARDED AS MONEY A DVANCED OUT OF THE BORROWED FUND. FROM THE FACTS WE ALSO FIND THAT THE DEBIT BALANCE WAS NOT THERE IN THE ACCOUNTS OF VCIL THROUGHOUT THE YEAR. AS PER THE SUBMISSION OF THE ASSESSEE THERE WAS OWN INTEREST FREE FUND FOR R S. 1,53,56,168.00 AND THE LD. DR FAILED TO BRING ANYTHING CONTRARY TO THE FIN DINGS OF THE LD. CIT(A). HENCE IN OUR CONSIDERED VIEW WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). HENCE THIS GROUND OF REVENUES APPEAL IS DI SMISSED. 9. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 11/ 05/2016 SD/- SD/- (S.S.VISHWANETHRA RAVI) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 11 / 05 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIRCLE-1, AAYAKAR BHAVAN, 7 TH FL, P7, CHOWRINGHEE SQ. KOL-69 2. /RESPONDENT-M/S AXSYS TECHNOLOGIES LTD., 35, C.R.AV NUE, 1 ST FLOOR, KOLKATA-12 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,