Shri Arvind Nagarmal Birla, Ahmedabad V. The Dy.CIT.,Circle-5, Ahmedabad

ITA 1780/AHD/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80259 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 28-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: S N DIVETIA

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.1780/AHD/2009 [ASSTT.YEAR : 2005-2006] SHRI ARVIND NAGARMAL BIRLA OPP: RAJPATH CLUB, SARKHEJ GANDHINAGAR HIGHWAY, BODAKDEV, AHMEDABAD. PAN : AEHPB 8061 M /VS. DCIT, CIR.5 AHMEDABAD. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 1& 2 3 )/ ASSESSEE BY : SHRI S.N. DIVETIA + 2 3 )/ REVENUE BY : SHRI O.P. VAISHNAV, CIT-DR 5 2 &(*/ DATE OF HEARING : 8 TH JULY, 2014 678 2 &(*/ DATE OF PRONOUNCEMENT : 08/08/2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSTT.YEAR 2008-2009 IS DIRECTED AGAINST THE OR DER OF THE CIT(A). 2. THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS AS UNDER: 1. THE AO HAD DISALLOWED A SUM OF RS.6,09,144/- BE ING INTEREST EXPENDITURE ON LOANS TAKEN ON ACCOUNT OF INTEREST F REE ADVANCES MADE TO VARIOUS CONCERNS TREATING THEM AS ADVANCES FOR NON- BUSINESS PURPOSE. THE CIT(A) HAS REDUCED THE DISAL LOWANCE TO THE TUNE OF INTEREST ON AMOUNT ADVANCED TO M/S.SHANTI B UILDERS, AND ITA NO.1780/AHD/2009 -2- ACCORDINGLY, HAS ERRED ON FACTS AND IN LAW IN DISAL LOWING THE CLAIM PARTIALLY. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE WAS HAVING INTEREST FREE FUNDS WHICH WERE PARTLY UTILIZ ED FOR MAKING ADVANCES TO SISTER CONCERNS, AND THEREFORE, DISALLOWANCE OUT OF INTEREST EXPENDITURE WAS NOT JUSTIFIED. THE LEARNED DR SUBMITTED THAT T HE ADVANCES WERE MADE TO THE SISTER CONCERNS FOR WHICH NO COMMERCIAL EXPE DIENCY COULD BE PROVED BY THE ASSESSEE. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THERE IS NO FINDIN G RECORDED BY THE AO OR THE CIT(A) THAT WHETHER THE SISTER CONCERNS TO W HOM THE AMOUNT WERE ADVANCED BY THE ASSESSEE, AS INTEREST FREE ADVANCE, HAVE UTILIZED THE AMOUNT, SO RECEIVED, FOR ITS BUSINESS PURPOSE. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT IT SHALL BE REASONABLE TO RESTORE THIS ISSUE TO THE FILE OF THE AO WITH DIRECTION TO PASS A DE NOVO ORDER ON THIS ISSUE AFTER VERIFYING WHAT WHETHER THE SISTER CONCE RNS TO WHOM THE AMOUNT WAS ADVANCED BY THE ASSESSEE, AS THE INTEREST FREE FUNDS, HAVE UTILIZED THE AMOUNT, SO RECEIVED, FOR ITS BUSINESS PURPOSE. IF THE SISTER CONCERNS HAVE UTILIZED THE SAID AMOUNT FOR ITS BUSINESS PURPOSE, THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT IN S.A. BUILDERS, 288 ITR 1, SHALL BE APPLICABLE. THE AO IS FURTHER DIRECTED TO EXAMINE THAT WHETHER THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE WERE SUFFICI ENT TO ADVANCE INTEREST FREE LOANS TO THE SISTER CONCERNS, AND DECIDE THE I SSUE AFRESH AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 5. THE GROUND NO.2 OF THE APPEAL OF THE ASSESSEE IS AS UNDER: ITA NO.1780/AHD/2009 -3- 2. THE AO HAD DISALLOWED A SUM OF RS.6,75,000/- ON ACCOUNT OF WARRANTY COSTS. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISALLOWING THE CLAIM. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE AMOUNT WAS A PROVISION FOR WARRANTY AND SHOULD HAVE BEEN ALLOWED AS PER THE RATIO OF THE DECISION OF THE HONBLE APEX COURT IN ROTORK CONTRO LS INDIA (P.) LTD. VS. CIT, [2009] 314 ITR 62. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE AO HAS NOT EXA MINED THE PAST AND SUBSEQUENT HISTORY OF THE CASE OF THE ASSESSEE THAT WHETHER THE SIMILAR PROVISIONS WERE MADE IN THE PAST OR IN THE SUCCEEDI NG YEARS, AND ALLOWED BY THE DEPARTMENT, AND ALSO WHETHER THE SAME WERE U TILIZED FOR THE BUSINESS PURPOSE OF THE ASSESSEE. ACCORDINGLY, THE ISSUE IS RESTORED TO THE FILE OF THE AO WITH DIRECTION TO RECORD A CLEAR CUT FINDING ON THE ISSUE, AFTER EXAMINING THE PAST AND SUBSEQUENT YEARS PRACTICE OF THE ASSESSEE ON THIS ISSUE, AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. THE GROUND NO.3 OF THE APPEAL OF THE ASSESSEE IS AS UNDER: 3. THE AO HAD DISALLOWED A SUM OF RS.60,000/- ON A CCOUNT OF TELEPHONE EXPENSES. THE CIT(A) HAS REDUCED THE DIS ALLOWANCE TO RS.40,000/- AND ACCORDINGLY, HAS ERRED ON FACTS AND IN LAW IN DISALLOWING THE CLAIM TO THAT EXTENT. 9. WE HAVE HEARD THE PARTIES. WE FIND THAT THE DIS ALLOWANCE OUT OF TELEPHONE EXPENSES WAS REDUCED FROM RS.60,000/- TO RS.40,000/- BY THE CIT(A). THE TOTAL TELEPHONE EXPENSES INCLUDING MO BILE TELEPHONE EXPENDITURE AMOUNTED TO RS.9.60 LAKHS. THE DISALLO WANCE MADE BY THE ITA NO.1780/AHD/2009 -4- CIT(A) FOR PERSONAL USE OF THE TELEPHONE AND MOBILE PHONE SEEMS TO BE MORE THAN REASONABLE, AND ACCORDINGLY, NO INTERFERE NCE IN THE ORDER OF THE CIT(A) ON THIS ISSUE IS CALLED FOR, AND ORDER OF TH E CIT(A) ON THIS ISSUE IS CONFIRMED, AND THE GROUND NO.3 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 10. THE GROUND NO.4 OF THE APPEAL OF THE ASSESSEE I S AS UNDER: 4. THE AO HAD DISALLOWED A SUM OF RS.3,00,000/- ON ACCOUNT OF TRAVELING EXPENSES. THE CIT(A) HAS REDUCED THE DIS ALLOWANCE TO RS.1,00,000/- AND ACCORDINGLY, HAS ERRED ON FACTS A ND IN LAW IN DISALLOWING THE CLAIM TO THAT EXTENT. 11. WE HAVE HEARD THE PARTIES. WE FIND THAT THE DI SALLOWANCE OUT OF TRAVELING EXPENSES WAS RESTRICTED TO RS.1,00,000/- BY THE CIT(A), AS AGAINST RS.2,00,000/- MADE BY THE AO. WE FIND THAT THE CIT(A) HAS RECORDED THAT THE ASSESSEE HAS NOT GIVEN DETAILS TO THE AO WITH REGARD TO VARIOUS FOREIGN TRIPS UNDERTAKEN BY THE ASSESSEE-PR OPRIETOR. THE CIT(A) HAS RECORDED THAT DURING THE APPELLATE PROCEEDINGS, THE DETAILS WITH REGARD TO THE FOREIGN TOUR WAS FURNISHED, BUT FOR PART OF THE EXPENSES, THE ASSESSEE WAS NOT HAVING ANY EVIDENCE. IN THESE FACTS, WE HO LD THAT THE DISALLOWANCE CONFIRMED BY THE CIT(A) WAS REASONABLE, AND THE GRO UND NO.4 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT