Solace Capital Services Pvt. Ltd, Ahmedabad V. Income Tax Officer, Ward-4(1)(2), Ahmedabad

ITA 1784/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7335 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 28-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L MEENA
• Assessee Lawyers: CHHAJED
• Keywords: Notional interest
• Section: 154

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 1784/AHD/2017 / ASSESSMENT YEAR: 2012-2013 SOLACE CAPITAL SERVICES P.LTD. O/702, CHANDABALA OPP: SUVIDHA SHOPPING CENTRE PALDI, AHMEDABAD 380 007. PAN : AAOCS 7840 P VS ITO, WARD-4(1)(2) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.S.CHHAJED, AR REVENUE BY : SHRI B.L.MEENA, SR.DR / DATE OF HEARING : 02/05/2019 /DATE OF PRONOUNCEMENT : 02/05/2019 O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-8, AHMEDABAD DATED 16.6.2017 PASSED FOR T HE ASSTT.YEAR 2012- 13. 2. ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL, OUT O F THEM IT DID NOT PRESS GROUND NO.3. GROUND NO.1 AND 4 ARE GENERAL G ROUNDS, WHICH DO NOT CALL FOR RECORDING OF ANY FINDING. HENCE, ALL THESE GROUNDS ARE REJECTED. ONLY GROUND WHICH HAS BEEN PRESSED BY TH E ASSESSEE IS GROUND NO.2, WHEREIN IT HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.3,30,500/-. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.AO HAS OBSERVED THAT ASSESSEE HAS NOT ITA NO.1784/AHD/2017 - 2 - CHARGED INTEREST ON ADVANCE OF RS.1,44,50,000/- GIV EN TO SOLACE STOCK P.LTD. HOWEVER, IT HAS DEBITED INTEREST EXPENSES OF RS.7,89,041/-, HENCE BY TAKING RATE OF INTEREST AT 6% ON THE ADVANCE GIV EN TO THE SISTER CONCERN, HE CALCULATED NOTIONAL INTEREST AT RS.8,67 ,000/- WHICH IS MORE THAN INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. ACCORDINGLY, THE AO DID NOT ALLOW INTEREST EXPENDITURE CLAIMED BY THE A SSESSEE. THE ASSESSEE THEREAFTER MOVED AN APPLICATION UNDER SECTION 154 W HICH WAS ALLOWED BY THE AO AND DISALLOWANCE OF INTEREST AT RS.3,30,5 00/- WAS RE-WORKED OUT. 4. I FIND THAT THE ASSESSEE HAS INTEREST FREE FUND OF RS.3,22,11,819/- OUT OF WHICH IT COULD BE CONSTRUED THAT THE ASSESSE E MUST HAVE GIVEN ADVANCE WITHOUT CHARGING INTEREST. SINCE INTEREST FREE FUNDS ARE MORE THAN THE INTEREST FREE ADVANCE GIVEN BY THE ASSESSE E, THEREFORE, THERE SHOULD NOT BE ANY INTEREST EXPENDITURE REQUIRE TO B E DISALLOWED FROM THE CLAIM OF THE ASSESSEE. FOR THIS PROPOSITION, I AM FORTIFIED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWERS LTD., 288 ITR 1 (BOM), I ALLOW THE APPE AL OF THE ASSESSEE AND DELETE DISALLOWANCE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 2 ND MAY, 2019. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 02/05/2019