Uniproducts (India) Ltd., New Delhi V. ITO, New Delhi

ITA 1918/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3758 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 19-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SRUJANI MOHANTY
• Keywords: Business expenditure

Judgement Text

ITA NO. 1918/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1918/DEL/2011 A.Y. : 2006-07 M/S UNIPRODUCTS (INDIA) LTD., KHASRA NO. 361, VILLAGE JONAPUR MEHRAULLI, NEW DELHI 110 047 (PAN : AACU0224D) VS. INCOME TAX OFFICER, WARD-18(1), ROOM NO. 247, CR BUILDING, NEW DELHI 110 002 (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. SANJIV RAI MEHRA, CA DEPARTMENT BY : MS. SRUJANI MOHANTY, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 21.1.2 011 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) ERRED IN UPHOLDING DISALLOWANCE OF ` 9,82 ,800/- OUT OF INTEREST PAID BY THE ASSESSEE. 3. IN THIS CASE ASSESSING OFFICER OBSERVED THAT DU RING THE ASSESSMENT PROCEEDING, IT WAS NOTED THAT ASSESSEE H AS TAKING LOANS ITA NO. 1918/DEL/2011 2 ON WHICH INTEREST HAS BEEN PAID AND CLAIMED AS BUSI NESS EXPENDITURE. ON PERUSAL OF INVESTMENT MADE DURING THE YEAR, IT W AS OBSERVED THAT ASSESSEE HAD PAID ` 81,90,000/- BEING SHARE A PPLICATION OF THE JOINT VENTURE COMPANY M/S JUKEN UNI PRODUCTS PVT. LTD. ON QUERY IN THIS REGARD IT WAS SUBMITTED THAT THE SAID AMOUNT WA S INVESTED OUT OF SHARE HOLDERS FUNDS AND NO LOAN WAS RAISED FOR TH E SAME. HENCE, NO DISALLOWANCE OF INTEREST IS WARRANTED. ASSESSING OFFICER DID NOT AGREE WITH THE SAME. HE HELD THAT ASSESSEE HAS TAKEN FRESH UNSECURED LOAN ON WHICH INTEREST HAS BEEN PAID. HE TREATED T HE INTEREST PAID EQUIVALENT TO AMOUNT USED FOR ABOVE INVESTMENTS AS NON-BUSINESS EXPENDITURE AND ACCORDINGLY, INTEREST @ 12% ON ` 8 1,90,000/- WAS DISALLOWED. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ASSESSING OFFICER S ORDER. 5. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BE FORE US. 6. LD. COUNSEL OF THE ASSESSEE REITERATED THAT ASSE SSEE HAS USED HIS OWN FUNDS TO MAKE THE INVESTMENT AND NO BORROWED F UNDS WERE USED. WE FIND THAT THIS ASPECT WAS SUBMITTED BEFORE THE AS SESSING OFFICER ALSO AND ASSESSING OFFICER HAS NOT REBUTTED THE SA ME AND HAS GIVEN NO FINDING WITH REGARD TO THE VERACITY OF THIS STAT EMENT. IN OUR ITA NO. 1918/DEL/2011 3 CONSIDERED OPINION, WHEN THE ASSESSEE IS CLAIMING TH AT IT HAS USED INTEREST FROM FUNDS FOR THE PURPOSE OF INVESTMENT, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO GIVE FINDING ON THIS ISSUE. ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE REMIT THIS ISSUE TO T HE FILE OF THE ASSESSING OFFICER TO CONSIDER THE SAME AFRESH, IN LIGHT OF T HE SUBMISSIONS BEING MADE BY THE ASSESSEE. 7. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER O F INCOME TAX (APPEALS) ERRED IN SUSTAINING DISALLOWANCE OF ` 1,6 2,208/- UNDER THE HEAD PRIOR PERIOD EXPENSES. 8. IN THIS CASE ASSESSING OFFICER NOTED THAT AS PE R TAX AUDIT REPORT ASSESSEE HAS DEBITED EXPENDITURE OF ` 3,33,402/- AS PRIOR PERIOD EXPENDITURE WHICH HAS NOT BEEN ADDED FOR WHILE CALC ULATING THE TAXABLE INCOME. ON QUERY IN THIS REGARD ASSESSEE SUBMITTED THAT THESE EXPENSES WERE ACTUALLY INCURRED DURING THE CU RRENT YEAR. ASSESSING OFFICER DID NOT ACCEPT THIS CONTENTION A ND DISALLOWED THE AMOUNT OF ` 3,33,402/- AS PRIOR PERIOD EXPENSES. 9. UPON ASSESSES APPEAL LD. COMMISSIONER OF INCOME T AX (APPEALS) NOTED THAT THE BREAKUP OF THE PRIOR PERIOD EXPENSES AS UNDER:- DATE DATE DATE DATE PARTICULARS PARTICULARS PARTICULARS PARTICULARS AMOUNT AMOUNT AMOUNT AMOUNT 31.3.06 FABRICATED CARATE FROM NEEL KAMAL 169833.00 31.3.06 MATERIAL PURCHASE FROM YOGESHWAR CHEMICALS 19303.40 31.3.06 AMC OF BAAN SYSTEM T/F FROM LEGAL AND PROFESSIONAL IN 24.2.05 TO 31.3.2005 22192.00 31.3.06 CARPET ASSLY RR FLR TKM FROM 50385.00 ITA NO. 1918/DEL/2011 4 ANAND BROS 31129.00 81514.00 31.3.06 TRIMMING DIE CORSA FROM ANAND BROS. 650.00 1881.00 1140.00 33779.00 3111.00 40561.00 LESS : PRIOR PERIOD INCOME 333402 .40 171194.46 162207.94 9.1 FROM THE AFORESAID DETAIL, LD. COMMISSIONER OF INCO ME TAX (APPEALS) HELD THAT IT WAS CLEAR THAT AN AMOUNT OF ` 1,71,194/- BELONGS TO PRIOR PERIOD INCOME. ACCORDINGLY, HE HE LD THAT EFFECT OF PRIOR PERIOD INCOME SHOULD HAVE BEEN GIVEN BY THE A SSESSING OFFICER. AFTER DEDUCTION PRIOR PERIOD INCOME AMOUNTING TO ` 1 ,71,194/-, THE WORKING OF PRIOR PERIOD EXPENSES IS RESTRICTED TO ` 1,62,207/-. 10. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 11. LD. COUNSEL OF THE ASSESSEE CONTENDED THAT ASS ESSEE HAD MADE THE PAYMENTS DURING THE CURRENT ASSESSMENT YEAR AS RELEVANT BILLS WERE RECEIVED DURING THE YEAR. WE FIND THAT THE E XPENDITURE IN THIS REGARD HAS BEEN INCURRED ON 31.3.2006. THIS IS WIT HIN THE FINANCIAL YEAR UNDER APPEAL. THE ASSESSEE HAS MADE THE PAYMENT S WHEN THE BILLS WERE RECEIVED IN THIS REGARD. IN OUR CONSID ERED OPINION, THE EXPENDITURE IN THIS REGARD CANNOT BE HELD TO BE PR IOR PERIOD EXPENSES ITA NO. 1918/DEL/2011 5 AND DISALLOWANCE IN THIS REGARD CANNOT BE MADE. HE NCE, WE SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APP EALS) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16/6/2011 UPO N CONCLUSION OF HEARING. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 16/6/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES