The Jtcit Ahmdabad Range-1, Ahmedabad V. M/S Cera Leasing Finance & Indus Ltd, Ahmedabad

ITA 1927/AHD/2001

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85862 (ITAT-AHMEDABAD)
• Duration Of Justice: 13 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-03-2015
• Assessment Year: 1992-1993
• Appeal Filed On: 31-08-2001
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: URVASHI SODHANA R

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA. NO.1927/AHD/2001 (ASSESSMENT YEAR:1992-93) JT. CIT, AR-1, AHMEDABAD APPELLANT VS. CERA LEASING FINANCE & INDUSTRIES LTD., MADHUSUDAN HOUSE OPP.- NAVRANGPURA TELEPHONE EXCHANGE, AHMEDABAD RESPONDENT P.A.N./G.I.R. NO.: 31-069-CX-2797 /BY APPELLANT : SHRI ROOPCHAND, SR.D.R. /BY RESPONDENT : SMT. URVASHI SODHAN,A.R. !' /DATE OF HEARING : 25.03.2015 #$% !' /DATE OF PRONOUNCEMENT : 27.03.2015 ITA NO. 1927/AHD/01 A.Y. 92-93 [JT. CIT VS. CERA LEASING FINANCE & INDUSTRIES LTD.] PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, AHMEDABAD , DATED MAY 22 ND , 2001 FOR A.Y. 1992-93 ON THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,83,000/- MADE BY THE AO ON ACCOUNT OF FINANCE CHARGES. HE HAS FURTHER ERRED I N NOT APPRECIATING THE FOLLOWING FACTS:- (A) THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTE M OF ACCOUNTS AND THEREFORE FIANANCE CHARGES HAVE TO BE CREDITED AND TAXED AS THE INCOME OF THE ACCOUNTING YEAR. (B) THAT THERE IS NOTHING ON RECORDS TO SHOW THAT T HE CO-OP. SOCIETIES FROM WHOM THE AMOUNTS WERE DUE WERE NON-GENUINE/BOGUS AND EVEN IN SUCH A CASE, THE ASSESSEE CAN CLAIM THE SAME AS BAD DEBT ONLY IN THE YEAR IN WHICH IT IS PROVED THAT WAY. (C) THAT THE INTEREST/FINANCE CHARGES ONCE ACCRUED, HAS TO BE ASSESSED TO TAX ON ACCRUAL BASIS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2. ONLY ISSUE IS WITH REGARDS TO ADDITION OF RS.4,8 3,000/- MADE BY ASSESSING OFFICER ON ACCOUNT OF FINANCE CHA RGES. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE MADE ON BEHALF OF ASSESSEE ITA NO. 1927/AHD/01 A.Y. 92-93 [JT. CIT VS. CERA LEASING FINANCE & INDUSTRIES LTD.] PAGE 3 AND HAVING CONSIDERED THE SAME, CIT(A)(A) HAS GRANT ED RELIEF TO THE ASSESSEE. SAME HAS BEEN OPPOSED ON BEHALF OF R EVENUE INTER ALIA SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION OF RS.4,83,000/- MADE BY ASSESSING OFFICER ON ACCOUNT OF FINANCE CHARGES. ACCORDINGLY, ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. O N OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORD ER OF CIT(A). 2.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD WE FIND THAT ASSESSEE ENTERED INTO HIRE PURC HASE AGREEMENTS WITH SOME SOCIETIES, WHICH WERE FOUND TO BE BOGUS. SO, THERE WAS NO SOURCE OF INCOME FROM WHICH ASSESS EE COULD EARN ANY INCOME STATED IN SUCH HIRE PURCHASE AGREEM ENTS. SINCE SOURCE ITSELF WAS NON EXISTENT, THERE WAS NO QUESTION OF ACCRUAL OF ANY FINANCE CHARGES IN THE HANDS OF ASSE SSEE FOR THE YEAR UNDER CONSIDERATION. IN THIS BACKGROUND, CIT( A) OBSERVED THAT IN SUBSEQUENT YEARS NO AMOUNT WAS REALIZED FRO M SUCH FAKE SOCIETIES AND ENTIRE VALUE OF ASSETS FINANCE H AS BEEN WRITTEN OFF IN A.Y. 1994-95. IT WAS NOT A CASE WHE RE ASSESSEE WAIVED ITS RIGHT TO RECEIVE INCOME UNILATERALLY OR OTHERWISE OR HAVE WRITTEN OFF DUE TO NON REALIZATION. CIT(A) AG REED WITH ARGUMENTS ADVANCED ON BEHALF OF ASSESSEE AND HELD T HAT NO FINANCE CHARGES WERE ACCRUED TO ASSESSEE FROM THE A SSETS FINANCED TO FAKE SOCIETIES AND THEREFORE, NO INCOME COULD BE BROUGHT ON TAX WHICH OTHERWISE WOULD HAVE BEEN EARN ED BY ASSESSEE HAD THESE SOCIETIES WERE FOUND GENUINE AND EXISTENT. ITA NO. 1927/AHD/01 A.Y. 92-93 [JT. CIT VS. CERA LEASING FINANCE & INDUSTRIES LTD.] PAGE 4 THIS IS A CASE WHERE INCOME IS NOT ACCRUED AT ALL D UE TO NON EXISTENCE/LOSS OF SOURCE OF INCOME ITSELF. IN VIEW OF ABOVE, CIT(A) WAS JUSTIFIED IN DELETING ADDITION OF RS.4,8 3,000/- MADE BY ASSESSING OFFICER ON ACCOUNT OF FINANCE CHARGES. SAME IS UPHELD. 3. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF MARCH, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 27/03/2015 TRUE COPY S.K.SINHA & & & & ' ' ' ' ('% ('% ('% ('% / COPY OF ORDER FORWARDED TO:- 1. +, / REVENUE 2. / ASSESSEE 3. // 0 / CONCERNED CIT 4. 0- / CIT (A) 5. '45 , , / DR, ITAT, AHMEDABAD 6. 589 :; / GUARD FILE. BY ORDER / & ,