The A.CI.T., Circle-4, Ahmedabad V. Ideal Petro Products, Ahmedabad

ITA 2033/AHD/2004

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5888 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-06-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 10-06-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING: 10.06.10 DRAFTED ON:10.06.10 ITA NO.2033/AHD/2004 ASSESSMENT YEAR : 2001-2002 THE ACIT, CIR.4, NAVJIVAN TRUST BLDG., OFF. ASHRAM ROAD, AHMEDABAD. VS. IDEAL PETRO PRODUCTS, 105, ANAND MANGAL I, B/H. FEMINA TOWN, C.G.ROAD, AHMEDABAD. PAN/GIR NO. : AAACI1562O (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ANIL KUMAR D.R. RESPONDENT BY: NONE O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VIII, A HMEDABAD, DATED 30.03.2004. 2. THE GROUNDS OF THE APPEAL OF THE REVENUE READS A S UNDER:- 1. LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN DELETING A SUM OF RS.2,07,65,701/- OUT OF DISALLOWANCE OF INTEREST OF RS.3,50,84,581/- MADE B Y THE AO IN THE ASSESSMENT ORDER. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS OF T HE CASE IN NOT APPRECIATING THE FACT THAT THE INTEREST DIFF ERENCE OF 3% (15% -12%) BEING RECEIPT AND PAYMENT AVERAGE IS CONSIDERED AS INCOME OF THE ASSESSEE DIVERTED TO EXCESS INTEREST PAYMENT HAS BEEN ADDED BY THE AO AN D AS SUCH A QUANTUM SHOULD HAVE BEEN UPHELD BY THE LD.CIT(A) IN TOTO INSTEAD OF PARTLY UPHOLDING THE DISALLOWANCE IN VIEW OF THE FACT THAT THE ISSUE/AMO UNT INVOLVED IS NOT A DISALLOWANCE WHICH OTHERWISE ATTR ACTS PROVISIONS OF SECTION 37(1) OF THE I.T.ACT, 1961. - 2 - 3. SINCE, THE FACTS AND ISSUE INVOLVED IN BOTH THE ABOVE GROUNDS OF APPEAL ARE COMMON, THEREFORE, THEY ARE BEING CON SIDERED AND DECIDED TOGETHER AS UNDER. 4. NOTICE OF HEARING WAS SENT TO THE RESPONDENT ASS ESSEE THROUGH THE LEARNED DEPARTMENTAL REPRESENTATIVE WHO HAS INFORMED THAT NOTICE WAS SERVED ON THE RESPONDENT A SSESSEE. NONE WAS PRESENT WHEN THE CASE WAS CALLED FOR HEARING AN D NEITHER ANY ADJOURNMENT APPLICATION WAS FILED BY THE ASSESSEE. THEREFORE, THE CASE WAS HEARD EX PARTE QUA THE RESPONDENT ASSESSEE AND DISPOSED OF CONSIDERING THE SUBMISSIONS MADE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND THE MATERIALS AVAILABLE ON RECOR D. 5. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER DISALLOWED RS.3,50,84,581 /- OUT OF INTEREST EXPENSES ON THE GROUND THAT ASSESSEE PAID INTEREST AT A HIGHER RATE IN RESPECT OF BORROWED FUNDS WHEREAS IT ADVANCED MONEY TO DIFFERENT PERSONS AT A LOWER RATE. THUS, THE EXCESS INTEREST PAID WAS NOT FOR BUSINESS PURPOSES AS PER THE LEARNED ASSESSING OFFICER. 6. ON APPEAL, LEARNED COMMISSIONER OF INCOME TAX(AP PEALS) RESTRICTED THE DISALLOWANCE TO RS.1,43,18,880/- AND DELETED THE DISALLOWANCE OF RS.2,07,65,701/- WHICH RELATED TO A DVANCES GIVEN TO RIM FINANCE AND GLOBAL FINANCE AND FIXED DEPOSIT WITH KALUPUR BANK. THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) OBSERVED THAT THE ASSESSEE HAS NOT GIVEN ANY ADVANCE TO RIM FINANCE AND GLOBAL FINANCE AND THE ADVANCE APPEARING IN THE BO OKS OF ASSESSEE REPRESENTS PART OF THE ASSETS TAKEN OVER BY THE ASS ESSEE BY TAKING OVER TRADING DEPARTMENT OF M/S.EWPL. SIMILARLY, FIX ED DEPOSIT WITH - 3 - KALUPUR BANK WAS MADE AS PER THE BUSINESS REQUIREME NT OF THE ASSESSEE COMPANY. IN VIEW OF THE ABOVE FACTS, THE L EARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE DIS ALLOWANCE OF INTEREST OF RS.2,07,65,701/-. 7. THE REVENUE BEFORE US DISPUTED THE ABOVE DELETIO N OF DISALLOWANCE OF INTEREST. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED U PON THE ORDER OF THE LEARNED ASSESSING OFFICER. 9. WE FIND THAT LEARNED DEPARTMENTAL REPRESENTATIVE COULD POINT OUT ANY ERROR IN THE ORDER OF THE LEARNED COM MISSIONER OF INCOME TAX(APPEALS). WE FIND THAT THE REVENUE COUL D NOT BRING ANY MATERIAL TO CONTROVERT THE FINDING OF THE LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) THAT ADVANCE TO RIM FINANCE AND GLOBAL FINANCE WERE PART OF BUSINESS ASSETS TAKEN OVER BY THE ASSESSEE AND WAS NOT AN ADVANCE GRANTED BY THE ASSESSEE AND FURTHER THAT FIXED DEPOSIT MADE WITH KALUPUR BANK WAS FOR ANY CO NSIDERATION OTHER THAN THE BUSINESS CONSIDERATION. IN ABSENCE OF ANY SUCH MATERIAL BROUGHT ON RECORD, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX(APPEALS). IT IS CONFIRMED AND THE GROUNDS OF AP PEAL OF THE REVENUE ARE DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 18 TH DAY OF JUNE, 2010. SD/- SD/- ( T.K. SHARMA ) ( N.S . SAINI ) JUDICIAL MEMBER ACCOUNTAN T MEMBER AHMEDABAD; ON THIS 18 TH DAY OF JUNE, 2010 PARAS - 4 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VIII, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 11.06.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 11.06.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 11.06.2010 ---------- --------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 11.06.2010 --------- ---------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 14.06.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 18.06.2010 -------- ------------ 7. FILE SENT TO THE BENCH CLERK 18.06.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- - -------------------