ACIT, Circle-9, Pune V. Suresh Kumar Kashmirilal Agarwal, Pune

ITA 2055/PUN/2012

• Counselvise Citation: 205524514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2055/PN/2012 A.Y. 2009-10 ACIT, CIRCLE-9, PUNE APPELLANT VS. SURESHKUMAR KASHMIRILAL AGARWAL PLOT NO.15, SECTOR NO.25, PCNTDA, PUNE 44 PAN: ACUPA6602L RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI PRA MOD SHINGTE DATE OF HEARING: 05.03.2014 DATE OF ORDER : 11.03.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-V, [SHORT CI T(A)-V] PUNE, DATED 12.07.2012 FOR A.Y. 2009-10 ON THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THA T THE INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE WAS M ORE THAN INTEREST FREE ADVANCE MADE TO M/S. SMART FOUNDRY PV T. LTD WHEN THE SOURCES OF FUNDS AT THE DISPOSAL OF THE AS SESSEE WERE INSUFFICIENT TO COVER THE TOTAL AMOUNT OF ADVA NCE MADE OF RS.235.03 LACS? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN IGNORING TH E FACT THAT THE ASSESSEE'S CURRENT ASSETS AND FIXED ASSETS INCL UDING INVESTMENTS AND SUNDRY DEBTORS TAKEN TOGETHER STOOD AT RS.181.78 LACS AND LEAVING BALANCE AT RS.90 .53 LACS 2 WHICH IS INSUFFICIENT TO GRANT THE ADVANCE OF RS.2 35.03 LACS? 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY OF THE ABOVE GROUNDS OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL, WHO IS ALSO PROPR IETOR OF M/S. GOYAL FOUNDRY. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE AMOUNT OF 1,03,52,195/- WAS GIVEN AS INTEREST FREE ADVANCE TO M/S. SMART FO UNDRY PVT. LTD. DURING THE YEAR. IT WAS ALSO NOTICED THAT M/S . SMART FOUNDRY PVT. LTD. IS A RELATED CONCERN OF ASSESSEE. THE CUMULATIVE ADVANCE TO M/S. SMART FOUNDRY PVT. LTD. WAS 2,35,03,491/- AT THE END OF THE YEAR. THE ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE HAD PAID INTEREST TO THE TUNE OF 20,74,968/- ON ACCOUNT OF ITS WITHDRAWAL, ACCORDING LY, HE DISALLOWED THE INTEREST TREATING THE CORRESPONDING BORROWING WAS NOT UTILIZED FOR THE PURPOSE OF BUSINESS. 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING BEEN CONSIDERED THE SAME, THE CIT(A) HAD DIRECTED THE ASSESSING OFFICER TO DELETE 20,74,968/-. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA STATED THAT THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE INTERE ST FREE FUNDS AVAILABLE TO THE ASSESSEE WAS MORE THAN INTEREST FR EE ADVANCE MADE TO M/S. SMART FOUNDRY PVT. LTD WHEN THE SOURCE S OF FUNDS AT THE DISPOSAL OF THE ASSESSEE WERE INSUFFICIENT T O COVER THE TOTAL AMOUNT OF ADVANCE MADE OF 235.03 LACS. THE CIT(A) WAS NOT JUSTIFIED IN IGNORING THE FACT THAT THE ASSESSEE'S CURRENT ASSETS AND FIXED ASSETS INCLUDING INVESTMENTS AND SUNDRY D EBTORS TAKEN TOGETHER STOOD AT 181.78 LACS AND LEAVING BALANCE AT 90.53 LACS WHICH WAS INSUFFICIENT TO GRANT THE ADVANCE O F 235.03 LACS, ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND T HAT OF ASSESSING 3 OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNE D AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A). 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT INTEREST FREE ADVANCE TO M/S. SMART FOUNDRY PVT. LTD. WAS 235.03 LACS WHILE THE ASSESSEE WAS HAVING INTEREST FREE FUNDS IN HIS CAPITAL COST AT 136.21 LACS AND INTEREST FREE UNSECURED LOAN AT 136.10 LACS, THE TOTAL OF WHICH COMES TO 272.31 LACS. IN THIS BACKGROUND, IT WAS FOUND TH AT INTEREST FREE FUNDS WERE AVAILABLE WITH THE ASSESSE E WAS MORE THAN INTEREST FREE ADVANCE MADE TO M/S. SMART FOUND RIES PVT. LTD. WE FIND THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. 178 TAXMAN 135 (BOM) HAS HELD THAT WHERE THERE ARE FUNDS AVAILABLE BOTH INTEREST FREE AND INTEREST BEARING THEN A PRESUMPTION WOULD ARISE THAT INVESTMENT WOULD BE OUT OF INTEREST FREE FUND AVAIL ABLE WITH THE COMPANY PROVIDED THE SAID FUNDS ARE SUFFICIENT TO M AKE INVESTMENTS. A SIMILAR VIEW HAS BEEN TAKEN BY PUNE BENCH IN THE CASE OF SUMITRA VIJAY PATIL, ITA NO.652/PN/08 A S WELL AS IN THE CASE OF SHRI SUMAN SHAMRAO PATIL, ITA NO.651/PN /08. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BE HALF OF REVENUE. IN VIEW OF ABOVE, WE ARE NOT INCLINED TO INTERFERE WITH THE REASONED FACTUAL AND LEGAL FINDING OF CIT(A), W HEREBY, HE HAD DELETED THE ADDITION OF 20,74,968/- MADE BY THE ASSESSING OFFICER. WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 11 TH OF MARCH, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 11 TH MARCH, 2014 GCVSR 4 COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-V, PUNE 4) THE CIT-V, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE