Crown Cans (India) Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 2160/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8161 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-01-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 21-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: JOHNSON BARA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 2160/DEL/2009 ASSESSMENT YEAR: 2004-05 CROWN CANS (INDIA) PVT. LTD., AG-30, SHALIMAR BAGH, DELHI. PAN NO. AAACC0703F VS. INCOME TAX OFFICER, WARD 3(4), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : JOHNSON BARA, CA RESPONDENT BY: MANISH GUPTA, DR O R D E R PER R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 18.02.2009 FOR A.Y. 2004-05, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO UP HOLDING ADDITION OF RS. 5,83,645/- BEING THE INTEREST ON AD VANCES RECOVERABLE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. IN THE COURSE OF ASSESSMENT U/S 143(3) THE AO FOUND THAT THE ASSESSEE COMPANY HAD MADE AN ADVANCE TO MR. R.S. GU PTA, ITA NO. 2160/D/09 2 DIRECTOR OF THE COMPANY. THIS ADVANCE WAS ALSO APP EARING IN THE LAST YEAR BALANCE SHEET, WHEREON INTEREST INCOM E OF RS. 5,83,645/- WAS BOOKED IN EARLIER YEARS BUT NO INTER EST INCOME HAS BEEN SHOWN IN THIS YEAR. THE AO THEREFORE, MAD E AN ADDITION ON ACCOUNT OF INTEREST ALLEGED TO BE RECEI VABLE FROM MR. R.S. GUPTA. BY THE IMPUGNED ORDER, CIT(A) CONF IRMED THE ADDITION. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HAV E GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. FROM THE RECORD, WE FOUND THAT ADVANCE WAS MADE TO THE DIREC TOR OF THE COMPANY MR. R.S. GUPTA WHO HAD ALREADY BEEN EXPIRED BEFORE THE END OF THE RELEVANT FINANCIAL YEAR UNDER CONSIDERATION. WIFE OF THE DIRECTOR MR. R.S. GUPTA WAS NOT KEEPING GOOD HEALTH AND THE ADDITION WAS MADE FOR T HE REASON THAT THE PROOF OF BAD FINANCIAL POSITION HAS NOT BE EN SUBMITTED. A LETTER WAS FILED BY WIFE OF MR. R.S. GUPTA WHO EX PIRED ON 07.02.04 ACCORDING TO WHICH MR. R.S. GUPTA WAS BEDR IDDEN FOR ALMOST AN YEAR AND THAT SHE WAS NOT IN A POSITION T O PAY BACK EVEN THE PRINCIPLE AMOUNT OF LOAN. SINCE THE LOAN ITSELF WAS IN DOUBT BECAUSE OF THE BAD FINANCIAL POSITION AND THE PERSON TO WHOM ADVANCE HAVE BEEN MADE HAD ALREADY BEEN DIED, THERE ITA NO. 2160/D/09 3 IS NO JUSTIFICATION FOR MAKING ADDITION BY ASSUMING INTEREST INCOME ON SUCH ADVANCES. WE, THEREFORE, DO NOT FIN D ANY JUSTIFICATION ON THE PART OF AO FOR MAKING ADDITION ON ACCOUNT OF THE NOTIONAL INCOME WHICH WAS NEITHER RECEIVED B Y THE ASSESSEE COMPANY NOR THERE WAS ANY HOPE OF RECEIVIN G, IN VIEW OF THE FACT THAT THE PERSON TO WHOM ADVANCE WA S MADE HAD ALREADY BEEN DIED AFTER REMAINING BEDRIDDEN FOR MORE THAN ONE YEAR AND WHOSE WIFE WAS NOT IN A POSITION TO PAY BACK THE PRINCIPLE. HOWEVER, THE DEPARTMENT IS AT LIBERTY TO BRING TO TAX THE INTEREST INCOME IF ANY ACTUALLY RE CEIVED IN THE SUBSEQUENT YEAR, BY BRINING THE SAME TO THE TEXT NE T IN THE YEAR OF RECEIPT. WE, DIRECT ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 25.02.2010 (RAJPAL YADAV) JUDICIAL MEMBER (R.C. SHARMA) ACCOUNTANT MEMBER DATED: 25.02.2010 *KAVITA CHOPRA ITA NO. 2160/D/09 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR