Rajshree Vanijya (P) Ltd., Kolkata V. ITO, Ward-2(1), Kolkata, Kolkata

ITA 2167/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4674 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR CIT SR DR REV
• Keywords: Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER] I.T.A. NO. 2167/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO.2168/KOL/2016 ASSESSMENT YEAR: 2012-13 RAJSHREE VANIJYA PVT. LTD.....APPELLANT 7, GANESH CHANDRA AVENUE KOLLKATA 700 013 [PAN : AABCR 2400 B] INCOME TAX OFFICER, WARD-2(1), KOLKATA.........................................RESPONDENT APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, APPEARING ON BEHALF OF THE ASSESSEE. SHRI SAURABH KUMAR, ADDL. CIT, SR. DR, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : OCTOBER 4 TH , 2018 DATE OF PRONOUNCING THE ORDER : OCTOBER 24 TH , 2018 O R D E R PER J. SUDHAKAR REDDY, AM :- BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE BUT IDENTICAL ORDERS OF THE LD. COMMISIONER OF INCOME TAX (APPEALS) 1, KOLKATA, DT. 20/09/2016 PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), FOR THE ASSESSMENT YEARS 2011-12 & 2012-13. 2. AS THE ISSUES ARISING IN BOTH THESE APPEALS ARE IDENTICAL, THEY ARE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS COMMON ORDER. 3. THE SOLE ISSUE THAT ARISES FOR OUR CONSIDERATION IS THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 36(1)(III) OF THE ACT. 2 I.T.A. NO. 2167/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO.2168/KOL/2016 ASSESSMENT YEAR: 2012-13 RAJSHREE VANIJYA PVT. LTD 3.1. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THIS ISSUE HAS ARISEN IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS, 2009-10 & 2010-11. THE TRIBUNAL, IN THE EARLIER YEARS HAD UPHELD THE FINDINGS OF THE LD. CIT(A). THE B BENCH OF THE ITAT KOLKATA IN THE ASSESSEES OWN CASE IN ITA NO.1722/KOL/2013, FOR THE ASSESSMENT YEAR 2009-10 AT PARA 5 HELD AS FOLLOWS:- 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED THE WHOLE OF INTEREST DEBITED IN P&L ACCOUNT FOR RS.45 01 802/- U/S. 36(1)(III) OF THE ACT ON ACCOUNT OF INTEREST FREE LOAN GIVEN TO SISTER CONCERNS VIZ. M/S. PHOOL COMMERCIAL PVT. LTD. AND M/S. NLBED. THE LD. CIT(A) TOOK NOTE OF THE FACT THAT ASSESSEES TURNOVER WAS OF RS.109.26 CR. AND ITS PAID UP SHARE CAPITAL AND RESERVES AVAILABLE WITH THE ASSESSEE WERE TO THE TUNE OF RS.2.2 CR. RS.. 2.86 CR. WAS SECURED LOANS ON WHICH INTEREST OF RS.45 01 802/- WAS DEBITED AS PER SCHEDULE 14 OF THE ANNUAL REPORT. THE ASSESSEE HAD ADVANCED A SUM OF RS. 46296 917/- AS ON 31.03.2009 TO M/S. NLBED AND AS PER THE MOU DATED 21.04.2008 THIS ADVANCE WAS GIVEN TO M/S. NLBED FOR PURCHASE OF LAND. THE LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT THE ASSESSEE COMPANY EARNED PROFIT OF RS.55 96 500/- ON ACCOUNT OF SALE OF PROPERTY IN FY 2010- 11 WHICH FACT IS DISCERNIBLE FROM A PERUSAL OF PAGE 43 OF THE PAPER BOOK AND THAT THE SAID PROFIT HAS BEEN DULY REFLECTED IN THE COMPUTATION OF INCOME FOR AY 2011-12. THE LD. CIT(A) HAS ALSO TAKEN NOTE OF THE FACT THAT THE ASSESSEE RECEIVED FURTHER RS. 30 LACS ON 04.10.2012 FROM THE SALE OF A PLOT AFTER RECEIVING THE PRINCIPAL AMOUNT ADVANCED TO M/S. NLBED. FROM THE AFORESAID FACTS AND THE MOU BETWEEN THE ASSESSEE AND THE SISTER CONCERN M/S. NLBED IT IS CLEAR THAT THE ASSESSEE HAS ADVANCED THE AMOUNT FOR THE PURPOSE OF BUSINESS AND THAT IT WAS FOR COMMERCIAL EXPEDIENCY THAT THE AMOUNT WAS ADVANCED BY THE ASSESSEE. THE DECISION OF THE ASSESSEE TO GIVE ADVANCE OF THE AMOUNT HAS FRUCTIFIED AND THE ASSESSEE IS IN RECEIPT OF PROFIT IN THE FY 2010-11 WHICH FACT COULD NOT BE CONTROVERTED BY THE LD. D/R BEFORE US. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSEES CASE FALLS IN THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF S. A. BUILDERS (SUPRA) AND THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND WE CONFIRM THE SAME AND DISMISS THE APPEAL OF THE REVENUE. 6. IN THE RESULT THE APPEAL OF REVENUE IS DISMISSED. THE B BENCH OF THE ITAT KOLKATA IN THE ASSESSEES OWN CASE IN ITA NO.933/KOL/2013, FOR THE ASSESSMENT YEAR 2010-11 AT PARA 5 HELD AS FOLLOWS:- 5. THE SECOND CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE AMOUNT OF RS. 51,00,000/- SEPARATELY MENTIONED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER WAS FORMING PART OF THE OPENING BALANCE OF THE ADVANCE GIVEN TO M/S. PHOOL COMMERCIAL PVT. LTD. HE HAS CONTENDED THAT SINCE THE SAID AMOUNT WAS ALREADY CONSIDERED IN THE OPENING BALANCE AND THE SAME WAS REPAID DURING THE YEAR UNDER CONSIDERATION, THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING THE A.O. TO DISALLOW INTEREST ATTRIBUTABLE TO THE SAID AMOUNT 3 I.T.A. NO. 2167/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO.2168/KOL/2016 ASSESSMENT YEAR: 2012-13 RAJSHREE VANIJYA PVT. LTD SEPARATELY. WE ARE UNABLE TO ACCEPT THIS CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS OBSERVED THAT THE TOTAL AMOUNT OF RS. 2,71,00.000/- WAS ADVANCED BY THE ASSESSEE TO M/S. PHOOL COMMERCIAL PVT. LTD. IN THE IMMEDIATELY PRECEDING YEAR AND WHILE DECIDING THE ISSUE RELATING TO THE DISALLOWANCE OF INTEREST ATTRIBUTABLE TO THE SAID AMOUNT IN A.Y. 2009-10, IT WAS FOUND THAT THE SAID AMOUNT TO THE EXTENT OF RS. 2.2 CRORES WAS ADVANCED BY THE ASSESSEE COMPANY OUT OF ITS OWN FUNDS IN THE FORM OF RESERVES AND EQUITY CAPITAL. THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF INTEREST ACCORDINGLY WAS SUSTAINED IN A.Y. 2009-10 TO THE EXTENT IT WAS ATTRIBUTABLE TO THE BALANCE AMOUNT OF RS. 51,00,000/- ADVANCED TO M/S. PHOOL COMMERCIAL PVT. LTD. SINCE THE SAID AMOUNT WHICH REMAINED OUTSTANDING IN THE IMMEDIATELY PRECEDING YEAR WAS PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION BEFORE 14.10.2009, THE DISALLOWANCE ON ACCOUNT OF INTEREST ATTRIBUTABLE TO THE SAID AMOUNT WAS LIABLE TO BE MADE FOR THE PERIOD FROM 01.04.2009 TO THE TIME WHEN THE SAID AMOUNT HAD BEEN RETURNED BACK BY M/S. PHOOL COMMERCIAL PVT. LTD. TO THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) DIRECTING THE A.O. TO DISALLOW INTEREST ATTRIBUTABLE TO THE AMOUNT OF RS. 51,00,000/- ADVANCED BY THE ASSESSEE COMPANY TO M/S. PHOOL COMMERCIAL PVT. LTD. FOR THE PERIOD FROM 01.04.2009 TILL THE DATE WHEN SUCH AMOUNT HAS BEEN REFUNDED BY M/S. PHOOL COMMERCIAL PVT. LTD. IN THE YEAR UNDER CONSIDERATION @ 13% P.A. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 4. AS THE FACTS AND CIRCUMSTANCES ARE THE SAME, FOR THE IMPUGNED ASSESSMENT YEARS, CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER, FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE DISALLOWANCE IN THE MANNER IN WHICH THE TRIBUNAL HAS DIRECTED IN THE EARLIER ASSESSMENT YEARS. 5. IN THE RESULT, THESE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. KOLKATA, THE 24 TH DAY OF OCTOBER, 2018. SD/- SD/- [S.S. VISWANETHRA RAVI] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 24.10.2018 {SC SPS} 4 I.T.A. NO. 2167/KOL/2016 ASSESSMENT YEAR: 2011-12 I.T.A. NO.2168/KOL/2016 ASSESSMENT YEAR: 2012-13 RAJSHREE VANIJYA PVT. LTD COPY OF THE ORDER FORWARDED TO: 1. RAJSHREE VANIJYA PVT. LTD 7, GANESH CHANDRA AVENUE KOLLKATA 700 013 2. INCOME TAX OFFICER, WARD-2(1), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES