M/S. PARAS HOUSING PVT. LTD., Bhopal V. THE JCIT RANGE-2, Bhopal

ITA 227/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5808 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 06-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S GAUTAM
• Assessee Lawyers: N D PATWA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 227/IND/2015 A.Y. : 2010-11. M/S.PARAS HOUSING PRIVATE LIMITED, JT. CIT, RANGE 2, BHOPAL VS. BHOPAL APPELLANT RESPONDENT PAN NO. AAACP6144K APPELLANTS BY : SHRI ASHISH GOYAL AND SHRI N. D. PATWA, ADV. RESPONDENT BY : SHRI G. S. GAUTAM , D. R. O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A), BHOPAL-2, DATED 16.01.2015 FOR THE ASSES SMENT YEAR 2010-11. DATE OF HEARING : 12 .01.2016 DATE OF PRONOUNCEMENT : 09.02 .2016 M/S.PARAS HOUSING PVT.LTD., BHOPAL VS. JT. CIT, RAN GE 2, BHOPAL I.T.A.NO.227 /IND/2015 A.Y.2010-11 2 2 2. THE SHORT FACTS OF THE CASE ARE AS UNDER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF BUILDERS AND REAL ESTATE DEVELOPERS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS ADVANCED A SUM OF RS. 81,22,000/- TO M/S. BEAM DEVELOPERS PVT.LTD. A ND RS. 2,83,00,000/- TO M/S. MAHARAJA REALTORS PVT.LIMITED . IN THIS REGARD, THE ASSESSEE COMPANY STATED THAT THEY HAD ACCUMULATED PROFIT OF RS. 3.77 CRORES AND THEY HAVE PAID UP SHARE CAPITAL OF RS. 36.03 LACS AT THE END OF FINAN CIAL YEAR 2010. THE AO FOUND THAT THE ASSESSEE HAS DEBITED TH E AMOUNT OF RS. 40,64,607/- ON ACCOUNT OF INTEREST AGAINST L OAN TAKEN FROM BANK AND THE ASSESSEE HAD CLAIMED THAT HE HAS GIVEN LOAN AND ADVANCED RS. 4,68,23,758/-. THEREFORE, THE AO HAS ENQUIRED WHY THE ASSESSEE DID NOT CHARGE INTEREST A GAINST THE SAID ADVANCE. AFTER RECEIVING THE REPLY, THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS ADVANCED CERTAIN INTEREST PAI D AMOUNT AND NO BENEFIT IS RECEIVED BY THE ASSESSEE FROM THE SAID ADVANCES OF LOAN. THEREFORE, THE ASSESSEE HAS DIVER TED BORROWED FUND FROM NON BUSINESS CONSIDERATION AND M/S.PARAS HOUSING PVT.LTD., BHOPAL VS. JT. CIT, RAN GE 2, BHOPAL I.T.A.NO.227 /IND/2015 A.Y.2010-11 3 3 ACCORDINGLY THE INTEREST AMOUNTING TO RS. 8,18,401 WAS DISALLOWED AGAINST BARBARIA KALON HERMITAGE PHASE-I PROJECT ON ACCOUNT OF DIVERSION OF BORROWED FUND FOR NON-BU SINESS PURPOSES. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS CONFIRMED THE SAME. 5. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESS EE COMPANY HAD ACCUMULATED PROFIT AMOUNTING TO RS. 3.7 7 CRORES AND PAID UP SHARE CAPITAL OF RS. 36.03 LACS. THE AS SESSEE HAS ADVANCED TO BARBARIA KALON HERMITAGE AND TO M/S. MA HARAJA REALTORS PVT.LIMITED FROM ACCUMULATED PROFIT AND FR OM THE CAPITAL AVAILABLE WITH THE ASSESSEE. THEREFORE, WHE N THE ASSESSEE IS HAVING INTEREST FREE FUNDS, THE ASSESSE E IS AT LIBERTY TO USE THIS FUND AND HE CAN GIVE THIS FUND FOR INTE REST FREE ADVANCES. 6. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH IS CLAIM CAN BE EXAMINED BY THE ASSESSING OFFICER. 7. THE LD. DR SUBMITTED THAT THE ASSESSEE WAS HAVING ACCUMULATED PROFITS OF RS. 3.77 CRORES AND PAID UP SHARE M/S.PARAS HOUSING PVT.LTD., BHOPAL VS. JT. CIT, RAN GE 2, BHOPAL I.T.A.NO.227 /IND/2015 A.Y.2010-11 4 4 CAPITAL AT RS. 36.03 LACS AT THE END OF FINANCIAL Y EAR 2010 AND BOTH THESE ADVANCES FROM THE ABOVE PARTIES WAS OUT OF ACCUMULATED PROFIT EARNED BY THE ASSESSEE COMPANY S INCE INCEPTION AND PAID UP SHARE CAPITAL WAS AVAILABLE W ITH THE ASSESSEE COMPANY. THE LD. DR SUBMITTED THAT THE AO HAS NOT VERIFIED WHETHER ON THE DATE ON WHICH THE INTEREST FREE LOAN WAS GIVEN ON THAT DAY, THE ASSESSEE HAD INTEREST PA ID FUNDS ON THAT DAY OR NOT, THAT IS NOT VERIFIED BY THE ASSESS ING OFFICER. THEREFORE, THE MATTER MAY BE RESTORED TO THE AO FOR VERIFICATION. 8. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FA CTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE AO AND CIT(A) HAS NOT VERIFIED WHETHER ON THE DATE OF ADVANCES OF RS. 81,22,000/- TO M/S. BEAM DEVELOPERS PRIVATE LIMITED AND RS. 2.83 CRORES TO M/S. MAHARAJA REALTORS PRIVATE LIMIT ED. THE ASSESSEE HAD INTEREST PAID PROFIT OF RS. 3.73 CRORE S OR NOT AND WHETHER THE ASSESSEE HAD SHARE CAPITAL OF RS. 36.03 LACS AND WHETHER IT WAS AVAILABLE ON THE DATE WHEN THE ADVAN CE WAS GIVEN. THEREFORE, THIS REQUIRES VERIFICATION AT THE END OF THE AO. M/S.PARAS HOUSING PVT.LTD., BHOPAL VS. JT. CIT, RAN GE 2, BHOPAL I.T.A.NO.227 /IND/2015 A.Y.2010-11 5 5 THEREFORE, WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR VERIFICATION AND DECIDE THE SAME ACCORDINGLY AS PER LAW. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 9 TH FEBRURY, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 9 TH FEBRUARY, 2016. CPU*