R.S.Credit Private Limited, Kolkata V. I.T.O Wd - 12(2),kolkata, Kolkata

ITA 2314/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4911 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 03-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 27-08-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL
• Assessee Lawyers: G C ROY
• Keywords: Revenue expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANES H, AM] ITA NO.2314/KOL/2013 ASSESSMENT YEAR : 2008-09 R.S.CREDIT PVT. LTD. -VERSUS- I.T.O., WARD-12(2) , KOLKATA KOLKATA (PAN:AABCR2267A) ( APPELLANT ) (RESPONDENT) FOR THE APPELLANT : SHRI G.C.ROY, A.R. FOR THE RESPONDENT : SHRI RAJAT KUMAR KUREEL, JCIT, SR.DR DATE OF HEARING : 03.05.2016. DATE OF PRONOUNCEMENT : 06.05.2016. ORDER PER SHRI M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE O RDER OF THE LEARNED CIT(A)-XII, KOLKATA IN APPEAL NO.470/CIT(A)-XII/12(2)/10-11 FOR THE ASST YEAR 2008-09 PASSED AGAINST THE ORDER OF ASSESSMENT FRAMED BY THE LEARN ED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. AO IS JUSTIFIED IN DISALLOWING A SUM OF RS.19,74,100/- ON UNSECURED LOANS TAKEN FROM DIFFERENT PARTIES AND CLAIMED THE SAME AS DEDUCTION. THE LD. AO ALSO OBSERVED THAT THE ASSESSEE HAS MAINTAINED BANK BALANCE OF RS.7,46,79,717/- WHICH I NCLUDES FIXED DEPOSITS FOR MARGIN MONEY FOR RS.2,36,72,077/- AND FIXED DEPOSIT FOR OV ERDRAFT ACCOUNT OF RS.2,98,45,715/-WHICH WERE MARKED AS LIEN WITH THE BANK FOR MARGIN MONEY MAINTENANCE AS REQUIRED FROM TIME TO TIME. THE LD. AO OBSERVED THAT WHEN THE ASSESSEE HAS GOT SUFFICIENT OWN FUNDS THERE WAS NO NEED TO MAKE ANY BORROWINGS WARRANTING PAYMENT OF INTEREST. ACCORDINGLY HE DISA LLOWED THE INTEREST CLAIM OF RS,19,74,100/- IN THE ASSESSMENT. THE SAME WAS UPHE LD BY THE LD.CIT(A) ON FIRST APPEAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THE ASSESSEE COMPANY IS ENLISTED AS TCM OF NCDEX AND MCX AND ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF ITA NO.2314/KOL/2013 R.S.CREDIT PVT. LTD. A.Y.2008-09 2 COMMODITIES IN THE CONCERNED EXCHANGE FOR ITS DIFFE RENT CLIENTS. ACCORDINGLY SECURITY DEPOSITS AS WELL AS MARGIN MONEY WERE REQUIRED TO B E MAINTAINED FROM TIME TO TIME ON THE TRANSACTIONS OF ITS CLIENTS. IT IS NOT IN DISPU TE THAT THE ASSESSEE HAD MADE BORROWINGS IN THE FORM OF UNSECURED LOANS FROM DIFF ERENT PARTIES AND UTILIZED THE SAME FOR THE PURPOSE OF ITS BUSINESS. THE ONLY GRIEVANCE OF THE AO IS THAT WHEN THE ASSESSEE HAS GOT SUFFICIENT OWN FUNDS THERE WAS NO NEED TO M AKE ANY BORROWINGS WARRANTING PAYMENT OF INTEREST. WE FIND THAT THE FIXED DEPOSIT S KEPT BY THE ASSESSEE WERE LIEN MARKED IN FAVOUR OF THE BANK AND OTHERS AS MARGIN M ONEY AND THE SAME COULD NOT BE UTILIZED OBVIOUSLY FOR THE PURPOSE OF REGULAR BUSIN ESS TRANSACTIONS. IT IS NOT THE CASE OF THE REVENUE THAT THE BORROWED FUNDS HAVE BEEN UTILI ZED FOR NON BUSINESS PURPOSES BY THE ASSESSEE. ONCE THE BORROWING HAS BEEN ACCEPTED TO BE UTILIZED FOR BUSINESS PURPOSES THE ALLOWANCE OF INTEREST PAYMENT THEREON BECOMES AUTOMATIC. WE PLACE RELIANCE IN THIS REGARD ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CALDERN PHARMACEUTICALS LTD VS CIT REPORTED IN 265 ITR 244 (CAL) . IN VIEW OF THE AFORESAID FINDINGS AND THE JUDICIAL PRONOUNC EMENT MENTIONED HEREIN ABOVE WE HAVE NO HESITATION IN DIRECTING THE AO TO ALLOW THE CLAIM OF INTEREST OF RS.19,74,100/-. 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE LD. AO IS JUSTIFIED IN DISALLOWING THE BANK COMMISSION PAID OF RS.1,72, 372/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LD.AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION TOWARDS BANK COMMISSION OF RS.4,11,979/- AND OUT OF THAT HE OBSE RVED THAT A SUM OF RS.1,72,342/- WAS NOT REFLECTED IN THE BANK ACCOUNT IN THE ASSESS MENT YEAR UNDER APPEAL AND ACCORDINGLY PROCEEDED TO DISALLOW THE SAME. THE ASS ESSEE TRIED TO EXPLAIN THAT THE SAME REPRESENTS BANK COMMISSION PAID DURING THE FIN ANCIAL YEAR 2006-07 RELEVANT TO A.Y.2007-08 AND WAS SHOWN AS PRE-PAID EXPENSES IN T HE BALANCE SHEET AS ON 31.3.2007 AND FROM THE SAID PRE-PAID EXPENSES ACCOU NT, THIS SUM OF RS.1,72,342/- WAS CHARGED OFF AS REVENUE EXPENDITURE DURING THE ASSES SMENT YEAR UNDER APPEAL. ON APPEAL THE LD. CIT(A) HOWEVER FAILED TO APPRECIATE THE CONTENTION OF THE ASSESSEE AND UPHELD THE ORDER OF THE LD. AO ON THIS ISSUE. ITA NO.2314/KOL/2013 R.S.CREDIT PVT. LTD. A.Y.2008-09 3 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT FROM THE FACTS STATED HEREIN A BOVE THAT THE REVENUE HAD MADE THIS ADDITION WITHOUT APPRECIATING THE NORMAL ACCOUNTING NORMS. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS ACTUALLY PAID THE BANK COMMISSION DURI NG THE FINANCIAL YEAR 2006-07 RELEVANT TO A.Y.2007-08 AND FOR THE PERIOD ATTRIBUT ABLE BEYOND THE RELEVANT FINANCIAL YEAR, THE ASSESSEE CLASSIFIED THE SAME UNDER THE HE AD PRE-PAID EXPENSES AND HAD DULY REFLECTED THE SAME IN THE ASSET SIDE OF THE BALANCE SHEET. DURING THE ASSESSMENT YEAR UNDER APPEAL, THE AMOUNT LYING IN THE PRE-PAID EXPE NSES HAS BEEN CHARGED OFF TO THE REVENUE AS THE SAME PERTAINS TO THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. WE FIND LOT OF FORCE IN THE CLAIM OF THE AS SESSEE IN THIS REGARD AND HENCE WE HAVE NO HESITATION IN DIRECTING THE LD. AO TO ALLOW THE CLAIM OF THE ASSESSEE TOWARDS PAYMENT OF BANK COMMISSION IN THE SUM OF RS.1,72,34 2/-. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 06.05.2016. SD/- SD/- [MAHAVIR SINGH] [M.BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBE R DATE :06.05.2016. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . R.S.CREDIT PRIVATE LIMITED, K.M.GULGULIA & CO., 3, SYNAGOGUE STREET, 2 ND FLOOR, ROOM NO.17, KOLKATA-700001. 2 THE I.T.O., WARD-12(2), KOLKATA. 3 . CIT(A)-XII, KOLKATA 4. CIT- IV, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NO.2314/KOL/2013 R.S.CREDIT PVT. LTD. A.Y.2008-09 4