The DCITAhmedabad Circle-1, Ahmedabad V. Anjani Fabrics Ltd., Ahmedabad

ITA 2318/AHD/2007

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85571 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 31-05-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD , LH LHLH LH BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA. NO.2318/AHD/2007 (ASSESSMENT YEAR:2004-05) DCIT, CIRCLE-1, AHMEDABAD APPELLANT VS. ANJANI FABRICS LTD. 252, NEW CLOTH MARKET, OUTSIDE RAIPUR GATE, AHMEDABAD RESPONDENT PAN: AABCA7883M /BY APPELLANT : SHRI M. K. SINGH, SR. D.R. /BY RESPONDENT : SHRI GAURAV NAHTA, A.R. !' /DATE OF HEARING : 05.02.2015 #$% !' /DATE OF PRONOUNCEMENT : 06.02.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, AH MEDABAD, DATED 29.03.2007 FOR A.Y. 2004-05 ON THE FOLLOWING GROUND: ITA NO. 2318/AHD/07 A.Y. 04-05 [DCIT VS. ANJANI FABRICS LTD.] PAGE 2 (1) THE CIT(A) ERRED IN LAW AND ON FACTS IN DIRECT ING TO DELETE THE ADDITION MADE U/S. 36(1)(III) & 14A OF RS.24,89,222/-. 2. AT THE OUTSET OF HEARING LEARNED AUTHORIZED REPR ESENTATIVE POINTED OUT THAT THIS ISSUE IS COVERED BY ASSESSEE S OWN CASE FOR A.Y. 2003-04, WHEREIN TRIBUNAL HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 9. ADMITTEDLY IN THE ASSESSMENT YEAR UNDER APPEAL THERE IS NO MATERIAL CHANGE IN THE FACTS BECAUSE NO FRESH INVESTMENT HAVE BEEN MADE BY THE ASSESSEE IN THE RE LEVANT PREVIOUS ASSESSMENT YEAR. IN THE ASSESSMENT YEAR 2 002-03 THE LD. CIT(A) HAS RECORDED A FINDING OF FACT THAT IT IS ALSO A PART OF THE BUSINESS ACTIVITY TO HAVE CONTROLLING I NTEREST OF SISTER/GROUP CONCERN AND EVEN IF THE FUND MUSTERED BY APPELLANT THROUGH PUBLIC ISSUE WERE NOT UTILIZED IN THE MANNER AS INDICATED IN THE PROSPECTS IT WAS NOT COG NIZANCE TO SIT IN THE DETAILS OF THE APPELLANT COMPANY TO A DJUDICATE WHATEVER HAS BEEN DEPLOYMENT OF FUND AT A PARTICULA R POINT OF TIME. THE LD. C.I.T.(A) HAS ALSO RECORDED A FIN DING OF FACT THAT INVESTMENTS WERE MADE BY THE ASSESSEE-COMPANY FOR THE F.Y. ENDING 31-3-1996 WHEN INVESTMENTS AROSE TO RS.549.56 CRORES AS AGAINST RS.79.25 CRORES IN THE PRECEDING YEAR. AT THE SAME TIME, THERE WAS NO INCR EASE IN BORROWINGS IN THE RELEVANT FINANCIAL YEAR WHICH IS OBVIOUS FROM THE FACT THAT AS ON 31.3.1996, THE BORROWINGS WERE RS.2.58 CRORES AS AGAINST RS.2.61 CRORES AS ON 31.3 .95. IT IS THUS OBVIOUS THAT THE INVESTMENT CAME FROM SHARE CA PITAL AND RESERVES AND SURPLUSES AND NOT FROM THE BORROWI NGS. AFTER THE FINANCIAL YEAR 1995-96, THERE IS NO INCRE ASE IN INVESTMENT. THE INVESTMENT HAS DECLINED PROGRESSIVE LY AND IN THE RELEVANT PREVIOUS YEAR, INVESTMENT WAS OF RS ./328.55 LAKHS AS AGAINST INVESTMENT OF RS.328.80 LAKHS IN T HE PRECEDING YEAR. I THEREFORE, FIND THAT THERE WAS NO FRESH INVESTMENT BY THE APPELLANT IN THE RELEVANT PREVIOU S YEAR, WHICH COULD BE SUBJECT MATTER OF SCRUTINY BY THE A. O. ONCE THE FUNDS WERE STUCK UP IN INVESTMENTS, IT WAS QUIT E NATURAL FOR THE APPELLANT TO BORROW FUNDS TO CARRY OUT THE BUSINESS ACTIVITIES AND INTEREST OF SUCH BORROWED F UNDS WAS ITA NO. 2318/AHD/07 A.Y. 04-05 [DCIT VS. ANJANI FABRICS LTD.] PAGE 3 DIRECTLY LINKED TO BUSINESS ACTIVITIES AND THEREFOR E, WAS ALLOWABLE AS DEDUCTION. THERE IS NO MATERIAL BROUGH T TO OUR NOTICE TO DIVER THESE FINDINGS RECORDED BY THE LD. C.I.T.(A). WE ARE THEREFORE, OF THE VIEW THAT LD. C.I.T.(A) HA S GIVEN COGENT REASON FOR DELETING THE DISALLOWANCE OF RS.24,14,101/- MADE BY A.O. OUT OF INTEREST EXPENSE U/S. 36(L)(III). WE ARE THEREFORE, INCLINED TO UPHOLD TH E ORDER OF THE LD. C.I.T.(A). NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE. FACTS BEING SIMILAR SO FOLLOWING SAME REASONING, WE ARE NOT INC LINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DELETED THE ADDITION MADE U/S.36(1)(III) & 14A OF RS.24,89,222/-. SAME IS UPHELD. 3. AS A RESULT, APPEAL FILED BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 06 TH DAY OF FEBRUARY, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA & & & & ' ' ' ' ('% ('% ('% ('% / COPY OF ORDER FORWARDED TO:- 1. +, / REVENUE 2. / ASSESSEE 3. // 0 / CONCERNED CIT 4. 0- / CIT (A) 5. '45 , , / DR, ITAT, AHMEDABAD 6. 589 :; / GUARD FILE. BY ORDER / & ,