ITO 1(3)(2), MUMBAI V. SAMETA EXPORTS P. LTD, MUMBAI

ITA 2386/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1312 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2017
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 12-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2014
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 2386 /MUM/20 14 (ASSESSMENT YEAR 20 08 - 09 ) ITO 1(3)(2) ROOM NO. 541 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. M/S. SAMETA EXPORTS P. L TD. N.K. MEHTA INTERNATIONAL HOUSE 178, BACKBAY RECLAMATION MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABCS4409H ASSESSEE BY SHRI KIRAN KAPADIA DEPARTMENT BY S HRI AARSI PRASAD DATE OF HEARING 1 3 .4 . 201 7 DATE OF PRONOUNCEMENT 13 . 4 . 2 01 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 5.12.2013 PASSED BY THE LEARNED CIT(A) - 2, MUMBAI AND IT RELATES TO A.Y. 2008 - 09. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT( A) IN DELETING THE DISALLOWANCE OF INTEREST EXPENDITURE. 2. THE FACTS RELATING TO THE ISSUE ARE THAT THE ASS ESSING OFFICER NOTICED THAT PART OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE IN A.Y. 2004 - 05 AND 2006 - 07 WAS DISALLOWED FOR THE REASON THAT THE ASSESSEE HAS DIVERTED INTEREST BEARING FUNDS TO GIVE INTEREST FREE ADVANCE TO SISTER CONCERN. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS HAVING UNSECURED LOAN OF ` 30.67 CRORES IN THE LIABILITY SIDE AND IT HAS GIVEN LOAN AND ADVANCE TO OTHER PARTIES TO THE TUNE OF ` 16.87 CRORES. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED A SUM OF ` 40,75,530/ - , BEING INTEREST OF ` 39,85,530/ - RELATING TO THE LOAN TAKEN FROM SARASWAT COOPERATIVE BANK AND SAMETA EXPORTS P. LTD. 2 INTEREST OF ` 90,00 0/ - PERTAINING TO A FIXED LOAN. THE LEARNED CIT(A) NOTICED THAT THE DISALLOWANCE MADE IN A.Y. 2004 - 05 & 2006 - 07 HAVE BEEN DELETED BY HIS PREDECESSOR BY FOLLOWING THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF S.A. BUILDERS (288 ITR 1). ACCO RDINGLY, BY FOLLOWING THE DECISION OF HIS PREDECESSOR, HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ABOVE SAID INTEREST DISALLOWANCE. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 3. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE R E V E NUE HAS CHALLENGED THE RELIEF GRANTED BY THE LEARNED CIT(A) IN A.Y. 2004 - 05 AND 2006 - 07 BY FILING APPEAL S BEFORE THE ITAT. ACCORDINGLY THE LD D.R SUBMITTED THAT THIS APPEAL MAY ALSO BE CLUBBED WITH THOSE APPEALS. 4. WHEN ENQUIRED ABOUT THE STATUS OF T HOSE APPEALS, THE LD A.R SUBMITTED THAT THE APPEAL RELATING TO A.Y. 2004 - 05 HAS SINCE BEEN HEARD BY THE TRIBUNAL AND ORDER IS AWAITED. HE FURTHER SUBMITTED THAT THE APPEAL RELATING TO A.Y. 2006 - 07 IS STILL PENDING BEFORE THE TRIBUNAL. 5 . THE LEARNED AR, ON THE CONTRARY , OBJECTED TO THE CLUBBING OF THE APPEALS BY SUBMITTING THAT THE FACTS PERTAINING TO THE INTEREST DISALLOWANCE ARE TOTALLY DIFFERENT DURING THE YEAR UNDER CONSIDERATION , EVEN THOUGH THE ASSESSING OFFICER HAS FOLLOWED THE ORDER PASSED BY HIM IN A.Y. 2004 - 05 & 2006 - 07 . EXPLAINING FURTHER, LEARNED AR SUBMITTED THAT THE ASSESSEE HAD TAKEN LOAN FROM TWO BANKS DURING THE YEAR RELATING TO A.Y. 2004 - 05 , VIZ., SARASWAT COOPERATIVE BANK AND ING VYASYA BANK. THE LOAN TAKEN FROM SARASWAT COOPERATIVE BANK WAS GIVEN AS ADVANCE TO A SISTER CONCERN NAME D M/S PALLOR TRADING PVT. LTD. IN THE YEAR RELATING TO A.Y. 2004 - 05. HENCE, THE ASSESSING OFFICER IN A.Y. 2004 - 05 & 2006 - 07 HAD DISALLOWED THE INTEREST ON THE REASONING THAT THE INTEREST BEARING LOANS HAVE BEE N DIVERTED TO GIVE INTEREST FREE ADVANCE TO ITS SISTER CONCERN. 6 . LEARNED AR SUBMITTED THAT INTEREST PERTAINING TO ING VYASYA BANK LOAN HAS NOT BEEN DISALLOWED IN THE EARLIER YEARS , I.E., THE SAME HAS BEEN ACCEPTED SAMETA EXPORTS P. LTD. 3 AS TAKEN FOR BUSINESS PURPOSES AND ACC ORDINGLY INTEREST WAS ALLOWED IN THE EARLIER YEARS . HE FURTHER SUBMITTED THAT THE ASSESSEE HAS RECEIVED BACK THE ADVANCE GIVEN TO SISTER CONCERN NAME D M/S PALLOR TRADING PVT. LTD. AND THE SAME HAS BEEN UTILISED TO REPAY THE LOAN TAKEN FROM ING VYSYA BANK LTD. ACCORDINGLY, HE SUBMITTED THAT THERE IS NO CASE OF GIVING OF INTEREST FRE E ADVANCE TO SISTER CONCERN AND HENCE THE ENTIRE LOAN TAKEN FROM SARASWAT COOPERATIVE BANK LTD. SHOULD BE CONSIDERED AS UTILISED FOR THE PURPOSE OF BUSINESS ONLY. HE FURTHER SUB MITTED THAT THE LOANS TAKEN BY THE ASSESSEE ALSO CONSISTS OF BULK AMOUNT OF INTEREST FREE LOANS ALSO. ACCORDINGLY HE SUBMITTED THAT NO DISALLOWANCE IS CALLED FOR. 7 . IN THE REJOINDER, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS BRI NING ON RECORD CERTAIN NEW FACTS, WHICH HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER. 8 . HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER , SINCE THE ASSESSEE IS BRING ING ON RECORD CERTAIN NEW FACTS WHICH HAVE NOT BEEN CONSIDERED BY THE ASSESSING OFFICER. PERUSAL OF THE A SSESSMENT ORDER WOULD ALSO SHOW THAT THE ASSESSING OFFICER HAS SIMPLY FOLLOWED THE DECISION TAKEN BY HIM IN A.Y. 2004 - 05 WITHOUT EXAMINING THE FACTUAL ASPECTS . IN THE SIMILAR MANNER, THE LD CIT(A) HAS ALSO SIMPLY FOLLOWED HIS EARLIER ORDER. SINCE IT IS THE CLAIM OF THE ASSESSEE THAT THE FACTS ARE TOTALLY DIFFERENT IN THIS YEAR AND SINCE THESE NEW FACTS REQUIRE EXAMINATION, WE DEEM IT PROPER TO RESTORE T HIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE IT AFRESH BY DULY CONSIDERING THE INFORMA TION/EXPLANATION S THAT MAY BE FURNISHED BY THE ASSESSEE. AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE ASSESSING OFFICER MAY TAKEN APPROPRIATE DECISION IN ACCORDANCE WITH LAW. SAMETA EXPORTS P. LTD. 4 9 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1 3 .4 .201 7. SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 1 3 / 4 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI