Appeal details
Counselvise Citation
[2018] 126 COUNSELVISE.COM (IT) 3570 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 8 month(s) 30 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-02-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2012-2013
Appeal Filed On
02-05-2016
Judgement Text
IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2431/DEL./2016 ASSESSMENT YEAR: 2012-13 DCIT, CIRCLE 10(1), NEW DELHI (APPELLANT) VS. GETIT INFOSERVICES PVT. LTD., GYS HEIGHTS, PLOT NO. 10-11, 2 ND FLOOR, TOWER-C, SECTOR 125, NOIDA. PAN AACCG7314C (RESPONDENT) ASSESSEE BY SH. RAGHUNATH, SR. DR REVENUE BY NONE ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-IV, NEW DELHI DATED 04.02.2016 FOR THE ASSES SMENT YEAR 2012-13 ON THE FOLLOWING GROUND : 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY A. O. ON ACCOUNT OF PROPORTIONATE INTEREST U/S. 36(1)(III) OF THE ACT W ITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COMPANY HAD DIVERTED ITS FUN DS BY GIVING THE SAME AS INTEREST FREE TO ITS SUBSIDIARY COMPANY AND ON T HE OTHER HAND CLAIMING THE INTEREST EXPENSES ON BORROWED FUNDS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME AT RS. (-) 53,47,70,687/- ON 29.09.2012. THE CASE W AS SELECTED FOR SCRUTINY AND DATE OF HEARING 21.11.2017 DATE OF PRONOUNCEMENT 01 .02.2018 ITA NO. 2431/DEL./2016 2 STATUTORY NOTICES WERE ISSUED. THE ASSESSEE WAS ENG AGED IN THE BUSINESS OF PUBLISHING AND DISTRIBUTION OF DIRECTORIES WITH YEL LOW PAGES AND INDUSTRIAL DIRECTORIES. DURING THE COURSE OF SCRUTINY PROCEEDI NGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY HAD ADVANCED A S UM OF RS.9,19,59,182/- TO ITS SUBSIDIARY COMPANY NAMED CONNECT MARKET DATA (P) LTD. WITHOUT CHARGING ANY INTEREST, WHEREAS THE ASSESSEE COMPANY CLAIMED INTEREST EXPENSES OF RS.3,41,64,024/-. ON BEING ASKED, THE A SSESSEE SUBMITTED ITS REPLY, WHICH READS AS UNDER : 'REGARDING INTEREST NOT CHARGED ON LOAN GIVEN TO SU BSIDIARY COMPANY, IT IS SUBMITTED THAT THE ASSESSEE COMPANY HAS NOT MADE LO AN/ADVANCE TO ITS 100% SUBSIDIARY COMPANY FROM THE BORROWED FUNDS ON WHICH THE ASSESSEE COMPANY HAS PAID INTEREST DURING F.Y 2010-11 RELEVANT TO A.Y 2011-12. THE ASSESSEE COMPANY HAS GIVEN INTEREST FREE LOAN TO ITS SUBSIDIARY OUT OF ITS OWN FUNDS I.E. EQUITY AND RESERVES. IT IS, FURTHER SUBMITTED THAT CONNECT MARKET DATA P VT. LTD. IS 100% SUBSIDIARY OF THE ASSESSEE COMPANY AND THERE IS NO RESTRICTION ON GRANTING LOAN TO THE SUBSIDIARY COMPANY. INTEREST FREE LOAN GIVEN BY THE ASSESSEE COMPANY TO ITS WHOLLY OWNED SUBSIDIARY IS OUT OF COMMERCIAL EXPEDIENCY. IT IS PERTINENT TO MENTION HERE THAT BOTH THE COMPA NIES FALL UNDER THE SAME TAX BRACKET, THEREFORE, CHARGING OF NOTIONAL I NTEREST BY THE HOLDING COMPANY ON LOAN ADVANCED TO ITS SUBSIDIARY COMPANY WOULD DECREASE THE LOSS OF THE ASSESSEE COMPANY AND ON THE OTHER HAND, WOULD INCREASE THE LOSS OF SUBSIDIARY COMPANY SIMULTANEOUSLY, RESULTIN G IN NO LOSS OF REVENUE TO THE INCOME TAX DEPARTMENT.' 3. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE AND AFTER RELYING ON SOME CASE LAWS, DISAL LOWED THE INTEREST @ 12% ITA NO. 2431/DEL./2016 3 TO THE TUNE OF RS.1,10,35,102 U/S. 36(1)(III) OF TH E IT ACT. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REL YING UPON SOME CASE LAWS, DELETED THE ADDITION VIDE IMPUGNED ORDER. AGGRIEVED , THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR RELIED ON THE ORDER OF THE ASSESS ING OFFICER AND THE AR OF THE ASSESSEE RELIED ON THE ORDER OF LD. CIT(A) A ND REITERATED THE SUBMISSIONS MADE BEFORE HIM. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING TH ROUGH THE ENTIRE MATERIAL ON RECORD, WE FIND THAT IT IS NOT IN DISPU TE THAT THE ASSESSEE HAD GIVEN INTEREST FREE ADVANCES TO ITS 100% SUBSIDIARY COMPA NY. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REL YING ON THE DECISIONS OF HONBLE DELHI HIGH COURT AND THE DECISION OF HONBL E SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. HAS RIGHTLY DELETED THE ADDITION OBSERVING AS UNDER : I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMI SSIONS MADE BY THE APPELLANT AND THE CASE LAWS CITED BY BOTH. IT IS NO TED THAT THE APPELLANT HAD ADVANCED FUNDS TO ITS 100% WHOLLY OWNED SUBSIDI ARY COMPANY WHICH IS ALSO ENGAGED IN SIMILAR BUSINESS OF PRINTING AND PUBLISHING AND THAT THE FUNDS HAVE BEEN ADVANCED TO ITS SUBSIDIARY AS A PAR T OF CORPORATE / BUSINESS STRATEGY TO EXPAND ITS BUSINESS OPERATIONS OUT OF COMMERCIAL EXPEDIENCY. IN VIEW OF THE ABOVE FACTS AND CASE LAW S, THE APPELLANT'S CASE IS FULLY COVERED BY THE JURISDICTIONAL HIGH COURT DECI SION IN DALMIA CEMENT PVT. LTD. AND APEX COURT DECISION IN S.A. BUILDERS LTD. SUPRA. HENCE, THE DISALLOWANCE OF RS 1,10,35,102/- IS DELETED. ITA NO. 2431/DEL./2016 4 6. NO CONTRARY MATERIAL IS BROUGHT ON RECORD ON BEH ALF OF THE REVENUE. WE, THEREFORE FIND THAT THE LD. CIT(A) HAS PASSED A REA SONED ORDER AND HAS REACHED A CORRECT CONCLUSION AFTER RELYING ON THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT AND OF HONBLE APEX COURT, WHICH NEEDS NO INTERFERENCE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS FOUND DEV OID OF MERITS AND IS LIABLE TO FAIL. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEBRUARY, 2018. SD/- SD/- (BHAVNESH SAINI ) (L.P. SAH U) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01.02.2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI
