M/s. Bombay Sales Corporation, Ahmedabad V. The JCIT, Range-3, Ahmedabad

ITA 2433/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76826 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-06-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 11-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: S N DIVATIA
• Keywords: Opportunity of being heard; Principle of natural justice; Non-deduction of tax
• Section: 143(3)

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD , !' # $ $ $ $ %, # BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. $./ I.TA. NO.2433/AHD/2013 A.Y. 2010-11 2. $./ I.TA. NO.2553/AHD/2013 A.Y. 2010-11 1. M/S.BOMBAY SALES CORPORATION MRUDUL TOWER B/H.TIMES OF INDIA ASHRAM ROAD AHMEDABAD-380 009 2. THE DCIT CIRCLE-3 AHMEDABAD / VS. 1. THE JCIT, RANGE-3 AHMEDABAD 2. M/S.BOMBAY SALES CORPORATION AHMEDABAD #( !' $./)* $./ PAN/GIR NO. : AAAFB 8515 F ( (+ / // / APPELLANTS ) .. ( ,-(+ / RESPONDENTS ) ASSESSEE BY : SHRI S.N. DIVATIA, A.R. REVENUE BY: SHRI O.P. BATHEJA, SR.DR . / ' / / / / DATE OF HEARING : 09/06/2014 012 / ' / DATE OF PRONOUNCEMENT : 13/06/2014 !3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE TWO APPEALS; ONE BY THE ASSESSEE AND THE A NOTHER BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE LD.CO MMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABAD (CIT(A) IN SHOR T) DATED 26/08/2013 PERTAINING TO ASSESSMENT YEAR (AY) 2010- 11. THESE ITA NO.2433/AHD/2013 (BY ASSESSE E) AND ITA NO.2553/AHD/2013 (BY REVENUE) M/S.BOMBAY SALES CORPORATION VS. JCIT/DCIT ASST.YEAR 2010-11 - 2 - APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .2553/AHD/2013 FOR AY 2010-11. THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE DISALLOWANCE OF RS.2.46 CRORES MADE U/S.40(A)(IA) D ESPITE THE FACT THAT THE ASSESSEE HAD NOT DEDUCTED TDS U/S.194 H ON THESE PAYMENTS WHICH WERE IN THE NATURE OF COMMISSION. 2. THE CIT(A) OUGHT TO HAVE CONSIDERED THE SO CAL LED SALES INCENTIVES/CASH DISCOUNT AS COMMISSION AS ENVISAGED IN EXPLANATION (I) TO SECTION 194H OF THE ACT. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER TO THE EXTENT MENTIONED ABOVE SINCE THE ASSESSEE HAS FAILED TO DI SCLOSE HIS TRUE INCOME/BOOK PROFIT. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED TO THE ABOVE EXTENT. THE APPELLANT CRAVES, TO LEAVE, TO AMEND O R ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.54,39,190/-. THE CASE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) O F THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 04/03/2013, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE VARIOUS ADDITIONS/DISALLOWANCES INCLUDING THE DISAL LOWANCE MADE U/S.40(A)(IA) OF THE ACT AMOUNTING TO RS.2,46,27,38 4/- AND DISALLOWANCE ITA NO.2433/AHD/2013 (BY ASSESSE E) AND ITA NO.2553/AHD/2013 (BY REVENUE) M/S.BOMBAY SALES CORPORATION VS. JCIT/DCIT ASST.YEAR 2010-11 - 3 - OF INTEREST MADE U/S.36(1)(III) OF THE ACT AMOUNTIN G TO RS.1,04,948/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL, THEREBY THE LD.CIT(A) LD.CIT(A) DELETED THE DISALLO WANCE OF RS.2,46,27,384/- MADE U/S.40(A)(IA) AND SUSTAINED T HE DISALLOWANCE OF RS.1,04,948/-. NOW, AGAINST THE ORDER OF THE LD.CI T(A), BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEALS BEFORE US. 4. GROUND NOS.1 & 2 ARE INTER-CONNECTED. THE ONLY EFFECTIVE GROUND OF REVENUES APPEAL IS AGAINST THE DELETION OF DISA LLOWANCE OF RS.2.46 CRORES MADE U/S.40(A)(IA) OF THE ACT. 4.1. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIO N. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SHRI S.N.DIVATIA SUBMIT TED THAT THE ISSUE IS COVERED BY THE DECISION OF THE COORDINATE BENCH (IT AT A BENCH AHMEDABAD) IN ASSESSEES OWN CASE IN ITA NO.1835/AH D/2011 FOR AY 2008-09 DATED 02/08/2013. THE LD.COUNSEL FOR THE A SSESSEE HAS ALSO PLACED A JUDGEMENT OF HONBLE BOMBAY HIGH COURT RE NDERED IN THE CASE OF CIT VS. INTERVET INDIA PVT.LTD. IN INCOME-TAX AP PEAL NO.1616 OF 2011, DATED 01/04/2014. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS DECIDED THIS ISSUE V IDE PARAGRAPH NOS.4.2 ITA NO.2433/AHD/2013 (BY ASSESSE E) AND ITA NO.2553/AHD/2013 (BY REVENUE) M/S.BOMBAY SALES CORPORATION VS. JCIT/DCIT ASST.YEAR 2010-11 - 4 - TO 4.4 OF HIS ORDER WHICH ARE REPRODUCED HEREINBELO W FOR THE SAKE OF CLARITY. 4.2. THESE GROUNDS ARE AGAINST DISALLOWANCE OF RS. 2,46,27,384/-. THIS AMOUNT COMPRISES OF TWO ELEMENTS. THE FIRST O NE IS DISALLOWANCE OF SALES INCENTIVE OF RS.2,42,31,233/- AND THE SECOND ONE IS DISALLOWANCE OF CASH DISCOUNT OF RS.3,96,151/-. THESE TWO AMOU NTS WERE DISALLOWED U/S.40(A)(IA) FOR NON-DEDUCTION OF TAX U/S.194H. 4.3. AS REGARDS THE FIRST ELEMENT BEING DISALLOWA NCE OF SALES INCENTIVE, IDENTICAL ISSUE CAME UP FOR THE CONSIDERATION IN TH E IMMEDIATELY PRECEDING ASSESSMENT YEAR 2009-10. VIDE MY ORDER D TD. 31.01.2013 IN APPEAL NO.CIT(A)-VI/ACIT.CIR.3/134/11-12, DISALLOWA NCE MADE ON THIS COUNT WAS DELETED BY ME. WHILE DOING SO, RELIANCE WAS PLACED BY ME ON THE ORDER OF CIT(APPEALS) IN THE CASE OF THE APPELL ANT FOR THE A.Y. 2008- 09. THE SAID ORDER OF CIT(APPEALS) FOR A.Y.2008-09 WAS APPEALED AGAINST BY THE REVENUE. THE HONBLE ITAT, AHMEDABA D VIDE THE ORDER DTD. 02.08.2013 IN ITA NO.1835/AHD/2011 DISMISSED T HE APPEAL OF THE REVENUE BY HOLDING AS UNDER:- 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY AND HAVE PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FI ND THAT THE ASSESSEE-FIRM IS DISTRIBUTOR OF M/S.SHEELA FOAM PVT .LTD. (SFPL FOR SHORT) FOR THE GUJARAT STATE. THE ASSE SSEE HAS MADE PAYMENT OF SALES INCENTIVE TO THE DEALERS OF SFPL. THE ONLY ISSUE IN THIS CASE IS REGARDING THE NATURE OF PAYMENT OF SALES INCENTIVE PAID TO THE DEALERS OF SFPL WHETHER THE NATURE OF COMMISSION OR BROKERAGE, WITHIN THE MEANING OF SECT ION 194H OF THE ACT. WE FIND THAT A PLAIN READING OF PROVISION OF SECTION 194H WITH ITS EXPLANATION MAKES IT CLEAR THAT THE P ROVISION OF SECTION 194H SHALL BECOME APPLICABLE WHEN THE PAYME NT IS RECEIVED BY A PERSON WHO IS ACTING ON BEHALF OF ANO THER OR ACTING AS AN AGENT OF ANOTHER PERSON. THE CIT(A) HAS RECO RDED A FINDING THAT A PERUSAL OF VARIOUS TERMS AND CONDITI ONS OF THE AGREEMENT ENTERED INTO BY SFPL WITH THE ASSESSEE- FIRM SHOWS THAT THE DISTRIBUTORSHIP IS ON PRINCIPAL-TO-PRINCIP AL BASIS AND NOT ON PRINCIPAL-AGENT BASIS. THE REVENUE COULD NOT CO NTROVERT THIS FINDING RECORDED BY THE CIT(A). THE CIT(A) HAS REC ORDED THAT ITA NO.2433/AHD/2013 (BY ASSESSE E) AND ITA NO.2553/AHD/2013 (BY REVENUE) M/S.BOMBAY SALES CORPORATION VS. JCIT/DCIT ASST.YEAR 2010-11 - 5 - M/S.SFPL WAS SELLING THE GOODS TO THE ASSESSEE FI RM, AND IN TURN THE ASSESSEE WAS SELLING GOODS TO THE AUTHORIZ ED DEALERS APPOINTED BY M/S.SFPL. VARIOUS DEALERS WERE GIVE N SALES TARGET AND PERCENTAGE OF INCENTIVE WAS GIVEN ON THE BASIS OF THEIR PERFORMANCE/ACHIEVEMENT OF THE SALE TARGET GIVEN TO THEM. THE CIT(A) HAS REPRODUCED THE RELEVANT TABLE OF INCENTI VE DEPENDING ON THE HIGHER ACHIEVEMENT OF SALES IN HIS APPELLATE ORDER. WE FIND THAT THE NATURE OF PAYMENT BY THE ASSESSEE TO VARIOUS DEALERS OF SFPL IS AN INCENTIVE TO ACHIEVE MORE SALES ONL Y, AND NOT IN THE NATURE OF PAYMENT OF BROKERAGE OR COMMISSION TO THIRD PARTY. THE CIT(A) HAS FOLLOWED THE DECISION OF ITAT, DELHI BENCH IN THE CASE OF NATIONAL PANASONIC INDIA P.LTD. VS. DCI T, 94 TTJ (DELHI) 899 WHEREIN SALES INCENTIVES ALLOWED TO THE DEALER TREATED AS COMMISSION BY THE LOWER AUTHORITIES, WAS REJECTED AND HELD AS NOT COVERED UNDER SECTION 194H OF THE ACT. A SIMILAR VIEW AS TAKEN BY THE ITAT, CALCUTTA BENCHES IN VIDY ANATH AYURVED BHAVAN LTD. VS. JCIT, 83 TTJ 409 (CAL). WE FIND THAT SIMILAR PAYMENT OF SALES INCENTIVE GIVEN TO THE DEA LERS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2007-2008 WAS NOT TREATED AS COMMISSION IN SCRUTINY ASSESSMENT FRAMED BY THE AO UNDER SECTION 143(3) OF THE ACT. WE FIND THAT THE CIT(A) HAS PASSED A WELL REASONED SPEAKING ORDER ON THIS ISSUE . IN THESE FACTS, WE CONFIRM THE ORDER OF THE CIT(A) IN HOLDIN G THAT THE AO WAS NOT JUSTIFIED IN TREATING THE PAYMENT OF INCENT IVES TO THE DEALERS AS WELL AS TO ANOTHER DISTRIBUTOR, AS PAYME NT OF COMMISSION LIABLE TO TDS UNDER SECTION 194H OF THE ACT, AND THAT PROVISION OF SECTION 194H ARE NOT AT ALL APPLI CABLE ON THE FACTS OF THE CASE, AND IN DELETING THE ADDITION UND ER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, THE GROUND OF T HE APPEAL OF THE REVENUE BEING WITHOUT MERIT, IS DISMISSED. RESPECTFULLY FOLLOWING THE SAID DECISION, IMPUGNED DISALLOWANCE OF SALES INCENTIVE U/S.40(A)(IA) IS DELETED. 4.4. SECOND ELEMENT OF THE DISALLOWANCE IS CASH DIS COUNT OF RS.3,96,151/-. IN THE ASSESSMENT ORDER, A.O. OBSE RVED THAT THE CASH DISCOUNT WAS PAID TO DEALERS TO WHOM THE SALES INCE NTIVES WERE PAID; SINCE THE CASH DISCOUNT WAS SIMILAR IN NATURE TO SA LES INCENTIVES, IT WAS BEING TREATED AS COMMISSION AND SINCE TAX WAS NOT D EDUCTED ON THE CASH DISCOUNT, DISALLOWANCE OF THE SAID SUM WAS BEING MA DE U/S.40(A)(IA). THE CONTENTIONS OF THE LD.A.R. ARE THAT CASH DISCOU NT IS REDUCTION IN ITA NO.2433/AHD/2013 (BY ASSESSE E) AND ITA NO.2553/AHD/2013 (BY REVENUE) M/S.BOMBAY SALES CORPORATION VS. JCIT/DCIT ASST.YEAR 2010-11 - 6 - INVOICE VALUE OF THE GOODS ON ACCOUNT OF TIMELY PAY MENT WITHIN THE CREDIT PERIOD ALLOWED BY THE VENDOR; IT IS CREDITED TO THE LEDGER ACCOUNTS OF THE DEALERS AND THEREFORE SECTION 194H HAS NO AP PLICATION. HAVING CONSIDERED THE FACTS OF THE MATTER AND KEEPING IN V IEW THE TRIBUNALS DECISION REGARDING THE SALES INCENTIVES, I HOLD THA T THE PROVISIONS OF SECTION 194H ARE NOT ATTRACTED TOWARDS THE CASH DIS COUNT GIVEN BY THE APPELLANT. ACCORDINGLY, THE DISALLOWANCE MADE BY T HE A.O. BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IS NOT IN ACCOR DANCE WITH LAW. IT IS DELETED. 5.1. WE FIND THAT THE LD.CIT(A) HAS FOLLOWED THE D ECISION OF HONBLE COORDINATE BENCH OF THIS TRIBUNAL RENDERED IN ASSES SEES OWN CASE IN ITA NO.1835/AHD/2011 FOR AY 2008-09 DATED 02/08/201 3. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS TH AT THE FACTS IN THIS YEAR ALSO ARE IDENTICAL. SINCE NO CHANGE IN THE FACTS AND CIRCUMSTANCES IS POINTED OUT BY THE REVENUE, THEREFORE WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), THE SAME IS HEREBY UPHELD O N THIS ISSUE. THUS, GROUND NOS.1 & 2 OF REVENUES APPEAL ARE DISMISSED. 6. NOW, WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 2433/AHD/2013 FOR A.Y.2010-11. THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1.1. THE ORDER PASSED U/S.250 ON 26.8.2013 FOR AY 2 010-11 BY CIT(A)-VI, ABAD UPHOLDING THE DISALLOWANCE DISALLOW ING INTEREST EXP. OF RS.1,04,948 IS WHOLLY ILLEGAL, UNLAWFUL AND AGAI NST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O R ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FUR NISHED AND THE EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF INTEREST EXP. OF RS.1 ,04,948. ITA NO.2433/AHD/2013 (BY ASSESSE E) AND ITA NO.2553/AHD/2013 (BY REVENUE) M/S.BOMBAY SALES CORPORATION VS. JCIT/DCIT ASST.YEAR 2010-11 - 7 - 2.2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE OF INTERE ST EXP. OF RS.1,04,948 AS NON-BUSINESS PURPOSES. 2.3. WITHOUT PREJUDICE TO ABOVE, THE LD.CIT(A) HAS ERRED IN COMPUTING THE DISALLOWANCE OF INTEREST AT RS.1,04,948/-. IT IS THEREFORE PRAYED THAT THE DISALLOWANCE OF RS. 1,04,948 MADE BY THE AO AND CONFIRMED BY THE CIT(A) SHOULD BE CANCELLED. 6.1. GROUNDS ARE INTER-CONNECTED. THE ONLY EFFECTI VE GROUND OF ASSESSEES APPEAL IS AGAINST IN CONFIRMING THE DISA LLOWANCE BY THE LD.CIT(A) OF RS.1,04,948/- MADE BY THE AO. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION AS THE ASSESSEE WAS HAVING SUFFICIENT INTEREST-FREE FUNDS. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BE LOW AND SUBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED THE DIRECT LINK TO T HE BUSINESS PURPOSE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD.CIT(A) REPRODUCED THE SUBMISSIONS OF THE ASS ESSEE IN PARAGRAPH NO.5.1 OF HIS ORDER WHICH ARE IN THE FOLLOWING TERM S:- 5.1. IN THE WRITTEN SUBMISSION, THE APPELLANT SUBM ITTED AS UNDER:- 4.1 THE NEXT GROUND OF APPEAL RELATES TO THE DISAL LOWANCE OF INTEREST EXPENSE OF RS.1,04,948/- IT IS DISCUSSED IN PARA-9 .7 OF THE ORDER. IT IS OBSERVED BY AO THAT THE APPELLANT HAD CLAIMED INTER EST EXPENSES OF RS.18,74,051 BUT THERE WAS NO PROOF THAT THE FUNDS WERE DIRECTLY LINKED TO THE BUSINESS PURPOSE. HENCE, PRO-RATA INTEREST TO THE INTEREST FREE LOANS AND ADVANCES OF RS.18,15,832/- GIVEN TO THREE PARTIES WAS MADE. THE APPELLANT HAD SUBMITTED EXPLANATION VIDE LETTER DT.1.3.2013. ITA NO.2433/AHD/2013 (BY ASSESSE E) AND ITA NO.2553/AHD/2013 (BY REVENUE) M/S.BOMBAY SALES CORPORATION VS. JCIT/DCIT ASST.YEAR 2010-11 - 8 - 4.2. THE APPELLANT SUBMITS THAT IT HAD SUFFICIENT I NTEREST-FREE FUND BY WAY OF CAPITAL OF RS.2,01,15,717 WHICH FAR EXCEED T HE AFORESAID ADVANCES. THEREFORE, IN VIEW OF THE FREE FUND AVAI LABLE TO THE APPELLANT, NO DISALLOWANCE OF INTEREST IS JUSTIFIED. REFER TO RELIANCE UTILITIES & POWER LTD. 313 ITR 340 (BOM) & HUTCH ESSAR (78 DTR 7)(DEL), MUNJAL SALES CORPN. (298 ITR 298)(SC), NAVAL TECHNOPLAST I NDUSTRIES LTD. (TAX APPEAL NO.1416 OF 2011 DT. 24.9.2012 (GUJ). SECONDLY, IN CASE OF SMT. SHOBHNABEN AMIN, THE AO I N PARA 9.4 OBSERVES THAT IT WAS AN OPENING DEBIT BALANCE OF RS .11,27,187. THE APPELLANT HAS NOT CHARGED INTEREST THERE ON AND IT IS NOT FINDING OF AO IN EARLIER YEARS THAT THE SAME WERE GIVEN OUT OF INTER EST BEARING FUNDS. 7.1. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSION S HAS GIVEN ON FINDING THAT THE ASSESSEE-FIRM FAILED TO PROVE THAT THE INTEREST-FREE ADVANCES MADE TO THREE PARTIES WERE NOT OUT OF INTE REST-BEARING FUNDS. HE ALSO OBSERVED THAT THE ASSESSEE-FIRM HAS FAILED TO DEMONSTRATE THAT THE ADVANCES WERE FOR BUSINESS PURPOSE OR OUT OF COMMER CIAL EXPEDIENCY. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE I S THAT THE ASSESSEE WAS HAVING SUFFICIENT INTEREST-FREE FUNDS. HE HAS DRAW N OUR ATTENTION TOWARDS AUDITED ANNUAL ACCOUNTS WITH REPORT PLACED AT PAGE NOS.17-39 OF THE PAPER-BOOK, WHEREIN THE PAID-UP SHARE CAPITA L OF THE PARTNERS IS AMOUNTING TO RS.20,115,717/-. WE FIND THAT THERE I S INCREASE IN THE PARTNERS CAPITAL DURING THE YEAR. IT IS CONTENTE D BY THE LD.COUNSEL FOR THE ASSESSEE THAT OUT OF LOANS GIVEN TO THE PARTIES, S OME OF THE AMOUNT WAS GIVEN IN EARLIER YEAR. IT IS ALSO CONTENTED BY THE LD.COUNSEL FOR THE ASSESSEE THAT THE AO WAS NOT JUSTIFIED IN COMPUTING THE INTEREST TAKING THE ENTIRE CAPITAL AMOUNTING TO RS.3,24,25,243/-. AFTER CONSIDERING THE TOTALITY OF THE FACTS, WE RESTORE THIS ISSUE BACK T O THE FILE OF LD.CIT(A) TO DECIDE IT AFRESH AFTER VERIFYING THE CLAIM OF THE A SSESSEE WHETHER THE ITA NO.2433/AHD/2013 (BY ASSESSE E) AND ITA NO.2553/AHD/2013 (BY REVENUE) M/S.BOMBAY SALES CORPORATION VS. JCIT/DCIT ASST.YEAR 2010-11 - 9 - ASSESSEE WAS HAVING THE SUFFICIENT INTEREST-FREE FU NDS OR NOT AND ALSO VERIFY WHETHER THE LOAN WAS GIVEN IN THE CURRENT YE AR OR IN THE EARLIER YEARS. THE LD.CIT(A) MAY DECIDE THIS ISSUE AFTER S EEKING THE REMAND REPORT FROM THE AO. NEEDLESS TO SAY THAT THE LD.CI T(A) WOULD PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THUS, GROUNDS OF ASSESSEES APPEAL ARE ALLOWED FOR STATISTICAL PURPO SES. 8. IN THE COMBINED RESULT, REVENUES APPEAL IS DISM ISSED, WHEREAS ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( %) !' # # ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/ 06 /2014 6 .., .../ T.C. NAIR, SR. PS !3 / ,7 8!72 !3 / ,7 8!72 !3 / ,7 8!72 !3 / ,7 8!72/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. $$ 9 / CONCERNED CIT 4. 9() / THE CIT(A)-VI, AHMEDABAD 5. 7%: , , , / DR, ITAT, AHMEDABAD 6. :;< =. / GUARD FILE. !3 !3 !3 !3 / BY ORDER, -7 , //TRUE COPY// > >> >/ // / $) $) $) $) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD