M/s. Crown Engineering Co., Baroda V. The ACIT.,Circle-2(1), Baroda

ITA 2533/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0983 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.2533/AHD/2013 / ASSTT. YEAR: 2008-2009 M/S.CROWN ENGINEERING CO. 4 TH FLOOR, KOTHARI CHAMBER KOTHI ROAD, BARODA. PAN : AABFC 2298 P VS ACIT, CIR.2(1) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SMT.URVASHI SHODHAN, AR REVENUE BY : SHRI O.P. MEENA, SR.DR / DATE OF HEARING : 21/07/2016 / DATE OF PRONOUNCEMENT: 01/08/2016 $%/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF THE LD.CIT(A)-II, BARODA DATED 23.9.2013 PASSED FOR THE ASSTT.YEAR 2008-09. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST AMOUNTING T O RS.9,23,520/- 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 28.9.2008 DECLARING TOTAL INCOME AT RS.13,27,560 /-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE H AS PAID INTEREST OF RS.26,89,583/-. IT HAS GIVEN LOANS AND ADVANCES AM OUNTING TO RS.7,97,29,991/- TO VARIOUS GROUP CONCERNS AND OTHE R PARTIES. THE LD.AO FURTHER OBSERVED THAT THE ASSESSEE HAD SHOWN INTERE ST INCOME OF RS.11,55,920/-. THE DIFFERENCE OF INTEREST PAID AN D INTEREST RECEIVED HAS BEEN DISALLOWED BY THE AO AT RS.15,33,663/-,. THE REASO N ASSIGNED BY THE AO IS ITA NO.2533/AHD/2013 2 THAT THE ASSESSEE HAS USED INTEREST BEARING FUNDS F OR NON-BUSINESS PURPOSE I.E. FOR MAKING ADVANCES TO VARIOUS GROUP CONCERNS. 4. ON APPEAL, IT WAS POINTED OUT BY THE ASSESSEE TH AT OUT OF THE TOTAL ADVANCE GIVEN BY IT ONLY A SUM OF RS.76.96 LAKHS WA S GIVEN OUT OF INTEREST BEARING FUNDS. REST OF THE ADVANCES WAS GIVEN OUT OF ITS OWN FUNDS OR INTEREST FREE FUNDS. THEREFORE, THE INTEREST EXPENDITURE TO THE EXTENT OF ADVANCE, A SUM OF RS.76.96 LAKHS CAN BE DISALLOWED. THE LD.CIT(A) HAS CALCULATED THE INTEREST AT THE RATE OF 12% ON THIS AMOUNT AND WORK ED OUT A SUM OF RS.9,23,520/-. THE LD.FIRST APPELLATE AUTHORITY HA S CONFIRMED THE DISALLOWANCE OF THIS AMOUNT. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IT IS PERTINENT TO OBSERVE THAT AGAINST THIS INTEREST EXPENDITURE, THE ASSESSEE HAS AN INTEREST INCOME OF RS.11,55,920/-. THUS, THE INTEREST INCOME IS HIGHER THAN THE INTEREST EXPENDI TURE ATTRIBUTABLE TO SUM WHICH HAS BEEN USED BY THE ASSESSEE FOR NON-BUSINES S PURPOSE I.E. FOR GIVING ADVANCES TO THE GROUP CONCERNS. THE TOTAL INTEREST EXPENDITURE CANNOT BE CONSIDERED FOR WORKING OUT ANY DISALLOWANCE, BECAUS E, THE REST OF THE AMOUNTS SHOULD BE INCURRED FOR THE PURPOSE OF BUSINESS. TH E ONLY AMOUNT OF RS.76.96 BORROWED BY THE ASSESSEE HAVE NOT USED FOR THE PURP OSE OF BUSINESS, AND THIS AMOUNT CARRIES EXPENDITURE OF RS.9,23,520/- WHICH C AN BE TAKEN CARE BY THE ALLEGED INTEREST INCOME OF RS.11,55,920/-. THUS, I N MY VIEW, NO DISALLOWANCE DESERVES TO BE MADE OUT INTEREST EXPENDITURE. I AL LOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 1 ST AUGUST, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/08/2016