Sh. Pawan Bansal, Hisar V. ACIT, Hisar

ITA 2573/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74237 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 19-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: GAUTAM JAIN S
• Keywords: Deemed dividend; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2573/DEL/2010 ASSESSMENT YEAR : 2006-07 SHRI PAWAN BANSAL, ACIT, 23-25, RED SQUARE MARKET, CIRCLE HISSAR, HISSAR. V. HISSAR. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.ADGPB ADGPB ADGPB ADGPB- -- -3493 3493 3493 3493- -- -H HH H APPELLANT BY : SHRI SALIL AGARWAL & SHRI GAUTAM JAIN, ADVOCATES. RESPONDENT BY : MS. MEENAKSHI VOHRA, D.R. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) 22.3.2010. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEALS BUT THE GRIEVANCE OF ASSESSEE REVOLVES ABOUT TWO ISSUES ONE RELATES TO ACTION OF LD CIT(A) IN UPHOLDING THE ASSESSMENT ORDER WITH RESPECT TO TREATING AN AMOUNT RECEIVED FROM M/S DAISY MOTORS PVT. LTD. U/S 2(22)(E) OF THE INCOME TAX ACT, 1961 AND SECOND ISSUE RELATES TO SUSTAINING THE DISALLOWANCE OF ` .2,11,510/- REPRESENTING FINANCIAL CHARGES PAID BY THE APPELLANT TREATING THE SAME TO BE AS CAPITAL EXPENDITURE. 2. AT THE OUTSET, THE LD AR OF THE ASSESSEE SUBMITTED THA T THE MAIN ISSUE INVOLVED WAS IN RELATION TO SECTION 2(22)(E) OF T HE ACT AND IT WAS SUBMITTED THAT UNDER SAME FACTS AND CIRCUMSTANCES IN THE CASE OF SHRI ITA NO2573/DEL/2010 2 ANIL BANSAL IN I.T.A. NO.2574/DEL/2010, THE HON'BLE TRIBUNAL HAS DEALT WITH THE ISSUE AND IN THIS CONNECTION OUR ATTENTION WA S INVITED TO PARA 6 AND 7 OF THE SAID ORDER. IN THE LIGHT OF THE ABOV E TRIBUNAL ORDER DATED 19.7.2013 OUR ATTENTION WAS INVITED TO COPY OF ACCOUNT OF DAISY MOTORS (P) LTD. AS APPEARING IN THE BOOKS OF ASSESSEE WIT H THE PROPOSITION THAT THE ASSESSEE WAS HAVING A CURRENT ACCOUN T WITH THE SAID COMPANY AND ALL THE TRANSACTIONS WERE NOT CREDIT ENTRIES AND RATHER THERE WERE MORE DEBIT ENTRIES THAN CREDIT ENT RIES. OUR ATTENTION WAS FURTHER INVITED TO ENTRIES FROM 30.8.2005 TO 9.11 .2001 AND IT WAS SUBMITTED THAT ALL ENTRIES WERE DEBIT ENTRIES AND ASSESSE E WAS TO RECEIVE FROM THE SAID COMPANY DURING THIS PERIOD. HE FURTHER HIGHLIGHTED THAT THE DEBIT BALANCE GOT CONVERTED IN TO CREDIT BALANCE ON 14.11.2005 AND 16.11.2005 AND THE ADDITION WAS NOT M ADE FOR THESE CREDIT BALANCES. CONTINUING HIS ARGUMENTS HE FURTHER SUBMITTED THAT FROM 22.11.2005 TO 30.3.2006 THE BALANCE AGAIN GOT CONVERTED INTO DEBIT BALANCE. IN VIEW OF THE ABOVE FACTS, IT WAS SUBM ITTED THAT THERE WAS NO QUESTION OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT AS THE TRANSACTIONS WERE HAPPENING IN THE CURRENT ACCOUNT AN D CONSIDERING THE SIMILAR CIRCUMSTANCES, THE TRIBUNAL IN ITS ORDER IN THE CASE OF MR. ANIL BANSAL HAS ALREADY CONSIDERED THE ISSUE. 3. THE LD DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF ASSESSING OFFICER AND LD CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FIRST ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE AS IN THE CASE OF MR. ANIL BANSAL IN I.T.A. NO.2574 UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE HON'BLE TRIBUNAL HAS CONSIDERED SIMILAR TRANSACTION S AS CURRENT ACCOUNT TRANSACTIONS AND HAS NOT AS DEEMED DIVIDEND. TH E RELEVANT ITA NO2573/DEL/2010 3 FINDINGS ARE CONTAINED IN PARA 6 & 7 OF THIS ORDER WH ICH ARE REPRODUCED FOR THE SAKE OF CONVENIENCE. 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOT H THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE C OPY OF THE ASSESSEES ACCOUNT IN THE BOOKS OF M/S DAISY MOTORS PVT. LTD. IS PLACED AT PAGES 19 & 20 OF THE ASSESSEES PAPER BOOK. FOR READY REFERENCE, THE SAME IS ANNEXED HEREWITH AS ANNEX URE 1. FROM A PERUSAL OF THE ABOVE ACCOUNT, IT IS SEEN THAT THERE WAS OPENING CREDIT BALANCE, THEN DEBIT BALANCE OCCURRED DUE TO CERTAIN PAYMENTS MADE BY M/S DAISY MOTORS PVT. LTD. T O THE ASSESSEE IN THE MONTH OF APRIL AND JULY. THEREAFTER, F ROM JULY 2005 TO 22 ND MARCH, 2006, THERE WAS A CREDIT BALANCE AND AGAIN ON 30TH MARCH, 2006, THERE WAS A DEBIT BALANCE. IF WE FURTHER ANALYZE THE ACCOUNTS, WE FIND THAT THE MAXIMUM DEBIT BALANCE OF THE ACCOUNT OF THE ASSESSEE WAS ONLY `2,08,212/- WHIL E THE MAXIMUM CREDIT BALANCE WAS MORE THAN `2 CRORES. THAT THE DEBIT BALANCE OF `2 LAKHS WAS ONLY FOR A PERIOD OF TEN DAY S I.E. FROM 23 RD JULY TO 8TH AUGUST, 2006 WHILE THE CREDIT BALANCE OF MORE THAN A CRORE REMAINS FOR MORE THAN TWO MONTHS AND CR EDIT BALANCE OF MORE THAN `20 LAKHS REMAINS FOR MORE THAN SIX MONTHS. FROM THE COPY OF ACCOUNT, IT IS EVIDENT THAT THE ASSESSEE ALSO MADE PURCHASE OF TEN VEHICLES. THUS, THE ACC OUNT IS CLEARLY IN THE NATURE OF A RUNNING CURRENT ACCOUN T AND MERELY BECAUSE FOR A FEW DAYS THERE WAS A DEBIT BALANCE OF ` 2,08,212/-, IT CANNOT BE SAID THAT SUCH DEBIT BALANCE WAS EITHER L OAN OR ADVANCE BY M/S DAISY MOTORS PVT. LTD. TO THE ASSESSEE. ON THESE FACTS, THE DECISION OF HON'BLE JURISDICTIONAL HIGH COU RT IN THE CASE OF AMBASSADOR TRAVELS P.LTD. (SUPRA), WHEREIN THEIR LOR DSHIPS HELD AS UNDER, WOULD BE SQUARELY APPLICABLE:- ITA NO2573/DEL/2010 4 5. WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE T RIBUNAL DOES NOT SUFFER FROM ANY ERROR OF LAW. IT IS QUITE CLEAR T HAT THE ASSESSEE WAS A TRAVEL AGENCY AND THE ABOVE TWO CONCERNS T HAT IT HAD DEALINGS WITH, THAT IS, M/S HOLIDAY RESORT (P) LTD. AND M/S AMBASSADOR TOURS (I) (P) LTD. WERE ALSO IN THE TOURISM B USINESS. THE ASSESSEE WAS INVOLVED IN THE BOOKING OF RESORTS FOR TH E CUSTOMERS OF THESE COMPANIES AND ENTERED INTO NORMAL BU SINESS TRANSACTIONS AS A PART OF ITS DAY-TO-DAY BUSINESS ACTIVITI ES. THE FINANCIAL TRANSACTIONS CANNOT IN ANY CIRCUMSTANCES BE T REATED AS LOANS OR ADVANCES RECEIVED BY THE ASSESSEE FROM THESE TWO CONCERNS. 7. SIMILAR VIEW WAS ALSO TAKEN BY THEIR LORDSHIPS IN THE CASE OF CREATIVE DYEING AND PRINTING P. LTD. (SUPRA). RESPECT FULLY FOLLOWING THE ABOVE DECISIONS OF HON'BLE JURISDICTIONA L HIGH COURT AND APPLYING THE RATIO OF THE ABOVE DECISIONS TO THE FACTS OF THE ASSESSEES CASE, WE HOLD THAT THE DEBIT BALANCE OF `2,08 ,212/- CANNOT BE TREATED TO BE DEEMED DIVIDEND UNDER SECTI ON 2(22)(E) OF THE ACT. ACCORDINGLY, THE ADDITION MADE BY THE A SSESSING OFFICER IS DELETED AND GROUND NO.2 OF THE ASSESSEES APPE AL IS ALLOWED. THE FACTS IN THE PRESENT CASE ARE SIMILAR AS IN THE PRE SENT CASE ALSO. CREDIT BALANCES REMAINED IN THE PERIOD 2.8.2005 TO 2 7.8.2005. FOR THE REST OF THE PERIODS THE ACCOUNT REMAINED IN DEBIT AN D THAT TOO WITH MUCH LARGER AMOUNTS THAN THE AMOUNTS WHERE ACCOUNT WA S IN CREDIT. THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE TR IBUNAL WE ALLOW THIS GROUND OF APPEAL. ITA NO2573/DEL/2010 5 6. AS REGARDS THE SECOND ISSUE OF CONSIDERING FINANCIAL CHARGES AS CAPITAL EXPENDITURE, THE LD AR DID NOT ARGUE THE SAM E, THEREFORE, THIS GROUND IS DISMISSED AS NOT PRESSED. 7. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE ASSE SSEE IS PARTLY ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH DAY O F FEBRUARY, 2014. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 14.02.2014. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. (ITAT, NEW DELHI). DATE OF HEARING 19.12.2013 DATE OF DICTATION 11.2.2014 DATE OF TYPING 11.2.2014 DATE OF ORDER SIGNED BY BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.