The Dy. CIT, Circle-1(1)(2), Ahmedabad V. M/s. Corrtech Energy Ltd., Ahmedabad

ITA 2581/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0750 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 22-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AFAQ SAIYAD
• Keywords: Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I AMARJIT SINGH , ACCOUNTANT MEMBER AND MS. MADHUMITA ROY , JUDICIAL MEMBER THE DCIT, CIRCLE - 1(1)(2), AHMEDABAD (APPELLANT) VS M/S. CORRTECH ENERGY LTD., 22 DHARA CENTRE NR VIJAY CHAR RASTA NAVRANGPURA AHMEDABAD - 380009 PAN: AAACI8838F (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R . ASSESSEE BY: SHRI AFAQ SAIYAD, A.R. DATE OF HEARING : 20 - 03 - 2 019 DATE OF PRONOUNCEMENT : 25 - 03 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2014 - 15 , AR ISES FROM ORDER OF THE CIT(A) - 1 , AHMEDABAD DATE D 21 - 09 - 2017 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2581 / A HD/20 17 A SS ESSMENT YEAR 2014 - 15 I.T.A NO. 2581 /AHD/20 17 A.Y. 2014 - 15 PAGE NO DC IT VS. M/S. CORRTECH ENERGY LTD. 2 2. THE SOLITARY GROUND OF APPEAL OF THE REVENUE IS DIRECTED AGA INST THE ORDER OF LD. CIT(A) IN DELETING THE ADDITIO N ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES OF RS. 80 , 53 , 857/ - . 3 . THE FACT IN BRIEF IS THAT THE ASSESSEE COMPANY HAS GIVEN INTEREST FREE ADVANCES TO THE AMOUNT OF R S. 6 , 71 ,15,479/ - TO ITS RELA T ED PARTIES . THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS NOT CHARGED ANY INTEREST ON THE AFORESAID ADVANCES GIVEN TO RELATED PARTIES , H OWEVER , THE ASSESSEE HAS INCURRED INTEREST EXPENSES AMOUNTING TO R S. 1 , 85 , 08 , 449/ - . ON QUERY , THE ASSESSEE EXPLAINED THAT IT HAD SUFFICIENT INTEREST FREE FUND TO THE AMOUNT OF RS. 34.02CRORES AS AGAINST PROVIDING OF INTEREST FREE LOAN AND ADVANCES TO THE PARTIES TO THE AMOUNT OF RS. 6.71 CRORES. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE STAT ING THAT ASSESSEE HAS NOT PROVED THAT ONLY INTEREST FREE FUNDS AVAILABLE WITH IT WERE USED FOR GI VING INTEREST FREE ADVANCES TO T H E RELATED PARTIES. THEREFORE, AFTER TAKING INTO CONSIDERATION THAT ASSESSEE HAS BEEN PAYING INTEREST ON LOAN ACC EPTED BY IT, T HE ASSESSING OFFICER HAS DISALLOWED INT EREST EXPENSES @ 12% OF INTEREST ON THE LO AN EXTENDED TO THE RELATED PARTIES . CONSEQUENTLY , THE ASSE SSING OFFICER HAS DISALLOWED INTEREST EXPENSE S TO THE AMOUNT OF RS. 80 , 53 , 8 57/ - AND ADDED TO THE TOTAL INCOME OF TH E ASSESSEE. 4 . AGGRIEVED ASSESSEE HAS FILED APPEAL THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED BOTH THE GROUNDS OF APPEAL OF THE ASSESSEE AFTER PLACING RELIANCE ON THE DECISION OF THE ITAT IN THE EARLIER ASSESSMENT YEAR 2009 - 10 IN THE CASE OF THE ASSESSE E ITSELF VIDE ITA NO. 1650/AHD/2012 & CO NO. 208/AH D/2012 ORDER DATED 31 - 10 - 2013 . I.T.A NO. 2581 /AHD/20 17 A.Y. 2014 - 15 PAGE NO DC IT VS. M/S. CORRTECH ENERGY LTD. 3 5 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS SUBMITTED THE COPY OF AFORESAID CITED ORDER OF THE I TAT VIDE WHICH THE SIMILAR ADDITION ON IDENT ICAL FA CT WAS DELETED. THE LD. DEPARTMENTAL REPRESENT ATIVE COULD NOT CONTROVERT THE SAME AND NOTHING HAS BEEN BROUGHT TO OUR RECORD SUGGESTING THAT THE DECISION OF THE HON BLE ITAT IS NOT APPLICABLE. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE G ONE THROUGH THE AFORESAID ORDER OF THE ITAT AND NOTICED THAT THE SIMILAR KIND OF DISALLOWANCE WAS DELETED AND RELEVANT PART OF THE DECISION OF ITAT IS REPRODUCED AS UNDER: - 15. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE - COMPANY HAS SUFFICIENT, INTEREST - FREE FUNDS. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HON'BLE COORDINATE BENCH (ITAT AHMEDABAD) IN THE CASE OF TO RRENT FINANCIERS (2001) 73 TTJ 624 WHEREIN THE TRIBUNAL HAS HELD AS UNDER: - 'ENTIRE INTEREST - FREE FUNDS AVAILABLE WITH THE ASSESSEE IS TO BE CONSIDERED. THE ENTIRE INTEREST - FREE FUNDS INCLUDE OWNER'S OWN CAPITAL, ACCUMULATED PROFITS AND OTHER INTEREST - FRE E CREDITORS AND LOANS, IF TOTAL INTEREST - FREE ADVANCES INCLUDING DEBIT BALANCES OF PARTNERS - 'DO NOT EXCEED THE TOTAL INTEREST - FREE FUNDS AVAILABLE WITH THE ASSESSEE, NO INTEREST IS DISALLOWABLE ON ACCOUNT OF UTILISATION OF FUND FOR NON - BUSINESS PURPOSES AND IF IT EXCEEDS, THE PROPORTIONATE DISALLOWANCE CAN BE MADE. THE AO IS REQUIRED TO RECALCULATE THE FIGURES OF DISALLOWANCE OF INTEREST PAID ON BORROWED FUNDS, THEREFORE, THE ORDER OF C1T(A) ON THIS ISSUE IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF AO FOR THE LIMITED PURPOSE TO RECALCULATE DISALLOWANCE OF INTEREST PAID ON BORROWED FUNDS, IF ANY, IN ACCORDANCE WITH THE ABOVE OBSERVATIONS AND AS PER PROVISIONS OF IT ACT. CIT VS. TINGRI TEA CO. LTD. (1971) 79 ITR 294 (CAL) RELIED ON.' 15.1. TH E LD. SR.DR COULD NOT CONTROVERT THE FINDING OF THE HON'BLE COORDINATE BENCH AND NOTHING HAS BEEN BROUGHT ON RECORD SUGGESTING THAT THE DECISION OF THE HON'BLE TRIBUNAL IN THE CASE OF TORRENT FINANCIERS(SUPRA) IS NOT APPLICABLE. THEREFO RE, RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE COORDINATE BENCH, WE HEREBY SET ASIDE THE ORDER OF THE LD.CIT(A) AND THE AO IS DIRECTED TO DELETE THE ADDITION. THUS, THIS GROUND RAISED BY THE ASSESSES IN ITS CROSS - OBJECTION IS ALLOWED. RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE ITAT AS CITED IN THE CASE OF ASSESSEE ITSELF ON SIMILAR FAC T S AND IDENTICAL I.T.A NO. 2581 /AHD/20 17 A.Y. 2014 - 15 PAGE NO DC IT VS. M/S. CORRTECH ENERGY LTD. 4 ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD. CIT(A), THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 2 5 - 03 - 201 9 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 25 /03 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,