DCIT, CHENNAI V. M/s. Hermes I Tickets Pvt. Ltd., CHENNAI

ITA 2587/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3952 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 06-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Commercial expediency

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2587/MDS/2016 & '& / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2), CHENNAI - 600 034. V. M/S HERMES I TICKETS PVT. LTD., C-9, THIRU-VIKA-INDUSTRIAL ESTATE, GUINDY, CHENNAI - 600 032. PAN : AABCH 7295 J ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI V. SREENIVASAN, JCIT +,)* - . / RESPONDENT BY : NONE / - 0' / DATE OF HEARING : 27.06.2017 12' - 0' / DATE OF PRONOUNCEMENT : 27.07.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI , DATED 25.07.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. NO ONE APPEARED FOR THE ASSESSEE INSPITE OF SERV ICE OF NOTICE. THE REGISTRY HAS PLACED ON THE RECORD THE POSTAL ACKNOWLEDGEMENT AS PROOF OF SERVICE OF NOTICE ON TH E ASSESSEE. 2 I.T.A. NO.2587/MDS/16 THEREFORE, WE HEARD THE LD. DEPARTMENTAL REPRESENTA TIVE AND PROCEEDED TO DISPOSE OF THE APPEAL ON MERIT. 3. SHRI V. SREENIVASAN, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III) O F THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE L D. D.R., THE ASSESSEE DEBITED ` 3,30,53,908/- AGAINST BUSINESS PROFIT TOWARDS INTEREST. THE LD. D.R. SUBMITTED THAT THE ASSESSEE AVAILED OVERDRAFT LOAN OF ` 40,33,86,485/- AND INCURRED A CORRESPONDING INTERES T COST TO THE EXTENT OF ` 3,30,63,908/-. ACCORDING TO THE LD. D.R., THE ADVANCES WERE MADE TO SISTER CONCERN OF THE ASSESSE E. ONE OF THE SISTER CONCERNS, NAMELY, GI HOSPITALITIES PVT. LTD. IS ENGAGED IN THE BUSINESS OF HOTEL BOOKING. HOWEVER, IT IS NOT IN R ECEIPT OF ANY INCOME TOWARDS HOTEL BOOKING. ACCORDING TO THE LD. D.R., THE ASSESSEE DIVERTED THE BORROWED FUNDS BY MAKING INVE STMENT IN THE SISTER CONCERN AND AT THE SAME TIME INCURRING HUGE INTEREST COST. SINCE THE MONEY WAS NOT ADVANCED FOR BUSINESS PURPO SE OR FOR MEETING ANY COMMERCIAL EXPEDIENCY, THE INTEREST CLA IMED BY THE ASSESSEE CANNOT BE ALLOWED. THEREFORE, ACCORDING T O THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE C LAIM OF THE 3 I.T.A. NO.2587/MDS/16 ASSESSEE BY PLACING RELIANCE ON THE JUDGMENT OF APE X COURT IN S.A. BUILDERS LTD. V. CIT (288 ITR 1). 4. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT( APPEALS) FOUND THAT THE ADVANCES WERE MADE FOR COMMERCIAL EXPEDIEN CY. ACCORDINGLY, HE ALLOWED THE CLAIM OF THE ASSESSEE B Y PLACING RELIANCE ON THE JUDGMENT OF APEX COURT IN S.A. BUIL DERS LTD. (SUPRA). THE REVENUE NOW CLAIMS THAT THERE WAS NO COMMERCIAL EXPEDIENCY IN ADVANCING MONEY TO SISTER CONCERNS. FROM THE OR DER OF THE CIT(APPEALS), MORE PARTICULARLY AT PAGE 6, IT APPEA RS THAT MAJOR PORTION OF AMOUNT WAS ADVANCED TO GI RETAIL PVT. LT D. AND GI TERMINAL I TECH PVT. LTD. FROM THE ORDER OF THE CI T(APPEALS) IT APPEARS THAT THE MAIN SOURCE OF REVENUE FOR THE ASS ESSEE-COMPANY IS COMMISSION FROM RAIL AND AIR BOOKING. GI TECHNO LOGY PVT. LTD. IS AN AGENT OF IRCTC AND IT REQUIRES FUNDS FOR UPKEEPI NG OF ITS SECURITY DEPOSITS. THEREFORE, THE ASSESSEE ADVANCED MONEY. THE CIT(APPEALS), AFTER VERIFYING THE MATERIAL FOUND TH AT MAXIMUM AMOUNT ADVANCED TO GI TECHNOLOGY PVT. LTD. FOR THE PURPOSE OF LICENCE FOR RAILWAY TICKET/PAYMENT GATEWAY FOR ONLI NE TRANSACTION UNDER LICENCE FROM RBI. THIS FACT IS NOT DISPUTED BY THE REVENUE. 4 I.T.A. NO.2587/MDS/16 THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE ADVANCE MADE BY THE ASSESSEE TO SISTER CONCERNS IS FOR COMMERCIAL EXPEDIENCY AND FOR THE PURPOSE OF BUSINESS. HENCE, THE JUDGMENT OF APEX COURT IN S.A. BUILDERS LTD. (SUPRA) WOULD C OME INTO OPERATION. THEREFORE, THIS TRIBUNAL DO NOT FIND AN Y REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 27 TH JULY, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 27 TH JULY, 2017. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-6, CHENNAI 4. PRINCIPAL CIT-2, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.