Dy.CIT.Cen.Circle, Aurangabad, Aurangabad V. Smt. Usha P.Kulkarni, Aurangabad

ITA 269/PUN/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72137 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY KSHIRSAGAR
• Assessee Lawyers: ADARSH KUMAR MODI
• Keywords: Opportunity of being heard; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 268 AND 269/PN/2011 (ASSTT.YEARS : 2005-06 & 2007-08) DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, AURANGABAD .. APPELLANT VS. SMT. USHA P. KULKARNI, 32, GURUKUL HOUSING SOCIETY, TILAKNAGAR, AURANGABAD. PAN NO. ALLPK 4791Q .. RESPONDENT APPELLANT BY : SHRI ABHAY KSHIRSAGAR RESPONDENT BY : SHRI ADARSH KUMAR MODI DATE OF HEARING : 29-08-2013 DATE OF PRONOUNCEMENT : 29-08-2013 ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST THE COMMON ORDER DATED 21-12-2010 OF THE CIT(A), AURANG ABAD RELATING TO ASSESSMENT YEARS 2005-06 AND 2007-08 RESPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN BOTH THES E APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED BY THIS COMMON ORDER. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : GROUNDS IN ITA NO.268/PN/2011 : I) WHETHER ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, THE HON'BLE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON MADE BY THE A.O. AT RS. 47,25,316/- FOR A.Y. 2005-06 BUSINESS P URPOSE, IGNORING THE FACT THAT IT IS EVIDENT FROM RECORDS THAT THE A SSESSEE FAILED TO PRODUCE EVIDENCE EITHER BEFORE THE A.O. OR BEFORE T HE CIT(A) TO SUBSTANTIATE HER OF INCURRENCE OF THE ABOVE EXPENDI TURE FOR BUSINESS PURPOSE. 2 II) WHETHER ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, THE HON'BLE CIT(A) WHILE DELETING AS MENTIONED IN GROUN D 1) ABOVE JUSTIFIED IN IGNORING THE FACT AS PER PROVISIONS OF SECTION36(L)(III) PROVIDES FOR WILL BE ONE THE ASSESSEE TO SATISFY TH E A.O. THAT WHATEVER LOANS WERE BY ONE ASSESSEE, THE SAME WERE USED FOR THE BUSINESS PURPOSE AS HAS BEEN HELD BY THE PANJAB & HARYANA HI GH COURT IN ITS DECISION DELIVERED IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LTD. 2006 (156 TAXMAN 237) THE ASSESSEE HAS FAILED. III) WHETHER ON THE LEARNED CIT(A) WAS RIGHT DELETING THE ADDITION AS MENTIONED IN GROUND 1) ABOVE, DESPITE T HE FACT THE ASSESSEE HAS FAILED TO PROVE THE NEXUS BETWEEN INTE REST FREE FUNDS AND THOSE ADVANCED INTEREST TO ITS SISTER CONCERN. V) ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. GROUNDS IN ITA NO.269/PN/2011 : (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE HON'BLE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON MADE BY THE A.O. AT RS. 49,12,232/- FOR A.Y. 2007-08 BUSINESS P URPOSE, IGNORING THE FACT THAT IT IS EVIDENT FROM RECORDS THAT THE A SSESSEE FAILED TO PRODUCE EVIDENCE EITHER BEFORE THE A.O. OR BEFORE T HE CIT(A) TO SUBSTANTIATE HER OF INCURRENCE OF THE ABOVE EXPENDI TURE FOR BUSINESS PURPOSE. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE HON'BLE CIT(A) WHILE DELETING ADDITION AS MENTIONED IN GROUND 1) ABOVE, JUSTIFIED IN IGNORING THE EVIDENCE OR RECORD S WHICH GOES TO PROVES THAT THE COMPARISON OF A FIGURES SHOWING THE ACTUAL PROFIT DERIVED AND THE CORRESPONDING INTEREST EXPENDITURE SHOWS THAT THE ASSESSEE HAS INCURRED LOSS BY EXECUTING SUB CONTRAC T WORK EVERY YEAR NO PRUDENT BUSINESSMAN WILL CARRY ON SUCH ACTIVITY YEAR AFTER YEAR. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE HON'BLE CIT(A) WHILE DELETING ADDITION AS MENTIONED IN GROUND 1) ABOVE JUSTIFIED IN IGNORING THE FACT AS PER PROVISI ONS OF SECTION36(1)(III) PROVIDES FOR DEDUCTION OF INTERES T ON LOANS RAISED FOR BUSINESS, PURPOSE & ONCE THE ASSESSEE CLAIMS AN Y SUCH DEDUCTION IN THE BOOK OF ACCOUNT, THE PRIME ONUS WILL BE ONE THE ASSESSEE TO SATISFY THE A.O. THAT WHATEVER LOANS WEE BY THE ASS ESSEE, THE SAME WERE USED FOR THE BUSINESS PURPOSE AS HAS BEEN HELD BY THE PANJAB & HARYANA HIGH COURT IN ITS DECISION DELIVERED IN T HE CASE OF CIT VS. ABHISHEK INDUSTRIES LTD. 2006 (156 TAXMAN 237) THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST ON HER EITHER BEF ORE THE A.O. OF BEFORE THE APPELLATE, AUTHORITY. (IV) WHETHER ON THE LEARNED CIT(A) WAS RIGHT D ELETING THE ADDITION AS MENTIONED IN GROUND 3 1) ABOVE, DESPITE THE FACT THE ASSESSEE HAS FAILED TO PROVE THE NEXUS BETWEEN INTEREST FREE FUNDS AND THOSE ADVANCED INTE REST TO ITS SISTER CONCERN. (V) ANY OTHER GROUND THAT MAY BE AT THE TIME OF HEARING. 3. AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL I SSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04, 2004-05 AND 2006-07. WE FIND THE TRIBUNAL VIDE ORDER DATED 26- 04-2012 IN ITA NO.619, 620 AND 621/PN/2010 FOR A.YS.2003-04, 2004- 05 AND 2006-07 HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFF ICER WITH CERTAIN DIRECTIONS. THE RELEVANT OBSERVATION OF THE TRIBUNAL READS AS U NDER : 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF ASSESSEE. WE HAVE ALSO CON SIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND FROM TH E COPY OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT GIVEN AN Y EXPLANATION BEFORE THE A.O AS TO HOW THE DEPOSITS WITH M/S. RUD RANEE CONSTRUCTION COMPANY ARE IN THE BUSINESS INTEREST O F THE ASSESSEE AND WHY THE INTEREST FREE ADVANCE GIVEN TO RCC COU LD NOT BE TREATED AS DIVERSION OF BORROWED FUNDS FOR NON-BUSINESS PUR POSES AND WHY THE INTEREST PAID ON THE SAME SHOULD NOT BE DISALL OWED. WE FIND THE ASSESSEE ARGUED BEFORE THE CIT(A) THAT INTEREST FR EE SECURITY DEPOSIT AS AN EARNEST MONEY WITH THE PRINCIPAL CONTRACTOR I S NORMAL BUSINESS PRACTICE IN CONSTRUCTION CONTRACT. IN OUR OPINION, THE ISSUE OF COMMERCIAL EXPEDIENCY HAS NOT BEEN PROPERLY EXAMIN ED BY THE CIT(A) WHO HAS SIMPLY RELIED ON THE SUBMISSIONS MA DE BY THE ASSESSEE BEFORE HIM WHICH WAS NOT BEFORE THE A.O. SINCE HUGE AMOUNT OF ADVANCE HAS BEEN GIVEN AS SECURITY DEPOS ITS, THEREFORE, THE JUSTIFICATION OF SUCH ADVANCE COMMENSURATE WIT H TURNOVER REQUIRES DEEPER SCRUTINY AT THE LEVEL OF A.O. WE, THEREFORE, DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE A.O WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS (SUPRA) AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTI CAL PURPOSES. 4. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE IN THE PRECEDING YEARS AND IN ABSENCE OF ANY C ONTRARY MATERIAL BROUGHT TO OUR NOTICE WE RESTORE THE ISSUE TO THE FILE OF T HE ASSESSING OFFICER TO 4 DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DIRECTI ONS GIVEN THEREIN. BOTH THE APPEALS FILED BY THE REVENUE ARE ACCORDINGLY ALLOWE D FOR STATISTICAL PURPOSES. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF, I.E., ON 29 TH DAY OF AUGUST 2013. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 29 TH AUGUST 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A), AURANGABAD 4. CIT CENTRAL, NAGPUR 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE