The Jt. CIT., Circle-5, Ahmedabad V. M/s Riddhi Siddhi Gluco Biols Ltd, Ahmedabad

ITA 278/AHD/2012

• Counselvise Citation: 27820514 RSA 2012
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Depreciation; Proportionate interest
• Section: 43B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO.278/AHD/2012 / ASSESSMENT YEAR: 2009-10 JCIT (OSD), CIRCLE-5, AHMEDABAD RIDDHI SIDDHI GLUCO BIOLS LTD 701, SAKAR-1, OPP. GANDIGRAM RAILWAY STATION, ASHRAM ROAD, AHMEDABAD PAN : AABCR 3417 Q / // / (APPELLANT) / // / (RESPONDENT) REVENUE BY : SHRI M.K. SINGH, SR. DR. ASSESSEE(S) BY : SHRI PRAKASH D. SHAH, AR ! '#$ ! '#$ ! '#$ ! '#$ / DATE OF HEARING : 21/05/2015 %& ! '#$ / // / DATE OF PRONOUNCEMENT: 12 /06/2015 '( '( '( '(/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIREC TED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-X I, AHMEDABAD DATED 28.11.2011, PERTAINING TO THE ASSESSMENT YEAR 2009- 10. 2. GROUND NO.1 OF THE REVENUES APPEAL READS AS UND ER:- I. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DEFERMENT OF SALES TAX LIABILITY U/S 43B OF THE ACT, AMOUNTING TO RS.3,74,93,860/-. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE GROUND NO.1 IS WITH REGARD TO DISAL LOWANCE U/S 43B ON ITA NO.278/AHD/2012 JCIT VS. RIDDHI SIDDHI GLUCO BIOLS LTD AY: 2009-10 2 ACCOUNT OF SALES TAX LIABILITY IN RESPECT OF WHICH THE ASSESSEE WAS AVAILING THE BENEFIT OF SALES TAX DEFERMENT SCHEME. WE FIND THA T SIMILAR ISSUE WAS CONSIDERED BY THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2005-06 AND 2006-07, AND ALSO FOR ASSESSMENT YEAR 2008-09; AND THE ITAT HELD THAT THE DISALLOWANCE U/S 43B IN RESPECT OF SUCH SALES T AX LIABILITY ON WHICH THE ASSESSEE IS ENTITLED TO SALES TAX DEFERMENT SCHEME IS NOT JUSTIFIED. THE RELEVANT PORTION OF THE ORDER OF THE ITAT FOR ASSES SMENT YEAR 2008-09 VIDE ITA NO.2395/AHD/2010 IS REPRODUCED BELOW FOR READY REFERENCE. 3. AS PER THE CORRESPONDING ASSESSMENT ORDER PASSE D U/S.143(3) OF THE ACT DATED 29.3.2010, THE ASSESSEE-COMPANY IS MANUFACTUR ING AND TRADING OF STARCH, TAPIOCA, CHEMICALS, MAIZE GRAIN AND ALLIED PRODUCTS.. IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD SHOWN SALES TAX LIABIL ITY OF RS.14,54,26,795/- UNDER THE HEAD 'SALES TAX DEFERMENT'. IT WAS ALSO N OTED BY THE AO THAT SALES TAX LIABILITY TO THE EXTENT OF RS.2,44,70,672/- REM AINED UNPAID OUT OF THE SALES TAX COLLECTED DURING THE YEAR. THE AO HAS THU S INVOKED THE PROVISIONS OF SECTION 43B OF THE ACT AND TAXED THE SAME IN THE HANDS OF THE ASSESSEE. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELL ATE AUTHORITY, THE LD.CIT(A) HAS FOLLOWED A DECISION OF THE TRIBUNAL A S PER THE FOLLOWING REFERENCE: '3.1. I HAVE CONSIDERED THE CONTENTIONS OF THE A.R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER. SIMILAR ISSUE AROSE IN THE APPELLANT'S OWN CASE FOR EARLIER ASSESSMENT YEAR. THE HON'BLE ITAT, 'B' BENCH, AHMEDABAD VIDE I TS ORDER IN ITA NO.1500/AHD/2009 DATED 07-08- 2009 DECIDED THE SAID ISSUE IN FAVOUR OF THE APPELLANT FOR THE A.Y. 2003-04. THE S AME WAS DECIDED IN FAVOUR OF THE APPELLANT BY ME FOR A.Y. 2006-07. THE REFORE, HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE ABOVE DECISIONS, I AM INCLINED TO DIRECT THE ASSESS ING OFFICER TO DELETE THE DISALLOWANCE MADE BY HIM ON ACCOUNT OF SALES-TA X DEFERMENT OF RS.2,44,70,672/-. THIS GROUND OF APPEAL IS ALLOWED. ' 4. HAVING HEARD THE SUBMISSION OF BOTH THE SIDES, W E HAVE BEEN INFORMED THAT IN ASSESSEE'S OWN CASE ITAT 'B' BENCH AHMEDABAD VID E AN ORDER DATED 04/09/2009 TITLED AS 'THE DY.CIT VS. M/S.RIDDHI SID DHI GLUCO BIOLS LTD.' BEARING ITA NO.1047/AHD/2010 FOR A.Y.2005-06 & ITA NO.1048/AHD/2010 FOR A.Y. 2006-07, THE TRIBUNAL HAS FOLLOWED THE PAS T HISTORY AND DISMISS THE ITA NO.278/AHD/2012 JCIT VS. RIDDHI SIDDHI GLUCO BIOLS LTD AY: 2009-10 3 GROUND OF THE REVENUE. RESULTANTLY, FOR THIS YEAR A S WELL THIS GROUND OF THE REVENUE IS HEREBY DISMISSED. 4. THE FACTS OF THE YEAR UNDER CONSIDERATION ARE ID ENTICAL; WE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF TRIBUN AL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09, UPHOLD THE ORDER OF TH E CIT(A) AND REJECT THE GROUND NO.1 OF THE REVENUES APPEAL. 5. GROUNDS NOS. 2 & 3 OF THE REVENUES APPEAL READ AS UNDER:- [ II) THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF INTEREST OF RS.32,82,2 82/- MADE BY THE ASSESSING OFFICER UNDER PROVISO TO SECTION 36(1)(II I) OF THE ACT. III)THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF PROPORTIONATE INTEREST OF RS.1,44,000/- MADE BY THE ASSESSING OFFICER. 6. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFF ICER FOUND THAT THE ASSESSEE INCURRED EXPENDITURE OF RS.26.01 CRORES FO R CAPITAL WORK-IN- PROGRESS. THE ASSESSEE PAID INTEREST OF RS.6.09 CRO RES ON ITS BORROWING. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE PART OF THE INTEREST PAYMENT WAS ATTRIBUTABLE TO THE FUNDS UTILIZED FOR CREATION OF CAPITAL WORK-IN- PROGRESS. HE, THEREFORE, MADE PROPORTIONATE DISALL OWANCE OF INTEREST WHICH AMOUNTED TO RS.32,82,282/-. THE SAME IS DELETED BY THE CIT(A); HENCE, THE GROUND NO.2 OF THE REVENUES APPEAL. 7. THE ASSESSING OFFICER ALSO FOUND THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE GAVE ADVANCE OF RS.12 L ACS WITHOUT CHARGING OF INTEREST. HE, THEREFORE, DISALLOWED THE INTEREST OF RS.1,44,000/- THEREON. ON ITA NO.278/AHD/2012 JCIT VS. RIDDHI SIDDHI GLUCO BIOLS LTD AY: 2009-10 4 APPEAL, THE CIT(A) DELETED THE SAME; HENCE, GROUND NO.3 OF THE REVENUES APPEAL. 8. AT THE TIME OF HEARING BEFORE US, BOTH THE PARTI ES AGREED THAT THE GROUNDS NOS. 2 & 3 ARE RELATED AND CAN BE DEALT WIT H SIMULTANEOUSLY. 9. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND POINTED OUT THAT THERE WAS TH E UTILIZATION OF HUGE MONEY FOR CAPITAL WORK-IN-PROGRESS AND ALSO GIVING INTEREST FREE ADVANCE TO OTHERS. THE ASSESSEE HAS BORROWED THE MONEY AND HAS PAID INTEREST OF MORE THAN RS. 6 CRORES THEREON. THEREFORE, THE ASSESSI NG OFFICER WAS FULLY JUSTIFIED IN DISALLOWING THE PROPORTIONATE INTEREST . HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 10. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT TH AT THE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE IS MANY TIMES MORE THAN THE INVESTMENT IN CAPITAL WORK-IN-PROGRESS AS WELL AS ADVANCE WITHOUT INTEREST. HE STATED THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE IS 289.08 CRORES (RS. RS.16.13 CRORES SHARE CAPITAL, RS.169.13 CRORES RES ERVE AND SURPLUS AND RS.103.82 CRORES ACCUMULATED DEPRECIATION). THAT CA PITAL WORK-IN-PROGRESS IS ONLY RS.26.01 CRORES AND THE ADVANCE TO OTHERS IS O NLY RS.12 LACS. THUS, THE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE IS S EVERAL TIMES MORE THAN THE FUND INVESTED IN CAPITAL WORK-IN-PROGRESS AND ALSO INTEREST FREE ADVANCE TO OTHERS. HE FURTHER STATED THAT THE REVENUE HAS NOT POINTED OUT THAT ANY BORROWED MONEY HAS BEEN UTILIZED FOR THE PURPOSE OF INVESTMENT IN CAPITAL WORK-IN-PROGRESS AND ALSO ADVANCE TO OTHERS. HE, TH EREFORE, SUBMITTED THAT THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE DISA LLOWANCE OUT OF INTEREST. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECIS ION OF HONBLE GUJARAT ITA NO.278/AHD/2012 JCIT VS. RIDDHI SIDDHI GLUCO BIOLS LTD AY: 2009-10 5 HIGH COURT IN THE CASE OF CIT VS. RAGHUVIR SYNTHETI CS LTD, REPORTED IN 354 ITR 222 (GUJ.) AND THE DECISION OF BOMBAY HIGH COUR T IN THE CASE OF CIT VS. RELIANCE UTILITY AND POWER LIMITED, REPORTED IN 313 ITR 340 (BOM.). 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE REVENUE HAS NOT DISPUTED THE AVAILABILITY OF HUGE INTEREST FREE FUND OF RS.289.0 8 CRORES WITH THE ASSESSEE. AS AGAINST THIS INTEREST FREE FUND, THE INVESTMENT IN CAPITAL WORK-IN-PROGRESS IS ONLY RS.26.01 CRORES AND ADVANCE TO OTHERS IS RS .12 LACS. THUS, THE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE IS MORE THAN 10 TIMES OF THE CAPITAL WORK-IN-PROGRESS AND ADVANCE TO OTHERS. ADMITTEDLY, THE ASSESSING OFFICER HAS NOT POINTED OUT THAT ANY BORROWED MONEY HAS BEE N UTILIZED FOR THE PURPOSE OF INVESTMENT IN CAPITAL WORK-IN-PROGRESS O R FOR ADVANCE TO OTHERS. HE MADE PROPORTIONATE DISALLOWANCE MERELY ON THE PR ESUMPTION THAT THE PROPORTIONATE BORROWED MONEY MUST HAVE BEEN UTILIZE D FOR INVESTMENT IN CAPITAL WORK-IN-PROGRESS, ETC. WE FIND THAT UNDER T HE SIMILAR CIRCUMSTANCES, HONBLE GUJARAT HIGH COURT IN THE CASE OF RAGHUVIR SYNTHETICS LTD (SUPRA) UPHELD THE DECISION OF ITAT. IN THAT CASE ALSO THE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE WAS MUCH MORE THAN THE INTEREST FREE LOAN GIVEN BY THE ASSESSEE. THE ASSESSING OFFICER HAS NOT PROV ED THAT THE BORROWED MONEY HAS BEEN UTILIZED FOR GIVING OF INTEREST FREE ADVANCES. THE ASSESSING OFFICER DISALLOWED THE INTEREST ON PROPORTIONATE BA SIS. THE CIT(A) DELETED THE ADDITION WHICH WAS UPHELD BY THE ITAT. ON APPE AL BY THE DEPARTMENT, THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER :- HELD, DISMISSING THE APPEAL, THAT WHEN THERE WAS N O EVIDENCE BROUGHT ON RECORD BY THE DEPARTMENT FOR THE TRIBUNAL TO HOLD O THERWISE THAN WHAT HAD BEEN CONCLUDED BY WAY OF ANY MATERIAL, THE ASSESSEE WAS ELIGIBLE FOR ALLOWANCE OF INTEREST. ITA NO.278/AHD/2012 JCIT VS. RIDDHI SIDDHI GLUCO BIOLS LTD AY: 2009-10 6 THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO THE FACTS BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RA GHUVIR SYNTHETICS LTD(SUPRA); WE, THEREFORE, RESPECTFULLY FOLLOWING T HE ABOVE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE GROUNDS NOS. 2 & 3 OF THE REVENUES APPEAL. 12. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 12 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 12/06/2015 BIJU T., PS '( ! ') *')' '( ! ') *')' '( ! ') *')' '( ! ') *')'/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ++ ' , / CONCERNED CIT 4. , ( ) / THE CIT(A) 5. )/0 ' , , / DR, ITAT, AHMEDABAD 6. 02 3 / GUARD FILE . '( '( '( '( / BY ORDER, TRUE COPY 4 44 4/ // / +5 +5 +5 +5 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD