Belgium Glass & Ceramics Pvt. Ltd., Baroda V. The ACIT,Circle-1(1), Baroda

ITA 296/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60336 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 02-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV SRDR

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %&'( %&'( %&'( %&'(, , , , )* + ) )* + ) )* + ) )* + ) ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.296/AHD/2012 [ASSTT.YEAR : 2002-2003] BELGIUM GLASS & CERAMICS P. LTD. PADRA JAMBUSAR HIGHWAY ROAD DABHASA VILALGE, PADRA DIST. BARODA 391 440. PAN NO. AAACB 8651 P /VS. ACIT, CIR.1(1) BARODA. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 1& 2 3 )/ ASSESSEE BY : SHRI MUKUND BAKSHI + 2 3 )/ REVENUE BY : SHRI B.L. YADAV, SR.DR 5 2 &(*/ DATE OF HEARING : 2 ND APRIL, 2012 678 2 &(*/ DATE OF PRONOUNCEMENT : 18-5-2012 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS)-I, BARODA FOR THE ASSESSMENT YEAR 2002-2 003. ITA NO.296/AHD/2012 -2- 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL READS A S UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ACTION OF THE AO IN CONFIRMING THE ADDITION OF RS.5,39,462/- OUT OF INTEREST EXPENSES CLAIMED BY THE APPELLANT C OMPANY ALLEGING THAT THE APPELLANT COMPANY HAS DIVERTED BO RROWED FUNDS FOR INTEREST FREE ADVANCE/LOANS GIVEN TO ASSO CIATE CONCERNS AND DIRECTORS OF THE APPELLANT COMPANY. T HE IMPUGNED ADDITION OF RS.5,39,462/- BEING ERRONEOUS IN LAW AN IN FACT IS PRAYED TO BE DELETED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS RS.2.13 CRORES AS CAPITAL AND SUNDRY CREDITORS (WITHOUT INTEREST) AND ADVANCES TO SISTER CONCERN WAS RS.49.47 LAKHS O NLY, AND THEREFORE, OWN FUNDS AVAILABLE WITHOUT INTEREST WITH THE ASSES SEE, WERE MUCH MORE THAN THE ADVANCE MADE TO THE SISTER CONCERN, A ND THEREFORE, NO CASE OF DISALLOWANCE OF INTEREST COULD BE MADE BY T HE DEPARTMENT. HE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE WITH THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CASE O F TORRENT FINANCIERS VS. ACIT, 73 TTJ (AHD) 624 AND ALSO BY T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. RAGHUVIR SYNTHETICS LTD., TAX APPEAL NO.829 OF 2007 DATED 5- 12-2011. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARN ED COUNSEL OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE IS MAINTA INING MIXED FUNDS AND THERE WAS NO NEXUS BETWEEN THE INTEREST FREE LO ANS AVAILABLE WITH THE ASSESSEE AND THE INTEREST FREE ADVANCES MADE BY THE ASSESSEE TO ITS SISTER CONCERN. HE RELIED ON THE DECISIONS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED SUBMISSIONS OF THE BOTH THE P ARTIES AND HAVE PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE HAS RS.2.13 CRORES AS CAPITAL AND INTEREST FREE SUNDRY ITA NO.296/AHD/2012 -3- CREDITORS AS ON 31-3-2002 I.E. LAST DATE OF RELEVAN T ACCOUNTING PERIOD AND RS.1.95 CRORES AS ON 31-3-2001 I.E. LAST DATE O F ACCOUNTING PERIOD OF THE IMMEDIATE PRECEDING ASSESSMENT YEAR. THE AS SESSEE HAS ADVANCED A SUM OF RS.49.47 LAKHS TO ITS SISTER CONC ERN WITHOUT INTEREST WHICH IS FULLY COVERED WITH THE INTEREST FREE CAPIT AL AND SUNDRY CREDITORS AMOUNT AVAILABLE WITH THE ASSESSEE, AND T HEREFORE, NO ADDITION/DISALLOWANCE IN THIS CASE IS CALLED FOR. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HONBLE COURTS REFERRED TO ABOVE BY THE LEARNED COUNSEL FOR THE AS SESSEE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE GROUND NO.1 OF THE ASSESSEES APPEAL IS ALLOWED. 5. GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UN DER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ACTION OF THE LD.AO IN CONFIRMING THE ADDITION OF RS.1,56,600/- ON ACCOUNT OF SALARY PAID TO RELATIVE OF THE DIRECTORS THE IMPUGNED ADDITION OF RS.1,56,600/- B EING ERRONEOUS IN LAW AND IN FACT IS PRAYED TO BE DELETE D. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ONUS WAS ON TH E ASSESSEE TO PROVE THAT THE SALARY WAS PAID TO THE LADY DIRECTOR S OF THE ASSESSEE- COMPANY ON ACCOUNT OF SERVICES RENDERED BY THEM. W E FIND THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CASE. IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT TWO LADY DIRE CTORS HAVE RENDERED SOME SERVICES TO THE ASSESSEE-COMPANY, WE ARE OF THE VIEW ITA NO.296/AHD/2012 -4- THAT THE DISALLOWANCE MADE WAS JUSTIFIED, AND ACCOR DINGLY, THE GROUND NO.2 OF THE ASSESSEES APPEAL IS DISMISSED. 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD