M/s Miki Exports International, Meerut V. CIT, Meerut

ITA 2983/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81760 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 18-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKER
• Assessee Lawyers: P S KASHYAP
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 2983/DEL/2013 2983/DEL/2013 2983/DEL/2013 2983/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008 - -- - 09 0909 09 M/S MIKI EXPORTS M/S MIKI EXPORTS M/S MIKI EXPORTS M/S MIKI EXPORTS INTERNATIONAL, INTERNATIONAL, INTERNATIONAL, INTERNATIONAL, MIKI HOUSE, MIKI HOUSE, MIKI HOUSE, MIKI HOUSE, JAIL R JAIL R JAIL R JAIL ROAD, OAD, OAD, OAD, MEERUT. MEERUT. MEERUT. MEERUT. PAN : AACFM0101A. PAN : AACFM0101A. PAN : AACFM0101A. PAN : AACFM0101A. VS. VS. VS. VS. COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, MEERUT. MEERUT. MEERUT. MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.S. KASHYAP, FCA. RESPONDENT BY : SHRI J.P. CHANDRAKER, SR.DR. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT, MEERUT DATED 25 TH MARCH, 2013 FOR THE AY 2008-09. 2. GROUND NO.1 OF THE ASSESSEES APPEAL READS AS UN DER:- THAT ON FACTS AND IN LAW ORDER PASSED UNDER SECTIO N 263 IS ILLEGAL AND UNWARRANTED. THE LD.CIT HAS NOT MET THE BASIC CONDITIONS FOR PASSING ORDER UNDER SECTION 26 3 I.E. ORIGINAL ASSESSMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESS MENT ORDER PASSED IS NEITHER ERRONEOUS NOR PREJUDICIAL T O THE INTEREST OF REVENUE. THEREFORE, THE ORDER PASSED B Y THE LD.CIT IS ILLEGAL AND VOID AB INITIO. 3. ALL OTHER GROUNDS ARE ARGUMENTS IN SUPPORT OF GR OUND NO.1. 4. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT IN THE ORDER PASSED UNDER SECTION 263 DATED 25.03.2013, LEARNED CIT, MEERUT HELD THE ASSESSMENT ORDER DATED 28.12.2010 TO BE ITA-2983/DEL/2013 2 ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. HE SET ASIDE THE ASSESSMENT ORDER DATED 28.12.2010 FOR FRESH ADJ UDICATION AS PER THE OBSERVATIONS AND DIRECTION IN THE ORDER UNDER S ECTION 263. THAT IN THE ORDER UNDER SECTION 263, THE CIT DIRECTED THE A SSESSING OFFICER TO VERIFY VARIOUS ASPECTS. THE ASSESSEE HAS NO OBJECT ION WITH REGARD TO SUCH DIRECTION. HOWEVER, WITH REGARD TO DEBIT BALA NCE OF THE SISTER CONCERN AMOUNTING TO `94,20,685/-, THE CIT DIRECTED THE ASSESSING OFFICER TO DISALLOW THE INTEREST PAID AND CLAIMED B Y THE ASSESSEE PROPORTIONATELY ON INTEREST FREE ADVANCE. IT IS SU BMITTED BY THE LEARNED COUNSEL THAT SUCH DIRECTION OF THE CIT NEED S CONSIDERATION BY THE ITAT BECAUSE IT IS FACTUALLY AS WELL AS LEGALLY INCORRECT. HE SUBMITTED THAT THERE IS A DEBIT BALANCE OF THE SIST ER CONCERN M/S ALNOOR EXPORTS AMOUNTING TO `94,20,685/- BUT NO INTEREST F REE FUND HAS BEEN DIVERTED TO M/S ALNOOR EXPORTS. IN FACT, NO MONEY IS PAID TO THEM BY THE ASSESSEE. WHATEVER IS THE DEBIT BALANCE IS ON ACCOUNT OF THE BILLS OF THE PRESERVATION CHARGES AND THE FACILITY UTILIZ ATION CHARGES DEBITED TO THEIR ACCOUNT. HE FILED THE COPY OF ACCOUNT OF M/S ALNOOR EXPORTS IN THE ASSESSEES BOOKS OF ACCOUNT FOR THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. HE FURTHER SU BMITTED THAT MOREOVER, THE PARTNERS CAPITAL ON WHICH NO INTERES T IS PAID BY THE FIRM IS `8,44,64,811/-. THE LOAN ON WHICH INTEREST IS P AID WAS THE SECURED LOAN FROM BANK WHICH IS A PACKING CREDIT LIMIT AMOU NTING TO `52,55,032/- WHICH WAS WHOLLY UTILIZED FOR THE PURP OSE OF BUSINESS. HE, THEREFORE, SUBMITTED THAT THERE IS NO JUSTIFICATION FOR THE DIRECTION OF THE CIT TO PROPORTIONATELY DISALLOW THE INTEREST. SUCH DIRECTION MAY BE DELETED. 5. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF LEARNED CIT PASSED UNDER SECTION 263. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. WE FIND THAT AT PAGE ITA-2983/DEL/2013 3 9 PARAGRAPH 11, LEARNED CIT HAS NOTED THE DEBIT BAL ANCE IN THE ACCOUNT OF SISTER CONCERN AMOUNTING TO `94,20,685/-. THE C IT DID NOT AGREE WITH THE ASSESSEES CONTENTION THAT THERE IS HUGE C REDIT BALANCE IN THE ACCOUNT OF PARTNERS, ON WHICH NO INTEREST WAS PAID BY THE FIRM AND THEREFORE, NO PART OF INTEREST PAID BY THE ASSESSEE SHOULD BE DISALLOWED, AND HE DIRECTED THE ASSESSING OFFICER T O DISALLOW THE INTEREST PAID PROPORTIONATELY ON INTEREST FREE ADVA NCE TO THE SISTER CONCERN M/S ALNOOR EXPORTS. WE HAVE ALSO PERUSED T HE COPY OF ACCOUNT OF M/S ALNOOR EXPORTS IN THE ASSESSEES BOO KS OF ACCOUNT AND WE FIND THAT THE ENTIRE DEBIT TO THEIR ACCOUNT IS F OR PRESERVATION CHARGES AND FACILITY UTILIZATION CHARGES DEBITED TO THEM. THERE IS NOT A SINGLE INSTANCE OF PAYMENT OF MONEY BY THE ASSESSEE TO M/S ALNOOR EXPORTS. ON THE OTHER HAND, THERE IS A RECEIPT OF MONEY THROUGH MEERUT OFFICE. COPY OF THE LEDGER ACCOUNT IS ANNEX ED AS ANNEXURE-A TO THIS ORDER. FROM THIS ACCOUNT, IT IS EVIDENT THAT THERE IS NO PAYMENT OF MONEY TO M/S ALNOOR EXPORTS, SO, THE QUESTION OF DI VERSION OF BORROWED MONEY TO THEM DOES NOT ARISE. IN VIEW OF THE ABOVE , WE MODIFY THE ORDER OF LEARNED CIT IN THIS REGARD AND DELETE HIS DIRECTION TO DISALLOW THE INTEREST PAID BY THE ASSESSEE ON PROPORTIONATE BASIS ON ACCOUNT OF INTEREST FREE ADVANCE TO SISTER CONCERN M/S ALNOOR EXPORTS. THE REMAINING PORTION OF THE ORDER OF LEARNED CIT, WHER EIN HE HAS SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND DIRECTED HIM TO VERIFY VARIOUS ASPECTS, IS SUSTAINED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2014. SD/- SD/- ( (( ( CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG ) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 30.09.2014 VK. ITA-2983/DEL/2013 4 COPY FORWARDED TO: - 1. APPELLANT : M/S MIKI EXPORTS INTERNATIONAL, M/S MIKI EXPORTS INTERNATIONAL, M/S MIKI EXPORTS INTERNATIONAL, M/S MIKI EXPORTS INTERNATIONAL, MIKI HOUSE, JAIL ROAD, MEERUT. MIKI HOUSE, JAIL ROAD, MEERUT. MIKI HOUSE, JAIL ROAD, MEERUT. MIKI HOUSE, JAIL ROAD, MEERUT. 2. RESPONDENT : COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, MEERUT. MEERUT. MEERUT. MEERUT. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR 5/ (ANNEXURE-A) ITA-2983/DEL/2013 5 ITA-2983/DEL/2013 6 ITA-2983/DEL/2013 7