The ITO, Ward-7(1), Ahmedabad V. M/s. Radhika Petroleum, Ahmedabad

ITA 3016/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72955 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 29-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 03-11-2010
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: RUPESH R SHAH
• Keywords: Depreciation; Notional interest

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO. 3016/AHD/2010 A.Y. 2005-06 ITO, WARD-7(1) AHMEDABAD. VS M/S RADHIKA PETROLEUM, AHMEDABAD. PAN:AAHFR4384B (APPELLANT) (RESPONDENT) REVENUE BY : SH. O.P. BATHEJA, SR.D.R. ASSESSEE(S) BY : SH. RUPESH R. SHAH, AR / // / DATE OF HEARING : 29/01/2014 !'# / DATE OF PRONOUNCEMENT : 31/01/2014 $% $% $% $%/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)- XI, AHMEDABAD DATED 05.08.2010. 2. GROUND NO. 1 OF THE APPEAL IS DIRECTED AGAINST T HE ORDER OF THE LD. CIT(A) DELETING THE ADDITION OF RS 9,36,000/- MADE ON ACCOUNT OF INTEREST ON CASH IN HAND. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE ASSESSING OFFICER ADDED RS 9,36,000/- TO THE INCOME OF THE ASSESSEE ITA NOS.3016/AHD/2010 M/S RADHIKA PETROLEUM VS ITO, WARD-7(1), AHD. FOR A.Y. 2005-06 - 2 - BEING 12% OF RS 78,00,000/- ON THE GROUND THAT THE ASSESSEE MAINTAINED CASH BALANCE IN EXCESS OF ITS BUSINESS REQUIREMENT. 4. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION B Y OBSERVING AS UNDER: THERE IS NO BASIS WHATSOEVER ON WHICH THE ADDITION HAS BEEN MADE. AS STATED EARLIER IN THE ORDER THE APPELLANT PRODUCED THE BOOKS OF ACCOUNTS, AS AGAINST THE OBSERVATION OF TH E A.O. THAT THE CASH BOOK WAS NOT PRODUCED. IT IS FOR THE APPELLAN T TO DECIDE THE AMOUNT OF CASH TO BE KEPT ON HAND DEPENDING ON THE BUSINESS REQUIREMENT. FURTHER AS CONTENDED BY THE APPELLANT , IN THE IMMEDIATELY PRECEDING TWO YEARS AND THE SUBSEQUENT YEAR ALSO THE APPELLANT MAINTAINED SUBSTANTIAL CASH BALANCE A S ON 31 ST MARCH. IT IS NOT THE CASE OF THE A.O. THAT INTERES T BEARING FUNDS WERE ADVANCED INTEREST FREE. THEREFORE, HAVING CON SIDERED THE FACTS OF THE ISSUE I HOLD THAT THE ADDITION OF RS 9 ,32,000/- IS UNWARRANTED. IT IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5. BEFORE US, THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND RELIED UPON THE DECISION OF THE HONBLE ALLAHABAD H IGH COURT IN THE CASE OF CIT VS. H.R. SUGAR FACTORY (P) LTD 187 ITR 363 (ALL.) AND THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CA SE OF CIT VS. V.V. BABY & CO. 254 ITR 248 (KER.). 6. WE FIND THAT BOTH THE ABOVE DECISIONS ARE NOT AP PLICABLE IN THE INSTANT CASE AS THE ISSUE INVOLVED DOES NOT RELATE TO DISAL LOWANCE OF ANY INTEREST EXPENDITURE INCURRED BY THE ASSESSEE, BUT ON THE OT HER HAND, THE ISSUE INVOLVED RELATES TO CHARGING OF NOTIONAL INTEREST O N THE CASH BALANCE MAINTAINED BY THE ASSESSEE FOR BUSINESS PURPOSES. IN THE OPINION OF THE ITA NOS.3016/AHD/2010 M/S RADHIKA PETROLEUM VS ITO, WARD-7(1), AHD. FOR A.Y. 2005-06 - 3 - ASSESSING OFFICER, CASH BALANCE MAINTAINED BY THE A SSESSEE WAS MORE THAN NEED OF THE BUSINESS OF THE ASSESSEE. 7. IN THE INSTANT CASE, IT IS NOT THE CASE OF REVEN UE THAT ANY CASH WAS USED FOR NON-BUSINESS PURPOSES. FURTHER, THE NEED OF BU SINESS IS TO BE ASCERTAINED BY THE BUSINESSMAN AND IT IS NOT THE PR EROGATIVE OF THE REVENUE TO ADVISE THE BUSINESSMAN AS TO HOW MUCH LI QUID CASH SHOULD BE MAINTAINED BY THE BUSINESSMAN TO CARRY ON HIS BU SINESS. 8. IN THE ABOVE FACTS, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). HENCE, THIS GROUND OF THE APPEAL OF THE RE VENUE IS DISMISSED. 9. GROUND NO. 2 OF THE APPEAL IS DIRECTED AGAINST T HE ORDER OF THE LD. CIT(A) SETTING ASIDE THE ISSUE OF INTERNET EXPENSES OF RS 8,59,000/- WHICH IS BEYOND HIS POWERS U/S 251 OF THE ACT. 10. GROUND NO. 3 IS DIRECTED AGAINST THE ORDER OF T HE LD. CIT(A) IN SETTING ASIDE THE ISSUE OF DEPRECIATION OF RS 3,54,070/- WH ICH IS BEYOND HIS POWERS U/S 254(1) OF THE ACT. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE SOLE CONTENTION OF THE LD. DR IS THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN RESTORING THE ISSUES BACK TO THE FILE OF THE ASSESSING OFFICER. IT IS O BSERVED THAT THE ISSUES INVOLVED IN THE ABOVE TWO GROUNDS WERE DECIDED BY T HE LD. CIT(A) IN FAVOUR OF THE ASSESSEE ON PRINCIPLE SUBJECT TO VERI FICATION OF FACTS BY THE ASSESSING OFFICER. WE FAIL TO APPRECIATE THE GRIE VANCE OF THE REVENUE WHEN ACCORDING TO THE REVENUE, THE ASSESSING OFFICE R HAS BEEN ALLOWED ANOTHER OPPORTUNITY TO MAKE THE ASSESSMENT AS PER L AW. REVENUE HAS POINTED OUT NO GRIEVANCE ON MERITS OF THE DECISIONS OF THE LD. CIT(A) ITA NOS.3016/AHD/2010 M/S RADHIKA PETROLEUM VS ITO, WARD-7(1), AHD. FOR A.Y. 2005-06 - 4 - ON PRINCIPLES. WE, THEREFORE, DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THE ABOVE TWO G ROUNDS OF APPEAL. HENCE, THE ORDER OF THE LD. CIT(A) IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 31ST J ANUARY, 2014 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 31/01/2014 GHANSHYAM MAURYA GHANSHYAM MAURYA GHANSHYAM MAURYA GHANSHYAM MAURYA, SR. P , SR. P , SR. P , SR. P. .. .S SS S. .. .