ACIT, Circle 11(2), Pune V. M/s. Lab India Instruments Pvt. Ltd., Pune

ITA 303/PUN/2013

• Counselvise Citation: 30324514 RSA 2013
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANTKUMAR C LEUVA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 303/PN/2013 (ASSESSMENT YEAR 2009-10) ACIT, CIRCLE-11(2), PUNE .. APPELLANT VS. LAB INDIA INSTRUMENTS PVT. LTD., 34/38, BHARAT KUNJ SOCIETY-II, ERANDWANE, PUNE-411004 .. RESPONDENT PAN NO. AAACL5140P APPELLANT BY : SHRI HEMANT KUMAR C. LEUVA RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 27-09-2013 DATE OF PRONOUNCEMENT : 30-09-2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST D ELETION OF THE DISALLOWANCE OF RS.32,46,205/-. 2. THE ASSESSING OFFICER WHILE FINALISING THE ASSES SMENT HELD THAT ASSESSEE HAS USED INTEREST BEARING FUNDS WERE ADVAN CED TO SISTER CONCERNS WITHOUT CHARGING INTEREST. ACCORDINGLY, ADDITION I N QUESTION WAS MADE. BEFORE THE CIT(A) VARIOUS CONTENTIONS WERE RAISED A ND CIT(A) FOLLOWING SIMILAR ISSUE IN A.Y. 2008-09 HAS ACCORDED RELIEF T O THE ASSESSEE. SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF THE REVENUE. 3. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION IN QUESTION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST FREE ADVANCES TO SISTER CONC ERNS INSTEAD OF CONFIRMING SUCH DISALLOWANCE. CIT(A) ERRED IN HOLDING THAT TH E STAND TAKEN BY THE 2 ASSESSING OFFICER THAT IF THE ASSESSEE HAS NOT GIVE N OWN FUNDS TO ITS SISTER CONCERNS WITHOUT CHARGING ANY INTEREST, IT WOULD HA VE HAD TO BORROW INTEREST BEARING LOANS FOR ITS BUSINESS PURPOSES AS AMOUNTING TO STEPPING INTO THE SHOES OF THE ASSESSEE. THE LD. DEPARTMENT AL REPRESENTATIVE ALSO RELIED ON THE DECISION OF PUNE BENCH OF THE TRIBUNA L IN THE CASE OF SUPER METER MANUFACTURING COMPANY VS. JCIT AND URGED TO S ET ASIDE THE ORDER OF THE CIT(A) AND THAT OF THE ORDER OF THE ASSESSING O FFICER ON THE ISSUE BE RESTORED. ON THE OTHER HAND THE LD. AUTHORISED REPR ESENTATIVE SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THA T ASSESSEE HAD MADE INTEREST EXPENDITURE OF RS.32,46,205/-. ACCORDING TO THE LD. AR THE ASSESSING OFFICER MADE DISALLOWANCE ON THE GROUND T HAT ASSESSEE HAS USED INTEREST BEARING FUNDS FOR GIVING FOR NON-BUSINESS THAT TOO INTEREST FREE TO RELATED CONCERNS. ASSESSING OFFICER HAS INCORRECTLY ASSUMED THAT ALL THESE FUNDS WERE USED FOR NON-BUSINESS PURPOSES WITHOUT C ONSIDERING THE ASSESSEES SUBMISSION. THE ASSESSEE HAS INCURRED I NTEREST EXPENDITURE OF RS.32,46,205/- AND HAS EARNED INTEREST INCOME OF RS .1,41,49,039/- ON ITS FIXED DEPOSITS, RECURRING DEPOSITS AND INVESTMENT I N PARTNERSHIP FIRMS. AS SUCH, IT IS INCORRECT TO ASSUME THAT ASSESSEE HAS A DVANCED INTEREST BEARING FUNDS FOR ADVANCING TO SISTER CONCERNS WITHOUT INTE REST WHICH IS NOT CORRECT. AS DISCUSSED ABOVE, CIT(A) FOLLOWING THE DECISION I N A.Y. 2008-09 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WHEREIN SIMILAR ISSUE AROSE. 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERI AL ON RECORD WE FIND THAT IT HAS BEEN CONSISTENT STAND OF THE ASSESSEE T HAT ALL INTEREST BEARING LOANS WERE TAKEN FOR THE PURPOSE OF SPECIFIC ASSETS AND BANKS HAVE DISBURSED THE LOAN DIRECTLY FOR BUSINESS PURPOSES. IT WAS ALSO STATED THAT THERE WAS NO POSSIBILITY OF SUCH LOANS BEING USED B Y BORROWER FOR ANY OTHER 3 PURPOSES. THERE IS NOTHING ON RECORD TO SUGGEST TH AT ABOVE LOANS BORROWED BY THE ASSESSEE WERE USED OTHER THAN BUSINESS PURPO SES. ASSESSING OFFICER HAS NOT DISPUTED THAT ASSESSEE WAS HAVING ITS OWN F UNDS TO BE ADVANCED TO SISTER CONCERNS AS DISCUSSED ABOVE. SO, ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE INTEREST BEARING LOANS HAVE BEE N ADVANCED TO THE SISTER CONCERNS. ACCORDINGLY, THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER WAS NOT JUSTIFIED. REGARDING RELIANCE PLACED BY TH E DEPARTMENTAL REPRESENTATIVE ON THE DECISION OF SUPER METER MANUF ACTURING COMPANY (SUPRA) WE FIND THAT FACTS OF THE SAID CASE DOES NO T HELP THE REVENUE BECAUSE IN THE SAID CASE INTEREST FREE ADVANCES TO OTHER CO NCERNS WERE MADE FOR NON- BUSINESS PURPOSES WHILE ENTIRE FUNDS AVAILABLE WIT H THE ASSESSEE BEING INTEREST BEARING AND ASSESSEE HAVING ADVANCED INTER EST FREE LOANS TO OTHER CONCERNS FOR NON-BUSINESS PURPOSES AND ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S.36(I)(VIII) IN RESPECT OF PROPORTIONA TE INTEREST BUT IN THE CASE BEFORE US ASSESSEE WAS HAVING SUFFICIENT INTEREST F REE FUND WHICH WERE ADVANCED TO THE SISTER CONCERNS. ACCORDINGLY, ORDE R OF CIT(A) NEEDS NO INTERFERENCE. SAME IS UPHELD. 5. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL ME MBER PUNE DATED: 30 TH SEPTEMBER 2013 SATISH 4 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, PUNE 4 CIT-I, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE