N.R. Technologies Pvt. Ltd., Ahmedabad V. The Income tax Officer,Ward-3(1)(1), Ahmedabad

ITA 3055/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8323 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 22-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH HEARING CONCLUDED O
• Assessee Lawyers: R T SHAH

Judgement Text

ITA NO.3055/AHD/2016 ASSESSMENT YEAR : 2013-14 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO.3055/AHD/2016 ASSESSMENT YEAR: 2013-14 N.R. TECHNOLOGIES PVT. LTD., .... ............................ APPELLANT B/4, HIMMATLAL PARK, OPP. AZAD MUNICIPAL GARDEN, SATELLITE, AHMEDABAD. [PAN : AABCN 1131 H]. VS. INCOME TAX OFFICER, WARD 3(1)(1), AHMEDABAD. ........ .....RESPONDENT APPEARANCES BY R.T. SHAH & JIGNESH SHAH FOR THE APPELLANT V.K. SINGH FOR THE RESPONDENT HEARING CONCLUDED ON: 15.05.2018 ORDER PRONOUNCED ON : 18.05.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 5 TH OCTOBER 2016, FOR THE ASSESSMENT YEAR 2013-14, ON THE FOLLOWING GROUNDS:- (1) THE APPELLANT COMPANY CAME INTO EXISTENCE BEFO RE 11 YEARS AND NOT DONE ANY BUSINESS SINCE THEN TILL THE YEAR A.Y. 2013-14 UNDE R APPEAL. THE APPELLANT COMPANY MADE SHORT TERM BORROWINGS FROM AFRO ASIAN INSURANCE AND REINSURANCE BROKERS (I) PVT. LTD. RS.2,50,00,000/- @ 9% AND ADVANCED TO ICECORP SOLUTIONS PVT. LTD. @10%. ACCORDINGLY, INTE REST AT RS.25,00,000/- (SCH. 10 OF AUDITED ACCOUNTS) RECEIVED FROM ICECORP SOLUT IONS PVT. LTD. AGAINST WHICH INTEREST OF RS.13,12,500/- (SCH. 11 OF AUDITED ACCO UNTS) PAID TO AFRO ASIAN INSURANCE AND REINSURANCE BROKERS (I) PVT. LTD. AND THE COMPANY HAS SHOWN UNDER THE HEAD OTHER INCOME. THE APPELLANT COMPAN Y HAS NOT DONE ANY BUSINESS AND THEREFORE THE INCOME AND EXPENDITURE O F INTEREST FALLS UNDER THE HEAD OTHER SOURCES AND RIGHTLY SHOWN THE NET INTERE ST INCOME LIABLE TO TAX. DISALLOWANCE OF RS.13,12,500/- BE THEREFORE DELETED AND BE ALLOWED U/S.57(III) AS CLAIMED BY THE APPELLANT. (2) BANK CHARGES RS.14,636/- AND AUDIT FEES RS.16,8 54/- BE ALSO ALLOWED AGAINST INCOME FROM OTHER SOURCES. 2. THE MATERIAL FACTS ARE NOT IN DISPUTE. THE ASSES SEE HAS RECEIVED RS.2,50,00,000/- FROM AFRO ASIAN INSURANCE AND REINSURANCE BROKERS (INDIA ) PVT. LTD., AND IS PAYING INTEREST @ 9% ITA NO.3055/AHD/2016 ASSESSMENT YEAR : 2013-14 PAGE 2 OF 2 THEREON. THE ASSESSEE HAS EXTENDED A LOAN OF THE ID ENTICAL AMOUNT, I.E. RS.250 LAKHS, TO ICECORP SOLUTIONS PVT. LTD. AND IS CHARGING INTERES T @10% THEREON. WHILE THE ASSESSING OFFICER HAS TAXED INTEREST INCOME OF RS.25,00,000/- IN THE HANDS OF THE ASSESSEE AS INCOME FROM OTHER SOURCES, HE HAS NOT ALLOWED ANY DEDUCTION OF THE IN TEREST PAID, I.E. RS.22,50,000/- ON THE GROUND THAT EXPENSES DEBITED IN THE PROFIT AND LOS S ACCOUNT ARE NOT RELATABLE TO EARNING OR MAKING THE SAID INTEREST, AND, THEREFORE, INADMISSI BLE U/S 57(III) OF THE INCOME TAX ACT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEAL BEFO RE ME. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 4. I FIND THAT THERE IS NO DISPUTE THAT THE FUNDS U SED BY THE ASSESSEE, IN EXTENDING ADVANCE TO ICECORP SOLUTIONS PVT. LTD., ARE BORROWED FUNDS AND INTEREST OF RS.22,50,000/- HAS BEEN PAID IN RESPECT OF THE SAME. THE NEXUS OF INTEREST PAID AND INTEREST EARNINGS IS THUS WELL ESTABLISHED. UNDER THESE CIRCUMSTANCES, IN MY CONSIDERED VIEW, E XPENDITURE ON INTEREST PAYMENT IS CLEARLY ALLOWABLE UNDER SECTION 57(III), I, THEREFORE, DIRE CT THE ASSESSING OFFICER TO GRANT DEDUCTION OF RS.22,50,000/- UNDER SECTION 57(III), THE ASSESSEE SUCCEEDS ON THIS POINT. 5. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON THE 18 TH MAY, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: AHMEDABAD, THE 18 TH DAY OF MAY, 2018. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD