ACIT, Mandi Gobindgarh V. M/s Industrial Cables (India) Ltd., Rajpura

ITA 306/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2327 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 306/CHD/2012 ASSESSMENT YEAR: 2008-09 A.C.I.T. CIRCLE V M/S INDUSTRIAL CABLES (INDIA) MANDI GOBINDGARH LTD. RAJPURA PAN NO. AAACI 3498 P (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J.S. NAGAR RESPONDENT BY: SHRI G.N. GUPTA DATE OF HEARING 17.4.2013 DATE OF PRONOUNCEMENT 29.4.2013 ORDER PER T.R.SOOD, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF PASSED BY THE LD. CIT(A), PATIALA DATED 3.1.2012. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS:- 1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 63 ,00,000/- MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST ON INT EREST FREE ADVANCES/LOANS GIVEN BY THE ASSESSEE TO THE SUBSIDI ARY 2 COMPANY, M/S HARYANA TELECOM LTD. BY ACCEPTING THE GROUND OF COMMERCIAL EXPEDIENCY WHEREAS NO CASE OF COMMERCIAL EXPEDIENCY WAS MADE OUT. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS FURTHER ERRED IN PLACING RELIANCE ON THE HON'BLE TRIBUNALS DECISION IN THE CASE OF THE ASSE SSEE FOR THE ASSESSMENT YEAR 2005-06, IGNORING THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID DECISION AND I S IN APPEAL BEFORE HON'BLE HIGH COURT. 3 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS FURTHER ERRED IN PLACING RELIANCE UPON T HE HON'BLE TRIBUNALS DECISION IN THE CASE OF THE ASSE SSEE FOR THE ASSESSMENT YEAR 2005-06, IGNORING THAT THE DEPARTMENT HAS ALSO FILED A MISC. APPLICATION WITH THE HON'BLE TRIBUNAL, WHICH IS STILL PENDING. 3. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED INTER EST BY HOLDING THAT ASSESSEE HAS DIVERTED INTEREST BEARING FUNDS TO SIS TER CONCERNS WITHOUT INTEREST. 4. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION O N THE BASIS OF ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE FOR THE ASSESS MENT YEAR 2005-06. 5. BEFORE US, THE LD. DR STRONGLY SUPPORTED THE ORD ER OF THE ASSESSING OFFICER. 3 6. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN IDENTICAL CIRCUMSTANCES, THE ADDITION WAS DELETED B Y THE TRIBUNAL IN ASSESSMENT YEAR 2005-06. AGAINST THIS ORDER, THE R EVENUE HAS FILED A MISC. APPLICATION WHICH HAS ALSO BEEN DISMISSED THROUGH M .A. NO. 90/CHANDI/ 2009, COPY OF WHICH IS PLACED IN THE PAPER BOOK AT PAGES 40 TO 44. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT IN IDENTICAL CIRCUMSTANCES, THE TRIBUNAL HAS DELETED T HE ADDITION IN ASSESSMENT YEAR 2005-06 THROUGH ITA NO. 237/CHANDI/2009. THE CONCLUDING PARA 13 READS AS UNDER:- IT IS THUS EVIDENT THAT, THE HONBLE COURT THUS HE LD THAT FACTS OF EACH YEAR ARE INDEPENDENT AND HAVE TO BE TAKEN I NTO ACCOUNT FOR DETERMINATION WHETHER THE DISALLOWANCE OF INTEREST IS TENABLE OR NOT. IN THE INSTANT CASE SINCE WE FIN D IN THE YEAR UNDER CONSIDERATION THAT FRESH ADVANCES HAVE BEEN M ADE ON THE GROUND OF COMMERCIAL EXPEDIENCY, THUS THE INTER EST DISALLOWED BY THE ASSESSING OFFICE IS UNJUSTIFIED A ND THUS IS NOT SUSTAINABLE. MOREOVER, IT IS ALSO EVIDENT FROM THE AFORESAID OBSERVATIONS OF THE HONBLE HIGH COURT TH AT THERE WAS NO DIRECT JUDGMENT OF THE SUPREME COURT ON THIS ISSUE AND AS SUCH, THEY HAD PLACED RELIANCE ON THE JUDGMENT O F S.A. BUILDERS LTD. VS CIT AND ANOTHER (P&H) REPORTED IN 269 ITR 535 WHICH HAS BEEN EXTRACTED AT PAGES 3 AND 4 OF TH E JUDGMENT. THE JUDGMENT OF S.A. BUILDERS REPORTED IN 269 ITR 535 ALREADY STANDS SET ASIDE BY THE HONBLE APEX C OURT AS S.A. BUILDERS VS. CIT(SUPRA). HERE, WE ALSO SEEK TO PLACE RELIANCE ON THE JUDGMENT OF APEX COURT IN THE CASE OF CIT V 4 MODI INDS REPORTED IN 40 STC 173 WHEREIN IT HAS BEE N HELD THAT, ORDER OF APEX COURT IS TO BE FOLLOWED, EVEN I F THE HONBLE HIGH COURT HAS SENT THE REFERENCE FOR A PARTICULAR PURPOSE. IN VIEW THEREOF, WE ARE OF THE CONSIDERED OPINION THAT IN THE INSTANT CASE, DISALLOWANCE HAD BEEN MADE BY THE LOW ER AUTHORITIES WITHOUT APPRECIATING THE FACTS OF THE C ASE AND THE PROVISIONS OF LAW AND HENCE THE DISALLOWANCE OF INT EREST OF RS. 32,98,500.00 IS THEREFORE, DIRECTED TO BE DELETED. 8. LATER ON, REVENUE HAS FILED M.A. AGAINST THE ABO VE DECISION AND THE M.A. WAS DISMISSED VIDE ORDER DATED 9.3.2011 THROUG H M.A. NO. 90/CHD/2009. 9. IN VIEW OF THESE FACTS, WE FIND NOTHING WRONG WI TH THE ORDER OF LD. CIT(A) BECAUSE HE HAS MERELY FOLLOWED THE ORDER OF TRIBUNAL AND ACCORDINGLY WE CONFIRM THE IMPUGNED ORDER. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF APRIL, 2013. SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29 TH APRIL, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR 5