The ITO, Ward-4(3), Ahmedabad V. Indo Swiss Anti-Shock Ltd., Ahmedabad

ITA 3102/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72928 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-01-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 19-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: N B SHAH
• Keywords: Audit objection; Proportionate interest; Commercial expediency

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.3102/AHD/2010 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2003-04) INCOME TAX OFFICER WARD-4(3) AHMEDABAD / VS. INDO SWISS ANTI SHOCK LTD. C/O. SHAH & SHAH ASSOCIATES 702, ANIKET, C.G.ROAD NAVRANGPURA AHMEDABAD-380 009 ( !./)* !./ PAN/GIR NO. : AAACI 5889 G ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) AND CO NO.10/AHD/2014 AY 2003-04 (IN ITA NO.3102/AHD/2010 AY 2003-04) NIDO SWISS ANTI SHOCK LTD. VS. ITO, WARD- 4(3) AHMEDABAD .. AHMEDABAD (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI N.B. SHAH, A.R. REVENUE BY : SHRI O.P. BATHEJA, SR.D.R. ' . / $0 / / / / DATE OF HEARING : 30/01/2014 12' / $0 / DATE OF PRONOUNCEMENT : 05/02/2014 3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THE REVENUE AND THE ASSESSEE HAVE FILED THE APPEAL AND THE CROSS OBJECTION RESPECTIVELY AGAINST THE ORDER OF THE LD .COMMISSIONER OF INCOME TAX(APPEALS)-VIII, AHMEDABAD (CIT(A) FOR SHORT) DATED 25/08/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2003-04. 2. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT HE DOES NOT WISH TO PRESS THE CROSS-OBJECTION FILED BY THE ASSE SSEE. THE SR.DR HAS NO ITA NO.3012/AHD/2010(BY REVENUE)& CO NO.10/AHD/2014 (BY ASSESSEE) ITO VS. INDO SWISS ANTI SHOCK LTD. ASST.YEAR 2003-04 - 2 - OBJECTION. THEREFORE, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 3. NOW, WE TAKE UP THE REVENUES APPEAL IN ITA NO.3 102/AHD/2010 FOR AY 2003-04. THE REVENUE HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL. 1.1. THE LEARNED CIT(A)-VIII, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.9,45,651/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF PROPORTIONATE INTEREST EXPENSES TO THE EXTENT OF INTEREST NOT CHARGED ON INTEREST FREE ADVANCES GIVE N BY THE ASSESSEE, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 1.2. IN DOING SO, THE LEARNED CIT(A) HAS ERRED IN LAW AN D ON FACTS IN NOT APPRECIATING THAT NO COMMERCIAL EXPEDIENCY WAS INVO LVED IN GIVING THE SAID ADVANCES FREE OF INTEREST. 2.1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.77,410/- MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF THE DELAYED PAYMENT OF EMPLOYEE CONTRIBUTION TOWARD S THE PROVIDENT FUND ACCOUNT. 2.2. IN DOING SO, THE LEARNED CIT(A) HAS ERRED IN LAW AN D ON FACTS IN NOT APPRECIATING THAT SINCE THE SAID CONTRIBUTION WAS N OT PAID BY THE DUE DATE, THE SAID DISALLOWANCE WAS RIGHTLY MADE BY TH E ASSESSING OFFICER AS PER THE PROVISIONS OF SECTION 36(1)(VA) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF THE ASSESSING OFFICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L EARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE REST ORED TO THE ABOVE EXTENT. 3.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED AND THE ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT,196 1 (HEREINAFTER REFERRED TO AS THE ACT) R.W.S. 147 OF THE I.T.ACT WAS PASSED BY THE AO VIDE ORDER DATED 24/12/2008. WHILE FRAMING THE ASSESSMENT, THE AO MADE ADDITION(S) ON ACCOUNT OF INTEREST ATTRIBUTABLE TO INTEREST-FREE A DVANCES AMOUNTING TO RS.9,94,651/- AND NON-PAYMENT OF THE CONTRIBUTION O F EMPLOYEES CONTRIBUTION TOWARDS PF AMOUNTING TO RS.77,410/-. AGAINST THIS, THE ASSESSEE PREFERRED AN ITA NO.3012/AHD/2010(BY REVENUE)& CO NO.10/AHD/2014 (BY ASSESSEE) ITO VS. INDO SWISS ANTI SHOCK LTD. ASST.YEAR 2003-04 - 3 - APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL, THEREBY BOTH ADDITIONS MADE BY THE AO WERE DELETED. NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. GROUND NOS.1.1 & 1.2 ARE AGAINST THE DELETION OF ADDITION OF RS.94,651/-. THE LD.SR.DR SUPPORTED THE ORDER OF T HE AO, WHEREAS THE LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A) AND ALSO HAS FILED WRITTEN SUBMISSION. THE CONTENTION OF THE LD .COUNSEL FOR THE ASSESSEE IS THAT THE CASE OF THE ASSESSEE WAS REOPENED ON THE B ASIS OF AUDIT OBJECTION WHICH WAS NOT EVEN ACCEPTABLE TO THE AO. HE DREW OUR ATT ENTION TOWARDS ANNEXURE-I OF GIST OF OBJECTION IN SUPPORT OF THIS CONTENTION. HE FURTHER SUBMITTED THAT THE ISSUE OF DISALLOWANCE OF INTEREST ON ADVANCES H AS BEEN DECIDED BY THE HONBLE COORDINATE BENCH (ITAT A BENCH AHMEDABAD) IN ASSESSEES OWN CASE IN ITA NO.90/AHD/2008 FOR AY 2004-05, VIDE ORD ER DATED 21/05/2010. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE OBJECTION OF THE AO WAS THAT THE ADVANCES WERE NOT GIVEN FOR THE BUSINESS PURPOSES, BUT ON THE CONTRARY, THE ASSESSEE HAS DEMONSTRATED BEFORE THE AUTHORITIES THAT THE ADVANCES GIVEN FOR BUSINESS PURPOSES. THE IDENTICA L ISSUE WAS BEFORE THE COORDINATE BENCH OF AHMEDABAD IN ITA NO.90/AHD/2008 (SUPRA), WHEREIN THE HONBLE TRIBUNAL VIDE PARA-13 OF ITS ORDER HAS DECI DED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PARA-13 OF THE TRIBUNAL S ORDER IS REPRODUCED HEREUNDER:- 13. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESEN TATIVE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS). THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT P OINT OUT HOW THE ADVANCE GIVEN TO KARNATAKA ELECTRICITY BOARD FOR ELECTRIC SUPPLY, ADVANCE GIVEN FOR PURCHASE OF MACHINERY AND ADVANCE RENT PAID WERE NOT BUSINESS A DVANCES OF THE ASSESSEE. IN ITA NO.3012/AHD/2010(BY REVENUE)& CO NO.10/AHD/2014 (BY ASSESSEE) ITO VS. INDO SWISS ANTI SHOCK LTD. ASST.YEAR 2003-04 - 4 - ABSENCE OF ANY SUCH MATERIAL BROUGHT ON RECORD, WE CONFIRM THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THAT TH E ABOVE ADVANCES WERE FOR THE BUSINESS PURPOSE OF THE ASSESSEE AND NO DISALLOWANC E OF INTEREST IN RESPECT OF SUCH INTEREST FREE BUSINESS ADVANCES CAN LEGALLY BE MADE . FURTHER, IN RESPECT OF ADVANCE OF RS.64,66,410/- TO KARNATAKA JEWELS LTD., NO ERRO R IN THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHICH WAS AFTER GOING THROUGH THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2002 COULD BE POI NTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THUS, IT IS OBSERVED T HAT NO PART OF INTEREST BEARING FUND WAS UTILISED FOR GIVING ADVANCE RS.64,66,410/- TO KARNATAKA JEWELS LTD.. IN RESPECT OF BALANCE ADVANCE OF RS.43,10,900/- TO KAR NATAKA JEWELS LTD., THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER GOING THR OUGH THE LEDGER ACCOUNT OF THE SAID PARTY, FOUND THAT ADVANCE WAS GIVEN ON 29.3.20 04 ONLY. NO ERROR IN THIS FINDING OF HT LEARNED COMMISSIONER OF INCOME TAX(APPEALS)AL SO COULD BE BROUGHT ON RECORD BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. FURTHER , IT IS NOT IN DISPUTE THAT INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE COM PANY WAS MUCH MORE THAN INTEREST FREE ADVANCE GIVEN TO KARNATAKA JEWELS LTD. AND IN ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THAT THERE WAS A NEXUS BETWEEN INTER EST BEARING FUNDS AND INTEREST FREE ADVANCE TO THE SAID KARNATAKA JEWELS LTD., WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) IN RESPECT OF THIS PART OF THE ISSUE ALSO. WE THEREFO RE, DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE AND THE SAME IS DIS MISSED. 5.1. THE REVENUE HAS NOT POINTED OUT ANY CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE COORDINATE BENCH IN ITA NO.90/AHD/2008 (SUP RA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), THE SAME I S HEREBY UPHELD. THUS, THESE GROUNDS OF REVENUES APPEAL ARE REJECTED. 6. GROUND NOS.2.1 & 2.2 ARE AGAINST THE DELETION OF ADDITION OF RS.77,410/- MADE ON ACCOUNT OF DELAYED PAYMENT OF E MPLOYEES CONTRIBUTION TOWARDS PF ACCOUNT. THE LD.SR.DR SUPPORTED THE ORD ER OF THE AO, WHEREAS THE LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE EMPLOYEES CONTRIBUTION WAS MADE WITHIN TH E GRACE PERIOD PROVIDED BY THE LAW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON FACT THAT THE ASS ESSEE HAD MADE PAYMENT OF ITA NO.3012/AHD/2010(BY REVENUE)& CO NO.10/AHD/2014 (BY ASSESSEE) ITO VS. INDO SWISS ANTI SHOCK LTD. ASST.YEAR 2003-04 - 5 - EMPLOYEES CONTRIBUTION WITHIN THE GRACE PERIOD, TH EREFORE THE SAME ARE TREATED AS PAID ON OR BEFORE THE DUE DATE AS PER EXPLANATIO N ATTACHED TO SECTION 36(1)(VA) OF THE ACT. THIS FINDING OF THE LD.CIT(A ) IS NOT CONTROVERTED BY THE REVENUE, THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), THE SAME IS HEREBY UPHELD. THUS, THESE GROUNDS OF REVENUES APPEAL ARE REJECTED. 8. GROUND NOS.3 & 4 ARE GENERAL IN NATURE, NEED NO INDEPENDENT ADJUDICATION. 9. IN THE COMBINED RESULT, THE APPEAL OF THE REVENU E AND CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 05/ 02 /2014 60.., .../ T.C. NAIR, SR. PS 3 / ,$7 87'$ 3 / ,$7 87'$ 3 / ,$7 87'$ 3 / ,$7 87'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ '9 / CONCERNED CIT 4. '9() / THE CIT(A)-VIII, AHMEDABAD 5. 7 #: ,$ , , / DR, ITAT, AHMEDABAD 6. :;& <. / GUARD FILE. 3' 3' 3' 3' / BY ORDER, -7$ ,$ //TRUE COPY// = == =/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD