Amos Enterprise Ltd., Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 3351/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9742 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 15-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N DIVETIA
• Keywords: Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NOS: 1242 & 3351/AHD/2014 (ASSESSMENT YEARS: 2009-10 & 2010-11) AMOS ENTERPRISES LTD., 403, 637, PANCHVATI 2 ND LANE, ELLISBRIDGE, AHMEDABAD-6 V/S THE D.C.I.T., CIRCLE-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCA 3032E APPELLANT BY : SHRI S.N. DIVETIA, AR RESPONDENT BY : SHRI DINESH SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 20 -01-201 6 DATE OF PRONOUNCEMENT : 20 -01-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 1242 & 3351/AHD/2014 ARE APPEALS BY THE AS SESSEE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A)-6, AH MEDABAD DATED 19.02.2014 & 19.09.2014 PERTAINING TO A.YS. 2009-10 & 2010-2011. ITA NOS. 124 2 & 3351/AHD/2014 . A.YS. 2009-1 0 & 2010-11 2 2. BOTH THESE APPEALS HAVE COMMON ISSUES, THEREFORE, T HEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 3. THE COMMON GRIEVANCE IN BOTH THESE YEARS RELATE TO THE DISALLOWANCE MADE U/S. 40A(2)(B) OF THE ACT IN RESPECT OF INTERE ST PAID TO THE DIRECTORS OF THE COMPANY. 4. AT THE VERY OUTSET, THE COUNSEL FOR THE ASSESSEE ST ATED THAT THE GRIEVANCE RAISED IN THESE APPEALS IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSE ES OWN CASE FOR A.Y. 2008-09. THE COUNSEL PLACED THE ORDER OF THE T RIBUNAL. THE D.R. FAIRLY CONCEDED THAT THE ISSUES HAVE BEEN DECIDED I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND FORCE IN T HE CONTENTION OF THE LEARNED COUNSEL. WE FIND THAT WHILE DECIDING THE AP PEAL FOR A.Y. 2009- 10, THE LD. CIT(A) HAS FOLLOWED THE FINDINGS OF HIS PREDECESSORS GIVEN IN A.Y. 2008-09 AND WHILE DECIDING THE APPEAL FOR A .Y. 2010-2011, THE LD. CIT(A) HAS FOLLOWED THE FINDINGS GIVEN IN A.Y. 2009-2010. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL FOR A.Y. 200 8-09, ON IDENTICAL GRIEVANCE, THE FINDINGS OF THE TRIBUNAL READS AS UN DER:- 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE-COMPANY DECLAR ED TOTAL INCOME OF RS. 95,31,370/-. THE DISALLOWANCE IS MADE OF RS. 1,98,8 91/- BEING THE DIFFERENCE BETWEEN THE INTEREST PAID TO THE DIRECTOR AND INTER EST PAID TO OTHER PARTIES. THE A.O HAS NOT GIVEN ANY FINDING WITH REGARD TO THE FA IR MARKET RATE OF THE INTEREST PAID TO THE DIRECTOR. AS PER SECTION 40A(2)(B) OF T HE ACT, THE A.O IS EXPECTED TO GIVE A FINDING AS TO HOW THE EXPENDITURE AS CLAIMED IS EXCESSIVE OR UNREASONABLE. HAVING REGARD TO THE FAIR MARKET VALUE OF THE EXPEN DITURE, THE A.O HAS NOT GIVEN ITA NOS. 124 2 & 3351/AHD/2014 . A.YS. 2009-1 0 & 2010-11 3 ANY FINDING AS TO WHY THE EXPLANATION GIVEN BY THE ASSESSEE THAT THE INTEREST PAID AT THE RATE OF 12% WAS TOWARDS THE SMALL BORROWINGS . LOOKING TO THE TOTALITY OF THE FACTS OF THE CASE AND AFTER CONSIDERING THE PRE VAILING MARKET VALUE, WE ARE OF THE CONSIDERED VIEW THAT THE INTEREST PAID TO THE D IRECTOR AT THE RATE OF 14% ON UNSECURED LOAN IS NOT EXCESSIVE OR UNREASONABLE HAV ING REGARDING TO THE FAIR MARKET VALUE OF THE SAME. HENCE, GROUND NOS. 1.1 TO 3.1 OF THE ASSESSEES APPEAL ARE ALLOWED. 5. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDI NATE BENCH, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE A. O TO DELETE THE IMPUGNED ADDITIONS. BOTH THE APPEALS OF THE ASSESSE E ARE ALLOWED. 6. DECISION PRONOUNCED IN THE OPEN COURT. ORDER PRONOUNCED IN OPEN COURT ON 20 - 01 - 2016. SD/- SD/- (S. K. YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD