M/s Society Builders Limited, Kanpur V. Asstt. Commissioner of Income Tax-VI, Kanpur

ITA 348/LKW/2014

• Counselvise Citation: 34823714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIKAS GARG
• Keywords: Business expenditure; Corroborative evidences

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.348/LKW/2014 ASSESSMENT YEAR:2003 - 04 M/S SOCIETY BUILDERS LIMITED, (PRESENTLY M/S DOLPHIN DEVELOPERS LIMITED OWING TO AMALGAMATION) 7/71 A, TILAK NAGAR, KANPUR. PAN:AABCD8079J VS. DY.C.I.T., RANGE - VI, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VIKAS GARG, C. A. RESPONDENT BY SHRI AMIT NIGAM, D. R. DATE OF HEARING 12/08/2015 DATE OF PRONOUNCEMENT 1 8 /09/2015 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - I, KANPUR DATED 06/01/2014 FOR THE ASSESSMENT YEAR 2003 - 04. 2. GROUND NO. 1 & 2 ARE INTER - CONNECTED WHICH READ AS UNDER: 1. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN DISALLOWING INTEREST RS.46,705/ - PAID ON UNSECURED LOANS. 2. THAT THE AUTHORITIES BELOW, IN DISALLOWING INTEREST PAID RS.46,705/ - , HAVE ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE COMPANY HAD INTEREST FREE FUNDS THAT FAR EXCEED INTEREST FEE ADVANCE. 3. IT IS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE AUDITED ACCOUNTS OF THE ASSESSEE COMPANY FOR THE PRESENT YE AR IS AVAILABLE ON 2 AGES 19 TO 29 OF THE PAPER BOOK AND AS PER THE BALANCE SHEET AS ON 31/03/2003 AVAILABLE ON PAGE NO. 20 OF THE PAPER BOOK, OWN FUNDS IN THE FORM OF SHARE CAPITAL WERE OF RS.23.02 LAC S IN ADDITION TO SHARE APPLICATION MONEY OF RS.23.12 LAC AND INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE WERE ONLY RS.15.30 LAC AND THEREFORE, THE INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE ARE LESS THAN INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE COMPANY AND UNDER THESE FACTS, THE DISALLOWANCE MADE BY A SSESSING OFFICER AND CONFIRMED BY LEARNED CIT(A) IS NOT PROPER AS PER THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT AND ANOTHER VS. RADICO KH A ITAN LTD. [2005] 274 ITR 354 (ALL). 4. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT WAS HELD BY HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RADICO KHAITAN (SUPRA) THAT WHERE THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE IS MORE THAN INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE, NO DISALLOWANCE IS CALLED FOR OUT OF INTEREST EXPENDITURE INCURRED BY THE ASSESSEE. RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT, WE HOLD THAT THE INTEREST EXPENDITURE DISALLOWED BY ASSESSING O FFICER OF RS.46,705/ - AND UPHELD BY LEARNED CIT(A) IS NOT JUSTIFIED. WE, THEREFORE, DELETE THE SAME. THESE GROUNDS ARE ALLOWED. 6. GROUND NO. 3, 4 & 5 ARE AS UNDER: 3. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN DISALLOWING RS.6,00,000/ - U/S 40A(2)(A) OF THE INCOME TAX ACT 1961. 4. THAT THE AUTHORITIES BELOW, IN DISALLOWING EXPENSES OF RS.6,00,000/ - , HAVE ERRED IN NOT APPRECIATING THE FACTS 3 RELATING TO THE TRANSACTIONS RESULTING IN PAYMENT OF RS.6,00,000/ - . 5. THAT THE CIT( A) HAS ERRED IN JUSTIFYING THE DISALLOWANCE OF RS.6,00,000/ - BASED ON FACTS CONTRARY TO RECORD. 7. LEARNED A.R. OF THE ASSESSEE REITERATED THE SAME CONTENTIONS WHICH WERE RAISED BEFORE CIT(A) WHEREAS LEARNED D.R. OF THE REVENUE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY ASSESSING OFFICER ON PAGE NO. 3 OF THE ASSESSMENT ORDER THAT AS PER THE ORDER SHEET ENTRY, THE ASSESSEE WAS ASKED TO EXPLAIN THE PRECISE NATURE OF THE PAYMENT OF RS.6 LAC CLAIMED BY THE AS SESSEE TOWARDS COMMITMENT CHARGES ALONG WITH SUPPORTING EVIDENCE ABOUT ITS ALLOWABILITY. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT INITIALLY M/S GENIAL SECURITIES PVT. LTD. HAS MADE AN AGREEMENT TO PURCHASE LAND FROM MR. SANJEEV GUPTA AND SANJEEV GUPTA HUF (LAND OWNERS) BUT OVER A PERIOD OF TIME , M/S GENIAL SECURITIES PVT. LTD. COULD NOT FULFILL THEIR COMMITMENT AND REQUESTED THE LAND OWNERS THAT THEY MAY SELL THE PROPERTY TO THEIR SATISFACTION BUT THE LAND OWNERS HAD TO GET CONSTRUCT ION OF THE DUPLEX DONE FROM THE GROUP BUILDERS NAMELY THE ASSESSEE COMPANY I.E. M/S SOCIETY BUILDERS LTD. AND FOR THIS REASON , THE ASSESSEE COMPANY MADE A PAYMENT OF RS.6 LAC TO M/S GENIAL SECURITIES PVT. LTD. THE ASSESSING OFFICER WAS NOT S ATISFIED AND DISALLOWED THE SAME BY SAYING THAT THE ASSESSEE COMPANY COULD NOT FURNISH ANY EVIDENCE TO JUSTIFY THE SPECIFIC QUERY REGARDING EXPLAINING THAT THIS IS BUSINESS EXPENDITURE. BEFORE CIT(A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE AGR EED TO PAY RS.6 LAC TO M/S GENIAL SECURITIES PVT. LTD. AS CONSIDERATION FOR BRINGING BUSINESS OF CONSTRUCTION TO THE ASSESSEE COMPANY. IN THE LIGHT OF THIS CLAIM OF THE ASSESSEE WHICH COULD NOT BE SHOWN TO BE FALSE BY THE ASSESSING OFFICER OR BY LEARNED D .R. OF THE REVENUE, WE ARE OF THE 4 CONSIDERED OPINION THAT THIS EXPENDITURE IS IN THE NATURE OF COMMISSION PAYMENT FOR GETTING BUSINESS. M/S GENIAL SECURITIES PVT. LTD. HAS GIVEN UP THEIR CLAIM OVER THE LAND WHICH THEY AGREED TO PURCHASE FROM LAND OWNERS M R. SANJEEV GUPTA AND SANJEEV GUPTA HUF WITH THIS UNDERSTANDING THAT THE LAND OWNERS HAVE TO GET CONSTRUCT ED THE DUPLEX FROM THE ASSESSEE COMPANY. IN THIS MANNER , M/S GENIAL SECURITIES PVT. LTD. HELPED THE ASSESSEE COMPANY IN PROCUR ING BUSINESS FOR THE ASS ESSEE COMPANY AND IN LIEU OF THAT , THE ASSESSEE COMPANY MADE A PAYMENT OF RS.6 LAC TO M/S GENIAL SECURITIES PVT. LTD. AND THEREFORE, IN OUR CONSIDERED OPINION, THIS PAYMENT TO M/S GENIAL SECURITIES PVT. LTD. IS IN THE NATURE OF COMMISSION FOR GETTING BUSIN ESS AND THEREFORE, THIS IS ALLOWABLE AS BUSINESS EXPENDITURE. WE HOLD ACCORDINGLY. THESE GROUNDS ARE ALSO ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 /09/2015 SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR