Sugam Parivahan Ltd, V. ACIT CC-21,

ITA 359/DEL/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2253 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 25-11-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 22-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: M K JAIN
• Keywords: Opportunity of being heard; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL I.T.A. NO. 359/DEL/2007 ASSESSMENT YEAR: 2004-05 M/S.SUGAM PARIVAHAN LTD., VS. ASSISTANT COMMISSION ER OF IT, 43-DARYAGANJ, CENTRAL CIRCLE-21, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MK JAIN, CA RESPONDENT BY: MS. ANUSHA KHURA NA, DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 04.12.2006 PASSED FOR ASSESSMENT YEAR 2004-05. THE GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(A PPEALS) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF RS.2,57,182 OUT OF IN TEREST EXPENSES CLAIMED BY IT. THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE COMPANY AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION/ CARRIAGE OF GOODS MOSTLY THROUGH HIRED TRUCKS. IT HAS FILED ITS RETURN OF IN COME ON 1.11.2004 DECLARING TOTAL INCOME OF RS.63,05,740. DURING THE COURSE OF ASSESSMENT PROCEEDING, ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD ADVAN CED A SUM OF RS.37.66 2 LACS TO ITS SISTER COMPANY, NAMELY, M/S. ANADMAYEE FORGING (P) LTD. WITHOUT CHARGING ANY INTEREST. ASSESSING OFFICER HA S COMPUTED INTEREST @ 12% REQUIRED TO BE CHARGED BY THE ASSESSEE WHICH IS PAID BY IT TO OTHERS ON THE BORROWED CAPITAL. IN THIS EXERCISE ASSESSING OF FICER HAS MADE A DISALLOWANCE OF RS.2,57,182. 2. APPEAL TO THE LEARNED CIT(A) DID NOT BRING ANY R ELIEF TO THE ASSESSEE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT ASSESSEE HAS SUFFICIENT INTEREST FREE ADVANCES AND IT HAS MADE ADVANCES OUT OF THAT FUND. IN THE PAST, SIMILAR ADVANCES WERE GI VEN BUT NO DISALLOWANCE WAS MADE EXCEPT IN ASSESSMENT YEARS2002-03 AND 2003 -04. IN ASSESSMENT YEARS 2003-04 AND 2003-04, THE DISPUTE TRAVELED UP TO THE ITAT IN ITA NOS.3466/DEL/05 AND 3299/DEL/06. THE ITAT HAS SET A SIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION. T HUS, IN WAY A ISSUE IN DISPUTE, IS SQUARELY COVERED BY THE ORDER OF THE IT AT. LEARNED DR WAS UNABLE TO CONTROVERT THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. ON PERUSAL OF THE I.T.A.T.S ORDER, WE DO NOT FIND ANY DISPARITY OF FACTS BETWEEN THOSE YEARS AND THIS ASSESSMENT YE AR. THE CONTENTION OF THE ASSESSEE IN THOSE YEARS IS ALSO SIMILA R TO THAT OF THIS YEAR. IT 3 HAS PLEADED THAT IT WAS HAVING SUFFICIENT INTEREST FREE FUNDS OUT OF WHICH IT COULD MAKE INTEREST FREE ADVANCES TO THE SISTER CON CERN. THE ITAT HAS CONSIDERED THIS ARGUMENT BUT FACED A DIFFICULTY THA T FROM THE FUND FLOW STATEMENT ASSESSEE IS NOT ABLE TO ESTABLISH THAT IT HAS ADVANCED INTEREST FREE LOANS FOR ITS BUSINESS PURPOSES AND, THEREFORE, SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE OBSERVATION OF THE ITAT IN PARAGRAPH 11 READS AS UNDER: 11. WHEREAS IN THE INSTANT APPEALS, NEITHER BEFORE US NOR BEFORE THE TAX AUTHORITIES BELOW, THE ASSESSEE IS ABLE TO ESTA BLISH FROM THE FUND FLOW STATEMENT THAT THE INTEREST FREE LOANS GIVEN B Y THE ASSESSEE TO ITS SISTER CONCERN WERE OUT OF ITS INTEREST FREE FUNDS FOR THE PURPOSES OF ITS BUSINESS. HOWEVER, KEEPING IN VIEW THE OBSERVATIONS OF THE CIT(APPEALS) WHEREIN HE MENTIONED THAT FROM THE FUN D FLOW STATEMENT, THE ASSESSEE IS NOT ABLE TO ESTABLISH TH AT IT HAS ADVANCED INTEREST FREE LOANS FOR ITS BUSINESS PURPOSES AND A LSO KEEPING IN VIEW THE SUBMISSIONS OF LEARNED AR FOR THE ASSESSEE MADE BEFORE US WHEREIN HE CONTENDED THAT IN CASE HE IS ALLOWED SUF FICIENT TIME HE CAN PREPARE A CHART WITH THE ASSISTANCE OF THIS FUND FL OW STATEMENT CLEARLY INDICATING AS TO HOW THE INTEREST FREE LOANS WERE G IVEN BY THE ASSESSEE TO ITS SISTER CONCERN FROM ITS INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE FOR ITS BUSINESS PURPOSES AND ALSO KEEPING IN VIEW THE RATIO OF THE ABOVE DECISIONS (SUPRA) OF THE HON'BLE HIGH COU RT, WE CONSIDER IT APPROPRIATE THAT THIS ISSUE SHOULD BE SET ASIDE TO THE FILE OF THE 4 CIT(APPEALS) FOR DECIDING THIS ISSUE AFRESH ON MERI TS AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE FOR PROVING THAT THE ASSESSEE HAS ADVANCED INTEREST FREE LOANS TO IT S SISTER CONCERN M/S. ANANDMAYEE FORGINGS PVT. LTD. DURING ASSESSMENT YEA RS 2002-03 AND 2003-04 UNDER CONSIDERATION BEFORE US FOR ITS BUSIN ESS PURPOSES. ACCORDINGLY, THE IMPUGNED ORDER OF CIT(APPEALS) IN SUSTAINING THE IMPUGNED ADDITION OF RS.4,79,860 AND RS.5,71,550 IN ASSESSMENT YEARS 2002-03 AND 2003-04 RESPECTIVELY ARE SET ASID E AND THE MATTER IS RESTORED TO HIS FILE FOR COMPLIANCE. GROUND OF APPE AL TAKEN BY THE ASSESSEE IN ITS RESPECTIVE APPEALS STANDS ALLOWED F OR STATISTICAL PURPOSES. 5. RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT, WE ALLOW THIS APPEAL OF ASSESSEE FOR STATISTICAL PURPOSES AND SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE ITAT IN ASSESSMENT YEARS 2002-03 AND 2003-04 . 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON .12 .2009 ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: /12/2009 MOHAN LAL 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR