DCIT 9(2), MUMBAI V. KAMA JEWELLERY (I) P. LTD, MUMBAI

ITA 3619/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48537 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KISHOR PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NO.3619/MUM/2010 : ASST.YEAR 2007-2008 THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 9(2) MUMBAI. VS. M/S.KAMA JEWELLERY (I) P.LTD. UNIT 221, UDYOG BHAVAN, SONAWALA ROAD GOREGAON (EAST), MUMBAI 400 063. PAN : AAACK2261J. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.K.GUPTA RESPONDENT BY : SHRI KISHOR PATEL O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 18.02.2010 RELATES TO ASSESSMENT YEAR 2007-2008. 2. THE ONLY GROUND IS AGAINST THE DELETION OF DISAL LOWANCE OF INTEREST AMOUNTING TO RS.12,53,095. BRIEFLY STATED THE FACT S OF THE CASE ARE THAT THE ASSESSEE GAVE LOAN AND ADVANCES OF RS.2.92 CRORES. THE ASSES SING OFFICER NOTED THAT THE COMPANY HAD TOTAL BORROWED FUNDS OF RS.35.25 CRORES . HE, THEREFORE, COMPUTED DISALLOWANCE OF INTEREST ON PROPORTIONATE BASIS AT RS.12,53,095. THE LEARNED CIT(A) ORDERED FOR THE DELETION OF DISALLOWANCE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE BALANCE SHEET OF THE ASSESSEE AS ON 31. 3.2007 IS AVAILABLE AT PAGE 1 OF THE PAPER BOOK, FROM WHICH IT CAN BE SEEN THAT THE SHAREHOLDERS FUND IS TO THE TUNE OF RS.26.68 CRORES. AS AGAINST THAT LOAN AND ADVANC ES ARE GIVEN FOR A SUM OF RS.2.92 CRORES. THE HONBLE JURISDICTIONAL HIGH CO URT IN CIT VS. RELIANCE UTILITIES AND POWER LTD. [(2009) 313 ITR 340 (BOM.)] HAS HELD THAT IF THERE ARE INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE SUFFICIENT TO MEET ITS INVESTMENT AND AT THE SAME TIME LOAN HAS BEEN RAISED IT CAN BE PRESUMED THAT T HE INVESTMENTS WERE FROM INTEREST FREE FUNDS AND RESULTANTLY NO DISALLOWANCE OF INTEREST CAN BE MADE. ITA NO.3619/MUM/2010 M/S.KAMA JEWELLERY (I) P.LTD. 2 RESPECTFULLY FOLLOWING THE AFORESAID JUDGEMENT, WE UPHOLD THE DELETION OF DISALLOWANCE. 4. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 29 TH DAY OF APRIL, 2011 . SD/- SD/- (V.DURGA RAO) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 29 TH APRIL, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) IX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.