M/s Modern Steel Ltd., Mandi Gobindgarh V. ACIT, C-4(1), Chandigarh

ITA 364/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4084 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N D GUPTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHB, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.364/CHD/2018 ASSESSMENT YEAR: 2007-08 M/S MODERN STEELS LTD. VS. THE ACIT, C-4(1) POST BOX 12, GT ROAD CIRCLE-4(1) MANDI GOBINDGARH CHANDIGARH PUNJAB PAN NO. AABCM1871F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI. ASHOK GOYAL REVENUE BY : SHRI. N.D. GUPTA DATE OF HEARING : 17/07/2018 DATE OF PRONOUNCEMENT : 07/08/2018 ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-2, CHANDIGARH DT. 17/01/2018. 2. IN THE PRESENT ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS. 5,43,906/- AS INTEREST & RS. 1,37,202/- AS ADMINISTRATIVE EXPENSE S WHEN SUFFICIENT BUSINESS PROFITS & INTEREST FREE FUNDS WERE THERE & THERE WERE NOT A NY ADMINISTRATIVE EXPENSES. 2. THAT LD. CIT HAS ERRED IN CONFIRMING THE ADDITION O F RS. 5,43,906/- AS INTEREST & RS. 1,37,202/- AS ADMINISTRATIVE EXPENSES ON THE BASIS THAT ABHISHEK INDUSTRIES CASE IS STILL GOOD LAW & APPLICABLE & FURTHER WRONG LY INTERPRETING THAT HONBLE PB & HR COURT HAS KEPT THE ISSUE THAT IF THERE WAS NON I NTEREST BEARING FUNDS IN THE COMMON KITTY, THE SAME WOULD BE PRESUMED TO BE USED FOR GIVING THE INTEREST FREE ADVANCES IS OPEN. HENCE RELIEF BE ALLOWED. 3. THE ASSESSING OFFICER MADE DISALLOWANCE OF AMOUN T ON ACCOUNT OF ADMINISTRATIVE AND MANAGERIAL EXPENSES AS THE INCOM E EARNED BY THE ASSESSEE FROM THE INVESTMENT ARE CONSIDERED BEING IN THE NAT URE OF DIVIDEND AND LONG TERM CAPITAL GAIN BOTH OF WHICH ARE EXEMPT. 4. LD. CIT(A) CONFIRMED THE ADDITION ON THE GROUNDS THAT THE ASSESSING OFFICER HAS RIGHTLY MADE THE DISALLOWANCE AFTER DUL Y RECORDING THE SATISFACTION AND SINCE THE AMOUNTS HAVE BEEN INVESTED FROM THE C C ACCOUNT DIRECTLY THE 2 DISALLOWANCE NEED TO BE CONFIRMED. THE LD. CIT(A) A LSO HELD THAT THE ASSESSEE HAS NEITHER GIVEN ANY WORKING AS TO HOW THE FUNDS W ERE UTILIZED FOR ANY SPECIFIC PURPOSE. 5. BEFORE US, THE LD. AR SUBMITTED THAT THE ASSESSE E HAS GOT INTEREST FREE FUNDS OF RS. 35.77 CRORES AT HIS DISPOSAL WHEREAS T HE INVESTMENT MADE WAS ONLY OF RS. 1.13 CRORES AS ON 01/04/2006. IT WAS FURTHER ARGUED THAT AS ON 01/04/2007 THE OWN INTEREST FREE FUNDS AVAILABLE OR OF RS. 42. 81 CRORES AND HENCE NO DISALLOWANCE IS CALLED FOR. HE ARGUED THAT THE MATT ER HAS NOT BEEN EXAMINED IN PERSPECTIVE BY THE AUTHORITIES BELOW. 6. LD. DR WHILE RELYING ON THE ORDER OF THE LD. CIT (A), ARGUED THAT THE ENTIRE ISSUE NEEDS TO BE EXAMINED BY THE REVENUE BEFORE GI VING ANY RELIEF. 7. SINCE THE ISSUE PERTAINS TO VERIFICATION OF FACT UAL MATRIX ABOUT THE AVAILABILITY OF THE FUNDS, INTEREST FREE AS WELL AS INTEREST BEARING, THE MATTER IS BEING REFERRED BACK TO THE FILE OF THE LD. CIT(A) T O EXAMINE THE ISSUE AND TAKE AN APPROPRIATE DECISION AS PER THE RATIOS LAID DOWN BY THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF AVON CYCLES LTD. V. CIT, LUDHIANA, HONBLE HIGH COURT OF GUJARAT IN THE CASE OF PR. CIT VS. SI NTEX INDUSTRIES LTD., APEX COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT, NEW DELHI AND ANY OTHER CASE OTHER LAWS SUBMITTED BY THE REVENUE RELEVANT TO THE ISSUE IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT,1961. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07/08/2018 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR