DCIT, C-I, Ludhiana V. M/s R. N. Gupta & Co. Ltd., Ludhiana

ITA 403/CHANDI/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9066 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: SUBHASH AGGARWAL
• Section: 37(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 403/CHD/2018 / ASSESSMENT YEAR : 2014-15 THE DCIT, CIRCLES-1 LUDHIANA VS. M/S R.N. GUPTA &COMPANY LIMITED, C-55, FOCAL POINT, LUDHIANA ./PAN NO: AABCR9636F / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH SUBHASH AGGARWAL, ADVOCATE ' ! / REVENUE BY : SH. MANJIT SINGH, SR.DR. # $ % /DATE OF HEARING : 29.11.2018 &'() % / DATE OF PRONOUNCEMENT : 13.12 . 2018 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 08.01.2018 OF THE COMMISSIONER OF INCOM E TAX-I, LUDHIANA [HEREINAFTER REFERRED TO AS CIT]. 2. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE G ROUNDS OF APPEAL:- 1. WHETHER UPON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN ALLOWING RELIEF ON ACCOUNT OF CAPITALIZATI ON OF INTEREST AS PER PROVISO TO SECTION 36(1)(III) ON INVESTMENT IN FIXED ASSETS, CAPITAL WORK IN PROGRES S AND CAPITAL ADVANCES? ITA NO. 403-CHD-2018- M/S R.N. GUPTA & COMPANY LTD., LUDHIANA 2 2. WHETHER UPON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN ALLOWING RELIEF ON ACCOUNT OF DISALLOWIN G LOSS ON FOREIGN CURRENCY FLUCTUATION IGNORING THE FACTS OF THE CASE.? 3. GROUND NO.1 : VIDE GROUND NO.1, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 36(1)(III) OF THE INCOME-TAX ACT, 1961 (IN SHO RT 'THE ACT') OUT OF THE INTEREST EXPENDITURE IN RESPECT OF INVESTMENTS MAD E IN FIXED ASSETS CAPITAL WORK IN PROGRESS AND CAPITAL ADVANCES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. THE CIT(A) IN THIS CASE AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CAS E HAS GIVEN A CATEGORICAL FINDING THAT ASSESSEE WAS POSSESSED OF SUFFICIENT OWN INTEREST FREE FUNDS TO COVER THE CAPITAL WORK IN PROGRESS AN D CAPITAL ADVANCES. HE, THEREFORE, RELYING UPON THE DECISION OF THE JURISDI CTIONAL HIGH COURT IN THE CASE OF BRIGHT ENTERPRISES PVT LTD VS. CIT, JALANDHAR 381 ITR 107 AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE HAD NOT BORROWED ANY SPECIFIC LOANS FOR THE AFORESAID CAPITAL ADVANCES AND CAPITAL WORK IN PROGRESS, DELETED THE ADDITIONS SO MADE BY THE ASSE SSING OFFICER. 5. THE ISSUE IS NOW SQUARELY COVERED BY THE VARIOUS DECISIONS OF THE HIGH COURTS INCLUDING THAT OF THE DECISION OF THE H ON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRIGHT ENTERPRISES PVT. LTD VS. CIT, JALANDHAR (SUPRA) , CIT VS. KAPSONS ASSOCIATES (2016) 381 ITR 204 (P& H) AND THE LATEST DECISION OF THE COORDINATE BENCH OF THE TRIB UNAL (INCIDENTALLY CONSISTED OF BOTH OF US) IN THE CASE OF ACIT VS. JANAK GLOBAL RESOURCES PVT LTD ITA NO. 470/CHD/2018 ORDER DATED 16.10.201 8, WHEREIN, THE ISSUE ITA NO. 403-CHD-2018- M/S R.N. GUPTA & COMPANY LTD., LUDHIANA 3 HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY ALSO CONSIDERING THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF HERO CYCL ES VS. CIT 379 ITR 347 (SC) AND ALSO FINDINGS ARRIVED IN THE CASE OF A VON CYCLES LTD. VS. CIT IN ITA NO.277 OF 2013. THE HON'BLE COURTS HAVE HELD THAT IF THE ASSESSEE IS POSSESSED OF SUFFICIENT OWN INTEREST F REE FUNDS TO MEET THE INVESTMENTS / INTEREST FREE ADVANCES, THEN, UNDER THE CIRCUMSTANCES, PRESUMPTION WILL BE THAT INTEREST FREE ADVANCES / I NVESTMENTS HAVE BEEN MADE BY THE ASSESSEE OUT OF OWN FUNDS / INTEREST FR EE FUNDS. IN VIEW OF THIS, THERE IS NO MERIT IN THIS GROUND O F THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. 6. GROUND NO.2 : IN GROUND NO.2, THE REVENUE HAS AGITATED THE ACT ION OF THE CIT(A) IN ALLOWING THE RELIEF ON ACCOUNT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER ON LOSS ON FOREIGN CURRENCY F LUCTUATION. 7. THE RELEVANT DISCUSSION HAS BEEN MADE BY THE CIT (A) IN PARA 5 OF THE IMPUGNED ORDER. THE LD. CIT(A) HAS GIVEN A CATE GORICAL FINDING THAT THE LOAN IN FOREIGN CURRENCY WAS TAKEN BY THE ASSES SEE AT A LOWER RATE OF 7.5% AS AGAINST THE NORMAL RATE OF 12% PER ANNUM. THE SOLE PURPOSE WAS TO GET THE BENEFIT OF THE LOWER RATE OF INTEREST THEREBY IMPROVING THE INCOME BY WAY OF SAVING THE INTEREST COST. THE LD. CIT(A) WHILE RELYING UPON THE DECISION OF THE HON'BLE PUNE BENCH OF TH E TRIBUNAL IN THE CASE OF COOPER CORPORATION PRIVATE LIMITED ITA NO.86 6/PN/2004, AY2008- 09 ORDER DATED 29.4.2016, ON IDENTICAL FACTS, HAS DELETED THE ADDITIONS HOLDING THAT THE CONVERSION IN FOREIGN CURRENCY LOA N WHICH LED TO THE IMPUGNED LOSSES, WERE DICTATED BY REVENUE CONSIDER ATIONS TOWARDS SAVING ITA NO. 403-CHD-2018- M/S R.N. GUPTA & COMPANY LTD., LUDHIANA 4 INTEREST COST AND FURTHER HELD THAT THE SAID LOSS W AS ON REVENUE ACCOUNT AND WAS AN ALLOWABLE EXPENDITURE UNDER THE PROVISI ONS OF SECTION 37(1) OF THE ACT. 8. THE LD. DR COULD NOT POINT OUT ANY DISTINGUISHI NG FACTS OR CASE LAWS IN THIS RESPECT. IN VIEW OF THIS, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE CIT(A). THERE IS NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.2018 SD/- S/D- ( . . , & ' / B.R.R. KUMAR) () / ACCOUNTANT MEMBER ( / SANJAY GARG ) / JUDICIAL MEMBER DATED : 13.12.2018 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR