DCIT 8(3), MUMBAI V. SJR COMMODITIES & CONSULTANCIES P. LTD (FORMERLY KNOWN AS M/S. SU-RAJ DIAMOND CONSULTANCIES P. LTD), MUMBAI

ITA 4066/MUM/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59665 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 01-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

1 SJR COMMODITIES & CONSULTANCIES P LTD IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI E EE E BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI R S SYAL, R S SYAL, R S SYAL, R S SYAL, AM AM AM AM & SHRI & SHRI & SHRI & SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ITA NO. ITA NO. ITA NO. ITA NO. 4066/MUM/2009 4066/MUM/2009 4066/MUM/2009 4066/MUM/2009 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2005 2005 2005 2005- -- -06 0606 06) )) ) THE DY.COMMR OF INCOME TAX 8(3), MUMBAI VS SJR COMMODITIES & CONSULTANCIES P LTD (FORMERLY KNOWN AS M/S SU-RAJ DIAMOND CONSULTANCIES P LTD) 73C SU-RAJ HOUSE ANDHERI (E) MUMBAI 93 (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAACS9779H AAACS9779H AAACS9779H AAACS9779H ASSESSEE BY SH RAJESH P SHAH REVENUE BY SH P K B MENON DT.OF HEARING 5 TH JAN 2012 DT OF PRONOUNCEMENT 11 TH , JAN 2012 ORDER ORDER ORDER ORDER PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 18.2.2009 OF THE CIT(A) FOR THE ASSESSMENT YEAR 2005-06. 2 THE REVENUE HAS RAISED THE ONLY EFFECTIVE GROUND IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING INTEREST ON BORROWED FUNDS WHICH WERE UTILIZED FOR ADVANCING INTEREST FREE LOANS TO SISTER CONCERNS WI THOUT APPRECIATING THE FACTS OF THE CASE. 3 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF T HE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THIS ISSUE HAS BEEN CONSIDERED AND ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 IN ITA NO. 2120/MUM/2008 VIDE ORDER DATED 29 TH 2 SJR COMMODITIES & CONSULTANCIES P LTD SEPT 2011. WE FURTHER NOTE THAT THE CIT(A) HAS ALL OWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE ORDER OF THE ASSESSMENT Y EAR 2004-05. 4 THIS ISSUE HAS BEEN DECIDED AGAINST THE REVENUE B Y THE TRIBUNAL AND IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 200 4-05 IN PARA 5 AS UNDER: 5. HAVING HEARD THE RIVAL CONTENTIONS, AND HAVING PERUSED THE MATERIAL ON RECORD, WE SEE NO REASONS TO DISTURB WE LL REASONED CONCLUSIONS ARRIVED AT BY THE CIT(A) - PARTICULARLY AS LEARNED DEPARTMENTAL REPRESENTATIVE DID RIOT REALLY DISPUTE FACTUAL ELEMENTS EMBEDDED IN THE CONCLUSIONS ARRIVED AT BY THE CIT ( A) WITH REGARD TO THE BUSINESS EXPEDIENCY OF THE ASSESSEE. WE HAVE AL SO TAKEN NOTE OF LEARNED COUNSELS ARGUMENT THAT ASSESSEES STAN D TO THE EFFECT THAT ADVANCES WERE MADE FOR THE PURPOSE OF IMPORT O F ROUGH DIAMONDS, AND SIMPLY BECAUSE IMPORTS COULD NOT BE EFFECTED THE NATURE OF ADVANCES WOULD NOT CHANGE, HAS REMAINED U NCONTROVERTED BY THE REVENUE. IN ANY CASE, AS HELD BY HONBLE SUP REME COURT IN THE CASE OF S.A. BUILDERS (SUPRA), THE EXPRESSION COMM ERCIAL EXPEDIENCY IS OF WIDE IMPORT AND EVEN ADVANCES FOR THE PURPOS E OF BUSINESS OF THE SISTER CONCERN ARE REQUIRED TO BE TREATED AS FO R BUSINESS PURPOSES. THE ASSESSING OFFICER WAS THUS CLEARLY IN ERROR IN RESORTING TO THE DISALLOWANCE ON THE SHORT GROUND THAT WHILE THE ASSESSEE HAS BORROWED THE MONEY ON INTEREST, IT HAS GIVEN AN INT EREST FREE ADVANCE TO THE SISTER CONCERN. THAT APPROACH CERTAI NLY CONSTITUTE A VERY SUPERFICIAL VIEW OF THE MATTER, AND THE CIT(A) WAS JUSTIFIED IN REVERSING THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER. WE APPROVE THE CONCLUSION ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5 THEREFORE, FOLLOWING THE ORDER FOR THE EARLIER YE AR OF THE TRIBUNAL, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGA INST THE REVENUE. 6 IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 11 TH , DAY OF JAN 2012 SD/ SD/ SD/ SD/ SD/ SD/ SD/ SD/ ( R S SYAL ) ( R S SYAL ) ( R S SYAL ) ( R S SYAL ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) ( VIJAY PAL RAO ) ( VIJAY PAL RAO ) ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 11 TH , JAN 2012 3 SJR COMMODITIES & CONSULTANCIES P LTD RAJ* RAJ* RAJ* RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER