Shri Gulshan Bathla, Sonepat V. JCIT, Sonepat

ITA 4100/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7376 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 27-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: RAJ KUMAR ADVS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 4100/DEL /2013 ASSESSMENT YEAR: 2006-07 SHRI GULSHAN BATHLA VS. THE A.C.I.T. M/S SAMTA AUTOMOBILES RANGE SONEPAT GREEM CRESCEMT ROAD NEW DELHI NEW DELHI PAN : ADEPB 4349 N [APPELLANT] [RESPONDENT] DATE OF HEARING : 27.07.2016 DATE OF PRONOUNCEMENT : 19 .08.2016 APPELLANT BY : SHRI K. SAMPATH & RAJKUMAR, ADVS RESPONDENT BY : SHRI AMRIT LAL, SR. DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A), ROHTAK, DATED 02/05/2013 FOR A .Y 2009-10 PASSED IN FIRST APPEAL NO. 548/SPT/2011-12. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLLO WS : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE FOLLOWIN G ACTIONS OF THE A.O: 2 ITA NO. 4100/ DEL/2013 2 1. DISALLOWING THE BANK INTEREST TO THE TUNE OF RS. 8,09,711/- 2. MAKING 15% ADHOC DISALLOWANCE OUT OF ADVERTISEME NT, COURIER CHARGES, MISCELLANEOUS EXPENSES, PRINTING A ND STATIONERY, REPAIR AND MAINTENANCE, SALES PROMOTION , WORKSHOP EXPENSES, TELEPHONE AND CAR RUNNING EXPENS ES. GROUND NO 1 3. APROPOS GROUND NO. 1, THE LD. AR OF THE ASSESSEE CONTENDED THAT THE CIT(A), FOR UPHOLDING THE IMPUGNED ADDITION BY DISALLOWING BANK INTEREST TO THE TUNE OF RS. 8,09,711/- HAS RELIED O N THE DECISION OF THE CIT(A) VS. ABHISHEK INDUSTRIES LTD [2006\ 156 TAXMA N 257 [P & H] WHICH IS NOT A GOOD LAW. TO THIS PROPOSITION, THE LD. AR HAS PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF MUNJAL SALES CORPORATION VS. CIT 298 ITR 298 [SC] A ND DECISION OF THE HON'BLE PUNJAB HIGH COURT IN THE CASE OF GURDAS GAR G VS. CIT [2015] 63 TAXMAN.COM 289 [P&H]. THE LD. AR ALSO SUBMITTED TH AT THE CIT(A) FOR A.Y 2011-12 HAS ALLOWED SIMILAR CLAIM OF THE ASSESS EE HAVING SIMILAR SET OF FACTS AND CIRCUMSTANCES. 4. PER CONTRA, THE LD. DR OF THE REVENUE SUPPORTED THE ACTION OF THE AO AND CONTENDED THAT NO MATERIAL WAS BROUGHT O N RECORD TO SHOW THAT THE SAID INTEREST FREE LOANS/ADVANCES HAVE BEE N GIVEN FOR BUSINESS PURPOSES. THUS, THE CIT(A) WAS CORRECT IN UPHOLDING THE ADDITION. 3 ITA NO. 4100/ DEL/2013 3 5. ON CAREFUL CONSIDERATION OF THE ABOVE, WE ARE OF THE VIEW THAT ON CAREFUL PERUSAL OF THE HON'BLE SUPREME COUR T ORDER IN THE CASE OF MUNJAL SALES [SUPRA], WE OBSERVE THAT AFTER REFERRING TO THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF ABHISHEK INDUSTRIES [SUPRA], IT WAS HELD TH AT INTEREST PAID ON BORROWINGS CAN BE ALLOWED A DEDUCTION IN COMPUTI NG THE BUSINESS PROFITS AND EVERY ASSESSEE, INCLUDING A FI RM, HA TO ESTABLISH, IN THE FIRST INSTANCES, THAT IT WAS ALLO WABLE U/S 36(1)(III) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT']. 6. IN THE PRESENT CASE, AS PER BALANCE SHEET, THE F ACTS, AS NOTED BY THE CIT(A) IN PARA 4 OF THE IMPUGNED ORDER , CLEARLY REVEALS THAT AS ON 31.3.2009, THE CAPITAL WAS 11.15 LAKHS AND INTEREST FREE UNSECURED LOANS WERE 112.49 LAKHS TOT ALLING TO RS. 123.64 LAKHS. THE AMOUNT OF INTEREST FREE LOANS/AD VANCES GIVEN BY THE ASSESSEE TO THE SISTER CONCERN/PERSONS WERE RS. 94.53 LAKHS WHICH IS FULLY COVERED BY THE CAPITAL AND INT EREST FREE LOANS/ADVANCES TAKEN BY THE ASSESSEE THUS INTEREST PAID BY THE ASSESSEE, ON THE INTEREST BEARING LOANS, TAKEN FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE CANNOT BE DISALLOWED. THI S CLAIM HAS BEEN ALLOWED BY THE CIT(A) FOR A.Y 2011-12 ORDER DA TED 30.12.2015. HENCE, WE ARE INCLINED TO HOLD THAT TH E ISSUE AND 4 ITA NO. 4100/ DEL/2013 4 CONTENTIONS OF THE ASSESSEE GETS STRONG SUPPORT FRO M THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION AND WE ALLOW THE SAME AND THE AO IS DIR ECTED TO DELETE THE DISALLOWANCE. ACCORDINGLY, GROUND NO. 1 OF THE ASSESSEE IS ALLOWED. GROUND NO. 2. 7. APROPOS GROUND NO. 2, THE LD. AR CONTENDED THAT THE AO WAS NOT CORRECT IN MAKING ADHOC DISALLOWANCE OF 15% OUT OF ADVERTISEMENTS, COURIER CHARGES, MISCELLANEOUS EXPE NSES, PRINTING OF STATIONERY, REPAIR AND MAINTENANCE, SAL ES PROMOTION, WORKSHOP EXPENSES, TELEPHONE AND CAR RUNNING EXPENS ES, AS THE ASSESSEE PLACED ALL THE RELEVANT BILLS AND VOUCHERS TO SUPPORT THESE CLAIMS AND THERE WAS NO ELEMENT OF PERSONAL U SE. ALTERNATIVELY, THE LD. AR SUBMITTED THAT IF ALL THE ADHOC DISALLOWANCE HAS TO BE MADE, THEN IT MAY KINDLY BE REDUCED TO 10% OF THE TOTAL CLAIM. 8. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE IMP UGNED ORDER. HOWEVER, HE FAIRLY SUBMITTED THAT THE REVEN UE HAS NO OBJECTION IF IT IS FOUND JUST AND PROPER TO REDUCE THE PERCENTAGE OF DISALLOWANCE. FROM THE ABOVE SUBMISSIONS, WE AR E OF THE VIEW THAT THE ASSESSEE COULD NOT SATISFY US ABOUT THE PO SSIBILITY OF 5 ITA NO. 4100/ DEL/2013 5 ELEMENT OF PERSONAL USE. THUS THE ALTERNATIVE PLEA OF THE ASSESSEE ALSO NOT OBJECTED BY THE LD. DR IS ACCEPTE D AND THE AO IS DIRECTED TO REDUCE AND RESTRICT THE ESTIMATED DI SALLOWANCE @ 10% OF TOTAL IMPUGNED CLAIM OF THE ASSESSEE. ACCOR DINGLY, GROUND NO. 2 OF THE ASSESSEE IS PARTLY ALLOWED AS I NDICATED ABOVE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED AS INDICATED ABOVE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19.08 .2016. SD/- SD/- (S.V. MEHROTRA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH AUGUST, 2016 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, /ITAT, NEW DELHI