Balbir Kumar Gupta, Ludhiana V. ACIT, Ludhiana

ITA 413/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68604 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.413/CHD/2013 ASSESSMENT YEAR : 2007-08 SHRI BALBIR KUMAR GUPTA, VS THE ACIT, 677, INDUSTRIAL AREA-B, CIRCLE V, LUDHIANA. LUDHIANA. PAN : AARPG-3931B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESHGUPTA RESPONDENT BY : NONE DATE OF HEARING : 05.12.2013 DATE OF PRONOUNCEMENT : 23.12.2013 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-II, LUDHIANA DATED 22.02.2013 RELATING TO ASSESSMENT YEARS 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143( 3) OF THE INCOME- TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL 1. THAT LD. ASSESSING OFFICER HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE BY MAKING AN ADDITION OF RS. 2069 34/- TO THE INCOME OF THE ASSESSEE UNDER SECTION 36(1)((III ) ON ACCOUNT OF NOTIONAL INTEREST ON ADVANCE GIVEN TO ST AFF IN THE NORMAL COURSE OF BUSINESS OF ASSESSEE. 2. THEREFORE THE APPLICATION OF SECTION 271(1)(C) O N THIS ADDITION IS INVALID AND UNLAWFUL. 3. THE ADJOURNMENT APPLICATION MOVED BY THE ASSESSE E HAD BEEN REJECTED IN VIEW OF THE SMALLNESS OF THE ISSUE. 2 4. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE ADDITION OF RS. 2,06,934/- UNDER SECTION 36(1)(III) OF THE A CT. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD MADE INTEREST FREE ADVANCES TO HIS SONS SHRI TARUN KUMAR GUPTA OF RS. 913,048/- AND SHRI SANDEEP KUMAR GUPTA OF RS. 777,803/-. BOTH TH E SONS WERE EMPLOYED WITH THE ASSESSEE AND WERE DRAWING SALARY OF RS. 96,000/- PER ANNUM. THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE SAID ADVANCES WERE IN THE NORMAL COURS E OF BUSINESS BEING ADVANCES MADE TO THE EMPLOYEES. THE ASSESSING OFFI CER REJECTING THE CONTENTION OF THE ASSESSEE INVOKED THE PROVISIONS O F SECTION 36(1)(III) OF THE ACT AND DISALLOWED A SUM OF RS. 206,934/-. 6. THE CIT(APPEALS) UPHELD THE ORDER OF THE ASSESSI NG OFFICER. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE CIT( APPEALS). 7. ON THE PERUSAL OF THE RECORD AND THE FACTS OF TH E CASE, WE FIND THAT THE ASSESSEE HAD MADE ADVANCES TO HIS SONS SHRI TAR UN KUMAR GUPTA AND SHRI SANDEEP KUMAR GUPTA, BOTH OF WHOM WERE EMPLOYE D WITH THE ASSESSEE AND WERE RECEIVING SALARY OF RS. 96,000/- PER ANNUM. THE ASSESSEE HAD ADVANCED SUM OF RS. 913,048/- TO SHRI TARUN KUMAR GUPTA AND RS. 777,803/- TO SHRI SANDEEP KUMAR GUPTA AND B OTH ABOVESAID ADVANCES WERE INTEREST FREE ADVANCES. ON THE OTHER HAND, THE ASSESSEE HAD PAID INTEREST ON INTEREST BEARING FUNDS. IN VIE W OF THE ASSESSEE HAVING MADE INTEREST FREE ADVANCES, THE ISSUE ARISI NG IN THE PRESENT APPEAL IS WHETHER THE PROVISIONS OF SECTION 36(1)(I II) OF THE ACT ARE ATTRACTED. ADMITTEDLY, THE ADVANCES HAVE BEEN MADE TO THE SONS OF THE ASSESSEE WHO IN-TURN ARE EMPLOYED WITH THE ASSESSEE IN THE BUSINESS. IN THE ABOVESAID FACTS, IT CANNOT BE SAID THAT THE SAI D ADVANCES HAVE NOT BEEN MADE FOR BUSINESS PURPOSE. ACCORDINGLY, WE RE VERSE THE FINDING OF 3 THE CIT(APPEALS) IN THIS REGARD AND DELETE THE ADDI TION OF RS. 206,934/-. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS , ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER,2013. SD/- SD/- ( T.R.SOOD) (SUSHMA CHO WLA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 23 RD DECEMBER,2013 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT,CHD.