Prabhudhan Finance Pvt. Ltd., Kolkata V. A.C.I.T.,Circle-10(2), Kolkata

ITA 42/KOL/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2347 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 10-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Notional interest
• Section: 143(3); 20

Judgement Text

ITA NO. 42/KOL/2020 ASSESSMENT YEAR: 2016-2017 PRABHUDHAN FINANCE PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT I.T.A. NO. 42/KOL/2020 ASSESSMENT YEAR: 2016-2017 PRABHUDHAN FINANCE PVT. LIMITED,................... .....................APPELLANT 226/1, TRINITY, AJC BOSE ROAD, MINTO PARK, KOLKATA-700020 [PAN: AACCP6358B] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. ................RESPONDENT CIRCLE-10(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 APPEARANCES BY: SHRI ANIL KOCHAR, ADVOCATE, FOR THE APPELLANT SHRI JAYANTA KHANRA, JCIT, SR. D.R., FOR THE RESPON DEN T DATE OF CONCLUDING THE HEARING : FEBRUARY 19, 2020 DATE OF PRONOUNCING THE ORDER : MARCH 20, 2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DAT ED 15.11.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.4,71.190/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF INTEREST ON LOAN ADVANCED TO M/S. PUJA F ERRO ALLOYS LIMITED. 2. THE ASSESSEE IN THE PRESENT CASE IS A NON-BANKIN G FINANCE COMPANY. THE RETURN OF INCOME FOR THE YEAR UNDER CO NSIDERATION WAS FILED BY IT ON 31.03.2018 DECLARING TOTAL INCOME OF RS.16 ,550/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS ADVANCED LOANS TO FOUR PARTIE S INCLUDING M/S. PUJA FERRO ALLOYS LIMITED, BUT NO INTEREST HAS BEEN CHAR GED ON THE SAID LOANS. SINCE THE ASSESSEE HAD CHARGED INTEREST ON THE LOAN S ADVANCED TO THE ITA NO. 42/KOL/2020 ASSESSMENT YEAR: 2016-2017 PRABHUDHAN FINANCE PVT. LIMITED 2 OTHER PARTIES, THE ASSESSING OFFICER CALCULATED THE NOTIONAL INTEREST IN RESPECT OF LOANS ADVANCED TO THE SAID FOUR PARTIES AT RS.8,96,220/- AND AN ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTA L INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 25.12.2018. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) CHALLENGING THE ADDITION MADE BY THE A SSESSING OFFICER ON ACCOUNT OF NOTIONAL INTEREST IN RESPECT OF LOANS AD VANCED TO THE CONCERNED FOUR PARTIES. DURING THE COURSE OF APPELLATE PROCEE DINGS, THE LD. CIT(APPEALS) NOTED THAT THE ASSESSEE-COMPANY HAD CH ARGED INTEREST ON THE LOAN ADVANCED TO M/S. PUJA FERRO ALLOYS LIMITED EVEN IN THE IMMEDIATELY PRECEDING YEAR WHILE NO SUCH INTEREST W AS CHARGED ON THE LOANS ADVANCED TO THE OTHER THREE PARTIES. HE ACCOR DINGLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F NOTIONAL INTEREST IN RESPECT OF LOANS GIVEN TO THE SAID THREE PARTIES BU T CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE NOT IONAL INTEREST IN RESPECT OF THE LOAN ADVANCED TO M/S. PUJA FERRO ALL OYS LIMITED OBSERVING THAT THERE WAS NO SATISFACTORY REASON GIVEN BY THE ASSESSEE-COMPANY FOR NOT CHARGING INTEREST ON THE LOAN GIVEN TO M/S. PUJ A FERRO ALLOYS LIMITED FOR THE YEAR UNDER CONSIDERATION. THE LD. CIT(APPEA LS) ACCORDINGLY RESTRICTED THE ADDITION OF RS.8,96,220/- MADE BY TH E ASSESSING OFFICER ON THIS ISSUE TO RS.4,71,190/-. STILL AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS SUBMITTED THAT EVEN THOUGH THE INTEREST WAS CHARGED BY THE ASSESSEE- COMPANY ON THE LOAN GIVEN TO M/S. PUJA FERRO ALLOYS LIMITED FOR THE IMMEDIATELY PRECEDING YEAR, THERE WAS NO SUCH INTER EST ACTUALLY CHARGED FOR THE YEAR UNDER CONSIDERATION. HE HAS CONTENDED THAT A CONSCIOUS ITA NO. 42/KOL/2020 ASSESSMENT YEAR: 2016-2017 PRABHUDHAN FINANCE PVT. LIMITED 3 DECISION WAS TAKEN BY THE ASSESSEE-COMPANY NOT TO C HARGE INTEREST ON THE LOAN GIVEN TO M/S. PUJA FERRO ALLOYS LIMITED FOR TH E YEAR UNDER CONSIDERATION KEEPING IN VIEW THE RELEVANT FACTS AN D CIRCUMSTANCES AND IN THE ABSENCE OF ANY UNDERSTANDING OR AGREEMENT TO CH ARGE SUCH INTEREST, THE INCOME ON ACCOUNT OF THE SAID INTEREST HAD NOT ACCRUED TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. KEEPING IN VIEW T HIS SUBMISSION MADE BY THE LD. COUNSEL FOR THE ASSESSEE, I HOLD THAT TH ERE WAS NO REAL INCOME ON ACCOUNT OF INTEREST ON THE LOAN ADVANCED BY THE ASSESSEE-COMPANY TO M/S. PUJA FERRO ALLOYS LIMITED THAT HAD ACCRUED TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND THE ADDITION MADE BY T HE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF SUCH NOTIONAL INTEREST IS NOT SUSTAINABLE. I, THEREFORE, DELETE T HE SAID ADDITION AND ALLOW THIS APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 20, 202 0. SD/- (P.M. JAGTAP) VICE- PRESIDENT) KOLKATA, THE 20 TH DAY OF MARCH, 2020 COPIES TO : (1) PRABHUDHAN FINANCE PVT. LIMITED, 226/1, TRINITY, AJC BOSE ROAD, MINTO PARK, KOLKATA-700020 (2) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-10(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-4, KO LKATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.