ACIT, CHENNAI V. Saravana Stores (Tex), CHENNAI

ITA 437/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4611 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 11-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Keywords: Commercial expediency

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. BEFORE DR.O.K. NARAYANAN, VICE-PRESIDENT & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 437/MDS/2013 ASSESSMENT YEAR: 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE IV(2), 46, NUNGAMBAKKAM HIGH ROAD, CHENNAI. VS. M/S. SARAVANA STORES (TEX), NO. 45, RANGANATHAN STREET, T. NAGAR, CHENNAI 600 017. [PAN : AAWFS6761Q] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. MADHAVAN, JCIT RESPONDENT BY : NONE DATE OF HEARING : 11.09.2013 DATE OF PRONOUNCEMENT : 11.09.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I, CHENNAI DATED 27.12.2012 RELEVANT TO THE ASSESSMENT 2008-09. 2. THIS APPEAL OF THE REVENUE IS TIME BARRED BY 04 DAYS IN FILING. THE DEPARTMENT HAS FILED CONDONATION IN THE FORM OF AFFIDAVIT REQUESTING TO CONDONE THE DELAY. BY REFERRING TO TH E CONTENTS THEREIN, THE LD. DR HAS REQUESTED TO CONDONE THE DELAY. ACCO RDINGLY, WE CONDONE THE DELAY OF 04 DAYS IN FILING THE APPEAL A ND ADMIT THE SAME I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.4 44 437 3737 37/M/ /M/ /M/ /M/13 1313 13 2 FOR HEARING. NONE APPEARED ON BEHALF OF THE ASSESSE E. HENCE, WE PROCEED TO DECIDE THE APPEAL ON MERITS AFTER HEARIN G OF THE LD. DR. 3. THE ISSUE INVOLVED IN THIS APPEAL RELATES TO IN TEREST DISALLOWANCE OF ` .83,84,139. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT ON VERIFICATION OF THE BALANCE SHEET, AN AMOUN T OF ` .45.02 CRORES WAS SHOWN AS LOANS AND ADVANCES TO SISTER CONCERNS AND TO RELATIVES AND PARTNERS WITH NO INTEREST BEING CHARGED. THE ASSESS EE HAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE BORROWED FUNDS FROM THE BANK WERE UTILIZED FOR ONLY BUSINESS AND THE AMOUNT GIVEN AS LOANS AND ADVANCES WERE OUT OF THE CAPITAL ACCOUNT. THE ASSESSING OFFICER HAS FOUN D THAT THE AMOUNT REFLECTED IN THE PARTNERS CAPITAL ACCOUNT WAS ` .56.60 CRORES AND AFTER DEDUCTING THE VALUE OF ASSETS, THE BALANCE WAS ONLY AT ` .17.8 CRORES. THEREFORE, AGAINST THE TOTAL ADVANCES OF ` .45.02 CRORES, REDUCING THE AMOUNT AVAILABLE OF ` .17.8 CRORES, HE REASONED THAT THE BALANCE OF ` .27.22 CRORES COULD HAVE ONLY BEEN OUT OF BORROWED FUNDS. HENCE, THE INTEREST CLAIMED AMOUNTING TO ` .83,84,139/- WAS DISALLOWED. 4. ON APPEAL, THE LD. CIT(APPEALS) ON THE REASON T HAT THE LOANS AND ADVANCES ARE ON THE BASIS OF COMMERCIAL EXPEDIENCY AND EXCEPT THREE ITEMS, ALL THE ITEMS HAVE CLEAR NEXUS WITH THE BUSI NESS OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER PARTLY. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.4 44 437 3737 37/M/ /M/ /M/ /M/13 1313 13 3 6. WE HAVE HEARD THE LD. DR AND THE LD. DR HAS SUB MITTED THAT THE VERY SIMILAR ISSUE HAS CAME UP BEFORE THE LD. CIT(APPEAL S) IN EARLIER ASSESSMENT YEAR AND THE SAME WAS REMITTED BACK TO THE ASSESSIN G OFFICER TO CONSIDER THE ISSUE AFRESH. WE ALSO FIND THAT IN THE GROUNDS OF APPEAL, REVENUE HAS RAISED A SPECIFIC GROUND IN 1.B BY STATING THAT A S IMILAR GROUND HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER IN THE A SSESSMENT YEAR 2007-08. AFTER HEARING THE LD. DR, WE FIND THAT THE ISSUE HA S TO GO BACK TO THE ASSESSING OFFICER FOR CONSISTENCY AND THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(APPEALS) AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH BY KEEPING IN VIEW THE DECISION TAKEN FOR ASSESSMENT YEAR 2007-08 AND DECIDE THE ISSUE IN ACC ORDANCE WITH AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON WEDNESDAY, THE 11 TH OF SEPTEMBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 11.09.2013 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.