M/s Blue Stampings & Forgings Ltd., Faridabad V. ACIT, Faridabad

ITA 4423/DEL/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7186 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 11-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K.C.SINGHAL
• Keywords: Proportionate interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. C.N. PRASAD, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA No.4423/Del/2016 Assessment Year: 2012-13 Blue Stampings & Forgings Ltd., Plot No.12, Sector-25, Faridabad PAN No.AAACB9348K Vs ACIT Circle-11 CGO Building Faridabad (APPELLANT) (RESPONDENT) Appellant by Sh. K. C. Singhal, CA Respondent by Sh. Manu Chaurasia, Sr. DR Date of hearing: 10/03/2022 Date of Pronouncement: 10/03/2022 ORDER PER N. K. BILLAIYA, AM: This appeal filed by the assessee is preferred against the order of the CIT(A), Faridabad dated 22.02.2016 pertaining to A.Y.2012-13. 2. The grievance of the assessee read as under :- 1. On the law, facts and circumstances of the case, Ld. CIT(A) was not justified in substaining the disallowance of 2 interest of Rs.11,10,388.00 paid as ECB loan for purchase of shares of its sister concern M/s. MECA Stamp International, France. 2. On the law, facts and circumstances of the case, the Ld. CIT(A) was not justified in substaining the disallowance of proportionate interest of Rs.54,28,510.00 on advance given to its sister concern M/s. MECA Stamp International, France. 3. At the very outset the counsel for the assessee stated that the issue raised vide ground No.1 has been decided by this Tribunal in favour of the assessee in earlier assessment years. The Counsel supplied the copy of this Tribunal. 4. We have carefully considered the grievance raised vide ground No.1. Facts on record show that the assessee has raised loan of Rs.9 crores from Standard Chartered Bank, Mauritus for acquiring equity shares of MECA Stamp International, France. On such borrowed capital the assessee paid interest of Rs.11,10,388/-. This interest was earlier disallowed by the AO who was of the opinion that the loan raised as ECB was utilized 3 in making investment in shares and trading in shares is not the business activity of the assessee. 5. An identical issue was considered by this Tribunal in ITA No.2533/Del/2014 and 2578/Del/2018 for A.Y.2008-09. The relevant findings read as under :- 4 6. A similar quarrel arose in A.Y.2009-10 to 2011-12 wherein the coordinate Bench followed its earlier order. The relevant findings read as under :- 5 6 7 7. Respectfully following the decision of the coordinate Bench (supra) we direct the AO to delete the impugned addition ground No.1 is allowed. 8. The underlying facts in the issue raised vide ground No.2 are that during the course of the scrutiny assessment proceedings the AO noticed the assessee had advanced money to MECA Stamp International amounting to Rs.4.19 crores which at the end of the previous year total Rs.18279000/-. The assessee was asked to explain the details of advance and its purpose. In its reply the assessee explained that the advance was given for business purposes. The AO was of the opinion that no evidence whatsoever was filed to substantiate that the money advanced was given out of internal accrual and not from borrowed funds. The AO proceeded by disallowing the interest expenditure attributable to the said advance and made addition of Rs.54,28,510/-. The assessee agitated the matter before the CIT(A) but without any success. 8 9. Before us the counsel for the assessee stated that the advances were given in F.Y.2010-11 and no adverse view has been taken by the AO in the earlier assessment years. The DR stated that no such details were furnished before the AO. 10. We have given a thoughtful consideration to the rival submissions. Page No.25 and 26 of the paper book show that the advances were made in F.Y.2010-11. The contention of the counsel that no adverse inference has been drawn by the AO in the relevant assessment years cannot be brushed aside. However, in the interest of justice and fair play we restore this issue to the files of the AO. The assessee is directed to furnish necessary evidences to show that the advances were made in earlier assessment years on which no adverse inference was drawn by the AO. The AO is directed to examine the same and decide the issue afresh after giving a reasonable opportunity of being heard to the assessee. 11. In the result, the appeal filed by the assessee is allowed in part for statistical purpose. 9 12. The order is pronounced in the open court on 10.03.2022 in the presence of both the rival representatives. Sd/- Sd/- (C.N. PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* Date:- 10.03.2022 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 10 Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for Pronouncement Date on which the fair order comes back to the Sr. PS/ PS Date on which the final order is uploaded on the website of ITAT 11.03.2022 Date on which the file goes to the Bench Clerk Date on which file goes to the Head Clerk. The date on which file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order