ITO, New Delhi V. Sh. Atul Anand, New Delhi

ITA 446/DEL/2013

• Counselvise Citation: 44620114 RSA 2013
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y KAKKARDR
• Keywords: Additional evidence; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI R. P. TOLANI, JUDICIAL MEMBER AND SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A.NO.446/DEL/2013 ASSESSMENT YEAR : 2009-10 ITO VS. ATUL ANAND WARD-24(1), ROOM NO. 1307, C-5/44, 13 TH FLOOR, DR. S. P. MUKHERJEE CIVIC CENTRE, SAFDARJUNG DEVE LOPMENT AREA MINTO ROAD, NEW DELHI. NEW DELHI. PAN: AADPA0520C. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.S.GUPTA ,ADV. RESPONDENT BY : MS. Y. KAKKAR,DR. O R D E R PER J. S. REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIREC TED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS)-XXIII, NEW DELHI DATED 12.11.2012. ON THE FOLLOWING GROUNDS: 1 ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAS ERRED IN DELETING DISALLOWANCE OF RS.94 ,04,843/- REPRESENTING INTEREST ON ADVANCES MADE TO SISTER CO NCERN WITHOUT COMMERCIAL EXPEDIENCY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING DISALLOWANCE OF RS.7,00,0 00/- BEING NOTIONAL RENTAL INCOME CALCULATED U/S 23 OF THE INC OME TAX ACT,1961. 2 3. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAS ERRED IN ADMITTING THE ADDITIONAL EVIDE NCE BEFORE HER WITHOUT AFFORDING ANY OPPORTUNITY TO ASSESSING OFFICER FOR EXAMINE THE EVIDENCE AS PER SUB-RULE 46A OF THE IT RULES 1962. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. 2. WE HAVE HEARD MS. Y. KAKKAR LD. DEPARTMENTAL REP RESENTATIVE ON BEHALF OF THE REVENUE AND MR.V.S.GUPTA, LD. ADVOCAT E ON BEHALF OF THE ASSESSEE. 3. AFTER HEARING RIVAL CONTENTIONS, WE HOLD AS FOLL OWS: AS ON THE FIRST ISSUE OF DISALLOWANCE OF INTEREST, WE FIND THAT THE LD. CIT (A) HAS AT PARA 7 PAGE 18 DELETED THE DISALLOWANCE BY HOLDING THAT TH E ASSESSE HAS SUFFICIENT INTEREST FREE FUNDS. 3.1 THIS IS A CASE WHERE THE ASSESSEE HAS SUFFICIEN T INTEREST FREE FUNDS AS COMPARED TO THE INTEREST FREE ADVANCES MADE TO SIST ER CONCERNS. THIS FACT IS EVIDENT FROM THE PERUSAL OF THE BALANCE SHEET OF TH E ASSESSEE AS ON 31 ST MARCH, 2009 WHICH IS AT PAGE 145 TO 148 OF THE PAPE R BOOK. THE CIT (A) HAS ANALYZED THE POSITION BY OBSERVING THAT THE OPENING BALANCE OF THE ASSESSEES CAPITAL ACCOUNT AS ON 04.02.2008 WAS RS. 10,38,07,9 05/- AND THAT THE ASSESSEE INTRODUCED FURTHER CAPITAL OF RS.3,67,12,1 76/- DURING THE YEAR AND WHEREAS THE LOANS AND ADVANCES GIVEN OF RS.1,16,53, 493/- THAT TO WHICH WAS 3 A CARRIED FORWARD FROM EARLIER YEAR. HE ALSO HELD T HAT NO INTEREST DISALLOWANCE WAS MADE IN THE SCRUTINY FOR ASSESSMEN T YEAR 2008-09. 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT DI SPUTE THIS FACTUAL POSITION RECORDED BY THE LD. CIT (A). HER SUBMISSIO N IS THAT THE DATEWISE POSITION HAS NOT BEEN EXPLAINED AND ITEMWISE DETAIL S NOT GIVEN AND THAT THE ASSESSEE HAS NOT DEMONSTRATED COMMERCIAL EXPEDIENCY . SHE RELIED ON CERTAIN CASE LAWS IN SUPPORT OF THIS PROPOSITION. 5. IN THE PRESENT CASE AS FACTUAL POSITION RECORDED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DEMONSTRATES T HAT THE ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS. PRESUMPTION IS THAT SUCH INTEREST FREE FUNDS HAVE BEEN UTILIZED FOR GIVING INTEREST FREE ADVANCE S, UNLESS OTHERWISE PROVED. FOR THIS PROPOSITION WE DRAW STRENGTH FROM THE JUDG MENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE U TILITIES AND POWER LTD., 313 ITR 340 (BOM). RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE FINDING OF THE LD. CIT (A). 6. THE LD. CIT (A) ALSO HELD THAT THE LOANS IN QUES TION TAKEN BY THE ASSESSEE WERE FOR SPECIFIC PURPOSES, NAMELY FOR EXP ORT BILL DISCOUNTING, PACKING CREDIT LOANS, TERM LOAN TAKEN FOR PURCHASE OF PROPERTY FOR BUSINESS USE, CAR LOAN AND OVERDRAFT. THE BANK WHEN GUARANTY SUCH SPECIFIC LOANS, ENSURE THAT THE MONEY IS USED FOR THE PURPOSE FOR W HICH IT IS GIVEN . THE 4 FUNDS ARE NOT RELEASED TO THE ASSESSEE BUT ARE PAID TO THE ORGANIZATION FROM WHERE THE ASSESSEE RECEIVED THE ASSET/ GOODS ETC. D IRECTLY. THEY HAVE SUFFICIENT CHEQUES AND BALANCES IN THE SYSTEM. 7. UNDER THE CIRCUMSTANCES TO ALLEGE THAT, THE LOAN GRANTED BY A BANK OR FINANCIAL INSTITUTION FOR SPECIFIC PURPOSE HAS BEEN DIVERTED, WITHOUT EVIDENCE WHAT SO EVER, FOR THE PURPOSE DISALLOWING INTEREST PAYMENT CANNOT BE COUNTENANCED. THUS ON THIS GROUND ALSO THE ORDER OF THE LD. CIT (A) HAS TO BE UPHELD. IN THE RESULT THIS GROUND OF THE REVENUE IS DISMISSED. 8. GROUND NO.2 IS AGAINST THE DELETION OF AN ADDITI ON OF RS.7 LAC AS NOTIONAL INCOME. THE ASSESSEE HAS A PROPERTY AT C-7 4 AND 75, HOSIERY COMPLEX, NOIDA. THE ASSESSEE CLAIMED THAT THESE TWO PREMISES WERE USED AND OCCUPIED FOR THE BUSINESS PURPOSES. THE ASSESSI NG OFFICER CONSIDERING THE TURN OVER AND ESTIMATED THAT ONLY 20% OF THE PR EMISES WERE USED FOR BUSINESS AND THE BALANCE 80% OF THE PROPERTY WAS VA CANT AND HE ESTIMATED A NOTIONAL INCOME OF RS.7 LAC UNDER THE PROVISIONS OF SECTION 22 OF THE ACT. THE CIT (A) CONSIDERED (A) THE CERTIFICATE OF REGIS TRATION AND ALLOTMENT OF TIN BY THE DEPARTMENT OF COMMERCIAL TAXES GOVT. OF UP. (B) MONTHLY VAT RETURNS. (C) DETAILS OF PURCHASE OF FURNITURE. (D) DETAILS OF PURCHASE OF MACHINERY. (E) DETAILS OF PURCHASES OF RAW MATERIAL . (F) COPIES OF THE ASSESSMENT ORDERS OF COMMERCIAL TAX OFFICER, AN D HELD THAT THE PREMISES 5 IN QUESTION HAVE BEEN OCCUPIED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS. HE FURTHER HELD THAT THE ASSESSING OFFICER HAS NO B ASIS WHAT SO EVER, TO ESTIMATE THAT 20% OF THE FACTORY WAS ONLY BEING USE D FOR BUSINESS AND FOR HOLDING THAT THE BALANCE AREA WAS LYING VACANT. 9. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CO NTROVERT THIS FACTUAL FINDING OF THE FIRST APPELLATE AUTHORITY. HER ARGUM ENTS WERE ON THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCE ETC. THESE ARE DEV OID OF MERIT. IN THE RESULT THIS GROUND IS DISMISSED. 10. GROUND NO.3 IS ON THE ADMISSION OF ADDITIONAL E VIDENCE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY AD DITIONAL EVIDENCE THAT WAS ADMITTEDLY AN ASSESSMENT ORDER OF THE COMMERCIAL TA X DEPARTMENT, AND THAT IT WAS FILED AT ON THE DIRECTION OF THE LD. CIT (A) U/ S 46(A) (IV). IN OUR VIEW NOTHING TURNS ON THIS ISSUE. A COPY OF THE ORDER OF THE COMMERCIAL TAX OFFICER, EVEN IF IGNORED DOES NOT EFFECT THE ALLOWA BILITY OF THE GROUND NO.2 AS OTHER EVIDENCES PRODUCED SUFFICE TO SUPPORT THE ORD ER OF THE LD. CIT (A). IN THE RESULT THIS GROUND OF THE REVENUE IS DISMIS SED PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2014 SD/- SD/- (R. P. TOLANI) (J. S. REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 TH FEBRUARY, 2014. 6 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER DEPUTY REGISTRAR, ITAT. S. SINHA