The ACIT, Circle-1, Bhavnagar V. Shri Shyambhusan Khillan, Bhavnagar

ITA 452/AHD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6978 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 18-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KULSHRESTHA
• Assessee Lawyers: B R POPAT

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV , JUDICIAL MEMBER AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ./ ITA NO . 452 / AHD/ 20 1 3 [ [ / ASSESSMENT YEAR : 200 9 - 1 0 ACIT, CIRCLE - 1, BHAVNAGAR VS SHYAMBHUSAN B. KHILLAN, PLOT NO.2264/B, B/S.PUNJAB NATIONAL BANK, HILL DRIVE, BHAVNAGAR PAN : AAVPK 0083 E / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI B. KULSHR ESTHA, SR DR ASSESSEE(S) BY : SHRI B.R. POPAT, AR / DATE OF HEARING : 1 2 / 1 1 /2014 / DATE OF PRONOUNCEMENT: 12 / 1 2 /2014 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - XX , AHMEDABAD DATED 14 . 12 .201 2 FOR AY 200 9 - 1 0 BY TAKING FOLLOWING GROUNDS . 1. THE LD. CIT(A) - XX, AHMEDABAD HAS ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST ON THE BORROWED FUNDS DIVERTED TO SHYAM ALLOYS & TUBES LTD. (RS.10,50,482/ - ) & SHYAM STEELS PVT. LTD. (RS.51,46,100/ - ) BY HOLDING THAT AS THE LOANS/ADVANCES WERE GIVEN IN EARLIER YEARS, THEREFORE, THE INTEREST ON LOAN CANNOT BE DISALLOWED IN THE Y EAR UNDER CONSIDERATION, WITHOUT APPRECIATING THE FACT THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE BORROWED FUNDS HAS BEEN UTILIZED FOR BUSINESS PURPOSES AND THAT EVEN IF THE INTEREST BEARING BORROWED FUNDS WERE DIVERTED FOR NON - BUSINESS ITA NO 452 / AHD / 201 3 AY 200 9 - 1 0 SHRI SHYAMBHUSAN B. KHILLAN - 2 - PURPOSES IN EARLIER YEARS, THEN ALSO THE INTEREST THEREON WILL BE DISALLOWABLE IN SUBSEQUENT YEAR IF THE ASSESSEE CLAIMS INTEREST EXPENSES ON SUCH BORROWED FUNDS. 2. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER B E RESTORED TO THE ABOVE EXTENT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS ADVANCED INTEREST - FREE LOAN T O FOUR PARTIES IN EARLIER YEARS OF RS.81,96,582/ - . HE, THEREFORE, DISALLOWED RS.14,75,385/ - OUT OF INTEREST EXPENDITURE BY ESTIMATING INTEREST @ 18% ON RS.81,96,582/ - . 4. ON APPEAL, THE CIT(A) DELETED THE ABOVE DISALLOWANCE BY OBSERVING THAT NO MATERIAL WAS BROUGHT BEFORE HIM TO SHOW THAT THE INTEREST BEARING BORROWED CAPITAL WERE UTILIZED FOR ADVANCING INTEREST - FREE LOAN IN QUESTION, THE INTEREST - FREE FUNDS AVAILABLE WITH THE ASSESSEE WERE MORE THAN THE INTEREST - FREE ADVANCE IN QUESTION AND NO DISALLOWA NCE OF INTEREST IN RESPECT OF INTEREST - FREE ADVANCE IN QUESTION WAS MADE IN EARLIER YEARS. 5. BEFORE US, THE DR COULD NOT POINT OUT ANY DEFECT IN THE ABOVE FINDINGS OF THE CIT(A). IN OUR CONSIDERED VIEW, IN ABSENCE OF ANY MATERIAL BROUGHT BEFORE US TO S HOW THAT THE INTEREST BEARING FUNDS WERE UTILIZED FOR INTEREST - FREE ADVANCE S AND KEEPING IN VIEW THE FACT THAT THE INTEREST - FREE FUNDS AVAILABLE WITH THE ASSESSEE WERE MORE THAN THE INTEREST - FREE ADVANCE MADE IN THE EARLIER YEARS AND IN THE EARLIER YEARS I T WAS ACCEPTED BY THE REVENUE THAT INTEREST - FREE ADVANCE WAS OUT OF INTEREST - FREE FUNDS AVAILABLE WITH THE ASSESSEE AS INDICATED BY THE FACT THAT NO DISALLOWANCE OF INTEREST EXPENDITURE WAS ITA NO 452 / AHD / 201 3 AY 200 9 - 1 0 SHRI SHYAMBHUSAN B. KHILLAN - 3 - MADE IN THE EARLIER YEARS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY , THE 12 TH OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( SHA ILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 12 / 1 2 /2014 * BIJU T / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A ) - XX, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY TRUE COPY / ( DY./ASSTT. REGISTRAR) , / ITAT, AHMEDABAD