ITO 6(1)-2, MUMBAI V. AKSHAR COMMUNICATION P. LTD, MUMBAI

ITA 4592/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8452 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-10-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 07-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND , SHRI RAJENDRA, ACCOUNTANT MEMBER I.TA. NO. 4592/MUM/2011 ASSESSMENT YEAR 2002-03 ITO-6(1)-2, ROOM NO. 503, AAYAKAR BHAVAN, MUMBAI 400 020. VS. M/S. AKSHAR COMMUNICATION PVT LTD., 4, VISHWA VINAY 504, BHAGOJI KEER MARG, MAHIM, MUMBAI 400 016. PAN: AABCA 1757 A ( / APPELLANT ) ( ! / RESPONDENT ) REVENUE BY : SHRI MANOJ KUMAR ASSESSEE BY : SHRI MANDAR VAIDYA ' # $% / DATE OF HEARING : 09-10-2012 &'( # $% / DATE OF PRONOUNCEMENT : 23-10-2012 ) / O R D E R PER RAJENDRA, AM CHALLENGING THE ORDER OF THE CIT(A)-14, MUMBAI ORDE R DT. 22-03-2011, ASSESSING OFFICER (AO) HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF INTEREST D ISALLOWANCE OF RS.9,38,327/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT UTI LIZED BORROWED FUNDS FOR THE PURPOSES OF ITS BUSINESS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION RS. 9,38,327/- MADE ON ACCOUN T OF INTEREST DISALLOWANCE AND ALLOWING RELIEF TO THE ASSESSEE ON BASIS OF FRESH S UBMISSION MADE BY ASSESSEE THAT THE LOAN GIVEN TO THE SISTER CONCERN WAS OUT OF THE SUN DRY CREDITORS, WITHOUT GIVING THE ASSESSING OFFICER AN OPPORTUNITY FOR VERIFICATION O F THE SAME WHICH IS IN CONTRAVENTION OF RULE 46A OF THE ACT. I.TA. NO. 4592/MUM/2011 M/S. AKSHAR COMMUNICATION PVT LTD., 2 3. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTE R ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-COMPANY, ENGAGED IN THE BUSINESS OF PUBLIC ATION OF NEWS PAPER FILED ITS RETURN OF INCOME ON 29-10-2002 DECLARING TOTAL LOSS AT RS. 2.63 LAKHS. INITIALLY, THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME-TAX ACT, 1961(ACT) BY THE ASSESSING OFFICER (AO). LATER ON, THE CASE WAS SELECTED FOR SCRUTINY AND WAS FINALIZED U/S. 143(3) OF THE ACT ON 28-02-2005 DETERMINING TOTAL I NCOME OF THE ASSESSEE AT RS. 7.56 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, AO MADE VARIOUS ADDITIONS/DISALLOWANCES TO THE INCOME OF THE ASSESSEE. AN APPEAL WAS PREFE RRED BY THE ASSESSEE-COMPANY BEFORE THE FIRST APPELLATE AUTHORITY (FAA). MATTE R WAS DECIDED AGAINST THE ASSESSEE- COMPANY VIDE ORDER DT. 10-01-2006 OF THE FAA. IN T HE APPELLATE PROCEEDINGS, A BENCH OF THE ITAT VIDE ORDER DT. 04-12-2009 RESTORE D BACK THE MATTER TO THE FILE OF FAA FOR FRESH ADJUDICATION AFTER GIVING DUE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. 3. MAIN ISSUE IN THE APPEAL UNDER CONSIDERATION IS ABO UT DIS-ALLOWANCE OF INTEREST AMOUNT TO RS. 9.3 LAKHS ON ACCOUNT OF DIVERSION OF FUNDS TO SISTER CONCERN. THE ASSESSEE-COMPANY MADE SUBMISSIONS BEFORE THE FAA AS PER THE DIRECTIONS OF THE TRIBUNAL. AFTER CONSIDERING THE SAME, HE HELD THAT THE APPELLANT-COMPANY WAS IN THE BUSINESS OF PUBLISHING DAILY NEWS PAPER, THAT THE S ISTER CONCERN, TO WHOM ADVANCE WERE GIVEN WAS PUBLISHING A WEEKLY MAGAZINE, THAT T HE OBJECTS OF BOTH THE COMPANIES WERE TO PUBLISH NEWS-PAPER, THAT AO HAD MADE THE AD DITION HOLDING INTEREST FREE ADVANCES TO SISTER CONCERN WERE FROM THE BORROWED F UNDS, THAT THE ASSESSEE-COMPANY HAD ADVANCE LOAN FROM SUNDRY CREDITORS AMOUNTING TO RS. 1.72 CRORES WHICH WAS NON- INTEREST BEARING LIABILITY, THAT THERE WAS NO NEXUS BETWEEN INTEREST FREE LOAN GIVEN BY THE APPELLANT TO ITS SISTER CONCERN AND FUNDS BORRO WED FROM THE BANKS. RELYING UPON THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF SA BUILDERS (158 TAXMAN 82), HE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) SUBMITT ED THAT LOAN ADVANCED TO SISTER CONCERN WAS NOT FOR BUSINESS PURPOSES, THAT ASSESSEE HAD PAID INTEREST TO THE BANKS, WHEREAS IT DID NOT CHARGE INTEREST FROM THE SISTER CONCERN. AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT LOANS TAKEN FROM THE BANK WAS UTILIZED FOR BUSINESS PURPOSES ONLY, THAT ADVANCES TO SISTER CON CERN WAS OUT OF THE SUNDRY CREDITORS, THAT THERE WAS NO NEXUS BETWEEN THE LOAN OBTAINED FROM THE BANK AND THE LOANS ADVANCED TO THE SISTER CONCERN. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. IT IS FOUND THAT ASSESSEE HAD NON-INTEREST BEARING FUNDS FROM VARIOUS CREDITORS AMOUNTING TO RS. 1.72 CRORES DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. IN ABSENCE OF ANY POSITIVE EVIDENCE, WE ARE NOT INCLINED TO ACCEPT TH E FACT THAT LOAN ADVANCED TO SISTER CONCERN WAS FROM THE INTEREST BEARING FUNDS. IT IS SEEN THAT AMOUNT BORROWED FROM THE BANK WAS USED FOR VARIOUS BUSINESS PURPOSES AND HEN CE INTEREST WAS ALLOWABLE FOR THE SAID AMOUNT. IN OUR OPINION, FAA HAS RIGHTLY HELD THAT THERE WAS NO NEXUS BETWEEN THE INTEREST FREE LOAN GIVEN BY THE APPELLANT TO IT S SISTER CONCERN AND THE FUNDS BORROWED FROM THE BANKS. THE FACTUAL POSITION OF T HE CASE IS THAT THE AMOUNT I.TA. NO. 4592/MUM/2011 M/S. AKSHAR COMMUNICATION PVT LTD., 3 BORROWED FROM THE BANKS HAD BEEN UTILIZED FOR SPECI FIC PURPOSES, WHERE AS THE INTEREST FREE LOAN GIVEN BY THE APPELLANT TO THE SISTER CONC ERN WAS OUT OF SUNDRY CREDITORS. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DEC ISION OF THE SA BUILDERS LTD (SUPRA), WE DO NOT WANT TO INTERFERE WITH THE ORDER OF THE FAA. AS A RESULT, APPEAL FILED BY THE AO STA NDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER, 2012. SD/- SD/- ( . . / I.P. BANSAL ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, *' DATE: 23 RD OCTOBER, 2012 TNMM ) ) ) ) # ## # $+ $+ $+ $+ ,+($ ,+($ ,+($ ,+($ / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR A BENCH, ITAT, MUMBAI 6. GUA RD FILE !+$ $ //TRUE COPY// )' )' )' )' / BY ORDER, - -- - / . . . . DY./ASSTT. REGISTRAR , / ITAT, MUMBAI