ACIT, UDAIPUR V. M/s. Adarsh Engitech Projects (P) Ltd., UDAIPUR

ITA 477/JODH/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3031 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 10-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 477/JODH/2009 (A.Y. 2006-07) ACIT, CIRCLE-2 VS M/S. ADARSH ENGITECH PROJECTS ( P) LTD. UDAIPUR. B-1 & B-2, PRATAP NAGAR INDUSTRIAL AREA, UDAIPUR. PAN NO. ABPPJ8776N ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : DR. DEEPAK SEHGAL, CIT(DR) DATE OF HEARING : 13/03/2013. DATE OF PRONOUNCEMENT: 30/04/2013. PER HARI OM MARATHA, J.M.: THIS APPEAL OF THE REVENUE FOR A.Y. 2006-07 IS DIR ECTED AGAINST THE ORDER OF LD. CIT(A), UDAIPUR, DATED 20/05/2009. 2. THE ASSESSEE-COMPANY IS ENGAGED IN THE MANUFACTU RING OF ENGINEERING GOODS AND MACHINES, AND ALSO IN THE CIV IL AND ENGINEERING, CONTRACTS. DURING THE YEAR THE ASSESSEE AHS SHOWN T OTAL SALES AT RS. 6,18,52,049/- AND HAS SHOWN G.P. RATE OF 11.53% AS AGAINST 11.79% SHOWN IN THE IMMEDIATELY PRECEDING YEAR. THE ASSESS EE HAS ALSO SHOWN JOB WORK CHARGE AT RS. 2,47,72,450/-. IN THIS APPEA L FOLLOWING TWO GROUNDS HAVE BEEN RAISED :- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) HAS ERRED IN :- 1. DELETING THE ADDITION OF RS. 91,23,220/- MADE B Y THE AO ON ACCOUNT OF INFLATION OF EXPENSES. 2. DELETING THE ADDITION OF RS. 2,87,563/- MADE BY THE AO ON ACCOUNT OF INTEREST PAYMENT. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY PE RUSED THE ENTIRE RECORD INCLUDING WRITTEN SUBMISSIONS AND THE PAPER BOOK FILED BEFORE US. THE FACTS APROPOS GROUND NO. (1) ARE THAT THE A O HAS NOTICED INFLATION OF EXPENSES ON THE GROUND THAT THE ASSESS EE HAS SHOWN HUGE AMOUNTS AS OUTSTANDING TO THE SUB CONTRACTORS AS UN DER :- 1. SHRI MAHIPAL SINGH PROP. M/S BAHUBALI FABRICATORS & ERECTORS 3,141,469 2. SHRI KARAN SINGH PROP. M/S DEVRA & CO. 2,785,430 3. SHRI GIRIRAJ BHATT PROP. M/S GIRIRAN ENGG & CONST. CO. 2,556,460 4. SHRI ZAKIR HUSSAIN HABIBI, PROP. M/S HABIBI ENGG. 410,220 5. SHRI ADAVIT PRASAD ROUT PROP. M/S ROUT FABRICATORS 2,131,779 6 SHRI V IKRAM SINGH JHALA PROP. M/S UNIQUE ENGG. & BUILDERS 1,948,206 7. SHRI VIJAY SINGH CHOUDHARY PROP. M/SVIJAY FABRICATORS 3,906,892 TOTAL 16,880,456 THE AO HAS TREATED THEM AS INFLATED EXPENSES AND HA S ALSO TREATED THE SUB CONTRACTORS AS ASSESSEES EMPLOYEES AND BY DUBB ING THEM AS MANAGED AFFAIR AHS MADE THE IMPUGNED ADDITION. ON T HE OTHER HAND LD. CIT(A) HAS DELETED THE ENTIRE ADDITION BY FOLLOWING THE ORDERS OF THE ITAT FOR A.YS 2003-04 AND 20205-06, WHEREIN THE YEA RS THE AO HAD MADE SIMILAR ADDITIONS, ON THE BASIS OF SAME REASON INGS WHICH HAVE BEEN DELETED BY THE TRIBUNAL, AHS DELETED THE IMPUG NED ADDITION. THE REVENUE IS AGGRIEVED. 4. AFTER HEARING BOTH SIDES, WE ARE CONVINCED THAT THE AO HAD MADE SIMILAR DISALLOWANCES IN THE EARLIER YEARS AND THES E HAVE BEEN DELETED BY THE TRIBUNAL. ACCORDINGLY, BY RESPECTFULLY FOLLO WING THE TRIBUNAL ORDER OF JODHPUR BENCH RENDERED IN IA NO. 384/JDPR/ 2006 FOR A.Y. 2003-04 IN THIS ASSESSEES CASE. WE CONFIRM THE IMP UGNED DELETION AND DISMISS GROUND NO. (1) OF THIS APPEAL. 5. THE FACTS APROPOS GROUND NO. (2) ARE THAT THE AO NOTICED THAT ASSESSEE HAS PAID INTEREST WHILE IT IS ENJOYING HEA VY CASH AND BANK BALANCE. THE ASSESSEE EXPLAINED THAT IT HAS NOT TAK EN ANY FRESH LOAN DURING THIS YEAR AND INTEREST WAS PAID ONLY ON OLD LOANS TO THE BANKS. THIS REASONING DID NOT FIND FAVOUR WITH THE AO BUT THE LD. CIT(A) HAS TREATED THIS EXPLANATION S THE ADDITION OF RS. 2,87 ,563/- MADE OUT OF INTEREST PAID TO BANKS. 6. BEFORE US BOTH PARTIES HAVE REITERATED THEIR EAR LIER STAND. WE HAVE FOUND IT FOR A FACT THAT THE ASSESSEE-COMPANY HAS NOT RAISED ANY LOAN DURING THE YEAR AND IN EARLIER YEARS INTEREST PAID WAS ALLOWED. THE ASSESSEE HAS PAID INTEREST OF RS. 2,87,563/- ON OLD LOANS AND HAS RECEIVED INTEREST AMOUNT OF RS. 8,06,534/- ON FDRS . IT IS ALSO NOTED THAT THE ASSESSEE AHS NOT PAID ANY INTEREST TO TRAD E CREDITORS. THE BORROWING OF RS. 39 LACS WAS MADE FOR BUSINESS PURP OSE. THUS, IT CANNOT BE INFERRED THAT THE ASSESSEE-COMPANY HAS DI VERTED FUNDS FOR NON BUSINESS PURPOSE. NO CASE OF DIVERSION OF INTER EST BEARING FUNDS FOR PERSONAL PURPOSE OR FOR NON INTEREST BEARING ADVANC E HAS BEEN MADE OUT BY THE AO. THEREFORE, WE DONT FIND ANY VALID R EASON TO INTERFERE IN THE IMPUGNED FINDING AND, THUS, CAN NOT ALLOW GR OUND NO. (2). 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH APRIL, 2013. VL COPY TO ALL CONCERNED.