DCIT, Chandigarh V. M/s Steel Strips Industries Ltd., Chandigarh

ITA 486/CHANDI/2002

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8476 (ITAT-CHANDIGARH)
• Duration Of Justice: 13 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2016
• Assessment Year: 1999-2000
• Appeal Filed On: 21-06-2002
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: NISHITH BANSAL
• Keywords: Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.60/CHD/1996 (ASSESSMENT YEAR : 1991-92) ITA NO.1530/CHD/1995 (ASSESSMENT YEAR : 1993-94 THE A.C.I.T., VS. M/S STEEL STRIPS LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: ITA NO.1169/CHD/1997 (ASSESSMENT YEAR : 1995-96) THE A.C.I.T., VS. M/S STEEL STRIPS LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. ITA NO.929/CHD/2000 (ASSESSMENT YEAR : 1996-97) THE D.C.I.T., VS. M/S STEEL STRIPS LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: ITA NO.486/CHD/2002 (ASSESSMENT YEAR : 1999-2000) THE D.C.I.T., VS. M/S STEEL STRIPS LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: AND ITA NO.548/CHD/2002 (ASSESSMENT YEAR : 2000-01) THE A.C.I.T., VS. M/S STEEL STRIPS LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. (APPELLANT) (RESPONDENT) 2 APPELLANT BY : SHRI S.K.MITTAL, DR RESPONDENT BY : SHRI NISHITH BANSAL DATE OF HEARING : 08.02.2016 DATE OF PRONOUNCEMENT : 18.02.2016 O R D E R PER RANO JAIN, A.M . : ALL THESE SIX APPEALS HAVE ARISEN OUT OF THE OR DER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT, WHEREBY THE ISSUE OF DISALLOWANCE UNDER SECTION 36(1)(III) OF T HE ACT HAS BEEN SENT BACK TO THE TRIBUNAL. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING THE YEAR, THE ASSESSEE HAS ADVANCED MONEY TO M/S STEEL STRIPS & ALLOYS AND M/S ASIA STEEL ALLOYS. ALSO DU RING THE YEAR, THE ASSESSEE HAS CHARGED INTEREST AMOUNTING T O RS.27 LACS. THE ASSESSING OFFICER WORKED OUT INTER EST @ 18% AMOUNTING TO RS.47,87,628/- AND MADE ADDITION O F DIFFERENCE OF RS.20,87,628/-. THE LEARNED CIT (APP EALS) DECIDED THE ISSUE IN FAVOUR OF AND THE APPEAL OF TH E DEPARTMENT BEFORE THE I.T.A.T. ALSO GOT DISMISSED. THE DEPARTMENT FURTHER WENT IN APPEAL BEFORE THE HON'BL E PUNJAB & HARYANA HIGH COURT, WHEREBY THE HON'BLE CO URT ORDERED AS FOLLOWS : WE HAVE HEARD COUNSEL FOR THE PARTIES, PERUSED THE AFORESAID JUDGMENT AND AFTER DUE APPRAISAL OF T HE FACTS OF THE PRESENT CASE, HAVE NO MANNER OF DOUBT THAT 3 CONTROVERSY IN THE PRESENT APPEAL IS IDENTICAL TO TH E CONTROVERSY IN THE AFORESAID CASE AND WOULD, THEREFORE, REQUIRE THAT A SIMILAR O RDER IS PASSED ENABLING THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH TO ASCERTAIN WHETHER THE ASSESSEE IS ENTIT LED TO DEDUCTION UNDER SECTION 36(L)(III) OF THE INCOME TAX ACT, 1961 ON THE INTEREST COMPONENT IN RESPECT OF CAPITAL BOR ROWED, BASED UPON PARAMETERS LAID DOWN IN M/S S.A. BUILDER S LTD, V. COMMISSIONER OF INCOME TAX (APPEALS) AND ANOTHER (2007) 288 ITR 1. IN VIEW OF WHAT HAS BEEN RECORDED HEREINABOVE, THE APPEAL IS ALLOWED; THE IMPUGNED ORDER IS SET ASIDE TO TH E LIMITED EXTENT OF DEDUCTION CLAIMED UNDER SECTION 36(L)( III) OF THE IT. ACT AND REMITTED TO THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH TO DECIDE THE MATTER AFRESH. 3. NOW, IN THIS BACKGROUND THE ISSUE OF INTEREST UNDER SECTION 36(1)(III) OF THE ACT HAS COME BACK T O US TO RE-ADJUDICATE THE SAME AS PER PARAMETERS LAID DOWN IN M/S S.A. BUILDERS CASE. THE PROPOSITION LAID DOW N BY THE HON'BLE APEX COURT IN M/S S.A. BUILDERS (SUPRA) IS THAT WHETHER THE ASSESSEE HAS ADVANCED MONEY TO SIS TER CONCERNS AS A MEASURE OF COMMERCIAL EXPEDIENCY. IF IT IS SO, THE INTEREST ON BORROWED FUNDS IS TO BE ALLOWED . IN THIS BACKGROUND, IN THE PRESENT CASE, IT HAS TO BE EXAMINED AS TO FOR WHAT PURPOSE THE MONEY HAS BEEN ADVANCED TO THESE CONCERNS. SINCE THIS ISSUE HAS N OT BEEN EXAMINED BY ANY OF THE LOWER AUTHORITIES, NO MATERIAL OR EVIDENCE IN THIS REGARD IS AVAILABLE ON RECORD, WE FIND OURSELVES CONSTRAINED TO DECIDE THE ISSUE. THEREFORE, WE THINK IT PROPER TO SEND THE MATER BAC K TO 4 THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISS UE OF COMMERCIAL EXPEDIENCY AS PROVIDED BY THE HON'BLE SUPREME COURT IN THE CASE OF S.A. BUILDERS (SUPRA) AND DECIDE THE SAME AS PER LAW. NEEDLESS TO ADD THAT T HE ASSESSEE SHOULD BE GIVEN PROPER AND ADEQUATE OPPORT UNITY OF BEING HEARD. 4. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF FEBRUARY, 2016. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 18 TH FEBRUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH