Punjab Stainless Steel Industries, New Delhi V. DCIT, New Delhi

ITA 4861/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4117 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 24-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: H MITTAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F NEW DELHI BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM ITA NO. 4861/DEL/2009 A.Y. 2004-05 PUNJAB STAINLESS STEEL INDUSTRIES VS. DCIT, CIRCLE 19(1) B-61, WAZIRPUR INDUSTRIAL AREA VIK AS BHAVAN NEW DELHI NEW DELH I (APPELLANT) (RESPONDENT) APPELLANT BY : . SH. H.MITTAR, C.A. RESPONDENT BY : MS. Y.KAKKAR, SR.D.R O R D E R PER B.C.MEENA, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE OR DER PASSED BY THE CIT (A)-XXII, NEW DELHI DATED 16.10.2009. 2. INITIALLY THE FOLLOWING GROUNDS WERE TAKEN IN TH E APPEAL. 1.1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD.CIT(A) HAS ERRED IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 17.57,369/- OUT OF INTEREST PAID TO THE BANK ON THE GROUND THAT THE AP PELLANT HAD MADE INTEREST FREE ADVANCES TO SISTER CONCERN M/S KESHO RAM INDUSTRIES. 1.2. THAT THE IMPUGNED ORDER WAS ERRONEOUS IN AS MU CH AS THE LD.CIT(A) DID NOT APPLY HIS MIND TO THE VITAL ASPECTS OF THE CASE NOT PLACED OR ARGUED BEFORE/ADDRESSED BY THE HONBLE ITAT IN THE APPELLA TE ORDER FOR A.Y. 2001- ITA 4861/DELHI/2009 PAGE 2 OF 5 A.Y. 2004-05 M/S PUNJAB STAINLESS STEEL INDUSTRIES, N.DELHI 02, IGNORING THE CASE LAW CITED BEFORE HIM WITHOUT DISTINGUISHING THE SAME AND IN MERELY MECHANICALLY FOLLOWING THE ORDER OF H IS PREDECESSOR. 1.3. THAT THE LD.CIT(A) IN ALL FAIRNESS SHOULD HAVE GIVE N HIS REASONING AND FINDING ON THE VARIOUS POINTS AND ISSUES RAISED BEFORE HIM AND SHOWING HOW THE CASE LAW CITED BEFORE HIM WAS NOT A PPLICABLE. 1.4. THAT THE APPELLANT CRAVES PERMISSION TO AMEND/ALTER OR ADD ANY GROUND OF APPEAL AT THE TIME OF HEARING OF THE APPE AL. HOWEVER A PETITION WAS SUBMITTED FOR ADDITIONAL GR OUND WHICH READS AS UNDER. THE APPELLANT PETITIONER MOST RESPECTFULLY PRAYS F OR GRANT OF LEAVE FOR URGING AND HEARING THE FOLLOWING AS A SPE CIFIC ADDITIONAL GROUND. THAT THE LD.CIT(A) HAS ERRED IN NOT CONSIDERING AN D ADJUDICATING UPON THE FOLLOWING GROUND RAISED BEFOR E HIM IN THE GROUNDS OF APPEAL. THE DISPOSAL OF THE ABOVE GROUND BY THE LDCIT(A) W AS VERY ESSENTIAL IN THE INTEREST OF SUBSTANTIAL JUSTICE. 4.2 WITHOUT PREJUDICE, THE RATE OF INTEREST ON PA CKING CREDIT ADVANCES WAS 8.50% WHILE ON FOREIGN BILLS DISCOUNTE D AND COLLECTION ADVANCES IT WAS 8.50%. AS SUCH THE DISA LLOWANCES OF INTEREST @ 14.5% INTEREST FREE ADVANCES WAS TOTALLY ERRONEOUS ARBITRARY AND HIGHLY EXCESSIVE. 4.3. THAT THE LD.AO FURTHER FAILED TO APPRECIATE THAT THE TOTAL AMOUNT OF INTEREST PAID ON CC ACCOUNT AMOUNTED TO O NLY RS. 2256/- WHEREAS THE DISALLOWANCE HAS BEEN MADE OF RS . 1757369/-. THE REMAINING INTEREST PAID WAS ON PACK ING CREDIT ADVANCES, FOREIGN BILL DISCOUNTED AND FOREIGN BILLS UNDER COLLECTION ETC. DIRECTLY RELATED TO TRADING ADVANCE S. ITA 4861/DELHI/2009 PAGE 3 OF 5 A.Y. 2004-05 M/S PUNJAB STAINLESS STEEL INDUSTRIES, N.DELHI IT IS HUMBLY PRAYED THAT THE ISSUE DESERVES TO BE R ESTORED TO THE FILE OF LD.CIT(A) TO CONSIDER AND ADJUDICATE UPON T HE ABOVE GROUND. 3. WHILE PLEADING ON BEHALF OF THE ASSESSEE THE LD. A.R. SUBMITTED THAT THE ISSUE REGARDING INTEREST FREE ADVANCES MADE TO THE SISTER CONCERNS M/S KESHO RAM INDUSTRIES IS COVERED AGAINST THE AS SESSEE BY A DECISION OF HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE. HOWEVER HE PLEADED THAT THE LD.CIT(A) HAS NOT ADJUDICATED UPON THE GRO UNDS RAISED BEFORE HIM IN GROUND NO. 4.2 AND 4.3, WHEREIN IT HAS BEEN CLAIMED THAT THE ASSESSEE IS PAYING INTEREST ON PACKING CREDIT ADVA NCES @ 8.50% ONLY. THEREFORE DISALLOWANCE OF INTEREST @ 14.5% ON INTER EST FREE ADVANCES WAS TOTALLY ERRONEOUS, ARBITRARY AND HIGHLY EXCESSIVE. HE PLEADED TO REDUCE THE RATE OF INTEREST TO WORK OUT THE DISALLOWANCE O F INTEREST ON INTEREST FREE LOANS TO SISTER CONCERNS. 4. ON THE OTHER HAND LD.D.R. SUBMITTED THAT THE LD .CIT(A) HAS ADJUDICATED UPON ALL THE GROUNDS RAISED BEFORE HIM. THE LD.D.R. SPECIALLY DREW OUR ATTENTION TO PARA 6.1, 6.2 AND 6 .3 OF LD.CIT(A)S ORDER WHERE THE LD. CIT(A) HAS ADJUDICATED UPON THE ABOVE GROUNDS. THE LD.D.R. HAS ALSO SUBMITTED THAT THE RATE OF INTERE ST @ 14.5% WAS ALSO STATED BY THE ASSESSEE HIMSELF. THE DISALLOWANCES WORKED OUT ON THAT BASIS HAS BEEN CONFIRMED IN THE PAST YEARS. SHE ALSO SUBMITTED THAT HONBLE DELHI HIGH COURT HAS ALREADY DECIDED THE IS SUE AGAINST THE ITA 4861/DELHI/2009 PAGE 4 OF 5 A.Y. 2004-05 M/S PUNJAB STAINLESS STEEL INDUSTRIES, N.DELHI ASSESSEE, THEREFORE, THERE IS NO MERIT IN THE GROUN DS RAISED BY THE ASSESSEE. 5. AFTER HEARING BOTH THE SIDES, WE FIND THAT THERE WAS A DIRECT NEXUS OF INTEREST BEARING FUNDS AND THE FUNDS DIVERTED T O THE SISTER CONCERN. THE INTEREST HAS BEEN PAID OUT ON BORROWED FUNDS. THE HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE HAS HELD AGAINST THE ASSESSEE. THE DISALLOWANCE OF INTEREST PAID HAVE TO BE SUSTAINED. IN THE ADDITIONAL GROUND THE ASSESSEE HAS PLEADED THAT GROUNDS RAIS ED IN APPEAL REGARDING THE RATE OF INTEREST HAS NOT BEEN ADJUDIC ATED UPON BY THE LD.CIT(A). AFTER CONSIDERING THE PLEADINGS AND FAC TS OF THE CASE WE HOLD THAT THESE ADDITIONAL GROUNDS ARE NOT BASED ON CORR ECT FACTS. LD.CIT(A) HAS CONSIDERED THE GROUNDS FROM 4.1 TO 4.4 IN HIS O RDER AT PARA NOS. 6.1, 6.2 AND 6.3. MORE OVER THE RATE OF INTEREST @ 14. 4.% ADOPTED FOR DISALLOWANCES STATED BY THE ASSESSEE HIMSELF. THE REFORE, WE FIND NO MERIT IN THE ADDITIONAL GROUNDS AND WE DISMISS THE SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL,2011. SD/- SD/- (R.P.TOLANI) (B.C.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 29 TH APRIL, 2011 *MANGA ITA 4861/DELHI/2009 PAGE 5 OF 5 A.Y. 2004-05 M/S PUNJAB STAINLESS STEEL INDUSTRIES, N.DELHI COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR 6.GUARD FILE BY ORDER DY. REGISTRAR // TRUE COPY //