ACIT, Patiala V. M/s G.C. Strips Ltd., Patiala

ITA 501/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68450 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: ASHOK KUMAR GOEL
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A,CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 501/CHD/2013 ASSESSMENT YEAR:2009-10 THE ACIT, VS M/S G.C.STRIPS LTD., CIRCLE, BHAWANIGARH ROAD, PATIALA. SAMANA, DISTT. PATIALA. PAN NO. AACCG-4412B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH RESPONDENT BY : SHRI ASHOK KUMAR G OEL DATE OF HEARING : 30.07.2013 DATE OF PRONOUNCEMENT : 03.09.2013 O R D E R PER SUSHMA CHOWLA, JM THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF CIT(APPEALS), PATIALA DATED 26.02.2013 RELATING TO ASSESSMENT YEA R 2009-10 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ACTION OF THE AO REGARDING REJECTION OF BOOKS OF ACCOUNT U/S 145(3) AND THEREBY DELETING THE ADDITIO N OF RS.39,28,502/-. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN ACCEPTING THE ASSESSEE'S EXPLANATION RELATING TO VA RIATION IN THE FIGURE OF OPENING STOCK EVEN THOUGH IT IS SETTLED LAW THAT THE CLOSIN G STOCK OF ONE YEAR HAS TO BE THE OPENING STOCK OF THE SUCCEEDING YEAR. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN ACCEPTING THE ASSESSEE'S EXPLANATION RELATING TO VA RIATION IN THE FIGURE OF OPENING STOCK EVEN THOUGH THE ASSESSEE HAD ITSELF DRAWN THE TRADING ACCOUNT ON THE DATE 2 OF SURVEY BY CONSIDERING THE VALUE OF CLOSING STOCK AS ON 31.03.2008 AS THE VALUE OF THE OPENING STOCK AS ON 01.04.2009. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN ACCEPTING THE ASSESSEE'S EXPLANATION RELATING TO VA RIATION IN THE FIGURE OF OPENING STOCK EVEN THOUGH SECTION 145A MANDATES THAT THE VA LUATION OF INVENTORY SHOULD TAKE INTO CONSIDERATION THE AMOUNT OF ANY TAX, DUTY , CESS OR FEE ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF LOCATION, WHEREAS THE ASSESSEE'S CLAIM INDICATES THAT IT HAS DEVIATED FRO M THESE PROVISIONS. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.5,11,200/- MADE ON ACCO UNT OF DISALLOWANCE OF INTEREST U/S 36(L)(III) OF THE I.T. ACT 1961 IN RESPECT OF INVESTMENT MADE IN SISTER CONCERN WITHOUT CHARGING THE INTEREST THEREON WHILE THE ASSESSEE HAD BORROWED FUNDS AT A HIGH RATE OF INTER EST. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN ACCEPTING THE APPELLANT'S CONTENTION THAT THE AMOUN T OF RS.42,62,000/-WAS GIVEN OUT OF THE ASSESSEE'S OWN SHARE CAPITAL IN DECEMBER , 2005 AND THAT THE BORROWED FUNDS WERE DISBURSED TO THE ASSESSEE ON 17.02.2006 THOUGH NO SUCH CLAIM WAS MADE BEFORE THE AO DURING THE ASSESSMENT PROCEEDING S AND NO DOCUMENTS TO CORROBORATE THIS CLAIM WERE SUBMITTED DURING THE AS SESSMENT PROCEEDINGS. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN ADMITTING FRESH EVIDENCE IN THE FORM OF DOCUMENTS I N SUPPORT OF THE AFORESAID CONTENTION WITHOUT GIVING THE AO AN OPPOR TUNITY TO EXAMINE THE FRESH EVIDENCE UNDER RULE 46A(3). 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS FAILED TO APPRECIATE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD ONLY GIVEN A GENERAL REPLY REPRODUCED IN THE ASSESSMENT ORDER ON THE ISSUE OF DISALLOWANCE OF INTEREST AND THAT AS PER T HE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. ABHISHEK INDUSTRIES PVT. LTD. IN 286 ITR 1 THE FACT AS TO WHETHER THE ASSESS EE HAD INTEREST FREE FUNDS AT THE TIME OF GIVING THE ADVANCE FOR MAKING A DISALLOWANCE OUT OF INTEREST EXPENDITURE IN RESPECT OF MONEY ADVANCED W ITHOUT BUSINESS CONSIDERATION IS NOT MATERIAL. 9. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT NO CLAIM WAS MADE BY THE ASSESSEE THAT THE INVESTMENT OF RS.42,62,000/- WAS MADE BY THE ASSESS EE FOR THE PURPOSE OF ITS BUSINESS. 10. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AND WIT HOUT PREJUDICE TO THE AFORESAID GROUND 5 TO 9, THE ID. CIT(A) HAS ERRED I N NOT HOLDING THAT THE FACTS OF THE CASE CALLED FOR DISALLOWANCE OF INTERE ST AND EXPENDITURE U/S 14A IN RESPECT OF THE INVESTMENT TOTALING RS.42,62, 000/- SINCE THE ASSESSEE HAD INVESTED IN SHARES AND HAD ALSO INCURR ED INTEREST EXPENDITURE 3 DURING THE RELEVANT PREVIOUS YEAR. 11. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET AS IDE AND THAT OF THE AO RESTORED. 12. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPOSED OF. 3. THE ISSUE IN GROUND NO. 1 TO 4 RAISED BY THE REV ENUE IS AGAINST DELETION OF ADDITION MADE ON ACCOUNT OF REJECTION O F BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AT RS.39,28,502/-. THE ISSUE IN GROUND NOS. 5 TO 10 RAISED BY THE REVENUE IS AGAINST DELET ION OF ADDITION MADE UNDER SECTION 36(1)(III) OF THE ACT AT RS.511,200/- . 4. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDER OF THE ASSESSING OFFICER. THE LD. AR FOR THE ASSESSEE PLAC ED RELIANCE ON THE ORDER OF THE CIT(APPEALS). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE IN GROUND NO.1 TO 4 RAISED BY THE REVENUE IS IN RELATION TO THE ESTIMATION OF PROFITS UNDER SECTION 145(3) OF THE A CT. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THERE WAS HUGE DIFFERENCE IN THE FIGURES OF OPENING STOCK AS WELL AS CLOSING STOCK OF RAW MATERIAL. SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE WHICH IS REPRODUCED AT PAGES 3 & 4 OF THE ASSESSMENT ORDER, WHICH READS AS UNDER : '1. ON PERUSAL OF YOUR AUDIT REPORT & BALANCE SHEET OF AY 2009-10 & 2008-09, IT HAS BEEN FOUND THAT THE VALUE OF CLOSIN G STOCK OF RAW MATERIAL TAKEN BY YOU IS RS.3,19,20,390/- ON 31.3.2008. THE SAME VALUE OF RS.3,19,20,390/- HAS B EEN TAKEN & CERTIFIED BY YOU AS OPENING STOCK ON 4.3.2009 ON TH E DATE OF SURVEY. BUT IN THE AUDIT REPORT OF AY 2009-10, YOU HAVE SHOWN THE VALUE OF OPENING STOCK OF RAW MATERIAL AT RS.2,79,91,888/ - THAT LEADS TO DIFFERENCE OF RS.39,28,502/-. IT IS DIFFICULT TO COMPREHEND HO W YOU CHANGED THE VALUE OF OPENING STOCK FROM RS.31,920,390/- TO RS.2 7,991,888/- WHICH LEADS TO A HUGE DIFFERENCE OF RS.39,28,502/-. IT SEEMS THAT IT IS JUST AN AFTER THOUGHT AFTER THE SURVEY CONDUCTED BY THE DEP ARTMENT FOR THE 4 REASONS BEST KNOWN TO YOU. SO, YOUR TRUE PROFITS CA NNOT BE CALCULATED. HENCE, YOU ARE REQUIRED TO SHOW CAUSE AS TO WHY YOU R BOOKS OF A/C MAY NOT BE REJECTED UNDER SECTION 145(3) R.W.S. 144 AND RS.39,28,502/- MAY NOT BE ADDED BACK TO YOUR RETURNED INCOME OF A.Y. 2 009-10. 6. THE REPLY OF THE ASSESSEE TO THE SHOW CAUSE NOTI CE IS REPRODUCED AT PAGES 4 TO 8 OF THE PAPER BOOK. THE BASIC PLEA OF THE ASSESSEE WAS THAT THE VALUATION OF THE STOCK WAS RE-WORKED BUT THE EF FECT OF DEVIATION WAS DECLARED IN THE AUDIT REPORT AND AS ITS EFFECT WAS NIL, NO ADJUSTMENT WAS MADE IN THE PROFIT & LOSS ACCOUNT. IN RESPECT OF T HE FACTUAL POSITION, THE ASSESSEE EXPLAINED AS UNDER : NOW THE FACTUAL POSITION IS AS UNDER. AS ON 31.3.2008 THE VALUE OF RAW MATERIAL IS AS UND ER: - GROSS VALUE RS. 31920390- MODVAT ELEMENT RS.3928502/-. THERE WAS A BALANCE IN RG PART II AMOUNT TO RS. 392 8502/- AS ON 31.03.2008 WHICH WAS ADJUSTABLE AGAINST EXCISE PAYA BLE. DURING THE F.Y. 2007-08 THE PURCHASES WERE SHOWN AT GROSS & RA W MATERIAL VALUATION WAS AT GROSS OF EXCISE, HENCE THIS AMOUNT RS.3928502/- WAS NOT SHOWN AS AN ASSET. IN THE BALANCE SHEET THE AMO UNT OF RS.3928502/- IS NOT THERE AS ASSET. DURING THE F.Y. 2008-09 WE HAVE CORRECTED THE P & L A/C BALANCE SHEET TO COMPLY WITH AS-2. AS PER REQUIREMENT THE O PENING STOCK WAS BIFURCATED INTO TWO I.E. RAW MATERIAL RS. 27991888/- MODVAT RECEIVABLE RS. 3928502/- TOTAL RS. 31920390/- HENCE THERE IS NO DIFFERENCE IN TAKING THE OPENING STOCK AT RS.27991888/- IN THE PROFIT OF THE COMPANY. RATHER LESSER OPENING STOCK WILL INCREASE THE PROFIT & NOT DECREASE THE PROFIT. FURTHER WE HAVE FILED AN ANNEXURE 'A' TO BE AUDIT R EPORT (COPY ENCLOSED) WHICH SAYS THAT AS PER SEC. 145A OF THE I.T. ACT. T HERE IS NO DIFFERENCE. THE 5 EXPENDITURE OF EXCISE TO THE EXTENT OF RS.3928502/- HAS BEEN LESS CLAIMED IN THE MFG. A/C WHICH COMPENSATE THE OPENING STOCK. 7. THE ASSESSING OFFICER, REJECTING THE EXPLANATION OF THE ASSESSEE, MADE AN ADDITION OF RS.39,28,502/-. 8. BEFORE THE CIT(APPEALS), ELABORATE SUBMISSIONS W ERE MADE BY THE ASSESSEE WHICH WERE FORWARDED TO THE ASSESSING OFFI CER AND THE ASSESSING OFFICER IN THE FIRST REMAND REPORT REPRODUCED THE F INDING IN THE ASSESSMENT ORDER WITHOUT DELIBERATING UPON THE CONTENTIONS OF THE ASSESSEE MADE BEFORE THE CIT(APPEALS). THE ASSESSING OFFICER WAS AGAIN REQUISITIONED VIDE LETTER DATED 28.01.2013 BY THE CIT(APPEALS) TO SUBMIT SPECIFIC REPLY. THE RELEVANT PARA 4.2 IN THIS REGARD IS REPRODUCED AS UNDER : 4.2 IN THE COUNTER COMMENT, SENT VIDE LET TER NO. 624 DATED 24.09.2012. THE A.O. SIMPLY REPRODUCED THE FINDING IN THE ASSESSMENT ORDER WITHOUT DELIBERATING ON THE CONTENTION OF THE APPEL LANT. THEREFORE, THE A.O. WAS AGAIN REQUIRED VIDE THIS OFFICE LETTER NO. 1201 DAT ED 28.01.2013 TO SUBMIT SPECIFIC REPLY. IT WAS INTIMATED TO HIM THAT A DETA ILED CHART WAS SUBMITTED BY THE APPELLANT SHOWING THAT THERE IS NO THE IMPACT O F PROFIT & LOSS ACCOUNT AS PER SECTION 145A OF THE INCOME TAX ACT 6 1 AND THE AMENDED PROFIT & LOSS ACCOUNT TAKING THE GROSS FIGURES. IT WAS ALSO INTIMATED TO HIM THAT THE APPELLANT HAS SUBMITTED THAT THE PROFIT WA S REDUCED IF HIGHER AMOUNT OF O PENING STOCK IS TAKEN AS PER THE VERSION OF THE A.O . THEREAFTER, FURTHER REPLY VIDE LETTER NO. 922 DATED 31.01.2013 WAS RECEIVED F ROM THE A.O. THE A.O. SIMPLY SUBMITTED THAT THE APPELLANT HAD ALREADY FIL ED THE SAME DOCUMENTS BEFORE THE A.O. DURING THE ASSESSMENT PROCEEDINGS A ND THE SAME ARE LYING ON RECORD. IT WAS ALSO SUBMITTED THAT THE A.O. HAD CON SIDERED THE SAME DOCUMENTS AND EXPLANATIONS GIVEN BY THE ASSESSEE BUT DIDN'T A LLOW THE CLAIM. NO REASON AS TO WHY THE EXPLANATION WAS REJECTED WAS GIVEN WH ICH APPEARS NEITHER IN THE ASSESSMENT ORDER NOR IN THE TWO REPL IES SUBMITTED BY THE A.O. 9. IN THE ABSENCE OF ANY REASONS BEING GIVEN BY THE ASSESSING OFFICER, THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER : 4.3 I HAVE CONSIDERED THE SUBMISSIONS MADE. IT IS AN ADMITTED FACT NOW THAT THE APPELLANT HAS DULY EXPLAINED HIS CASE AND ALSO SUBMITTED THE PROFIT & LOSS 6 ACCOUNT TAKING THE GROSS FIGURES AS WELL AS THE CHA RT PREPARED U/S 145A OF THE INCOME TAX, 61 DURING THE ASSESSMENT PROCEEDING AND SHOWN THAT THERE IS NO IMPACT IN PROFIT & LOSS ACCOUNT BY BIFURCATING THE OPENING STOCK IN TWO PARTS. THE DETAILED SUBMISSION OF THE APPELL ANT IN THIS CASE IS ALREADY REPRODUCED. THE A.O. HAS NOT BROUGHT OUT ANY DISCRE PANCY IN THE DOCUMENTS SUBMITTED BY THE APPELLANT. IT IS ALSO SUBMITTED TH AT BY INCREASING THE OPENING STOCK WITHOUT ANY CORRESPONDING FINDING OF DISCREPANCY IN THE SALE OR CLOSING STOCK, THE PROFIT WILL ACTUALLY REDUCE. CONSIDERING THE FACTS OF THE CASE, I AM OF THE OPINION THAT THIS ADDITION CAN'T BE SUSTAINED. THEREFORE, THE GROUND NO. 3 OF THE APPEAL IS ALLOWED. FURTHER, THE A.O. HAS REJECTED THE BOOKS OF ACCOUNT ONLY DUE TO THE DISCREPANCY IN OPENING S TOCK WHICH HAS NOW BEEN DULY EXPLAINED BY THE APPELLANT. THEREFORE, GROUND NO. 2 OF THE APPEAL IS ALSO ALLOWED AS BOOKS CAN'T BE REJECTED UNDER SUCH CIRCUMSTANCES. 10. THE LD. DR FOR THE REVENUE HAS FAILED TO CONTRO VERT THE ABOVESAID FINDINGS OF THE CIT(APPEALS) AND IN THE ABSENCE OF THE SAME, WE FIND NO MERIT IN THE GROUND OF APPEAL NOS. 1 TO 4 RAISED BY THE REVENUE AND THE SAME ARE DISMISSED. 11. THE NEXT ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATION TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY INVOK ING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT IN RESPECT OF INTERES T FREE ADVANCES MADE BY THE ASSESSEE TO ITS SISTER CONCERN. 12. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD MADE AN INVESTMENT OF RS.42,50,000/- IN M/S E.C.FIBRES L TD. THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY PROPORTIONATE INTE REST RELATING TO SUCH ADVANCES BE NOT DISALLOWED IN VIEW OF INTEREST PAID ON SECURED LOANS. IN REPLY, THE ASSESSEE SUBMITTED THAT THE SAID INVESTM ENT WAS MADE OUT OF ITS OWN FUNDS AND NO LOAN WAS RAISED FOR MAKING THE SAI D INVESTMENT. THE INTEREST PAID ON SECURED LOANS WAS CLAIMED TO BE AG AINST THE FACILITY OF CASH CREDIT LIMITS. THE ASSESSING OFFICER, REJECTI NG THE EXPLANATION OF THE ASSESSEE AND APPLYING THE RATIO LAID DOWN BY THE HO N'BLE PUNJAB & 7 HARYANA HIGH COURT IN CIT VS ABHISHEK INDUSTRIES 28 8 ITR 1 (P&H) DISALLOWED SUM OF RS.511,200/- UNDER SECTION 36(1)( III) OF THE ACT. 13. THE ASSESSEE BEFORE THE CIT(APPEALS), FURNISHED WRITTEN SUBMISSIONS WHICH ARE INCORPORATED UNDER PARA 5.1 A T PAGES 10 TO 16 OF THE APPELLATE ORDER. ON THE CONSIDERATION OF THE I SSUE, THE CIT(APPEALS) VIDE PARA 5.2 HELD AS UNDER : 5.2 IT IS, THEREFORE, OBSERVED THAT THE APPELLANT HAS CONTENDED THAT AT THE TIME OF INVESTMENT IN SHARES, THE COMPANY HAS NOT T AKEN ANY LOAN. THE INVESTMENTS WERE MADE IN DEC'2005 AND PAYMENT WAS M ADE OUT OF SHARE CAPITAL. THEREAFTER, THE APPELLANT BORROWED LOAN WH ICH WAS DISBURSED ON 17.02.2006. THERE IS NO OTHER LOAN FRO M ANY OTHER PARTY DURING F.Y. 2005-06. THE A.O. IN HIS REPLY DA TED 30.01.2013 SUBMITTED THAT THE ASSESSEE HAD ALSO MADE THIS SUBM ISSION BEFORE THE A.O. ALSO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, B UT THEN A.O. DULY CONSIDERED THE REPLY OF THE ASSESSEE AT THAT TIME, BUT DIDN'T ACCEPT THE SAME. NO REASON WAS GIVEN AS TO WHY THE APPELLANT'S SUBMISSI ON WASN'T ACCEPTED. ON THE OTHER HAND, THE APPELLANT HAS SUBMITTED THAT THE IN VESTMENT IN SHARE AMOUNTING TO RS.42,60,000/- WAS MADE TILL 22.12.200 6. THE DISBURSEMENT OF TERM LOAN HAS STARTED FROM 17.02.2007. THUS, THE TE RM LOAN WAS TAKEN AFTER THE INVESTMENTS ARE MADE IN THE SHARES. COPIES OF B ANK ACCOUNT IN SUPPORT WERE SUBMITTED WHICH WERE DULY FORWARDED TO THE A.O. THE A.O. HAS SUBMITTED THAT SUCH SUBMISSION WAS MADE DURING ASSESSMENT PROCEEDING ALSO. THEREFORE, CONSIDERING THE TOTALIT Y OF THE FACTS, AS THE APPELLANT HAS NOT USED THE BORROWED FUND TO INV EST IN SHARE OF SISTER CONCERN AND USED THE SHARE CAPITAL AVAILABLE WITH H IM TO INVEST IN THE SHARE, THEREFORE, THE ADDITION IS HEREBY DELETED. 13. THE LD. DR FOR THE REVENUE WAS CONFRONTED WITH THE FACT THAT THE BANK STATEMENTS OF THE ASSESSEE UNDER WHICH THE LOA NS WERE CLAIMED TO HAVE BEEN TAKEN AFTER THE DATE THE SAID INVESTMENTS WERE FORWARDED TO THE ASSESSING OFFICER AND NO ADVERSE REPORT HAS BEEN GI VEN BY THE ASSESSING OFFICER IN THIS REGARD. THE LD. DR FOR THE REVENUE HAD NO REPLY TO THE SAID PROPOSITION. IN VIEW OF THE FACTS AND CIRCUMSTANCE S OF THE CASE, WHERE THE ASSESSEE HAD MADE THE INVESTMENT IN M/S E.C.FIBRES LTD. AMOUNTING TO 8 RS.42,60,000/- TILL 22.12.2006 AND THE DISBURSEMENT OF THE TERM LOAN HAVING STARTED FROM 17.02.2007, WHICH FACT WAS DULY VERIFIED BY THE CIT(APPEALS). IT CANNOT BE SAID THAT INTEREST BEAR ING FUNDS WERE UTILIZED FOR THE SAID ADVANCES. THUS, THERE IS NO MERIT IN THE DISALLOWANCE OF INTEREST BY INVOKING THE PROVISIONS OF SECTION 36(1 )(III) OF THE ACT. UPHOLDING THE ORDER OF THE CIT(APPEALS), WE DISMISS THE GROUND NOS. 5 TO 10 RAISED BY THE REVENUE. 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF SEPTEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED : 3 RD SEPT.,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH