I.T.O Wd - 6(2),kolkata., Kolkata V. M/s Jagadhatri Vyapaar Pvt Ltd, Kolkata

ITA 533/KOL/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4546 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 16-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBASH AGARWAL LD
• Assessee Lawyers: SAURABH KUMAR CIT LD
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH, KOLKATA BEFORE : SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 533/ KOL/201 3 A.Y 20 09 - 10 I.T.O., WARD 6(2), KOLKATA VS. M/S. JAGADHATRI VYAPAAR PVT. LTD. PAN: AAACJ6565C [APPELLANT ] [ RESP ONDENT ] C.O NO. 49/ KOL/201 3 [ ITA NO. 533/KOL/2013 ] A.Y 20 09 - 10 M/S. JAGADHATRI VYAPAAR VS. I.T.O., WARD 6(2), KOLKATA PVT. LTD. [ CROSS OBJECTOR/ASSESSEE ] [ RESPONDENT /DEPARTMENT ] APPELLANT/ REVENUE BY : SHRI SAURABH KUMAR, ADDL. CIT, LD. SR.DR RESPONDENT/ DEPARTMENT BY : SHRI SUBASH AGARWAL, ADVOCATE, LD.AR DATE OF HEARING : 03 - 05 - 2018 DATE OF PRONOUNCEMENT : 01 - 08 - 2018 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THE ABOVE SAID APPEAL AND CORRESPONDING CROSS OBJECTION BY THE REVENU E AND ASSESSE ARE AGAINST THE ORDER DT. 06 - 12 - 2012 OF THE CIT - A, VI , KOLKATA FOR THE A.Y 2009 - 10. 2. THE REVENUE HAS RAISED THE FOLLOWING REVISED GROUNDS OF APPEAL AND PRAYED TO TAKE UP THE REVISED GROUNDS OF APPEAL FOR ADJUDICATION: - REVISED GROUNDS OF APPEAL A) LD. CIT(A) - VI, KOLKATA ERRED IN ALLOWING RELIEF TO THE ASSESSEE FOR AN AMOUNT OF RS.3,07,00,000/ - TOWARDS ADDITION MADE AGAINST SHARE APPLICATION MONEY PENDING ALLOTMENT SINCE ASSESSMENT YEAR 2007 - 08 BASED ON DETAILS, FRESH EVIDENCES FILED BY THE ASSESSEE COMPANY DURING APPELLATE PROCEEDINGS WITHOUT CALLING FOR REMAND REPORT. B) LD. CIT(A) - VI, KOL. ERRED IN ALLOWING RELIEF OF RS.L,80,53,105/ - IN RESPECT OF DISALLOWANCE OF INTEREST ON LOAN, ETC. RELYING ON FRESH DETAILS FILED BY THE ASSESSEE ITA NO 533/KOL/2013 & CO NO.49/KOL/2013 M/S. JAGADHATRI VYAPAAR PVT. LTD 2 C OMPANY DURING APPELLATE PROCEEDINGS WITHOUT CALLING FOR REMAND REPORT AND WITHOUT CONSIDERING THE FACTS OF THE CASE BEFORE DISPOSING OF APPEAL. C) LD. CIT(A) - VI, KOL. ERRED IN DISPOSING OF APPEAL RELYING ON FRESH DOCUMENTS FILED BY THE ASSESSEE DURING AP PELLATE PROCEEDING WHICH WERE NOT FILED / PRODUCED DURING ASSESSMENT PROCEEDINGS WITHOUT CALLING FOR REMAND REPORT, THUS VIOLATING RULE 46A OF THE INCOME TAX RULE. D) THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELETE OR MODIFY ANY OF THE GROUNDS OF APPE AL BEFORE OR AT THE TIME OF HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUSINESS OF RAW JUTE TRADING UNDER THE NAME & STYLE M/S. JAGADHATRI VYAPAAR PVT. LTD. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A .Y UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS. NIL. THE AO ASSESSED THE TOTAL INCOME OF ASSESSE AT RS.2,60,15,339/ - VIDE HIS ORDER PASSED U/S. 143(3) OF THE ACT DT. 29 - 12 - 2011. 4. GROUND NO. (A) IS RELATING TO DELETION OF ADDITION OF RS.3,07,00,00 0/ - MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION MONEY WITHOUT CALLING REMAND REPORT OF THE AO. 5. THE LD.DR SUBMITS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE AO THAT THE ASSESSE HAS SHOWN AUTHORIZED SHARE CAPITAL OF RS. 55,7 0,000/ - FROM 2005 - 06 TO 2009 - 10. THE AO DEPUTED AN INSPECTOR TO ENQUIRE THE SHARE APPLICATION MONEY IN RESPECT OF M/S. VENKATESHWAR FISCAL SERVICES PVT. LTD FOR RS.1,97,00,000/ - AND M/S. JUPITER FIVEST PVT. LTD FOR RS. 1,10,00,000/ - . ACCORDING TO AO, THE INSPECTOR COLLECTED THE P & L ACCOUNT, BALANCE SHEET OF M/S. JUPITER FIVEST PVT. LTD & M/S. VENKATESHWAR FISCAL SERVICES PVT. LTD FOUND THAT THE SHARE APPLICATION MONEY FOR ALLOTMENT WAS PENDING. FOR NOT ALLOTTING THE SAID SHARES TO THE SAID TWO COMPANI ES MENTIONED AS ABOVE, THE AO ADDED AN AMOUNT OF RS.3,07,00,000/ - TO THE TOTAL INCOME OF THE ASSESSE. THE CIT - A CONSIDERING THE SUBMISSIONS OF ASSESSE GIVEN RELIEF TO ASSESSEE AND DELETED THE ADDITION OF RS.3,07,00,000/ - . 6. THE LD. DR FURTHER SUBMITS TH AT THE ASSESSE FILED ADDITIONAL EVIDENCES BEFORE THE CIT - A AND ARGUED THAT BASING ON WHICH WITHOUT ITA NO 533/KOL/2013 & CO NO.49/KOL/2013 M/S. JAGADHATRI VYAPAAR PVT. LTD 3 SEEKING ANY REMAND REPORT FROM THE AO THE CIT - A ARBITRARILY DELETED THE SAID ADDITION MADE BY THE AO. 7. ON THE OTHER HAND, THE LD. AR DID NOT CONTROVERT TH E SAME AND AGREED TO REMAND THE MATTER TO THE FILE OF THE AO FOR HIS VERIFICATION. 8. HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ASSESSE FILED EVIDENCES BY WAY OF ADDITIONAL EVIDENCE I.E CERTIFICATE, LEDGER COPY OF SHARE APPLICATION M ONEY OF M/S. JUPITER FIVEST PVT. LTD FOR THE F.YS 2006 - 07, 07 - 08 AND 08 - 09 AND CLOSING BALANCE UNDER THE HEAD LOANS AND ADVANCES AND CERTIFIED COPY OF LIST OF LOANS AND ADVANCES FOR THE F.Y 2008 - 09 AND OTHER DETAILS AS MENTIONED IN THE SUBMISSIONS MADE BEFORE THE CIT - A. IT IS FURTHER NOTICED THAT THE CIT - A CONSIDERING THE ABOVE ADDITIONAL EVIDENCES AS AVAILABLE BEFORE HIM DELETED THE IMPUGNED ADDITION MADE ON ACCOUNT OF SHARE APPLICATION MONEY. THEREFORE, TAKING INTO CONSIDERATION THE FACTS AND CIRCUMST ANCES OF THE CASE AND SUBMISSIONS OF THE LD.AR & LD. DR AND IN THE INTEREST OF JUSTICE, WE DEEM IT FIT AND PROPER TO REMAND THE MATTER TO THE FILE OF THE AO FOR HIS FRESH CONSIDERATION. THE ASSESSE IS AT LIBERTY TO FILE NECESSARY EVIDENCES AND EXPLANATION TO SUBSTANTIATE ITS CLAIM AND CONTENTION. GROUND NO. (A) RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 9. GROUND NO. (B) OF THE REVENUES APPEAL AND GROUND TAKEN BY THE ASSESSE IN THE CROSS OBJECTION PERTAINED TO DISALLOWANCE OF INTEREST ON LO AN. 10. THE ASSESSE HAD CLAIMED EXPENDITURE BY WAY OF INTEREST OF LOAN OF RS.2,03,79,042/ - . INTEREST WAS PAID ON SECURED LOAN AND OVERDRAFT OBTAINED FROM THE BANK. THE AO DISALLOWED THIS AMOUNT ON THE GROUND THAT THE ASSESSE HAS GIVEN INTEREST FREE LOANS AMOUNTING TO RS.4,93,56,012/ - TO ITS SISTERS CONCERS DIVERTING INTEREST BEARING FUND FOR NON - BUSINESS PURPOSES. THE ASSESSE CARRIED THE MATTER BEFORE THE ITA NO 533/KOL/2013 & CO NO.49/KOL/2013 M/S. JAGADHATRI VYAPAAR PVT. LTD 4 LD. CIT - A. THE LD. CIT - A OBSERVED THAT OUT OF RS.4,93,56,012/ - THE TRANSACTION AMOUNTING TO RS. 2,47, 17,012/ - O N BUSINESS TRANSACTION AND AMOUNT OF RS. 5,05,000/ - WAS PAID IN EXCESS TO M/S. JEBL WHILE REP AYING THE AMOUNT OF RS . 1,02,70,000/ - . THUS, HE WORKED OUT THAT THE DIVERTED AMOUNT PAID TO SISTER CONCERNS OUT OF INTEREST BEARING LOANS WAS RS 2,41,34 ,000/ - . INTEREST @ 13% OF THIS AMOUNT WHICH WORKED OUT TO RS.31,37,420/ - WAS DISALLOWED. THE BALANCE DISALLOWANCE WAS DELETED BY THE LD. CIT(A). 11. AGGRIEVED, THE REVENUE FILED THIS APPEAL DISPUTING THE DELETION OF AN AMOUNT OF RS.1,80,53,105/ - BY THE LD. CIT(A). THE ASSESSE FILED CROSS OBJECTION DISPUTING THE SUSTENANCE OF DISALLOWANCE OF RS . 31,37,420/ - BY THE LD. CIT(A). 12. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE ASSESSE HAS INTEREST FREE FUNDS WITH IN THE FORM OF SHARE CAPITAL AND RESERV ES IN EXCESS OF THE AMOUNTS ADVANCED TO ITS SISTER CONCERNS A S INTEREST FREE LOANS .THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. REPORTED IN 313 ITR 340 HELD HELD THAT: IF THERE BE INTEREST FREE FUNDS AVAILABLE TO AN AS SESSEE SUFFICIENT TO MEET ITS INVESTMENT AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST FREE FUNDS AVAILABLE. SINCE THE CAPITAL OF APPELLANT IS MORE THAN THE PERSONAL INVESTMENTS NO DISAL LOWANCE OF INTEREST U/S.36(1)(III) IS CALLED FOR. ADDITION OF RS.1,20,000/ - IS DELETED AND GROUND RAISED BY THE APPELLANT IS HEREBY PARTLY ALLOWED.' 13. APPLYING THE PROPOSITION LAID DOWN IN THE CASE LAW OF SUPRA TO THE FACTS OF THE CASE AS THE INTEREST FREE FUNDS HELD BY THE ASSESSEE ARE FAR AND EXCESS OF THE I NTEREST FREE ADVAN C ES GIVEN BY THE ASSESSE TO ITS SISTER CONCERNS, IF THE PRESUMPTION I N SUCH SITUATION IS THAT THE INTEREST FREE FUNDS WERE USED TO GIVE INTEREST FREE ADVANCES TO ITS SISTER CO NCERNS , NO DISALLOWANCE C AN BE MADE U/S. 36(1) OF THE ACT. THUS, THIS GROUND OF REVENUES APPEAL IS ALLOWED IN PART AND GROUND TAKEN BY THE ASSESSE IN THE CROSS OBJECTION IS ALLOWED. ITA NO 533/KOL/2013 & CO NO.49/KOL/2013 M/S. JAGADHATRI VYAPAAR PVT. LTD 5 1 4 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED IN PA RT AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 - 08 - 2018 SD/ - SD/ - J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01 - 0 8 - 2018 **PP(SR.P.S.) COPY O F THE ORDER FORWARDED TO: 1. APP ELLANT/REVENUE :INCOME TAX OFFICER, WARD 6(2), KOLKATA, 6 TH FLOOR, P - 7 CHOWRINGHEE SQUARE, KOLKATA - 69. 2 RESPONDENT/ ASSESSEE: M/S. JAGADHATRI VYAPAAR PVT. LTD 14/1 JUDGES COURT ROAD, ALIPORE, KOLKATA - 700 027. 3. THE CIT( A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER SR.P.S,H.O.O, ITAT.KOL