ACIT,Range-2, Durgapur, Durgapur V. Shivam Meltech(P) Ltd., Howrah

ITA 534/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7941 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2012
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2012
• Court: TRIBUNAL
• Department Lawyers: K K DAS
• Assessee Lawyers: N O N E
• Keywords: Proportionate interest
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND ! ! ! ! , '# ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SANJAY ARORA, AM] $ $ $ $ / I.T.A NO. 534/KOL/2012 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2008-09 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. SHIVAM MELTECH (P) LTD. RANGE-2, DURGAPUR. (PAN: AACCK5618B) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI K. K. DAS FOR THE RESPONDENT: N O N E DATE OF HEARING: 07.08.2012 DATE OF PRONOUNCEMENT: 07.08.2012 '. / ORDER IMMEDIATELY UPON CONCLUSION OF HEARING OF THIS APPE AL ON 7 TH AUGUST, 2012, THE BENCH PASSED THE FOLLOWING ORDER: 7 TH AUGUST, 2012 APPEAL OF REVENUE IS DISMISSED AND PRONOUNCED IN O PEN COURT. DETAILED ORDER WILL FOLLOW. PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)- DURGAPUR IN APPEAL NO. 68/CIT(A)/DGP/2010-11 DATED 18.01.2012. ASSESSMENT WAS FRAMED BY ADDL. CIT, RANGE-1, DURGAPUR U/S. 143(3) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 23.12 .2010. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE OF INTEREST ON LOAN GIVEN FOR NON BUSI NESS ACTIVITY AT RS.10,95,000/-. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE OF RS.10,95,000/- AS DISALLOWANCE OF INTEREST ON THE LOAN GIVEN FOR NON- BUSINESS ACTIVITY. 3. WE HAVE HEARD SUBMISSIONS OF LD. DR AND GONE T HROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS SHOWN LOAN AND ADVANCE AT RS.2,35,32,220/- ON THE ASSET SIDE OF ITS BALANCE SHEET WHEREAS ON LIABILIT Y SIDE IT HAS SHOWN ADVANCE FROM PARTIES AT RS.2,33,31,497/-. ACCORDING TO AO, FROM THE LIST S UBMITTED BY ASSESSEE, IT IS CLEAR THAT THE ASSESSEE HAS GIVEN LOAN OF RS.1,22,81,277/- TO ONE SHRI K. C. MONDAL. ACCORDING TO AO, AS PER LIABILITY SIDE OF THE BALANCE SHEET ASSESSEE HAS AL SO OBTAINED LOAN AT RS.3,37,02,042/- AND UNSECURED LOAN AT RS.2,98,91,578/-. ACCORDING TO A O, THE TOTAL CUMULATIVE LOAN TOOK BY 2 ITA 534/K/2012 SHIVAM MELTECH (P) LTD. A.Y. 08-09 ASSESSEE WAS AT RS.6,35,93,620/-. THE AO REQUIRED THE ASSESSEE TO EXPLAIN HOW THE LOAN WAS GIVEN TO SHRI K. C. MONDAL AT RS.1,22,81,277/- REL ATES TO BUSINESS ACTIVITY. AS THE ASSESSEE COULD NOT ESTABLISH ANY RELATIONSHIP BETWEEN THIS L OAN AND THE BUSINESS ACTIVITY, THE AO PRESUMED THAT AMOUNT ADVANCED TO SHRI K. C. MONDAL IS OUT OF SECURED LOANS ON WHICH INTEREST HAS PAID. ACCORDINGLY, THE AO MADE DISALLOWANCE OF INTEREST ATTRIBUTABLE TO LOANS/ADVANCE GIVEN TO SHRI K. C. MONDAL AT RS.10,95,000/-. AGGR IEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO SIMPLY DIRECTED THE AO TO DISALLOW ONLY ON PROPORTIONATE INTEREST PAID ON UNSECURED LOANS ONLY. THE RELEVANT FINDING OF CIT( A) READS AS UNDER: IT HAS SUBMITTED LEDGER COPIES OF LOANS RECEIVED A ND ADVANCES GIVEN AS ALSO COPY OF ITS BANK ACCOUNT. PERUSAL OF THESE DOCUMENTS REVEA LS THAT THE UNSECURED LOAN TAKEN BY IT WAS SUFFICIENT TO COVER THE INTEREST FREE ADVANC E GIVEN. AT THE SAME TIME, I DO NOT THINK THAT THE APPELLANT HAS MADE OUT A CASE THAT T HE SAID ADVANCE WAS MADE FOR BUSINESS PURPOSES. UNDER THE CIRCUMSTANCES, WHILE I AGREE IN PRINCIPLE WITH THE AOS DISALLOWANCE, IN MY OPINION, IT WILL BE CORRECT TO DISALLOW PROPORTIONATE INTEREST PAID ON UNSECURED LOANS ONLY. THE A.O. WHILE GIVING EFF ECT TO THIS ORDER IS DIRECTED TO DO SO. THE BALANCE AMOUNT OF INTEREST DISALLOWED IS DIRECT ED TO BE DELETED. THIS GROUND OF APPEAL IS PARTLY ALLOWED, SUBJECT TO THE DIRECTION GIVEN ABOVE. WE FIND THAT SIMPLY THE CIT(A) HAS DIRECTED THE AO TO DISALLOW THE PROPORTIONATE INTEREST PAID ON UNSECURED LOANS. WE FIND NO INFIRMITY IN THE SA ID DIRECTION OF CIT(A) AND HENCE, THE SAME IS CONFIRMED. REVENUES APPEAL IS DISMISSED. 4. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 5. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- ! ! ! ! , '# , (SANJAY ARORA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( /# /# /# /#) )) ) DATED: 7TH AUGUST, 2012 01 %2 3 JD.(SR.P.S.) '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ACIT, RANGE-2, DURGAPUR. 2 ,-*+ / RESPONDENT SHIVAM MELTECH (P) LTD., 53/9/2, B. B . BOSE ROAD, RAMKRISHNAPUR, HOWRAH-711101. 3 . .% ( )/ THE CIT(A), DURGAPUR 4. .% / CIT, 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%@/ BY ORDER, /ASSTT. REGISTRAR .