M/s. Amba Metals, New Delhi V. ACIT, New Delhi

ITA 5378/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5719 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 14-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR MAHAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.5378/DEL/2016 ASSESSMENT YEAR: 2012-13 M/S. AMBA METALS, 21/6, WEST PATEL NAGAR, NEW DELHI. V. ACIT, CIRCLE-50(1), NEW DELHI. TAN/PAN: AAKFA 0755C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VED JAIN, CA RESPONDENT BY: SHRI MANOJ KUMAR MAHAR, SR.D.R. DATE OF HEARING: 05 08 2019 DATE OF PRONOUNCEMENT: 07 08 2019 O R D E R PER AMIT SHUKLA, JUDICIAL MEMBER THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST THE IMPUGNED ORDER DATED 11.08.2016 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS)-XVII, NEW DELH I FOR THE QUANTUM OF ASSESSMENT PASSED U/S. 143(3) FOR THE ASSESSMENT YEAR 2012-13. IN VARIOUS GROUNDS OF APPE AL, THE ASSESSE HAS CHALLENGED THE DISALLOWANCE OF INTEREST TO RS.18 LAC U/S. 36(1)(III). 2. AT THE OUTSET, IT WAS SUBMITTED BY THE LD. COUNS EL THAT IN THE CASE OF THE ASSESSE SIMILAR ADDITION WAS ALSO MADE IN A.Y. 2013-14 IN WHICH THE AO HAS PASSED VERBATIM SAME OR DER WITH THE SAME SET OF ALLEGATIONS AND THIS HONBLE T RIBUNAL IN I.T.A. NO.5378/DEL/2016 2 ITA NO. 6884/DEL/2017, VIDE ORDER DATED 31.07.2018, HAS DELETED THE SIMILAR ADDITION MADE BY THE LD. ASSESS ING OFFICER U/S 36(1)(III) ON ACCOUNT OF INTEREST ON ADVANCE TO M/S. SHRI SIDHBALI ISPAT LTD. THE RELEVANT FINDING OF THE SAI D ORDER FOR SAKE OF READY REFERENCE IS REPRODUCED HEREUNDER: 5. I FIND THAT IT IS NOT IN DISPUTE THAT THE ADVAN CE WAS GIVEN TO M/S. SHRI SIDHBALI ISPAT LTD. WHO WAS A SUPPLIER OF SPON GE IRON TO THE ASSESSEE. THE ADVANCE ADMITTEDLY WAS IN THE NORMAL COURSE OF BUSINESS. EVEN OTHERWISE, IT IS SEEN THAT THE ASSES SEE HAD MORE THAN ADEQUATE UNSECURED FUNDS AVAILABLE AT ITS DISPOSAL. IT IS ALSO SEEN THAT THE TERM SECURED LOANS OBTAINED FOR WORKING CA PITAL HAVE BEEN UTILIZED IN THE INVENTORIES. IN THE FACE OF THESE F ACTS WHICH THE ASSESSEE HAS CONSISTENTLY CANVASSED BEFORE THE AO A ND CIT (A) WHICH HAVE NOT BEEN REBUTTED, I FIND THAT THE ADDITION MA DE IN THE PECULIAR FACTS AND CIRCUMSTANCES AND THE JUDICIAL PRECEDENT AVAILABLE CANNOT BE SUSTAINED. THE ADDITION IS DIRECTED TO BE DELETE D.' 3. THUS, IT WAS SUBMITTED THAT THE ISSUE IS SQUAREL Y COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE TRIBUNAL WHEREIN SAME ADVANCE WAS GIVEN TO THE SIST ER CONCERN NATIONAL AMOUNT OF INTEREST HAS BEEN DELETE D. APART FROM THAT, HE ALSO SUBMITTED THAT ASSESSE HAS HUGE SURPLUS FUNDS AT THE TIME OF GIVING THE ADVANCE, AND THEREF ORE, NO DISALLOWANCE CAN BE MADE IN THIS REGARD. IN SUPPORT , HE RELIED UPON THE FOLLOWING JUDGMENTS. CIT VS. RELIANCE INDUSTRIES LTD. (2019) 410 ITR 466 (SC). PUNJAB STAINLESS STEEL INDUSTRIES. VS. ACIT, CIRCLE -34(1), NEW DELHI. HERO CYCLES (P) LTD. VS. COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA (2015) 379 ITR 347 (SC). I.T.A. NO.5378/DEL/2016 3 4. ON THE OTHER HAND, LD. DR HAS STRONGLY RELIED UP ON THE ORDER OF THE ASSESSING OFFICER AND LD. CIT (A). 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PE RUSING THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER, IT IS SEEN THAT ASSESSE HAS GIVEN LOAN TO M/S. SHRI SIDHBALI I SPAT LTD. TO THE TUNE OF RS.1,50,00,000/- WHICH HAS BEEN DISALLO WED BY THE ASSESSING OFFICER ON THE GROUND THAT IT IS A RE LATED PARTY AND THERE IS NO BUSINESS TRANSACTION BETWEEN THE SI STER CONCERN. WE FIND THAT IN THE SUBSEQUENT ASSESSMENT YEAR 2013-14 SIMILAR DISALLOWANCE OF INTEREST HAS BEEN D ELETED BY THE TRIBUNAL AS PER OBSERVATION MADE ABOVE WHEREIN IT HAS BEEN FOUND THAT M/S. SHRI SIDHBALI ISPAT LTD. WAS A SUPPLIER OF SPONGE IRON TO THE ASSESSE WHICH WAS IN THE NORM AL COURSE OF BUSINESS. ONCE IT HAS BEEN FOUND THAT ADVANCE GI VEN WAS IN THE NORMAL COURSE OF BUSINESS THEN NO DISALLOWAN CE OF INTEREST CAN BE MADE ON SUCH ADVANCE. FURTHER FROM PERUSAL OF THE BALANCE SHEET, IT IS SEEN THAT ASSESSEE HAS HUGE SURPLUS FUNDS IN THE FORM OF PARTNERS CAPITAL WHIC H IS FAR EXCEEDING THE ADVANCE GIVEN, THEREFORE, IN VIEW OF VARIOUS JUDICIAL PRECEDENTS AS RELIED UPON BY THE LD. COUNSE L NO DISALLOWANCE OF INTEREST CAN BE MADE. ACCORDINGLY, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONF IRMED BY THE LD. CIT (A) IS DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. I.T.A. NO.5378/DEL/2016 4 ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2019. SD/- SD/- [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: AUGUST, 2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR