JITENDRA J. MEHTA, MUMBAI V. DCIT OSD-II CENT RG 7, MUMBAI

ITA 5397/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55354 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 19-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR SINGH
• Assessee Lawyers: VIJAY MEHTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AN D SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5397/MUM./2010 (ASSESSMENT YEAR : 2004-05 ) MR. JITENDRA J. MEHTA 1401, RAHEJA CENTRE 14 TH FLOOR, NARIMAN POINT MUMBAI 400 021 PAN AAAPM2381K .. APPELLANT V/S DY. COMMISSIONER OF INCOME TAX (OSD)-II, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. VIJAY MEHTA REVENUE BY : MR. SUNIL KUMAR SINGH DATE OF HEARING 19.09.2011 DATE OF ORDER 30.09.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 25 TH MAY 2010, PASSED BY THE COMMISSIONER (APPEALS)-XXXX, MUMBAI, FOR ASSESSMENT YEAR 2004-05 . THE EFFECTIVE GROUND RAISED BY THE ASSESSEE, READS AS FOLLOWS:- THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF ` 11,91,000/- ON ACCOUNT OF PROPORTIONATE DISALLOWAN CE OF INTEREST FREE ADVANCES TO SISTER CONCERNS. MR. JITENDRA J. MEHTA ITA NO.5397/M/2010 2 2. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ASSESSEE HAD INTEREST FREE FUNDS RECEIVED FROM SIST ER CONCERNED AND THAT THE AMOUNT GIVEN AS INTEREST FREE LOAN TO SISTER CONCER N WAS LESS THAN 10% OF THE AMOUNTS RECEIVED FROM SISTER CONCERN. HE TOOK T HIS BENCH TO THE ORDERS PASSED BY THE ASSESSING OFFICER AS WELL AS THE COMM ISSIONER (APPEALS) TO POINT OUT THAT THIS FACT WAS NOT IN DISPUTE. HE ALS O DREW THE ATTENTION OF THE BENCH TO THE PAPER BOOK FILED BY THE ASSESSEE AND P OINTED OUT THAT THE PAYMENT OF INTEREST WAS MADE TO CANARA BANK, HDFC A ND ILNFS FOR AVAILING FINANCE. HE SUBMITTED THAT NO DISALLOWANCE COULD BE MADE UNDER THOSE CIRCUMSTANCES. IN SUPPORT OF HIS ARGUMENTS, HE RELI ED ON THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S RELIAN CE UTILITIES & POWER LTD. (2009) 313 ITR 340 (BOM.). 3. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE O RDERS OF THE LOWER AUTHORITIES. 4. AFTER HEARING THE RIVAL CONTENTIONS, WE FIND THAT T HE COMMISSIONER (APPEALS), AT PARA-3.1, OBSERVED THAT THE ASSESSEE HAS RECEIVED ` 4,77,33,000 IS INTEREST FREE ADVANCE FROM SISTER CO NCERN. AGAINST THIS, THE ASSESSEE HAS GIVEN AN AMOUNT OF ` 34,69,000 ONLY TO SISTER CONCERNS AS INTEREST FREE ADVANCE. THUS, ON FACTS, WE HOLD THAT THE ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS SO AS TO ENABLE HIM TO GIVE INTEREST FREE LOANS. HENCE, NO DISALLOWANCE CAN BE MADE ON INTEREST PAID . IN FACT, INTEREST WAS PAID BY AVAILING FINANCE FACILITIES FROM CANARA BAN K AND HDFC AND TO IL&FS. THE FUNDS BORROWED FROM THESE INSTITUTIONS HAVE NOT BEEN DIVERTED AS LOANS TO SISTER CONCERN. CONSEQUENTLY, WE SET ASIDE THE I MPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND ALLOWED THE GROUND R AISED BY THE ASSESSEE. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH SEPTEMBER 2011 MR. JITENDRA J. MEHTA ITA NO.5397/M/2010 3 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, I BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 19.9.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 22.9.2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26.9.2011 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 26.9.2011 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26.9.2011 SR.PS 6. DATE OF PRONOUNCEMENT 30.9.2011 SR.PS 7. FILE SENT TO THE BENCH CLERK 30.9.2011 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER