Appeal details
Counselvise Citation
[2015] 121 COUNSELVISE.COM (IT) 0486 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-06-2015
Appeal Filed By
Assessee
Bench Allotted
A
Assessment Year
2009-2010
Appeal Filed On
28-03-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HON BLE SRI RAJPAL YADAV , JM & HON BLE SRI B.P.JAIN , AM] I.T.A NO S . 554 & 555 /KOL/20 14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 SHRI LOKNATH PRASAD GUPTA - V S . - A.C.I.T., CENTRAL CIRCLE - XXIII, KOLKATA KOLKATA [ PAN : ADUPG 5810 F) (APPELLANT) (RESPONDENT) FOR THE APPEL LANT : SHRI A.K.TULSIYAN, FCA & SHRI AMIT KUMAR, ACA FOR THE RESPONDENT : SHRI SABOORUL H.USMANI, JCIT, SR.DR DATE OF HEARING : 08 .05 . 2015 DATE OF PRONOUNCEMENT : 08.06.2015. ORDER PER SHRI B.P.JAIN , AM THESE TWO APPEAL S OF THE ASSES SEE ARISE FROM TWO DI F FERENT ORDER S OF LD.CIT (A) - CENTRAL - III , KOLKATA FOR ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 DATED 24.11.2011 AND 24.01.2013 RESPECTIVELY. 2. GROUNDS OF APPEAL HAVE BEEN TAKEN IN BOTH THE APPEALS ON IDENTICAL ISSUE AND THEREFORE BOTH TH E APPEALS ARE TAKEN UP TOGETHER BY THIS CONSOLIDATED ORDER. THE RELEVANT GROUNDS OF APPE AL IN BOTH THE APPEALS IN ITA NO .554/KOL/ 2014 FOR A.YR.2009 - 10 AND ITA NO .555/KOL/2014 FOR A.YR.2010 - 11 ARE REPRODUCED AS UNDER : - 1. THAT THE LD. CIT(A) ERRED IN CON FIRMING THE DISALLOWANCE OF INTEREST OF RS.40,19,800/ - (RS.41,85,049/ - FOR A.YR.2010 - 11) MADE BY THE AO ON ACCOUNT OF LOAN ADVANCED TO SHRI OM PRAKASH GUPTA & M/S. LOGOTECH (INDIA) PVT. LTD. BY HOLDING THAT UNSECURED LOAN WAS ADVANCED FROM THE NEW UNSECURE D LOAN TAKEN. THE FINDING IS FACTUALLY WRONG. THE LOAN WAS ADVANCED TO THE PARTIES OUT OF OWN FUND ONLY. AS SUCH, DISALLOWANCE MADE BY THE AO AND CONFIRMED BY LD.CIT(A) NEED TO BE DELETED. 2. THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2 ITA NO. 554&555/KOL/2014 SRI LOKNATH PRASAD GUPTA A.YRS.2009 - 10&2010 - 11 2 3. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.554/KOL/2015 AND OUR ORDER HEREIN BELOW SHALL BE IDENTICALLY APPLICABLE TO THE CASE IN APPEAL NO.555/KOL/2014 FOR A.YR.2010 - 11. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD ADVANCED LOAN TO SHRI OM PRAKASH GUPTA, SON OF THE ASSESSEE AND THE SISTER CONCERN M/S. LOGOTECH (INDIA) PVT. LTD. IT WAS OBSERVED BY THE AO THAT LOAN GIVEN TO THESE TWO PERSONS WAS TO EXPEDITE THEIR B USINESS. THE ASSESSEE WAS ASKED TO EXPLAIN THAT THE INTEREST BORNE TO CONTINUE THE INTEREST FREE LOAN WITH THE SPECIFIED PERSONS SHOULD NOT BE DISALLOWED IN THE ABSENCE OF ANY COMMERCIAL EXPEDIENCY BETWEEN THE ASSESSEE AND SHRI OM PRAKASH GUPTA AND M/S.LOG OTECH (I)PVT. LTD.. THE RELEVANT EXPLANATION OF THE ASSESSEE IS REPRODUCED HEREIN BELOW : - THE LOANS PAID TO SRI OM PRAKASH GUPTA, SON OF THE ASSESSEE AND TO GROUP COMPANIES/GROUP CONCERNS, M/S. LOGOTECH (I) PVT. LTD. AND M/S. RAJA SPICE & FOOD PRODUCTS ( PROP. SMT. PUSHPA DEVI GUPTA, HAVING PAN : ADTPG7132P), WERE PAID OUT OF REGULAR BUSINESS RECEIPTS AND NOT OUT OF UNSECURED LOANS TAKEN. COPY OF LEDGER A/C OF LOAN GIVEN TO SHRI OM PRAKASH GUPTA FOR THE F.Y. 2006 - 07, 2007 - 08 & 2008 - 09 ARE ENCLOSED HEREW ITH. FROM THE SAME, IT MAY BE SEEN THAT OUT OF TOTAL LOAN OF RS.2,48,44,847/ - OUTSTANDING ON 31.03.2009, THE PAYMENTS WERE MADE AS UNDER : I - RS.50,00,000 : DURING 2006 - 07 II - RS.1,50,00,000 : DURING THE FY 2007 - 08 III - RS.48,44,847: DURING THE FY 2008 - 09 TOTAL AS AT 31.3.09 RS.2,48,44,847/ - WE ARE ENCLOSING HEREWITH A STATEMENT SHOWING THE DETAILS OF PAYMENTS OF THE LOAN TO SRI OM PRAKASH GUPTA DURING THE F.Y. 2008 - 09, ALONG WITH SOURCE THEREOF. COPY OF RELEVANT BANK STATEMENTS/BANK BOOKS ARE ALSO BEING PRODUCED HEREWITH. FROM THE SAME IT IS APPARENT THAT ALL THE SAID PAYMENT OF LOANS TO SRI OM PRAKASH GUPTA, WERE PAID OUT OF BUSINESS RECEIPTS AND NOT FROM THE UNSECURED LOANS TAKEN. FURTHER, PLEASE FIND HEREWITH COPY OF AUDITED BALANCE SHEET OF M/S.LOKNATH PRASAD GUPTA AS AT 31.03.07 AND AT 31.03.08. IT MAY BE SEEN FROM THE SAME THAT, THE ASSESSEE HAS INTEREST FREE OWN CAPITAL FUND OF RS.86,75,224.57 AS ON 31.03.07 AND RS.3,43,44,212.43 AS ON 31.03.08. THUS, IT IS CLEAR THAT LOANS ADVANCED ARE OUT INTEREST FREE OWN FUND AND NOT OUT OF INTEREST BEARING LOAN FUNDS. COPY OF LEDGER A/C OF LOAN TO THE GROUP COMPANY, M/S. LOGOTECH(I)PVT. LTD., FOR THE FY 2008 - 09 IS ALSO ENCLOSED HEREWITH SHOWING THE LOANS TO M/S.LOGOTECH(I) WAS ADVANCED 3 ITA NO. 554&555/KOL/2014 SRI LOKNATH PRASAD GUPTA A.YRS.2009 - 10&2010 - 11 3 DURING THE FY 2008 - 09, OUT OF TH E FIXED DEPOSITS MADE WITH BANK OF RAJASTHAN LTD. DURING THE F.Y.2007 - 08 AND NOT OUT OF BORROWED FUNDS. THE LD. CIT(A) CONFIRMED THE ACTION OF AO. 5. THE LD. COUNSEL FOR THE ASSE S SEE , AT THE OUTSET , RELIED UPON THE EXPLANATION GIVEN BEFORE BOTH THE AUTH ORITIES BELOW AND ARGUED THAT THE LOAN GIVEN TO SHRI OM PRAKASH GUPTA WAS MAINLY DURING THE FINANCIAL YEAR ENDING 31 ST MARCH, 2007 RELEVANT TO A.YR.2007 - 08 AND RELEVANT TO A.YR.2008 - 09 AND OUT OF TOTAL LOAN ADVANCED AS ON 31 ST MARCH, 2009 AT RS.2,48,44,84 7/ - . IT WAS ONLY RS.48,44,847/ - WHICH WAS ADVANCED DURING THE IMPUGNED YEAR. THE SAID AMOUNT WAS ADVANCED OUT OF REGULAR BUSINESS RECEIPT AND NOT OUT OF UNSECURED LOANS TAKEN. COPY OF THE RELEVANT BANK STATEMENTS, BANK BOO K S WERE PRODUCED BEFORE BOTH THE A UTHORITIES BELOW. NO DEFECT IN THE SAME HAS BEEN POINTED OUT. WHEN THE ASSESSEE HAS NOT INCURRED ANY INTEREST EXPENDITURE AND THE SAME HAVING BEEN GIVEN OUT OF INTEREST FREE FUNDS, THEN THERE IS NO BURDEN OF INTEREST ON THE ASSESSEE TO GIVE THE LOANS TO SH RI OM PRAKASH GUPTA AND THEREFORE NO DISALLOWANCE ON THIS ACCOUNT CAN BE MADE AND THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF S.A.BUILDERS VS CIT 288 ITR 1 (SC) CANNOT BE MADE APPLICABLE IN THE PRESENT CIRCUMSTANCES AND FACTS OF THE CASE. 5.1 . SIMILARLY THE LD.COUNSEL FOR THE ASSESSEE ARGUED THAT THE LOAN ADVANCED TO M/S.LOGOTECH (I)PVT. LTD. WAS OUT OF THE FIXED DEPOSITS MADE WITH BANK OF RAJASTHAN LTD. DURING THE FINANCIAL YEAR ENDING 31 ST MARCH, 2008 AND NOTHING HAS BEEN ADVANCED OUT OF THE BORROWED FUNDS AND I T IS A MATTER OF RECORD. NO DEFECT HAS BEEN POINTED OUT BY ANY OF THE AUTHORITIES BELOW. IN THIS CASE ALSO THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF S.A.BUILDERS VS CIT (SUPRA) CANNOT BE MADE APPLICABLE. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF VARIOUS COURTS OF LAW AS UNDER : - I ) S.P.JAISWAL ESTATES (P) LTD VS CIT (2012) 74 DTR (KOL) 294 II ) CIT VS BRITANNIA INDUSTRIES LTD. (2006) 280 ITR 525 (CAL) 4 ITA NO. 554&555/KOL/2014 SRI LOKNATH PRASAD GUPTA A.YRS.2009 - 10&2010 - 11 4 III ) CIT VS TIN BOX CO. (2003) 260 ITR 637 (DEL) \ IV ) CIT VS DALMIA C EMENT (BHARAT) LTD. 9I2002) 254 ITR 377 (DEL) V ) DCIT VS U.K.PAINTS (INDIA) LTD. (2010) 4 ITR (TRIB)455 (DEL) VI ) CIT VS HOTEL SAVERA (1999) 239 ITR 795 (MAD) VII)CIT VS PREM HEAVY ENGG. WORKS (P)LTD (2006) 285 ITR 554 (ALL) VIII)CIT VS RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340 ` IX) S.A.BUI LDERS LTD. VS CIT(A) & ANR (2007) 288 ITR 1 (SC) 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACT IN THE PRESENT CASE ARE THAT THE ASSESSEE HAD ADVANCED LOAN TO SHRI OM PRAKASH GUPTA AND TO HIS SISTER CONCERN M/S.LOGOTECH (I) PVT. LTD.. IT IS ALSO NOT DISPUTED THAT LOAN GIVEN TO SHRI OM PRAKASH GUPTA DURING THE YEAR ENDING 31 ST MAR CH, 2007 WERE RS.50,00,000/ - , DURING THE YEAR ENDING 31 ST MARCH, 2008 WERE RS.1,50,000/ - AND DURING THE IMPUGNED YEAR THE AMOUNT OF ADVANCE WAS RS.48,44,847/ - TOTALING TO RS.2,48,44,847/ - . IT WAS EXPLAINED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE BOTH TH E AUTHORITIES BELOW THAT THE SAID AMOUNT S HAVE BEEN PAID OUT OF REGULAR BUSINESS RECEIPTS AND NOT FROM THE UNSECURED LOANS. COPY OF THE BANK STATEMENTS, BANK BOOKS WERE PRODUCED BEFORE TH E AUTHORITIES BELOW. NO DEFECT IN THE SAME HAS BEEN POINTED OUT. WHE N THE ASSESSEE HAS NOT INCURRED ANY INTEREST EXPENDITURE THERE CANNOT BE ANY DISALLOWANCE IN INTEREST EXPENDITURE. SIMILARLY THE ASSESSEE SUBMITTED EXPLANATIONS IN RESPECT OF THE LOANS TO M/S.LOGOTECH (I)PVT. LTD BUT NO DEFECT HAS BEEN POINTED OUT IN THE SAME. ACCORDING LY HAVING INCURRED NO INTEREST EXPENDITURE IN BOTH THE CASES NO DISALLOWANCES OF INTEREST CAN BE MADE BY THE AO. ACCORDINGLY THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF S.A.BUILDERS VS CIT (SUPRA) IS NOT APPLICABLE IN THE PRESE NT FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY THE DECISION OF VARIOUS COURTS OF LAW RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE REPRODUCED HEREIN ABOVE 5 ITA NO. 554&555/KOL/2014 SRI LOKNATH PRASAD GUPTA A.YRS.2009 - 10&2010 - 11 5 HAVE BEEN PERUSED BY US AND THE SAME ARE APPLICABLE TO THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. ALL THE DECISIONS REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE AND THE RATIO LAID DOWN IS FOR OWN FUNDS AR E AVAILABLE WITH THE ASSESSEE AND T HUS IT IS IMPLIED THAT INVESTMENTS ARE MADE OUT OF OWN FUNDS AND NO DISALLOWANCE ON ACCOUNT OF INTERES T IS SUSTAINABLE. IN THE CIRCUMSTANCES AND FACTS OF THE CASE HAVING NOT BEEN BORNE ANY INTEREST BURDEN ON THE ADVANCE MADE TO THE SON OF THE ASSESSEE AND THE SISTER CONCERN, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF AO FOR DISALLOWANCE OF THE INTEREST IN VIEW OF OUR FINDINGS HEREIN ABOVE. ACCORDINGLY ORDER OF THE LD. CIT(A) IS REVERSED AND GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 8. GROUND NO.2, BEING GENERAL IN NATURE DOES NOT REQUIRE ANY ADJUDICATION. 9. IN THE RESULT APPEAL OF THE ASSE SSEE IN ITA NO .554/KOL/2014 IS ALLOWED. 10. NOW WE TAKE UP THE APPEAL OF ASSESSEE IN ITA NO .555/KOL/2014. 10.1. THE FACTS IN THE PRESENT CASE ARE IDENTICAL AS IN THE ASSESSEE S APPEAL IN ITA NO.554/KOL/2014 HEREIN ABOVE. AS MENTIONED HEREIN ABOVE THE FAC TS ARE IDENTICAL AND THEREFORE OUR ORDER IN ASSESSEE S APPEAL IN ITA NO.554/KOL/2014 OF EVEN DATE IS IDENTICALLY APPLICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE WITH REGARD TO THE DISALLOWANCE OF INTEREST A MOUNTING TO RS.41,85,049/ - IN THE IM PUGNED YEAR. ACCORDINGLY ORDER OF THE LD. CIT(A) IS REVERSED IN THE PRESENT CASE AND APPEAL OF THE ASSESSEE IS ALLOWED. 11. GROUND NO.2, BEING GENERAL IN NATURE DOES NOT REQUIRE ANY ADJUDICATION. 6 ITA NO. 554&555/KOL/2014 SRI LOKNATH PRASAD GUPTA A.YRS.2009 - 10&2010 - 11 6 12. IN THE RESULT BOTH THE APPEALS OF ASSESSEE IN ITA NO .554/KOL/2014 AND ITA NO.555/KOL/2014 ARE ALLOWED. ORDER PRONOUNCED IN THE C OURT ON ________________ SD/ - SD/ - [ RAJPAL YADAV ] [ B.P.JAIN ] JUDICIAL MEM BER ACCOUNTANT MEMBER DATED : [ RG PS ] COPY OF THE ORDER FORWARDED TO: 1. SRI LOKNATH PRASAD GUPTA, R.K.DEV PATH, TITAGARH, 24 - PARGANAS (N),KOLKATA - 700119. 2. A.C.I.T., CENTRAL CIRCLE - XXIII, KOLKATA 3. CIT(A) - CENTRAL - III, KOLKATA 4. CIT KOLKATA. 5 . CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES ORDER PRONOUNCED IN THE OPEN COURT ON 08.06.2015. SD/ - SD/ - (MAHAVIR SINGH) (B.P.JAIN) JM AM DATED 08.06.2015.
