AMBHE FERRO METAL PROCESSORS P.LTD, MUMBAI V. DCIT CIR 6(1), MUMBAI

ITA 5566/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2103 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 03-09-2014
• Court: TRIBUNAL
• Department Lawyers: A K DHONDIAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 5566 / MUM/20 1 4 ( ASSESSMENT YEAR : 2010 - 11 ) AMBHE FERRO METAL PROC. PVT. LTD., A - 204, ZEST BUSINESS SPACE, M.G.ROAD, GHATKOPAR (E), MUM BAI 400 077 VS. DCIT - 6(1), MUMBAI PAN/GIR NO. AAACA3873E APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI. RAJESH S. SHAH REVENUE BY SHRI. A.K.DHONDIAL DATE OF HEARING 27 / 10 /2016 DATE OF PRONOUNCEME NT 04 / 11 /2016 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2010 - 11, IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE ACT. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWAN CE OF INTEREST ON ACCOUNT OF INTEREST FREE ADVANCES GIVEN TO PARTIES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF IRON AND STEEL PRODUCTS. DURING TH E COURSE OF SCRUTINY OF ASSESSMENT, THE AO DISALLOWED INTEREST OF RS.4 , 16 ,499/ - OUT OF INTEREST PAID BY THE ASSESSEE ON LOANS TAKEN FOR THE PURPOSE OF AMBHE FERRO METAL PROCESSORS PVT. LTD., 2 BUSINESS ON ACCOUNT OF FUNDS UTILIZED BY ASSESSEE FOR GIVING INTEREST FREE LOANS AND ADVANCES TO THE RELA TED PARTIES AS UNDER: - A. AMBHE METAL UDYOG RS.2814836.00 B. J.D.STEEL CORP. RS. 134485.00 C. SUSHMA S.GUPTA RS. 521500.00 5. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF AO AND ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. LEARNED AR HAS DR AWN OUR ATTENTION TO THE FREE RESERVE AND CAPITAL OF ASSESSEE - COMPANY AS WELL AS CASH INCOME EARNED BY THE ASSESSEE AND IT WAS SUBMITTED THAT IN VIEW OF THE ASSESSEE HAVING SUFFICIENT INTEREST FREE FUNDS, NO DISALLOWANCE IS WARRANTED IN VIEW OF THE DECISIO N OF JURISDICTIONAL HIGH COURT IN CASE OF RELIANCE UTILITIES 313 ITR 340. 7. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES BELOW. FROM THE AUDITED BALANCE SHEET PLACED ON RECORD, WE FOUND THAT ASS ESSEE WAS HAVING FREE RESOURCES TO THE TUNE OF RS.3,96,89,125/ - IN ADDITION TO THE OWN CAPITAL OF RS.1,92,05,600/ - . FURT HERMORE, DURING THE YEAR ITSELF WE FOUND THAT ASSESSEE HAS EARN ED CASH PROFIT OF RS.4,03,00,000/ - . AS THE OWN FUNDS WAS MUCH MORE THAN THE ADVANCES GIVEN FREE OF INTEREST, IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF RELIANCE UTILITIES AS RELIED ON BY LEARNED AR, WE DO NOT FIND ANY JUSTIFICATION FOR THE DISALLOWANCE OF INTEREST SO MADE. AMBHE FERRO METAL PROCESSORS PVT. LTD., 3 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 04 / 11 /2016 SD/ - ( RAVISH SOOD ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBE R ACCOUNTANT MEMBER MUMBAI ; DATED 04 / 11 /201 6 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. // TRUE COPY//