ETP INTERNATIONAL P.LTD, MUMBAI V. ITO 8(1), MUMBAI

ITA 5647/MUM/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0934 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 19-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2012
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & MS. SUSHMA CHOWLA , J M ./ I TA NO. 564 7 / MUM/20 1 2 ( / ASSESSMENT YEAR : 200 9 - 10 ) M/S ETP INTERNATIONAL PRIVATE LIMITED, ETP HOUSE, 124, SAKI VIHAR ROAD, ANDHERI (E) , MUMBAI - 400072 VS. ITO - 8(1)(3), MUMBAI - 20 ./ ./ PAN/GIR NO. : A A ACI 4872 K ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI NITESH JOSHI /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 0 9 /0 6 / 2015 / DATE OF PRONOUNCEMENT 09/06 /20 15 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 16 , MUMBAI , DATED 15 - 6 - 2012 FOR THE ASSESSMENT YEAR 200 9 - 10 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE ACT ON THE FOLLOWING GROUND S : - 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 8,25,260/ - OUT OF INTEREST PAID ON THE GROUND THAT INTEREST BEARING FUNDS ARE UTILIZED BY THE APPELLANT FOR ADVANCING INTEREST FREE LOANS TO ITS SUBSIDIARY COMPA NIES. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SAID DISALLOWANCE OF INTEREST OUGHT BE DELETED. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE AO HAS MADE DISALLOWANCE ON INTEREST OF RS. 8,25,260/ - U/S.36(1)(III) ON THE PLEA THAT ASSESSEE HAS GIVEN INTEREST FREE ADVANCES TO ITS SUBSIDIARY . B Y ITA NO. 564 7 /1 2 2 STATING THAT SIMILAR ADDITION WAS MADE IN THE ASSESSEE YEARS 2007 - 08 & 2008 - 09, THE AO ADDED THE SAME IN ASSESSEES INCOME. 3. BY THE IMPUGNED ORDER THE CIT(A) ALSO CONFIRMED THE ACTION O F THE AO OBSERVING THAT SIMILAR ADDITION WAS CONFIRMED BY HIM FOR THE ASSESSMENT YEARS 2007 - 08 & 2008 - 09. 4. LD. AR PLACED ON RECORD ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007 - 08 & 2008 - 09, ORDER DATED 29 - 8 - 2012 AND 23 - 10 - 2013, RESP ECTIVELY, WHEREIN EXACTLY SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AFTER HAVING THE FOLLOWING OBSERVATION : - 3. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THE ASSESSEE ENTERED INTO AGREEME NT WITH M/S.ETP INTERNATIONAL LIMITED, SINGAPORE, TO RECEIVE 55% OF REVENUE ON SALE OF ETP V5 PRODUCTS IN ASIA PACIFIC REGION. DURING THE YEAR THE ASSESSEE HAD SALES OF `1.84 CRORE TO M/S.ETP INTERNATIONAL LIMITED, SINGAPORE. THIS CONTENTION OF THE ASSESSE E HAS BEEN RECORDED BY THE LEARNED CIT(A) IN PARA 3.3.4 OF THE IMPUGNED ORDER. THIS FACT INDICATES THAT THE MONEY WAS ADVANCED BY THE ASSESSEE TO ITS SUBSIDIARY COMPANY FOR BUSINESS PURPOSE. WE HAVE ALSO PERUSED THE BALANCE SHEET OF M/S.ETP INTERNATIONAL L IMITED, SINGAPORE WHICH IS AVAILABLE ON RECORD. IT CAN BE SEEN FROM THE BALANCE SHEET OF THE SUBSIDIARY COMPANY THAT THE AMOUNT OWING TO THE ASSESSEE - COMPANY HAS BEEN SHOWN AS SINGAPORE DOLLARS 512648. FROM THE ASSETS SIDE OF THE BALANCE SHEET, IT CAN BE O BSERVED THAT NO AMOUNT HAS BEEN TAKEN AWAY FROM THE COMPANY BY THE SHAREHOLDERS OR DIRECTORS FOR ANY PERSONAL PURPOSE. THERE IS ONE ITEM UNDER THE HEAD `CURRENT ASSETS TITLED AS OTHER RECEIVABLE, DEPOSITS & PREPAYMENTS STANDING AT SINGAPORE $ 147010. TH E BREAK UP OF THAT AMOUNT IS AVAILABLE ON PAGE 22 OF THE BALANCE SHEET OF M/S.ETP INTERNATIONAL LIMITED, SINGAPORE. THE FURTHER DETAILS OF THE DEPOSITS AND PREPAYMENTS COVERED UNDER THIS HEAD HAVE ALSO BEEN MADE AVAILABLE. FROM SUCH DETAILS IT CAN BE SEEN THAT NO AMOUNT RECEIVED BY M/S.ETP INTERNATIONAL LIMITED, SINGAPORE FROM THE ASSESSEECOMPANY HAS BEEN USED FOR ANY PURPOSE OTHER THAN BUSINESS. THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS VS. CIT [(288) ITR 1 (SC)] HAS HELD THAT WHERE INTEREST F REE LOAN IS ADVANCED BY AN ASSESSEE TO ITS SISTER CONCERN, WHICH AMOUNT IS IN FACT UTILIZED BY SUCH SISTER CONCERN FOR ITS BUSINESS PURPOSES, THEN NO DISALLOWANCE OF INTEREST CAN BE MADE. THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE ARE STRICTLY COVERED BY THE FACTS AND RATIO DECI DENDI IN THE CASE OF S.A.BUILDERS (SUPRA). HERE ALSO THE ASSESSEE ADVANCED INTEREST FREE LOAN TO SUBSIDIARY ITA NO. 564 7 /1 2 3 COMPANY FOR BUSINESS PURPOSE AND WHICH AMOUNT WAS IN FACT UTILIZED BY SUCH SUBSIDIARY COMPANY FOR ITS BUSINESS PURPOSES . THE FURTHER FACT THAT THE ASSESSEE IS ALSO EARNING INCOME THROUGH ITS SUBSIDIARY COMPANY AMPLY GOES TO PROVE THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF INTEREST ON THE GROUND THAT THE INTEREST BEARING FUNDS WERE UTILI ZED FOR NON - BUSINESS PURPOSES. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS (SUPRA), WE DELETE THE ADDITION OF `4.24 LAKH. 5. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST WITH RESPECT TO THE ADVANCES GIVEN TO THE SUBSIDIARIES WAS DELETED BY THE TRIBUNAL. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSE ES OWN CASE, THE AO IS DIRECTED TO DELETE THE DISALLOWANCE OF INTEREST. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 09/06 / 201 5 . SD/ - SD/ - ( ) ( SUSHMA CHOWLA ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 09/06 /201 5 . . /PKM , . / 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/