The ACIT, 1(2), Bhopal V. M/s. Bhaskar Foods Pvt. Ltd., Bhopal

ITA 587/IND/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6485 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESH

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.587/IND/2013 A.Y. 2010-11 ACIT-1(2), BHOPAL :: APPELLANT VS M/S. BHASKAR FOODS PVT. LTD., BHOPAL PAN AABCN 1312 L :: RESPONDENT REVENUE BY SHRI R.A. VERMA ASSESSEE BY SHRI S.S. DESHPANDE DATE OF HEARING 2 8 . 4 .201 4 DATE OF PRONOUNCEMENT 2 8 . 4 .201 4 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 25.7.2013 OF THE LD. CIT(A)-I, BHOPAL ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. FIR ST 2 APPELLATE AUTHORITY HAS ERRED IN DELETING THE ADDITION O F RS.83,24,881/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF INTEREST BEARING FUNDS OF THE COMPANY WHICH WERE G IVEN AS INTEREST FREE ADVANCES FOR THE BENEFIT OF THE GROUP . 2. DURING HEARING, WE HAVE HEARD SHRI R.A. VERMA, LD. SR. DR AND SHRI S.S. DESHPANDE, LEARNED COUNSEL FOR TH E ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVEN UE IS IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS THE LEAR NED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER BY FURTHER SUBMITTING THAT THE ISSUE IS COVERED BY THE DECISION OF THIS BENCH, THAT TOO, IN THE ASSESSEES OWN CASE FO R A.Y. 2009-10 (ITA NO.175/IND/2013, ORDER DATED 29.7.2013) WHEREIN ON THE IDENTICAL FACTS, THE APPEAL OF THE REVEN UE FOR A.Y. 2009-10 WAS DISMISSED. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE WITH THE HELP OF ANY POSITIVE MATERIAL. 3 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE ABOVE, W E ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE ORDER DATED 29.7.2013 (SUPRA): - THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 18.1.2013 OF THE LD. CIT(A)-I, BHOPAL ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. FIRST APPELLATE AUTHORITY HAS ERRE D IN DELETING THE DISALLOWANCE U/S 36(1)(III) OF RS.1,04,47,986/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST COST OF INTEREST FREE ADVANCES GIVEN TO THE GROUP CONCERNS. 2. DURING HEARING, WE HAVE HEARD SHRI R.A. VERMA, LD. SR. DR AND SHRI S.S. DESHPANDE, LEARNED COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE DECLARED TOT AL INCOME OF RS.6,04,10,161/- IN ITS RETURN. THERE WERE SOME DEBIT AND CREDIT BALANCES OF RS.8.70 CRORES WITH THE GROUP CONCERN COMPANIES, ON WHICH, THE LD. ASSESSING OFFICER CALCULATED INTEREST @12% AND THUS, ADDED BACK RS.1,04,47,986/- TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, BEFORE LD. CIT(A ), IT WAS CLAIMED THAT THE ASSESSEE HAS UNDERGONE TRANSACTIONS WITH THE GROUP CONCERN COMPANIES IN ITS NORMAL COURSE OF BUSINESS AND SUCH CREDIT/DEBIT BALANCES APPEARED AT THE END OF THE YEAR. IT WAS ALSO CLAIMED THAT THE ASSESSEE HAS NOT UTILISED ITS 4 BORROWED FUNDS TO GIVE INTEREST FREE ADVANCES TO SUCH GROUP COMPANIES, RATHER IT WAS CLAIMED THAT THE OPENING BALANCE OF THE ADVANCES OF THIS PARTY WAS RS.3,69,01,349/- WHICH RAISED TO RS.8,70,66,549/- AT THE END OF THE YEAR. IN ADDITIO N TO IT, THE ASSESSEE RECEIVED RS.13,52,77,455/- FROM VARIOUS PARTIES ON WHICH NO INTEREST HAS BEEN PAID, DURING THE YEAR, AND THE SAME WERE SHOWN AS UNSECURED LOANS INCLUDING RS.11 CRORES RECEIVED FROM INDIA UNITED TEXTILES LTD. THE OPENING AND CLOSING BALANCE OF ADVANCES GIVEN BY THE ASSESSEE T O OTHER CONCERNS IS SUMMARISED AS UNDER: PARTICULARS OPENING BALANCE(RS.) CLOSING BALANCE(RS.) ADDITION (RS.) BHASKAR FOODS P. LTD. HYDERABAD 0 2000 2000 BHASKAR INFRASTRUCTURE LTD. 0 50000000 50000000 BHASKAR RELIEF FUND SUNAMI 250952 250952 0 DEV FISCAL SERV. P. LTD. 23022737 23022737 0 GIRISH AGRAWAL NARMADA TRADING 7550145 7550145 0 INDIA UNITED TEXTILE MILLS LTD. 0 163200 163200 RAMESH CHANDRA AGRAWAL JI 500000 500000 0 SUDHIR AGRAWAL NARMADA TRADING 5577515 5577515 0 TOTAL BALANCE 3,69,01,349 8,70,66,549 5,01,65,200 THE CONCLUSION DRAWN BY THE LD. CIT(A) IS REPRODUCED AS UNDER: FROM THE ABOVE, IT WAS CLEAR THAT IN THIS CASE THE RE HAS NO EVIDENCE ON RECORD TO SUGGEST THAT INTEREST BEARING FUNDS WERE UTILISED FOR GIVING INTEREST FREE ADVANCES TO OTHER GROUP CONCERNS. HENCE, THERE WAS NO JUSTIFICATION FOR MAK ING DISALLOWANCE OF INTEREST @12% ON THE TOTAL CLOSING BALANCE OF ADVANCES GIVEN AT RS.8,70,66,549/- BY THE ASSESSING OFFICER. THEREFORE, CONSIDERING THE FACTS OF THE CASE AND LE GAL POSITION ON THE ISSUE, I AM OF THE CONSIDERED OPINION THAT N O DISALLOWANCE U/S 36(1)(III) OUT OF INTEREST EXPENSE S CLAIMED BY THE APPELLANT WAS CALLED FOR, AS THERE WAS NO EVIDENCE/MATERIAL ON RECORD TO DEMONSTRATE THAT INT EREST BEARING FUNDS WERE UTILISED FOR GIVING INTEREST FRE E ADVANCES TO OTHER GROUP CONCERNS. THUS, THE DISALLOWANCE OF RS.1,04,47,986/- OUT OF INTEREST CLAIMED IS DELETED . 5 2.2 IF THE TOTALITY OF FACTS AVAILABLE ON RECORD, CONCLUSION DRAWN IN THE IMPUGNED ORDER, OBSERVATION MADE IN THE ASSESSMENT ORDER ARE KEPT IN JUXTAPOSITION AND ANALYSED, FIRST OF ALL, THE FA CTUAL FINDING RECORDED IN THE IMPUGNED ORDER WAS NOT CONTROVERTED BY THE REVENUE WITH THE HELP OF ANY POSITIVE MATERIAL. SECONDLY, NO EVIDENCE WAS BROUGHT ON RECORD THAT INTEREST BEARING FUNDS WERE UTILISED FOR PROVIDING INTEREST FREE ADVANCES. THEREFORE, THERE IS NO JUSTIFICATION FOR MAKING THE DISALLOWANCES ON PRESUMPTIVE BASIS. THE STAND OF THE LD. CIT(A) IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES IN THE OPEN COURT AT THE CONCLUSION OF HEARING ON 29.7.2013. 2.2 IF THE TOTALITY OF FACTS AVAILABLE ON RECORD, CONCL USION DRAWN IN THE IMPUGNED ORDER, OBSERVATION MADE IN THE ASSESSMENT ORDER AND THE ORDER DATED 29.7.2013 OF THIS BENCH ARE KEPT IN JUXTAPOSITION AND ANALYSED, WE FIND TH AT THE FACTUAL FINDING RECORDED BY THE LD. CIT(A) WERE N EITHER CONTROVERTED BY THE REVENUE NOR ANY POSITIVE MATERIAL WAS BROUGHT ON RECORD TO SUBSTANTIATE THE OBSERVATION MADE IN THE ASSESSMENT ORDER. THE ASSESSEE IS A PRIVATE LIMITE D COMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING OF 6 SOYA OIL AND DOC FROM SOYA SEEDS. IN PARA 3.4, THE LD. CIT(A) HAS DULY EXAMINED THE POSITION OF OPENING AND CLOSING BALANCE OF ADVANCES GIVEN BY THE ASSESSEE TO OTH ER CONCERNS OF THE LAST TWO YEARS RELATING TO SUCH PARTIES . THE OPENING BALANCE AS ON 1.4.2009 WAS RS.10,65,66,549/- AND THE CLOSING BALANCE AS ON 31.3.2010 WAS RS.6,93,74,009/-. THE ADVANCES APPEARING IN THE CLOSING BALANCE AS ON 31.3.2010 ARE COMING FROM EARLIER YEARS. I T IS NOT WORTHY THAT IN EARLIER YEAR ASSESSMENTS UPTO ASSESSMENT YEAR 2008-09, NO DISALLOWANCE WAS MADE OUT OF INTEREST PAID ON BORROWED FUNDS. EVEN OTHERWISE, THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT INTEREST BEARIN G FUNDS WERE UTILISED FOR GIVING INTEREST FREE ADVANCES TO OTHER GROUP CONCERNS, THUS, THERE IS NO JUSTIFICATIO N FOR MAKING THE DISALLOWANCE U/S 36(1)(III) OF THE ACT OUT OF INTEREST EXPENSES CLAIMED BY THE ASSESSEE. WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. CIT(A) . IN VIEW 7 OF THIS FACTUAL FINDING, HIS CONCLUSION IS AFFIRMED, R ESULTING INTO DISMISSAL OF APPEAL OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES IN THE OPEN COURT AT TH E CONCLUSION OF HEARING ON 28.4.2014. SD/- SD/- (R.C.SHARMA) (JOGINDER S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.4.2014 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYAS!