HARSORA HOTELS P.LTD, VAPI V. ITO 5(1)(4), MUMBAI

ITA 5945/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8111 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHADR
• Assessee Lawyers: SANJAY R PARIKH
• Section: 143(3); 115JB

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.5945/MUM/2016 ASSESSMENT YEAR: 2011-12 M/S HARSORA HOTELS PVT. LTD. 577/578, HOTEL GREEN VIEW, NATIONAL HIGHWAY NO.8, PARDI, VAPI-396195 / VS. INCOME TAX OFFICER-5(1)(4), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / ASSESSEE / REVENUE P.A. NO. AAACH1522M $ % & / ASSESSEE BY SHRI SANJAY R. PARIKH $ % & / REVENUE BY MS. N. HEMALATHA-DR / DATE OF HEARING 18/12/2017 & / DATE OF ORDER: 18/12/2017 & / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 29/07/2016 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE FIRST GROUND RAISED BY THE ASSESSEE PERTAINS TO ITA NO.5945/MUM/2016 HARSORA HOTELS PVT. LTD. 2 DISALLOWING INTEREST OF RS.18,87,559/-, CLAIMED U/S 36(1)(III) ON THE GROUND THAT BORROWED FUNDS WERE UTILIZED FOR GIVING INTEREST FREE ADVANCES. THE CRUX OF ARGUMENT ADVANC ED BY SHRI SANJAY R. PARIKH, LD. COUNSEL FOR THE ASSESSEE , IS THAT THE ADVANCES GIVEN TO THE PARTNERSHIP FIRM WERE FOR THE PURPOSE OF BUSINESS AND THUS NO DISALLOWANCE IS CAL LED FOR. IT WAS PLEADED THAT NO INTEREST WAS PAID ON UNSECURED LOANS FOR WHICH MY ATTENTION WAS INVITED TO PAGE-14 OF THE PA PER BOOK. PLEA WAS ALSO RAISED THAT IDENTICAL CONTENTION OF T HE ASSESSEE WAS ACCEPTED FOR ASSESSMENT YEAR 2010-11, THEREFORE , THE SAME VIEW MAY BE TAKEN. ON THE OTHER HAND, THE LD. DR, DEFENDED THE CONCLUSION DRAWN IN THE ASSESSMENT ORDER/IMPUGNED ORDER. 2.1. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUS INESS OF CATERING, HOTEL AND RESTAURANT, DECLARED INCOME OF RS.6,40,240/- AND THE BOOK PROFIT U/S 115JB OF THE ACT OF RS.26,29,642/-. THE LD. ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT DETERMINING THE TO TAL ITA NO.5945/MUM/2016 HARSORA HOTELS PVT. LTD. 3 INCOME AT RS.39,81,670/- BY MAKING CERTAIN ADDITION S VIDE ORDER DATED 12/03/2014. THE DISALLOWANCE OF PROPORT IONATE INTEREST OF RS.18,87,559/- U/S 36(1)(III) WAS CARRI ED IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN, THE STAND TAKEN IN THE ASSESSMENT ORDER WAS AFFIRMED. THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. CONSIDERING THE TOTALI TY OF FACTS, I NOTE THAT THE ASSESSEE DID NOT FURNISH THE FUND FLO W STATEMENT BEFORE THE ASSESSING OFFICER. IT WAS THE DUTY OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM WITH DOCUMENTARY EVIDENCE. THE LD. COMMISSIONER OF INCOME TAX (APPEA L) HAS OBSERVED THAT THE ASSESSEE WAS HAVING INTEREST FREE FUNDS TO THE TUNE OF RS.29,20,379/- ONLY, WHEREAS, HE MADE INVESTMENT IN WORK IN PROGRESS AMOUNTING TO RS.1,12,24,229/- AND INVESTMENT IN PARTNERSHIP FIRM M/S NUMET HOTELS OF RS.61,54,793/- AND THUS THE ASSESSE E WAS NOT HAVING SUFFICIENT INTEREST FREE FUNDS FOR INVES TMENT IN CAPITAL WIP AND THE INVESTMENT IN CAPITAL WIP OF RS.1,12,24,229/- OUT OF INTEREST BEARING FUNDS. BEF ORE THIS TRIBUNAL, THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE INVESTMENT IN WIP AND PARTNERSHIP FIRM WAS MADE OUT OF OWN FUNDS AND THE ASSESSEE IS IN A POSITION TO ITA NO.5945/MUM/2016 HARSORA HOTELS PVT. LTD. 4 SUBSTANTIATE THE CLAIM WITH DOCUMENTARY EVIDENCE. I T WAS ALSO PLEADED THAT IDENTICALLY FOR ASSESSMENT YEAR 2 010-11, THE CONTENTION OF THE ASSESSEE WAS ACCEPTED. CONSID ERING THE TOTALITY OF FACTS, I AM OF THE VIEW THAT ONE MORE O PPORTUNITY NEEDS TO BE GRANTED TO THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. THE ASSESSEE IS DIRECTED TO FURNISH NECESSARY EVIDE NCE BEFORE THE LD. ASSESSING OFFICER TO SUBSTANTIATE ITS CLAIM . THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES ONLY. 3. THE NEXT GROUND RAISED BY THE ASSESSEE PERTAINS TO CONFIRMING THE DISALLOWANCE OF INTEREST MADE U/S 14 A OF THE ACT TO THE EXTENT OF RS.4,40,576/-. THE CRUX OF THE ARGUMENT IS THAT THE ASSESSEE WAS HAVING OWN SUFFICIENT FUND S TO MAKE THE INVESTMENT FOR WHICH OUR ATTENTION WAS INVITED TO PAGE-10 OF THE PAPER BOOK, WHEREIN, AS ON 31/03/2011, THE R ESERVE AND SURPLUS WERE CLAIMED TO BE TO THE TUNE OF RS.8,18,79,272/- (SCHEDULE A & B) AND THE INVESTMEN T WAS CLAIMED TO BE MADE OF RS.2,92,10,418/- (SCHEDULE F) . CONSIDERING THE TOTALITY OF FACTS, I FIND FORCE IN THE SUBMISSION OF THE ASSESSEE. HOWEVER, THE LD. ASSESS ING ITA NO.5945/MUM/2016 HARSORA HOTELS PVT. LTD. 5 OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE ASS ESSEE AFRESH WHETHER SUFFICIENT OWN FUNDS WERE AVAILABLE WITH TH E ASSESSEE AND DECIDE IN ACCORDANCE WITH LAW. THIS GR OUND OF THE ASSESSEE IS ALSO ALLOWED FOR STATISTICAL PURPOS ES. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESEN CE OF LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLU SION OF THE HEARING ON 18/12/2017. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 18/12/2017 F{X~{T? P.S / ! & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * / THE CIT, MUMBAI. 4. ) ) * / CIT- , MUMBAI 5. +,- ' , ) '#$ ' / , / DR, ITAT, MUMBAI 6. -0 1$ / GUARD FILE. & / BY ORDER, (+# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI