M/s. R.M. CHEMICALS P. LTD., Bhopal V. The ACIT 3(1), Bhopal

ITA 605/IND/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4325 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 25-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESHPANDE
• Keywords: Unexplained cash credit; Business income
• Section: 154

Judgement Text

R.M. CHEMICALS PVT. LTD. ITA NO. 605/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JM & SHRI O.P. MEENA, AM ITA NO. 605/IND/2014 A.Y.2007-08 M/S R.M. CHEMICALS PVT. LTD. BHOPAL PAN AAACR 7154D ::: APPELLANT VS ASSTT. COMMR. OF INCOME TAX 3(1) BHOPAL ::: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SHRI MOHD. JAVED DATE OF HEARING 28.7.2016 DATE OF PRONOUNCEMENT 16 .8.2016 O R D E R PER SHRI D.T.GARASIA, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, BHOPAL, DATED 28.8.20 14. R.M. CHEMICALS PVT. LTD. ITA NO. 605/IND/2014 2 2. THE SOLE GROUND OF THE ASSESSEE IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN MAINTAINING THE DISALLOWANCE OF RS.6,69,137/- ON THE GROUND THAT THE IN ON FDR EARNED ON ACCOUNT OF AGREEMENT BETWEEN THE BANK AND THE ASSESSEE IS INCOME FROM OTHER SOURCES. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN DOING JOB WORK FOR HINDUSTAN LEVER LTD AS P ER RAW MATERIAL SUPPLIED BY HLL. IT HAS TWO UNITS IN OPERATION-ONE AT DHULE, MAHARASHTRA AND THE ANOTHER AT BADDI, HAMCAHAL PRADESH. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME AT RS.1,20,86,892/- AFTER CLAIM ING DEDUCTION U/S 80IC(2)(A)(II) OF THE ACT FOR ENTIRE B USINESS PROFITS OFRS.1,68,83,698/- EARNED FROM BADDI, HP UNI T. THE ASSESSED THE INCOME AT RS.2,91,61,870/- BY DISALLOWING R.M. CHEMICALS PVT. LTD. ITA NO. 605/IND/2014 3 CLAIMED DEDUCTION OF RS.1,68,83,698/- AND MAKING FURTH ER ADDITION OF RS.1,91,275/- FOR UNEXPLAINED CASH CREDIT TO THE RETURNED INCOME OF RS.1,20,86,892/-. ON APPEAL, T HE ASSESSEES INCOME HAS BEEN ASSESSED AT RS.1,22,42,245/- VIDE ORDER DATED 31.3.2011 PASSED U/S 250 OF THE ACT. THEREAFTER, VIDE ORDER U/S 154 OF THE ACT THE ASSESS ING OFFICER MADE ADDITION OF RS.6,68,138/- ON ACCOUNT OF INTEREST TO ASSESSSEES INCOME OFRS.1,22,42,245/-. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL. 4. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN JOB WORK FOR HINDUSTAN LEVER LIMITED AS PER THE MATERIAL SUPPLIED BY HINDUSTAN LEVER LIMITED. THE ASSESSEE HAS R.M. CHEMICALS PVT. LTD. ITA NO. 605/IND/2014 4 RECEIVED INTEREST WHICH WAS RECEIVED FROM FDR FROM T WO BANKS FOR GETTING THE ORDER, THEREFORE, THE INTEREST EARNED BY THE ASSESSEE IS INCOME FROM BUSINESS. THE ASSESSEE HAS FURNISHED THE SECURITY BY WAY OF FIXED DEPOSIT, THE REFORE, THIS FDR IS BUSINESS INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE HON'BLE DEL HI HIGH COURT IN THE CASE OF CIT VS. KOSHIKA TELECOM LIMITED ; 287 ITR 479 (DEL.) WHEREIN IT IS HELD THAT WHEN THE DEPO SIT OF SURPLUS MONEY IS MADE WITH THE BANK IN DUE COURSE OF BUSINESS, INTEREST EARNED IS THE BUSINESS INCOME. T HE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT WH EN THERE ARE RIVAL VIEWS, NO ADDITION CAN BE MADE U/S 154 O F THE ACT AS THE VIEW IN FAVOUR OF THE ASSESSEE HAS TO BE FOLLOWED. ON THE OTHER HAND, THE LEARNED DR RELIED UP ON THE ORDERS OF THE AUTHORITIES BELOW. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND FORCE IN THE SUBMISSION OF THE ASSESSEE THAT WHEN THERE ARE RIVAL R.M. CHEMICALS PVT. LTD. ITA NO. 605/IND/2014 5 VIEWS, NO ADDITION CAN BE MADE U/S 154 OF THE ACT. WE , THEREFORE, FOLLOWING THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KOSHIKA TELECOM LTD. (SU PRA), DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN OPEN COURT ON 16 TH AUGUST, 2016 SD/- SD/- (O.P. MEENA) (D.T. G ARASIA) ACCOUNTANTMEMBER JUDICIAL MEMB ER 16 TH AUGUST, 2016 DN/- R.M. CHEMICALS PVT. LTD. ITA NO. 605/IND/2014 6