DCIT CIR. 7(3)(2), MUMBAI V. PREMIER FINANCE & TRADING CO. PVT. LTD., MUMBAI

ITA 6454/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7944 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 03-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: JAI BHANSALI
• Keywords: Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 6454/MUM/2016 (ASSESSMENT YEAR 2010-11 ) DCIT CIRCLE- 8(2)(2) ROOM NO. 625, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S SPRIT INFRAPOWER & MULTIVENTURES PVT. LTD. (SUCCESSOR TO PREMIER FINANCE & TRADING CO. LTD.) 18 TH FLOOR, A-WING, MARATHON FUTURES, N.M JOSHI MARG, LOWER PAREL, MUMBAI-400013. PAN: AALC5905J APPELLANT RESPONDE NT APPELLANT BY : SHRI H.N. SINGH (CIT-DR) RESPONDENT BY : SHRI JAI BHANSALI (AR) DATE OF HEARING : 19.09.2018 DATE OF PRONOUNCEMEN T : 10.09.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT P ER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF INCOME- TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-13, MUMBAI DATED 31 .08.2016 FOR ASSESSMENT YEAR 2010-11 WHICH IN TURN ARISES FROM T HE ASSESSMENT ORDER DATED 28.03.2013 PASSED UNDER SECTION 143(3) OF THE ACT. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN DELETING THE DISALLOW ANCE OF RS. 13,22,54,824/- MADE BY THE ASSESSING OFFICER U/S. 3 6(1)(III) OF THE INCOME TAX ACT? 2. AT THE OUTSET OF HEARING, THE LD. AUTHORIZED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT THE GROUND OF APPEAL RAISED B Y REVENUE IS COVERED IN ITA NO. 6454 MUM 2016-M/S SPRIT INFRAPOWER & MULTIV ENTURES PVT. LTD. 2 FAVOUR OF ASSESSEE AND AGAINST THE REVENUE, AS THE LD. CIT(A) WHILE PASSING THE IMPUGNED ORDER FOLLOWED THE ORDER OF TR IBUNAL IN ASSESSMENT YEAR 2009-10. THE LD. AR OF THE ASSESSEE FURNISHED THE COPY OF DECISION OF TRIBUNAL IN ITA NO. 1655/MUM/2013 FOR ASSESSMENT YEAR 2008-09 AND IN ITA NO.4416/MUM/2014 FOR ASSESSMENT YEAR 200 9-10. THE LD. AR OF THE ASSESSEE ALSO FURNISHED THE DETAILS OF INTER EST FREE FUNDS AVAILABLE WITH THE ASSESSEE AS ON 31.03.2010 AND SUBMITS THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION IS NOT DIFFERENT FORM ASSESSMEN T YEAR 2009-10. 3. ON GOING THROUGH THE GROUNDS OF APPEAL AND THE ORDE R OF TRIBUNAL, THE LD. DR FOR THE REVENUE SUBMITS THAT HE RELIED UPON THE ORDER OF ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO GONE THROUGH THE DETAILS OF INTEREST FREE FUNDS AVAILABLE AS ON 31.0 3.2010 WITH THE ASSESSEE FURNISHED BY LD. AR OF THE ASSESSEE WHICH AS UNDER: INTEREST FREE FUNDS AS ON 31.03.2010 AMOUNT IN RS. CRORE SHARE CAPITAL 0.68 RESERVES & SURPLUS 2,306.86 SHARE APPLICATION MONEY RECEIVED 121.04 INTEREST FREE LOANS 100.43 TOTAL INTEREST FREE FUNDS 2,529.01 INTEREST FREE ADVANCES INTEREST FREE LOAN -CONSIDERED GOOD 175.13 -DOUBTFUL 46.44 TOTAL 221.57 ITA NO. 6454 MUM 2016-M/S SPRIT INFRAPOWER & MULTIV ENTURES PVT. LTD. 3 LESS: ADVANCE CONSIDERED FOR SUO- MOTO INTEREST DISALLOWANCE 175.13 LESS: COVERED BY ITAT ORDER IN ASSESSEES OWN CASE FOR A Y 2008-09 & 2009-10 46.44 SHARE APPLICATION MONEY ADVANCED 62.39 TOTAL INTEREST FREE ADVANCES 62.39 5. WE HAVE SEEN THAT DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE MADE INTEREST PAYME NT OF RS. 57.25 CRORE (APPROX) WHILE THE ASSESSEE RECEIVED INTEREST OF RS . 39.05 CRORE (APPROX). THE ASSESSEE ALSO AVAILED SECURED AND UNSECURED LOA N OF RS. 771 CRORE. THE ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE TO T HE ASSESSEE AS TO WHY THE EXCESS INTEREST PAID OVER INTEREST RECEIVED SHO ULD NOT BE DISALLOWED. THE ASSESSEE FURNISHED ITS EXPLANATION AND CONTENDE D THAT THEY HAVE SUFFICIENT INTEREST FREE FUND AND NO ADDITION WAS R EQUIRED UNDER SECTION 36(1)(III). THE ASSESSEE ALSO FURNISHED THE DETAILS OF INTEREST FREE FUNDS AVAILABLE WITH THEM. THE CONTENTIONS OF THE ASSESSE E WERE NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER ON THE BA SIS OF THE FACT THAT SIMILAR ADDITION/ DISALLOWANCE WAS MADE AGAINST THE ASSESSEE IN ASSESSMENT YEAR 2008-09 AND 2009-10 DISALLOWED RS. 13.22 CRORE UNDER SECTION 36(1)(III). ON APPEAL BEFORE THE LD. CIT(A) , THE ASSESSEE CONTENDED THAT THE SIMILAR ADDITION WAS IN ASSESSMENT YEAR 20 08-09 AND 2009-10 AND ON APPEAL THE ORDER OF LD. CIT(A) DELETED THE ADDITION/ DISALLOWANCE AND ON FURTHER APPEAL BEFORE TRIBUNAL THE ORDER OF THE CIT(A) WAS ITA NO. 6454 MUM 2016-M/S SPRIT INFRAPOWER & MULTIV ENTURES PVT. LTD. 4 SUSTAINED. THE ASSESSEE ALSO FURNISHED THE COPY OF ORDER OF TRIBUNAL DATED 26.05.2016 BEFORE LD CIT(A). THE LD. CIT(A) BY FOLL OWING THE ORDER OF TRIBUNAL DISMISSED THE APPEAL OF REVENUE. 6. WE HAVE SEEN THAT WHILE DISMISSING THE APPEAL OF RE VENUE FOR ASSESSMENT YEAR 2008-09, THE CO-ORDINATE BENCH OF TRIBUNAL HEL D AS UNDER: AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER, THE FAA HELD THAT THE AO HAD MADE DISALLOWANCE OF INTER EST OF RS. 50 LAKHS ON ACCOUNT OF ADVANCE SHARE APPLICATION MONEY MADE TO ITS SISTER CONCERN, THAT AO HAD MADE THE DISALLOWANCE BY FOLLOWING THE FINDI NGS OF AY.2007-08, THAT THE EXAMINATION OF THE ASSESSMENT RECORDS REVEALED THAT NO SCRUTINY ASSESSMENT TOOK PLACE FOR THE AY.2007-08,THAT IN TH E ASSESSMENT ORDER FOR THE AY.2006-07 THERE WAS NO SCRUTINY,THAT THE AO HAD MA DE THE DISALLOWANCE WITHOUT ANY BASIS. HE FURTHER HELD THAT THE ASSESSE E HAD MADE INVESTMENT WHICH WOULD YIELD INCOME IN FORM OF DIVIDEND,THAT T HE INVESTMENT HAD BEEN MADE FOR PURPOSE OF EARNING INCOME,THAT INTEREST EX PENDITURE INCURRED FOR EARNING INCOME HAD TO BE ALLOWED U/S.36 (1) (III) O F THE ACT. FINALLY, HE DELETED THE DISALLOWANCE MADE BY THE AO. 4.DURING THE COURSE OF HEARING BEFORE US, THE DEPAR TMENTAL REPRESENTATIVE (DR) STATED THAT ISSUE COULD BE DECIDED ON MERITS. THE AUTHORISED REPRESENTATIVE (AR) SUPPORTED THE ORDER OF THE FAA. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE OF THE OPINION THAT THE OR DER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.THE AO H AD MADE THE DISALLOWANCE ON THE BASIS THAT IN THE EARLIER ASSESSMENT YEAR HI S PREDECESSOR HAD MADE THE IDENTICAL DISALLOWANCE. THE FAA HAD EXAMINED THE AS SESSMENT RECORDS OF THE EARLIER YEARS AND HAD FOUND THAT THE- THEN-AO HAD N OT MADE ANY DISALLOWANCE UNDER THE HEAD INTEREST ATTRIBUTABLE TO SHARE APPLI CATION MONEY OF THE SISTER CONCERN. THUS, THE WHOLE BASE OF MAKING THE ADDITIO N GOES.THEREFORE, CONFIRMING THE ORDER OF THE FAA FIRST GROUND OF APP EAL IS DECIDED IS THE AO. AND IN APPEAL FOR ASSESSMENT YEAR 2009-10, THE TRIB UNAL FOLLOWED THE ORDER OF ASSESSMENT YEAR 2008-09, OPERATIVE PART O F WHICH IS EXTRACTED BELOW: ITA NO. 4416/M/2014-AY.2009-10: 13.THE EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE ADDITION OF RS. 7.74 CRORES MADE BY THE AO UNDER SECTION 36(1)(III) OF T HE ACT. WE FIND THAT THE ISSUE IS IDENTICAL TO THE ISSUE RAISED BY THE AO IN THE EARLIER YEAR. FOLLOWING OUR ORDER FOR THE PREVIOUS YEAR, WE DISMISS THE EFF ECTIVE GROUND RAISED BY THE AO. ITA NO. 6454 MUM 2016-M/S SPRIT INFRAPOWER & MULTIV ENTURES PVT. LTD. 5 7. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSMENT YEAR 2008-09 AND 2009-10, WHICH WERE FOLLOWED BY LD. CIT (A), HENCE , WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE IMPUGNED ORDER. NO C ONTRARY FACT OR DECISION IS BROUGHT TO OUR NOTICE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/09/2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE:19.09.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI