Vasantram Mehta & Co. (P) Ltd., Vasco V. Joint Commissioner Income Tax, Margao Range, Margao

ITA 65/PAN/2006

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93451 (ITAT-PANAJI)
• Duration Of Justice: 9 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-06-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 06-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEHBOOB ALI KHAN LD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, HON'BLE ACCOUNTANT MEMBER ITA N O . 65 /PNJ/20 06 : (A.Y 2001 - 02 ) VASSANTRAM MEHTA & CO. (P) LTD., SUVARN BHANDEKAR BUILDING, SWATANTRA PATH, VASCO - DA - GAMA, GOA. PAN : AAACV6026A ( APPELLANT) VS. JCIT, MARGAO RANGE, MARGAO (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : MEHBOOB ALI KHAN, LD. DR DATE OF HEARING : 18 / 06 /201 5 DATE OF PRONOUNCEMENT : 18 / 06 /201 5 O R D E R PER GEORGE MATHAN : 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), PANAJI IN ITA NO. 65/MRG/04 - 05 DT. 26.12.2005 FOR THE A.Y 2001 - 02. NONE REPRESENTED ON BEHALF OF THE ASSESSEE. THE ASSESSEE HAS REQUESTED FOR ADJOURNMENT. NO SPECIFIC REASONS HAVE BEEN GIVEN FOR SEEKING THE ADJOURNMENT. CONSEQUENTLY, THE ADJOURNMENT SOUGHT STANDS REJECTED. SHRI MEHBOO B ALI KHAN, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. 2. IT WAS SUBMITTED BY THE LD. DR THAT THERE ARE TWO ISSUES IN THE ASSESSEES APPEAL. IT WAS THE SUBMISSION THAT GROUND NOS. 1(A), (B) & (C) WAS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING T HE DISALLOWANCE OF THE INTEREST IN RESPECT OF PACKING CREDIT BORROWED FROM UNITED WESTERN BANK LTD. IT WAS THE 2 ITA NO. 65/PNJ/2006 (A.Y : 2001 - 02) SUBMISSION THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF EXPORT OF PROCESSED IRON ORE. IT WAS THE SUBMISSION THAT T HE ASSESSEE HAD PURCHASED IRON ORE FROM M/S. BANDEKAR BROTHERS PVT. LTD. AND CERTAIN OTHER PARTIES. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD AVAILED EXPORT PACKING CREDIT FACILITY FROM UNITED WESTERN BANK LTD. FOR FINANCING THE PRE - SHIPMENT COST FOR EX PORT OF IRON ORE. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD PAID TOTAL AMOUNT OF RS. 9.36 CRORES TO M/S. BANDEKAR BROTHERS PVT. LTD. AND THE ASSESSEE HAD PURCHASED ORE FROM THE SAID COMPANY FOR ABOUT RS. 6.02 CRORES. THE ASSESSEE HAD RECEIVED BACK THE AMOUNT OF RS. 2.58 CRORES AND THE BALANCE OF NEARLY RS. 76,29,000/ - REMAINED AS ADVANCE IN ADDITION TO AN OPENING BALANCE OF RS. 11.36 CRORES. IT WAS THE SUBMISSION THAT FOR THE YEAR ENDED 31.3.2002 THE ASSESSEE HAD MADE FURTHER PURCHASES FROM M/S. BANDEK AR BROTHERS PVT. LTD. AND AS ON 31.3.2002 THE BALANCE AMOUNT RECEIVABLE WAS ONLY RS. 8.19 CRORES. IT WAS THE SUBMISSION THAT AS THERE WAS SUBSTANTIAL ADVANCES TO M/S. BANDEKAR BROTHERS PVT. LTD., WHICH IS AN ASSOCIATED COMPANY, THE AO HAD DISALLOWED THE I NTEREST ON THE PACKING CREDIT AMOUNT ON THE GROUND THAT THERE WAS DIVERSION OF FUNDS. IT WAS THE SUBMISSION THAT SAME HAD ALSO BEEN CONFIRMED BY THE LD. CIT(A). IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE SUSTAINED. IN REGARD TO GROUND NOS. 2(A), (B) AND (C), IT WAS THE SUBMISSION THAT THE ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS. 12,85,868/ - BEING LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATIONS. HE VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND LD. CIT(A). 3. WE HAVE CONSIDERED THE SUBMISSIONS. IN RESPECT OF THE FIRST ISSUE BEING THE DISALLOWANCE OF INTEREST ON PACKING CREDIT BORROWED, IT IS NOTICED THAT ADMITTEDLY THE ASSESSEE IS HAVING A RUNNING ACCOUNT WITH M/S. BANDEKAR BROTHERS P VT. LTD. IT IS NOTICED THAT THE ADVANCES GIVEN HAVE BEEN ADJUSTED 3 ITA NO. 65/PNJ/2006 (A.Y : 2001 - 02) AGAINST THE PURCHASES, BALANCE HAS ALSO BEEN RECEIVED BACK AND THE BALANCE AMOUNT, IF ANY, LEFT WITH M/S. BANDEKAR BROTHERS PVT. LTD. HAS ALSO BEEN ADJUSTED AGAINST THE PURCHASES IN THE SUB SEQUENT YEARS. THE PACKING CREDIT FACILITY HAS ALSO BEEN TAKEN FOR FINANCING THE PRE - SHIPMENT COST FOR EXPORT OF THE IRON ORE. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THIS ISSUE IS SQUARELY COVERED BY THE PRINCIPLES LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S. RELIANCE UTILITIES & POWER LTD. REPORTED IN 313 ITR 340 AS THE RESERVES AVAILABLE WITH THE ASSESSEE ITSELF WAS FAR IN EXCESS OF THE SAID ADVANCES. IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE BOMB AY HIGH COURT IN THE CASE OF M/S. RELIANCE UTILITIES & POWER LTD. REFERRED TO SUPRA, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) STANDS DELETED. 4. IN REGARD TO THE DISALLOWANCE OF LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATIONS, IT IS NOTICE D THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF WOODWARD GOVERNOR INDIA P. LTD. REPORTED IN 312 ITR 254. IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF WOODWARD GOVERNOR INDIA P. LTD. REFERRED TO SUPRA, THE ADDITION MADE BY THE AO AND, AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/06/2015. S D / - (N.K. BILLAIYA) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 8 /06/ 201 5 *SSL* 4 ITA NO. 65/PNJ/2006 (A.Y : 2001 - 02) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 5 ITA NO. 65/PNJ/2006 (A.Y : 2001 - 02) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 8 /06/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 1 9 /06/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 9 /06/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 9 /06/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 9 /06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 1 8 /06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 9 /06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER