Jewel Consumer Care Pvt.Ltd., Baroda V. The ACIT.,Circle-1(1), Baroda

ITA 661/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2371 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 20-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY RAI
• Assessee Lawyers: S N SOPARKARSR
• Keywords: Commercial expediency; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH D DD D BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI T.K.SHARMA T.K.SHARMA T.K.SHARMA T.K.SHARMA, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER AND AND AND AND SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:20 1 2011 DRAFTED ON: 24-1-11. ITA NO. 661 /AHD/ 2008 ASSESSMENT YEAR : 2004-05 J EWEL CONSUMER CARE PRIVATE LTD., SUBHAG, B-15/16 RAMIN PARK, OLD PADRA ROAD, BARODA. VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(2), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA. PAN/GIR NO. : AAACJ 4911G (A PPELLANT ) .. ( RESPONDENT ) APPELLAN T BY : SHRI S.N. SOPARKAR,SR.ADV. RESPONDENT BY: SHRI SANJAY RAI, SR.D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I ,BARODA , DA TED 08-12-2007 2. GROUND NO.1 OF THE APPEAL RELATES TO THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HOLDING THAT O UT OF `.5,34,70,625/- ADVANCED BY THE COMPANY INTEREST FREE TO M/S. AMIGO SECURITIES PRIVATE LTD., AN AMOUNT OF `.1,09,70.625/- WAS FOR NON BUSI NESS PURPOSE AND THEREFORE INTEREST PROPORTIONATE TO THE SAID AMOUNT BE DISALLOWED. 3. THE LEARNED ASSESSING OFFICER OBSERVED FROM THE MOU THAT THE ASSESSEE MADE INTEREST FREE DEPOSIT OF `.3.50 CRORE S TOWARDS USES OF PREMISES AND ANOTHER `.1.25 CRORE AS ADVANCE. THE LEARNED ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAD GIVEN I NTEREST FREE ADVANCE TO THREE OTHER SISTER CONCERNS NAMELY AMIGO BRUSHES P. LTD., SNOW DROP BRUSHES AND UNIDENT BRUSHES LTD., BUT THESE CONCERN S HAD NOT OFFERED ANY CONCESSION IN ANY FORM TO JUSTIFY NON CHARGING OF I NTEREST. FROM THIS THE LEARNED ASSESSING OFFICER CONCLUDED THAT THE INTERE ST FREE DEPOSIT OF `.4.75 - 2 - CRORES TO AMIGO SECURITIES PVT. LTD., AND INTEREST FREE ADVANCES/DEPOSITS OF `.166.03 LACS TO THREE SISTER CONCERNS WERE MADE FO R NON BUSINESS PURPOSES. HE ALSO OBSERVED THAT ASSESSEE HAD DEPOSI TED 4.75 CRORES WITH AMIGO SECURITIES PVT. LTD., FOR OFFICE SPACE WHILE THE OTHER SISTER CONCERNS HAD DEPOSITED 4.25 CRORES FOR THE SAME AMOUNT OF AR EA I.E. 7000 SQ. FT. THIS REPRESENTED EXCESSIVE BENEFIT BY THE ASSESSEE WITHO UT JUSTIFICATION. THEREFORE, SHE DISALLOWED INTEREST OF `.18,94,309/- @ 13% WHICH WAS THE PREVAILING MARKET RATE OF INTEREST UNDER SECTION 36 (1)(III) OF THE ACT. 4. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE DISALLOWANCE OF INTEREST ON DEPOSITS MADE WITH SISTER CONCERNS NAMELY AMIGO BRUSHES PVT. LTD., SNOW DROP BRISTLERS PVT. L TD., AND UNIDENT BRUSHES LTD., BUT CONFIRMED DISALLOWANCE OF INTEREST ON `.5 0 LACS ADVANCED MADE TO AMIGO SECURITIES PVT. LTD., AND ALSO DIRECTED TO MA KE PROPORTIONATE DISALLOWANCES ON `.59,70,625/- BEING AMOUNT ADVANCE D TO M/S. AMIGO SECURITIES PVT. LTD., AS PER CLAUSE 9(IV) OF THE MO U ON THE GROUND THAT THE SAID AMOUNT WAS LENT FOR NOTHING IN WRITTEN OR, IN OTHER WORDS FOR NO BUSINESS CONSIDERATION. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE FILED BEFORE US ORDER DATED 4-6-2010 OF THE TRIBUNAL IN THE CASE OF M/S/. UNIDENT BRUSHES LTD., ITA NO.4185/AHD/2007 & CO NO.12/AHD/2008 AND THE ORDER OF THE TRIBUNAL DATED 14-5-2010 IN THE CASE OF AMIGO BRUSH ES PVT. LTD., ITA NO.134/ & 158/AHD/2008 AND SUBMITTED THAT ON THE CO NSIDERATION OF SAME MOU FOR ACQUISITION OF OFFICE SPACE OF 7000 SQ .FT. THE TRIBUNAL HAS CONFIRMED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETING THE DISALLOWANCE OF INTEREST AND DISMISSED THE APPEAL OF THE REVENUE. 6. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRE SENTATIVE VEHEMENTLY ARGUED AND SUPPORTED THE ORDER OF THE LE ARNED ASSESSING OFFICER AND ALSO THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). HE ARGUED THAT THE AMOUNT OF `.59,70,625/- WAS ADVANCE D BY THE ASSESSEE NOT FOR ANY CONSIDERATION FOR ACQUIRING THE PREMISES BU T IN ORDER TO HELP M/S - 3 - AMIGO SECURITIES LTD., TO TEMPORARILY MEET ITS FINA NCIAL REQUIREMENTS AS WOULD BE EVIDENT FROM A READING OF CLAUSE 9(IV) OF THE MOU. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE ASSESSEE HAD ADVANCED `.4.75 CRORES TO M/S. AMIGO SECURITIES PVT . LTD. ACCORDING TO THE LEARNED ASSESSING OFFICER `.4.25 CRORES WAS ONLY FO R BUSINESS CONSIDERATION AND THEREFORE TREATED BALANCE AMOUNT OF `.50 LACS A S INTEREST FREE ADVANCE FOR NON BUSINESS CONSIDERATION AND CONSEQUENTLY DIS ALLOWED INTEREST EXPENDITURE RELATING TO `.50 LACS. ON APPEAL LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) ENHANCED SUCH DISALLOWANCE TO THE EXTENT OF INTEREST ON `.1,09,70,625/- ON THE GROUND THAT THE AMOUNT OF `.1,09,70,625/- WAS FOR NON BUSINESS PURPOSES. WE FIND THAT SIMILAR ADVANC E WAS ALSO MADE BY M/S. UNIDENT BRUSHES LTD., WHEREIN THE INCOME TAX OFFICE R DISALLOWED INTEREST EXPENDITURE RELATING TO ADVANCE OF `.7,89,45,000/- FOR THE SIMILAR REASONS. IN APPEAL TRIBUNAL DELETED SUCH A DISALLOWANCE VIDE IT S ORDER DATED 4-6-2010 IN ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 IN ASSE SSMENT YEAR 2004- 05 BY OBNSERVING AS UNDER:- A. N PAHUJA : THIS APPEAL BY REVENUE AND THE CROSS- OBJECTION[CO] BY THE ASSESSEE AGAINST AN ORDER DAT ED 22-08-2007 OF THE LD.CIT(APPEALS)-III, BARODA, RAISE THE FOLL OWING GROUNDS: ITA NO.4185/AHD/2007 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN DELETING THE INTEREST CHARGED ON INTEREST FREE L OAN OF RS.7,89,45,000/- GIVEN TO AMIGO SECURITIES PVT. LTD., RELYING UPON T HE JUDGMENT IN THE CASE OF S A BUILDERS LIMITED (288 ITR 1), WHEN THE SAID DEC ISION IS SQUARELY DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION U/S 80 IA AFTER GIVING EFFECT TO HIS ORDER, WHEN THE ASSESSEE HAS NOT CLAIMED ANY DEDUCT ION IN THE REVISED RETURN OF INCOME. 3 THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR AL TER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. CO NO.12/AHD/2008 1. THE LEARNED COMMISSIONER OF INCOME TAX (A) E RRED IN FACT AND IN LAW IN DISALLOWING INTEREST AMOUNTING TO RS.1,14 ,378/- ON THE - 4 - GROUND THAT THE SAID AMOUNT PERTAINS TO INTEREST FR EE ADVANCE NOT UTILIZED FOR THE PURPOSE OF BUSINESS. 2. YOUR APPELLANT CRAVES RIGHT TO ADD TO OR ALTER, AMEND ,SUBSTITUTE, DELETE OR WITHDRAW ALL OR ANY OF THE ABOVE GROUNDS IN CROSS-O BJECTION. 2 ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL OF T HE REVENUE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN D ECLARING INCOME OF RS.16,69,707/- FILED ON 1.11.2004 BY THE ASSESSEE, MANUFACTURING TOOTH BRUSHES, AFTER BEING PROCESSED ON 23.3.2005 U/S 14 3(1) OF THE INCOME- TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT ], WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 22.6.2005. SUBSEQUENTLY A REVISED RETURN DECLARING INCOME OF R S.10,13,800/- WAS FILED ON 25.2.2006 . DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASS ESSEE HAD ADVANCED INTEREST FREE LOAN OF RS.7,89,45,000/- TO M/S AMIGO SECURITIES PVT. LTD.[ASPL], IN TERMS OF AN AGREEMENT FOR CONSTRUCT ION OF A COMMERCIAL BUILDING AT PADRA ROAD. BARODA, WHEREUNDER THE ASSE SSEE COMPANY WAS ENTITLED TO THE USAGE RIGHT OF 7000 SQ FT. SPACE FU LLY FURNISHED WITH USAGE CHARGE@ RS.24/- PER SQ.FT. IN THE BUILDING TO BE CO NSTRUCTED BY M/S AMIGO SECURITIES PVT. LTD. BESIDES, THE ASSESSEE HA D ALSO ADVANCED INTEREST FREE LOAN OF RS.20,00,000/- TO S & G MOULD ERS PVT. LTD.[SGM]. ON PERUSAL OF THE BALANCE SHEET, THE AO NOTICED THA T THE ASSESSEE HAD RECEIVED SECURED LOAN OF RS.3,31,35,849/- FROM T HE BANK BESIDE UNSECURED LOANS OF RS.2,50,22,489/- AND HAD PAID I NTEREST OF RS.15,46,391/- ON TERM LOAN, RS.15,39,656/- TO BANK AND RS.17,39,853/- TO UNSECURED CREDITORS. IN RESPONSE TO A SHOW CAUSE NOTICE, PROPOSING TO DISALLOW INTEREST TO THE EXTENT NOTIONALLY CHARGEA BLE ON INTEREST FREE LOANS GIVEN TO ABOVE PARTIES, THE ASSESSEE REPLIED THAT SINCE THE ASSESSEE COMPANY WAS IN NEED OF OFFICE PREMISES, TH EY HAD ENTERED INTO AN AGREEMENT WITH M/S AMIGO SECURITIES PVT. LTD.(AS PL), WHEREUNDER INTEREST FREE FUNDS OF RS.7.00 CRORES TOGETHER WITH FLOAT OF RS.1.50 CRORES ( FOR VARYING PERIOD NOT EXCEEDING A CONTIN UOUS PERIOD OF ONE YEAR) WAS PROVIDED FOR ENABLING ASPL TO FINANCE CON STRUCTION OF THE SAID PREMISES. THUS, THE MONEY GIVEN AS ADVANCE WITH PRI MARY OBJECT OF TAKING THE PREMISES ON LEASE FOR BUSINESS PURPOSES, COULD NOT BE - 5 - CONSIDERED TO HAVE BEEN DIVERTED FOR NON-BUSINESS P URPOSES, THE ASSESSEE SUBMITTED . THERE IS NOTHING IN THE ASSESS MENT ORDER AS TO WHETHER OR NOT THE ASSESEE REPLIED IN RELATION TO A DVANCE OF RS. 20 LACS TO SGM. IN ANY CASE, AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE AND DISTINGUISHING THE DECISIONS RELIED UPON, THE A O OBSERVED THAT THE BALANCE SHEET OF THE ASSESSEE REVEALED THAT THE SHA RE CAPITAL & RESERVES & SURPLUS WERE RS.5,07,59,062/- WHILE LOAN FUNDS WERE RS.5,81 ,58,338/-. SINCE FIXED ASSETS BLOCK WAS RS.3,56,75,121/- BESIDES INVESTMENT OF RS .38,50,000/- IN SHARES OF THE COMPANY TO WHOM THE INTEREST FREE FUNDS WERE GIVEN, INVENTORY-RS.1,23,70,449/- AND SUNDRY DEBTORS- RS.1,66,24,857/-, THE AO DID NOT AC CEPT THE ASSESSEES PLEA THAT IT HAD SUFFICIENT INTEREST FREE FUNDS TO ADVANCE TO TH E AFORESAID TWO COMPANIES .ACCORDINGLY, THE AO DISALLOWED INTEREST OF RS.46 ,29,153/- ON THE GROUND THAT FUNDS WERE DIVERTED FOR NON-BUSINESS PURPOSES. 3 ON APPEAL, THE ASSESSEE REITERATED THEIR SUBMISS IONS BEFORE THE AO AND CONTENDED THAT THE ADVANCE WAS GIVEN TO ASP L IN FURTHERANCE OF COMMERCIAL EXPEDIENCY OF THE ASSESSEE. REGARDING I NTEREST FREE ADVANCE OF RS.20 LACS TO SGM, IT WAS SUBMITTED THAT M/S SGM WAS PRO VIDING JOB WORK SERVICES TO THE ASSESSEE . DUE TO TECHNOLOGICAL ADVANCES, AND IN ORDER TO HELP SGM TO UPGRADE ITS MACHINERY SO AS TO ENABLE THEM TO PROVIDE BETTER QU ALITY TOOTH BRUSH HANDLES, AN INTEREST FREE ADVANCE OF RS.20 LACS WAS PROVIDED. SINCE THE MONEY WAS ADVANCED FOR BUSINESS PURPOSES, NO DISALLOWANCE ON THIS ACCOUNT WAS CALLED FOR, THE ASSESSEE PLEADED. IN THE LIGHT OF THESE SUBMISSIONS, THE LD. CIT(A) WHILE RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S .A. BUILDERS LTD. VS. CIT, 288 ITR 1, CONCLUDED AS UNDER: 3.2.1..IN THE CASE OF ASPL THE ASSESSEE APPEAR S TO HAVE DERIVED CONSIDERABLE BENEFIT UNDER THE TERMS OF AGREEMENT, IN AS MUCH AS IT COULD OBTAIN OFFICE SPACE IN A PRESTIGIOUS LOCALITY, AT L OW RATES COMPRISING ONLY OF MAINTENANCE AND SERVICE CHARGES. THE USAGE OF THE PREMISES WAS, THEREFORE, VIRTUALLY RENT FREE. INSTEAD OF PAYING RENT MONTHL Y, THE ASSESSEE HAS ALLOWED USE OF ITS FUNDS FOR EARNING INTEREST BY ASPL IN LIEU O F USAGE OF OFFICE SPACE. FURTHER, THE ASSESSEE RETAINED THE OPTION OF CONVER TING THE LEASE INTO PURCHASE OF THE OFFICE PREMISES. IT THUS HAD THE RIGHT OF F IRST REFUSAL ON SALE OF THE IMPUGNED PROPERTY. THESE ARE CONSIDERABLE COMMERCI AL ADVANTAGES. IT MAY BE DISPUTED WHETHER THE COMMERCIAL ADVANTAGE DERIVED W AS COMMENSURATE TO THE LOSS ON ACCOUNT OF FOREGONE USAGE OF THE FUNDS IN Q UESTION. IF, HOWEVER, SOME NEXUS OF BUSINESS EXPEDIENCY COULD BE SHOWN, THEN T HE BUSINESS MAN SHOULD - 6 - BE ALLOWED TO BE THE BEST JUDGE OF HIS OWN INTEREST . FOLLOWING THE RATIO OF THE SUPREME COURTS DECISION IN S.A. BUILDERS LTD., I A M OF THE OPINION THAT THE DISALLOWANCE OF INTEREST RELATABLE TO ADVANCE OF RS .7,89,45,000/- WAS NOT JUSTIFIED. HOWEVER, SO FAR AS THE OTHER AMOUNT OF RS.20 LACS IS CONCERNED, IT IS NOTE WORTHY THAT THE ADVANCE WAS MADE LONG BACK, I. E. F.Y 1997-98. NO INTEREST HAS BEEN CHARGED ON SUCH ADVANCE. NO BENE FICIAL AGREEMENT HAS BEEN NEGOTIATED BY WHICH SOME ADVANTAGE IN THE COMMERCIA L SENSE COULD BE SAID TO HAVE BEEN DERIVED FROM THE ACT OF MAKING SUCH INTER EST FREE ADVANCE. IT IS ALSO PERTINENT TO NOTE THAT THE ADVANCE HAS STILL NOT BE EN REPAID AND USE OF THE FUNDS CONTINUED TO BE ENJOYED BY SGM. THIS APPEARS TO BE A ONE WAY FLOW OF BENEFIT FROM SGM. NO CORRESPONDING BENEFIT HAS BEEN SHOWN TO FLOW FROM SGM TO THE APPELLANT. HENCE, I AM OF THE OPINION THAT THIS TR ANSACTION COULD NOT BE SAID TO HAVE BEEN IN FURTHERANCE OF ANY COMMERCIAL INTEREST ON THE PART OF THE APPELLANT. ACCORDINGLY, IT IS HELD THAT THE INTEREST DISALLOWE D ATTRIBUTABLE TO THIS LOAN OF RS.20 LACS IS JUSTIFIED AND IS UPHELD. 3.2.2 THE PROPORTIONATE DISALLOWANCE OF THE INTERE ST ATTRIBUTABLE TO THE LOAN OF SGM IS WORKED OUT AS UNDER: 46,29,156 X 20,00,000 = 45,14,778 8,09,45,000 HENCE, DISALLOWANCE OF INTEREST OF RS.1,14,378/- IS UPHELD AND ADDITION OF THE REMAINING AMOUNT OF RS.45,14,778/- IS DIRECTED TO B E DELETED. 4 THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(A) IN DELETING DISALLOWANC E OF INTEREST IN RELATION TO ADVANCE TO M/S AMIGO SECURITIES PVT. LTD. WHILE THE ASSESSEE IN THEIR CO DISPUTED THE DISALLOWANCE OF RS.1,14,378/- UPHE LD BY THE LD. CIT(A). THE LEARNED DR SUPPORTED THE FINDINGS OF THE LD. C IT(A) IN RESPECT OF DISALLOWANCE OF INTEREST IN RELATION TO ADVANCE TO M/S AMIGO SECURITIES PVT. LTD. ON THE OTHER HAND , THE LD. AR ON BEHALF OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE LEARNED CIT (A) WHILE RELYING UPON THE DECISION IN THE CASE OF S.A. BUILDERS LTD. (SUP RA) AND CONTENDED THAT ISSUE RELATING TO DISALLOWANCE OF INTEREST ON ACCOU NT OF ADVANCE TO M/S AMIGO SECURITIES PVT. LTD. IS SQUARELY COVERED BY T HE DECISION DATED 14- 05-2010 OF THE ITAT IN THE CASE OF DCIT VS. ANIGO B RUSHES PVT. LTD. IN ITA NOS.134 AND 158/AHD/2008. AS REGARDS DISALLOWA NCE OF INTEREST OF RS.1,14,378/- UPHELD BY THE LD. CIT(A), THE LD. AR WHILE RELYING UPON THE DECISION OF THE ITAT IN THEIR OWN CASE FOR THE PRE CEDING YEARS CONTENDED THAT MATTER NEEDS TO BE RESTORED TO THE FILE OF TH E AO FOR READJUDICATION - 7 - IN THE LIGHT OF DECISIONS IN THE CASE OF SA BUILDER S LTD.(SUPRA) AND CIT VS. RELIANCE UTILITIES AND POWER LTD.,313 ITR 340(B OM.) . 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. UNDISPUTEDL Y, THE THE ASSESSEE ADVANCED THE MONEY TO ASPL WITHOUT CHARGING ANY IN TEREST IN TERMS OF AN AGREEMENT, SO AS TO ENABLE THE LATTER TO CONSTRUCT A BUILDING AND PROVIDE USAGE RIGHT OF 7000 SQ FT. SPACE FULLY FURNISHED @ RS.24/- PER SQ.FT. . INTER ALIA, THE ASSESSEE RETAINED THE OPTION OF CONVERTING THE LEASE INTO PU RCHASE OF THE OFFICE PREMISES. THUS, THE ASSESSEE DERIVED COMMERCIAL ADVANTAGE AND AC CORDINGLY, THE LD. CIT(A) DELETED THE INTEREST IN RELATION TO FUNDS ADVANCED TO ASPL. SINCE THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE. THIS VIEW OF OURS IS S UPPORTED BY A DECISION DATED 14-05-2010 OF A CO-ORDINATE BENCH IN THE CASE OF DCIT VS. ANIGO BRUSHES PVT. LTD. IN ITA NOS.134 AND 158/AHD/2008, WHEREIN AFTER ANALYZING SIMILAR TERMS & CONDITIONS OF AN MOU, THE ITAT RELYING, INTER ALIA, ON THE DECISION OF HONBLE APEX COURT IN THE CASE O F S.A. BUILDERS (SUPRA) CONCLUDED THAT THE AMOUNT ADVANCED FOR OBTAINING THE PREMISES ON LEASE WAS FOR THE BUSINESS EXPEDIENCY. IN VIEW OF THE FOREGOING, WE HAVE NO AL TERNATIVE BUT TO UPHOLD THE FINDINGS OF THE LD. CIT(A). THEREFORE, GROUND NO.1 IN THE AP PEAL OF THE REVENUE IS DISMISSED. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NO T POINT OUT ANY GOOD REASON FOR WHICH THE ABOVE ORDER OF THE TRIBUN AL PASSED ON THE SIMILAR FACTS IN THE CASE OF M/S. UNIDENT BRUSHES LTD., SHO ULD NOT BE FOLLOWED IN THE CASE OF THE PRESENT ASSESSEE. NO DISTINGUISHABLE FA CTS COULD BE BROUGHT BEFORE US IN THE FACTS OF THE PRESENT CASE. IN ABSE NCE OF ANY SUCH DISTINCTION WE DO NOT FIND ANY GOOD REASON TO NOT TO FOLLOW THE SAID ORDER OF THE TRIBUNAL IN THE INSTANT CASE ALSO. WE THEREFORE RES PECTFULLY FOLLOWING THE SAME SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND DELETE THE DISALLOWANCE OF INTEREST ON `.1,09,70,625/- AND ALLOW THE APPEAL OF THE ASSESSEE. - 8 - ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 25 TH DAY OF JANUARY, 2011. SD/- SD/- ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) JUDICIAL MEMBE JUDICIAL MEMBE JUDICIAL MEMBE JUDICIAL MEMBER R R R ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATED: AHMEDABAD, 25 TH DAY OF JANUARY, 2011. COMPILED AND COMPARED BY : PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, BARODA. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 24-1-2011 --------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 24-1-2011 ------ ------------- 3. DRAFT PROPOSED & PLACED 24-1-2011 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 24-1-2011 ---------- --------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 25-1-2011 --------- ----------- 6. KEPT FOR PRONOUNCEMENT ON 25-1-2011 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 25-1-2011 ---- ---------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- A.R. 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------