WEL Intertrade (P) Ltd., New Delhi V. ACIT, Circle- 27(2), New Delhi

ITA 7168/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5580 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 12-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: B, NEW DELHI) BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. K. N. CHARY, JUDICIAL MEMBER ITA NO:-7168/DEL/2018 ( ASSESSMENT YEAR: 2014-15) WEL INTERTRADE (P) LTD. 5E LOCAL SHOPPING CENTRE MASJID MOTH, GREATER KAILASH II NEW DELHI VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 27 (2) NEW DELHI APPELLANT RESPONDENT ASSESSEE BY : SH. C. S. AGGARWAL, SR. ADVOCATE SH. RAVI PRATAP MALL, ADVOCATE REVENUE BY : SH. ABHISHEK KUMAR, SR. DR DATE OF HEARING : 15.05.2019 DATE OF PRONOUNCEMENT : 03.06.2019 ORDER PER: N. K. BILLAIYA, AM THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS]-9, NEW DELHI, DATED 20.09.2018 FOR ASSESSMENT YEAR 2014-15. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF EXPE NDITURE OF RS.7180275/- WHICH REPRESENTED AMOUNT OF INTEREST PAID ON THE SU MS BORROWED BY THE 2 ITA NO.-7168/DEL/2018 ASSESSEE IN THE PRECEDING ASSESSMENT YEAR. THE CIT (A) FURTHER ERRED IN SUSTAINING A DISALLOWANCE OF RS.55741498/- WHICH RE PRESENTED AMOUNT OF INTEREST PAID ON BORROWED CAPITAL. 3. FACTS AS EMANATING FROM THE ASSESSMENT ORDER SHO W THAT THE ASSESSEE HAS CLAIMED INTEREST OF RS.819161817/- AS EXPENDITURE. THE DETAILS OF THE INTEREST CAN BE UNDERSTOOD FROM THE FOLLOWING CHART :- 3 ITA NO.-7168/DEL/2018 4. THE ASSESSING OFFICER WAS OF THE OPINIONS THAT S INCE THE LOAN OF RS.4.50 CRORES HAVE BEEN TREATED AS INCOME OF THE A SSESSEE U/S. 68 OF THE ACT IN A. Y 2013-14 INTEREST OF RS.7180275/- CANNOT BE ALLOWED. 5. THE ASSESSING OFFICER FURTHER FOUND THAT THE ASS ESSEE HAS GIVEN INTEREST FREE ADVANCED TO THE FOLLOWING PARTIES :- (I) NEW DELHI ESTATES PRIVATE LIMITED (II) FLOURISH DECORATIVE PRIVATE LIMITED (III) ARSHIYA LIFESTYLE LTD., 6. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE ADVANC ES WERE MADE TO THESE PERSONS ON WHICH NO INTEREST WAS CHARGED. TH E ASSESSEE FILED A DETAIL REPLY EXPLAINING THAT THE ADVANCES WERE MADE FOR BUSINESS PURPOSES. THE REPLY OF THE ASSESSEE DID NOT FIND ANY FAVOUR W ITH THE ASSESSING OFFICER WHO WAS OF THE OPINION THAT THE INTEREST BEARING FU NDS HAVE BEEN DIVERTED TO INTEREST FREE ADVANCES AND COMPUTED THE PROPORTI ONATE DISALLOWANCE OF INTEREST AT RS.55741498/-. 7. THE ASSESSEE AGITATED THE MATTER BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. 8. BEFORE US THE COUNSEL FOR THE ASSESSEE STATED TH AT ALL THE ADVANCES ARE COMING FROM EARLIER ASSESSMENT YEARS WHEN NO DI SALLOWANCE WAS MADE. THE COUNSEL FURTHER STATED THAT ASSESSEE WAS HAVING SUFFICIENT 4 ITA NO.-7168/DEL/2018 INTEREST FREE FUNDS AVAILABLE WITH IT AND, THEREFOR E, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ARE UNCALLED FOR AND DESER VES TO BE DELETED. 9. THE DR STRONGLY SUPPORTED THE FINDINGS OF THE AS SESSING OFFICER. 10. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS THE UNSECURED LOAN OF RS.4.50 CRORES IS C ONCERNED THE SAME HAS BEEN DELETED BY THE TRIBUNAL IN ITA NO.7166/DEL/201 8 VIDE ORDER DATED 03.06.2019. SINCE THE UNSECURED LOAN HAS BEEN ACCE PTED AS SUCH THE ASSESSING OFFICER IS DIRECTED TO ALLOW INTEREST PAI D ON SUCH BORROWINGS AMOUNTING TO RS.7180275/-. 11. IN SO FAR AS THE INTEREST EXPENDITURE OF RS.557 41498/- IS CONCERNED. THE UNDISPUTED FACT IS THAT THE ADVANCES ARE COMING FROM EARLIER ASSESSMENT YEARS AND THE SAME CAN BE UNDERSTOOD FRO M THE FOLLOWING CHART :- ASSESSMENT YEAR FRESH AMOUNTS ADVANCED OPENING BALANCE CLOSING BALANCE 2010 - 11 RS.4,68,20,703/ - RS.19,11,28,829/ - RS.23,79,49,532/ - 20 11 - 12 RS.2,97,83,315/ - RS.23,79,49,532/ - RS.24,03,21,786/ - 20 12 - 13 RS. 11,71,308/ - RS.24,03,21,784/ - RS.14,82,50,879/ - 5 ITA NO.-7168/DEL/2018 20 13 - 14 RS. 55,38,66,196/ - RS.14,82,50,879/ - RS.70,16,17,075/ - 20 14 - 15 RS. 6,47,41,720/ - RS,71,00,68, 931 RS.77,53,10,651/ - 12. IT IS TRUE THAT NO DISALLOWANCE WERE MADE IN EA RLIER ASSESSMENT YEARS. IT CAN BE SEEN THAT ONLY RS. 64741720/- HAV E BEEN ADVANCED DURING THE YEAR UNDER CONSIDERATION. WE FIND THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE AT THE BEGINNING OF THE YEAR WAS RS.326032309/-. THUS, IT CAN BE SAFELY CONCLUDED T HAT THE SAID INTEREST FREE ADVANCES HAVE BEEN GIVEN OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. 13. IN OUR CONSIDERED VIEW ON GIVEN FACTS AS DISCUS SED HERE IN ABOVE NO DISALLOWANCE IS TO BE MADE. WE DIRECT THE ASSESSIN G OFFICER TO DELETE THE ADDITION OF RS.55741498/- ALSO. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.2019. (K.N.CHARY) (N.K.BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 03.06.2019 NEHA 6 ITA NO.-7168/DEL/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO.-7168/DEL/2018 DATE OF DICTATION 20.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER