M & D Global Private Limited, Kanpur V. Astt. Commissioner of Income Tax-5, Kanpur

ITA 72/LKW/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0348 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 25-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K SINGH
• Keywords: Additional evidence; Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 72/LKW/2017 ASSESSMENT YEAR: 2012 - 13 M&D GLOBAL PRIVATE LIMITED 79/75, BANS MANDI KANPUR V. A SSTT. CIT - 5 KANPUR T AN /PAN : AAACM9361M (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI C. K. SINGH, D.R. DATE OF HEARING: 25 0 3 201 9 DATE OF PRONOUNCEMENT: 29 0 3 201 9 O R D E R PER A. D. JAIN, V.P . : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE LD. CIT(A) - III, KANPUR DATED 8/112016 FOR ASSESSMENT YEAR 20 12 - 13 , TAKING THE FOLLOWING GROUNDS: 1. LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS BY UPHOLDING FOLLOWING DISALLOWANCES, ADDED TO THE INCOME OF THE APPELLANT: SI. PARTICULARS AMOUNT (RS.) 1. BY ADDING AS DEEMED INTEREST CHARGEABLE ON NET DEBIT BALANCE OF SHAREHOLDERS AND OTHERS ON INTEREST FREE ADVANCE MADE, BY DISALLOWING OUT OF INTEREST PAID. 89,382.00 2. BY DISALLOWING SALES TAX EXPENSES A ND ADDING WHOLE OF SALES TAX EXPENSES 1,65,649.00 ITA NO.72/LK W/2017 PAGE 2 OF 4 INCURRED AND CLAIMED AS DEDUCTION WITHOUT ASSIGNING ANY REASON TOTAL 2,55,031.00 2. LD. CIT(APPEALS) FAILED TO APPRECIATE THE FACTS SUBMITTED DURING THE COURSE OF THE PROCEEDINGS. 3. LD CIT(APPEALS) FAILED TO APPRECIATE THE EVIDENCES PUT ON RECORD AND WITHOUT EVEN ADVANCING ANY MATERIAL, CONTRARY TO THAT THE EVIDENCES PUT ON RECORD, CATEGORICALLY REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE BASIS OF CONJECTURES WHIMS AND SURMISES. 4. LD.CIT(APPEAL S) HAS ERRED IN LAW AS WELL AS IN FACT BY APPLYING DEEMING PROVISION BY ADDING AS NOTIONAL INTEREST ON NET DEBIT BALANCES OF SHAREHOLDERS AND OTHERS AND FAILED TO APPRECIATE THAT THERE WAS NO NEXUS BETWEEN THE BORROWED FUNDS AND THE INTEREST FREE ADVANCES GRANTED TO THE SHAREHOLDERS OF THE COMPANY. 5. LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL IN FACT BY DISALLOWING AND ADDING WHOLE OF SALES TAX EXPENSES PAID AND CLAIMED AS DEDUCTION WITHOUT ASSIGNING ANY REASON AND WITHOUT APPRECIATING THE DETAILS ON RECORD INDICATIVE OF THE NATURE AND CHARACTER OF THE EXPENDITURE. 2 . THE A.O MADE THE ADDITION OF RS.1,65,649/ - DEBITED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT UNDER THE HEAD OF SALES TAX EXPENSES. THE A.O MADE THE ADDITION AS, ACCORDING TO HIM, THE ASSESSEE HAD FAILED TO EXPLAIN THE ALLOWABILITY OF THE EXPENDITURE. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE, HOLDING THAT THERE WAS NO EVIDENCE AS TO HOW THESE PAYMENTS, WHICH WERE TO BE RECEIVED FROM THE STATE, COULD BE SAID TO HAVE BECOME IRRECOVERABLE; THA T IN RESPECT OF CERTAIN SUMS, EVEN THEIR NATURE, AS TO WHETHER TAX, OR PENALTY, WAS NOT ASCERTAINABLE; AND THAT THE DETAILS OF THE SALES CORRESPONDING TO THE PAYMENTS HAD NOT BEEN FILED. ITA NO.72/LK W/2017 PAGE 3 OF 4 3 . BY WAY OF AN APPLICATION FOR ADDITIONAL EVIDENCE, THE ASSESSEE HAS SO UGHT TO PRODUCE BEFORE US (I) COPIES OF NINE SALES TAX CHALLANS OF M/S BHARAT ELECTRICALS, BEING A PROPRIETORSHIP CONCERN OF THE ASSESSEE, M/S M&D GLOBAL PRIVATE LIMITED, (II) COPY OF INCOME TAX ASSESSMENT ORDER DATED 12/2/1993, FOR ASSESSMENT YEAR 1990 - 91 , IN THE CASE OF M/S MOTOR AND DIESELS PVT. LTD., KANPUR, STAT ED LY EVIDENCING THAT M/S BHARAT ELECTRICALS IS A PROPRIETORSHIP CONCERN OF THE ASSESSEE AND (III) COPY OF FRESH CERTIFICATE OF INCORPORATION ISSUED IN PURSUANCE TO CHANGE OF NAME OF THE COMPANY FROM MOTOR & DIESELS (P) LTD. TO M&D GLOBAL (P) LTD. 4 . THE CONTENTION OF THE ASSESSEE IN THE APPLICATION IS FOUND TO BE CORRECT. THE ASSESSMENT ORDER DOES NOT EVINCE ANY QUERY HAVING BEEN PUT TO THE ASSESSEE WITH REGARD TO THE DISALLOWANCE OF SALES TAX EXPE NSES. EVEN NO QUESTION HAS BEEN SHOWN IN THE IMPUGNED ORDER TO HAVE BEEN RAISED O F THE ASSESSEE BY THE LD. CIT(A). THE DOCUMENTS NOW PLACED AS ADDITIONAL EVIDENCE HAVE A DIRECT BEARING ON THE ISSUE OF ALLOWAB ILITY OR OTHERWISE OF THE SALES TAX EXPENSES C LAIMED. SINCE NO QUESTION REGARDING DISALLOWANCE WAS RAISED, THE ASSESSEE DID NOT FILE THESE DOCUMENTS BEFORE THE AUTHORITIES BELOW. OTHERWISE TOO, THESE DOCUMENTS ARE DIRECTLY INDEPENDENTLY VERIFIABLE . 5 . THEREFORE, IN THE INTEREST OF JUSTICE, THESE DOCUME NTS ARE ADMITTED AS ADDITIONAL EVIDENCE. THE ISSUE OF DISALLOWANCE OF SALES TAX EXPENSES OF RS.1,65,649/ - IS REMITTED TO THE FILE OF THE A.O, TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON TAKING INTO CONSIDERATION THE AFORESAID ADDITIONAL EVIDENCE PRODU CED BY THE ASSESSEE. THE ASSESSEE, NO DOUBT, SHALL CO - OPERATE IN THE FRESH PROCEEDINGS BEFORE THE A.O. THE A.O SHALL AFFORD DUE AND ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE TO SUPPORT ITS CASE. ALL PLEAS AVAILABLE UNDER THE LAW SHALL REMAIN SO AV AILABLE TO TH E ASSESSEE. ITA NO.72/LK W/2017 PAGE 4 OF 4 6 . APROPOS THE ISSUE OF DEEMED INTEREST CHARGEABLE ON NET DEBIT BALANCE OF SHAREHOLDERS AND OTHERS ON INTEREST FREE ADVANCE MADE, BY DISALLOW ING A SUM OF RS.89,382/ - OUT OF INTEREST PAID, SINCE THE MATTER REGARDING DISALLOWANCE OF SAL ES TAX EXPENSES HAS BEEN REMITTED TO THE FILE OF THE A.O, AS ABOVE, THE ISSUE AT HAND IS ALSO SIMILARLY REMANDED TO THE A.O, TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON AFFORDING DUE AND ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE, NO DOUBT, SHALL COOPERATE IN THE FRESH PROCEEDINGS BEFORE THE LD. CIT(A). ALL PLEAS AVAILABLE UNDER THE LAW SHALL REMAIN SO AVAILABLE TO TH E ASSESSEE. 7 . IN THE RESULT, FOR STATISTICAL PURPOSES, THE APPEAL IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 29 / 0 3 /201 9 . SD/ - SD/ - [ T. S. KAPOOR ] [ A. D. JAIN ] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 29 /03/ 201 9 JJ: 2503 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR BY ORDER ASSISTANT REGISTRAR