M/s. M. Kantilal Exports, Surat V. The ACIT.,C.C.-2, Surat

ITA 752/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0686 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Keywords: Commercial expediency

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 752/AHD/2012 / ASSESSMENT YEAR : 2008-09 M/S. M. KANTILAL EXPORTS, 1205, PANCHRATNA, OPERA HOUSE, MUMBAI C/O ASHWIN PAREKH & CO., 410, KASHI PLAZZA, MAJURA GATE, SURAT PAN : AAAFM 4325 L VS ACIT, CENTRAL CIRCLE-2, SURAT / (APPELLANT) / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI PRAVIN KUMAR, SR DR / DATE OF HEARING : 26/08/2016 / DATE OF PRONOUNCEMENT: 05/09/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD DATED 19.01.2012 FOR ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDE R:- 1. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THE ADDITION OF RS.5,50,612/- BY DISALLO WING INTEREST U/S 36(1)(III) OF THE ACT ON TRADE ADVANCES TO R. VIPUL & CO., A SISTER CONCERN OF APPELLANT AND INVESTMENT IN PROPERTY. THE ADDIT ION SHOULD BE DELETED. 2. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THE ADDITION OF RS.4,03,004/- ON ACCOUNT OF FOREIGN TRAVELLING ITA NO. 752/AHD/2012 M/S. M. KANTILAL EXPORTS VS. ACIT AY : 2008-09 2 EXPENSES WITHOUT APPRECIATING THE FACTS OF DISALLOW ANCE MADE IN THE RETURN OF FRINGE BENEFIT TAX. THE ADDITION SHOULD BE DELETED. 3. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE REPEATED NOTICES TO THE ASSESSEE. THEREFORE , IT WAS CONSIDERED APPROPRIATE TO PROCEED WITH THE PRESENT APPEAL EX-PARTE QUA THE APPELLANT- ASSESSEE AFTER CONSIDERING THE SUBMISSIONS OF THE L D. DR AND THE MATERIAL AVAILABLE ON RECORD. 4. AT THE OUTSET, LD. DEPARTMENTAL REPRESENTATIVE C ONTENDS THAT BOTH ISSUES IN QUESTION ARE COVERED IN FAVOUR OF REVENUE BY THE DECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE IN ITA NO.451/AHD/2011 FOR AY 2007-08. 5. WE HAVE HEARD LD. DR, PERUSED THE MATERIAL PLACE D BEFORE US AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUES IN QUESTION ARE SQUARELY COVERED IN FAVOUR OF THE REVE NUE BY THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEA R 2007-08 VIDE ITA NO.451/AHD/2011, WHEREIN THE ITAT HAS HELD AS UNDER :- GROUND NO.1 RELATING TO DISALLOWANCE OF INTEREST U /S 36(1)(III) 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERU SED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE DISALLOWANCE WAS MADE BY THE A.O. ON THIS BASIS THAT THE BORROWED FUNDS WERE NOT USED BY THE ASSESSEE FOR THE PURPOSE OF BU SINESS BECAUSE THE SAME WERE ADVANCED TO THE SISTER CONCERN WITHOUT CHARGIN G ANY INTEREST AND WAS INVESTED IN PROPERTY AT AMBY VALLEY AND FOR BOTH THE SE UTILIZATION OF FUNDS, NO BUSINESS EXPEDIENCY WAS SHOWN BY THE ASSESSEE. B EFORE LD. CIT(A), RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF S.A. BUILDERS VS CIT AS REPORTED IN 288 ITR 01 AND IT WAS ARGUED THAT PROPERTY PURCHASED AT AMBY VALLEY WAS FOR BUSIN ESS PURPOSE AND INTEREST FREE FUNDS WERE GIVEN TO THE SISTER CONCER N FOR COMMERCIAL EXPEDIENCY. THE FINDING HAS BEEN GIVEN BY THE LD. C IT(A) THAT HE ASSESSEE HAS NOT PROVED THAT IT IS FROM OWN INTEREST FREE FU NDS AND THE ASSESSEE HAS ITA NO. 752/AHD/2012 M/S. M. KANTILAL EXPORTS VS. ACIT AY : 2008-09 3 ALSO NOT PROVED THAT THE ADVANCES WERE TRADE ADVANC ES FOR PURCHASE OF DIAMOND AND IT WAS FOR BUSINESS EXPEDIENCY AND PROP ERTY AT AMBY VALLEY IS ALSO NOT FOR THE USE FOR BUSINESS PURPOSE. IT WAS H ELD BY HIM THAT THE DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF S.A. B UILDERS (SUPRA), IS NOT APPLICABLE. IN THE PAPER BOOK FILED BEFORE US, THER E IS NO EVIDENCE SUBMITTED BY THE ASSESSEE THAT INTEREST FREE OWN FUNDS OF THE AS SESSEE WERE AVAILABLE AT THE RELEVANT POINT OF TIME AND HOW THERE IS ANY BUSINES S EXPEDIENCY FOR GIVING INTEREST FREE ADVANCES TO THE SISTER CONCERN AND FO R PURCHASE OF PROPERTY AT AMBY VALLEY. UNDER THESE FACTS, WE FIND THAT NO INTE RFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE AND THERE IS N O REASON FOR RESTORING THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECI SION. ACCORDINGLY, GROUND NO.1 OF THE ASSESSEE FIRM IS REJECTED. GROUND NO.2 - REGARDING ADDITION ON ACCOUNT OF FORE IGN TRAVELLING EXPENSES. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT IT IS NOTED BY THE A.O. IN PARA 8 OF THE ASSESSMENT ORD ER THAT THE ASSESSEE WAS REQUESTED TO FURNISH THE DETAILS OF FOREIGN TRAVEL EXPENSES AND PURPOSE OF FOREIGN TRAVEL AND TO GIVE DOCUMENTARY EVIDENCE TO SUPPORT THAT SUCH TRIP IS FOR BUSINESS PURPOSE ONLY. IT IS FURTHER NOTED BY H IM THAT THE LD. A.R. HAS FILED COUNTRY WISE TRIPS BUT DID NOT GIVE COMPLETE DETAILS OF VISIT AND BUSINESS PURPOSE OF VISIT. AS PER THE DETAILS OF FOREIGN TRA VEL EXPENSES, APPEARING ON PAGES 59-60, WE FIND THAT IN THE DETAILS, ASSESSEE HAS GIVEN NAMES OF THE PERSONS, DATE OF TRAVEL AND PLACE VISITED AND EXPEN DITURE DETAILS ARE GIVEN ONLY REGARDING TICKETS AND VISA AND PURCHASE OF FOR EIGN EXCHANGE. DETAILS TO SHOW THAT HOW THIS FOREIGN EXCHANGE WAS UTILIZED, I S NOT AVAILABLE IN THE DETAILS AND IT HAS BEEN STATED REGARDING PURPOSE OF TRAVEL THAT IT IS FOR BUSINESS TOUR WITHOUT SPECIFYING AS TO HOW IT WAS A BUSINESS TOUR AND NOT A LEISURE TRIP. THE COUNTRIES VISITED ARE RUSSIA, U.S .A., HONG KONG ETC. IN THE ABSENCE OF ANY SPECIFIC DETAILS REGARDING BUSINESS PURPOSE OF THESE VISITS AND FURTHER DETAILS REGARDING NATURE OF EXPENDITURE INC URRED OUT OF FOREIGN EXCHANGE PURCHASED, WE FEEL THAT SOME DISALLOWANCE IS NOT UNJUSTIFIED AND HENCE, IN OUR CONSIDERED OPINION, NO INTERFERENCE I S CALLED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO . GROUND NO.3 OF THE A SSESSEES APPEAL IN THE CASE OF THE FIRM IS ALSO REJECTED. WITH REGARD TO GROUND NO.2, WE FIND THAT IN THIS Y EAR ALSO THE DETAILS REGARDING THE FOREIGN TRAVEL EXPENSES AND PURPOSE O F FOREIGN TRAVEL ALONGWITH DOCUMENTARY EVIDENCE WERE NOT SUBMITTED B Y THE ASSESSEE. FACTS ITA NO. 752/AHD/2012 M/S. M. KANTILAL EXPORTS VS. ACIT AY : 2008-09 4 BEING SIMILAR TO ASSESSEES OWN CASE FOR AY 2007-08 , SO FOLLOWING THE SAME REASONING, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN UPHOLDING THE ADDITIONS MADE BY LD. AO. WE, THEREFORE, CONFIRM TH E ORDER OF THE CIT(A) AND DISMISS THIS APPEAL OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 5 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 05/09/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD