M/S RED ROSE ENTERPRISE, Mumbai V. ITO 17(3)(1), Mumbai

ITA 771/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6717 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 12-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.K. GUBGOTRA
• Assessee Lawyers: RADHA HALBE
• Section: 143(3); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO.771/MUM/2019 ( ASSESSMENT YEAR: 2015-16) M/S RED ROSE ENTERPRISE, ROOM NO. 7, 3 RD FLOOR, JENABHAI (GAYA) BLDG. 87/123, Y.M. ROAD, MASJID BUNDER, MUMBAI- 400003 VS. I.T.O.-17(3)(1) ROOM NO. 114, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. PAN/GIR NO. AADFR 5541 G (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY RADHA HALBE (ADV) REVENUE BY SHRI R.K. GUBGOTRA (JCIT-DR) DATE OF HEARING 05/02/2020 DATE OF PRONOUNCEMENT 06/02/2020 / O R D E R PER: R.C. SHARMA, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 13/12/2018 OF LD. CIT(A)-28, MUMBAI FOR THE A.Y. 20 15-16 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR DI SALLOWANCE OF INTEREST U/S36(1)(III) OF THE ACT AMOUNTING TO RS. 2,56,570/-. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FROM THE RECORD, I FOUND THAT THE A.O. HAS DISALLOWED PROPOR TIONATE INTEREST EXPENDITURE CLAIMED IN THE P&L ACCOUNT ON THE PLEA THAT THE ASSESSEE ITA NO. 771/MUM/2019 M/S RED ROSE ENTERPRISE VS ITO 2 HAS DIVERTED FUND FOR NON-BUSINESS PURPOSES. I ALSO FOUND THAT DURING THE YEAR UNDER CONSIDERATION, BALANCE SHEET OF THE ASSESSEE REFLECTED LOANS AND ADVANCES GIVEN TO FOLLOWING PARTIES FROM WHICH NO INTEREST HAD BEEN CHARGED. SL. NO. NAME OF THE PARTY LOAN AMOUNT IN RS. 1. CHANDRAKALA B GANDHI 4,10,000 2. SAHARA SILK INDUSTRIES 15,00,000 3. DEVENDRA ASSOCIATES 1,40,000 4. S.D. INTERNATIONAL 3,00,000 IT WAS CONTENTION OF THE LD AR THAT THE ADVANCES WE RE GIVEN FOR THE PURPOSE OF BUSINESS. THE CONTENTION OF THE LD. AR W AS AS UNDER: WE HAD GIVEN THE LOAN/ADVANCE TO THE FOLLOWING PART IES FOR THE FOLLOWING REASONS: SAHARA SILK- ADVANCE GIVEN FOR FABRICS TO BE DELIVE RED WHICH WAS NOT AS THE APPROVED CUT AND THE AMOUNT OF RS. 15 LAKHS IS TO BE REFUNDED; TILL DATE 11.95 LAKHS HAVE BEEN REFUNDED. ANNEXURE 1 ATTACHED FOR THE SAME. DEVENDRA ASSOCIATES- ADVANCE WAS GIVEN AS A DEPOSIT TOWARDS AN OFFICE WHICH WAS CANCELLED AND THE SAID AMOUNT WAS REFUNDED. ANNEXURE 2 ATTACHED FOR THE SAME. S D INTERNATIONAL- ADVANCE WAS GIVEN AS AN APPOINTM ENT OF AGENT FOR TRANSACTIONS OF A SPECIFIC CHEMICAL TENDER WITH OVE RSEAS CHEMICAL/DYES SUPPLIER WHICH DID NOT MATERIALIZE AN D S D INTERNATIONAL WAS NOT ABLE TO GET ANY SUPPLIERS. HE NCE THE AMOUNT WAS REFUNDED. ANNEXURE-3E ATTACHED FOR THE SAME. ITA NO. 771/MUM/2019 M/S RED ROSE ENTERPRISE VS ITO 3 CHANDRAKALA GANDHI- ADVANCE GIVEN FOR ONWARD BOOKIN G AND CONFIRMATION OF A CHEMICAL TENDER WHICH DID NOT CRY STALISE AND HENCE THE AMOUNT STANDS REFUNDABLE. ANNEXURE-4 ATTACHED F OR THE SAME. OUR ATTENTION WAS INVITED TO THE LETTERS FILED BY T HE RESPECTIVE PARTIES INDICATING THAT THE ADVANCES FOR BUSINESS PURPOSES, HOWEVER, THE LD DR HAS OBJECTED THAT THESE DOCUMENTS WERE NOT PRODUCED BEFORE THE LOWER AUTHORITIES, THEREFORE, THE SAME CONSTITUTE ADDITIO NAL EVIDENCE WHICH CANNOT BE ACCEPTED AT THE LEVEL OF TRIBUNAL. HOWEVE R, I FOUND THAT THESE DOCUMENTS GOES TO THE ROOT OF THE ISSUE, THER EFORE, IN THE SUBSTANTIAL INTEREST OF JUSTICE, I RESTORE THE MATT ER BACK TO THE FILE OF THE A.O. FOR DECIDING AFRESH AFTER CONSIDERING ALL THESE EVIDENCES SO FILED BY THE ASSESSEE TO THE EFFECT THAT THE ADVANC ES WERE GIVEN FOR THE PURPOSE OF BUSINESS. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN APPROPRIATE OPPORTUNITY OF HEARING BEFORE DECIDING THE ISSUE. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH FEBRUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 06/02/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT ITA NO. 771/MUM/2019 M/S RED ROSE ENTERPRISE VS ITO 4 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//