AIMCO PESTICIDES LTD, MUMBAI V. ITO 10(1)(1), MUMBAI

ITA 8128/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88591 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA CIT DR

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.8128/MUM/2011 ASSESSMENT YEAR: 2005-06 AIMCO PESTICIDES LTD. AKAHAND JYOTI, 8 TH ROAD, SANTACRUZ(E), MUMBAI-400051 / VS. THE INCOME TAX OFFICER, 10(1)(1) MUMBAI ( #$%& ' /ASSESSEE) ( / REVENUE) P.A. NO. AA ACA3365K #$%& ' / ASSESSEE BY): SHRI NISHIT GANDHI / REVENUE BY SMT. S. PADMAJA CIT -DR ( # ) ' * / DATE OF HEARING : 19/03/2015 +, ) ' * / DATE OF PRONOUNCEMENT : 19/03/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE I MPUGNED ORDER DATED 06/09/2011 OF THE LD. FIRST APPELLATE A UTHORITY, MUMBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTA INS TO DISALLOWANCE OF INTEREST PAID TO THE EXTENT OF RS.5 ,20,540/- ON AIMCO PESTICIDES LTD. 2 THE GROUND THAT INTEREST BEARING FUNDS WERE UTILIZE D FOR NON- BUSINESS PURPOSES OUT OF INTEREST FREE ADVANCES. 2. DURING HEARING OF THIS APPEAL, SHRI NISHIT GANDH I, LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT THE ASSESS EE WAS HAVING SUFFICIENT INTEREST FREE FUNDS, THUS, THE LD . ASSESSING OFFICER AND ALSO THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WERE NOT JUSTIFIED IN DISALLOWING THE INTEREST PAID TO THE RELATED PARTIES. THE LD. COUNSEL ALSO FILED THE POSITION O F AVAILABILITY OF FUNDS RIGHT FROM ASSESSMENT YEAR 2000-01 TO 2007 -08 EVIDENCING AVAILABILITY OF INTEREST FREE FUNDS AND INTEREST FREE LOANS WERE GIVEN TO THE CONCERNED PARTIES. RELIANC E WAS ALSO PLACED UPON THE DECISION 313 ITR 340 (BOM.) THE LD . CIT-DR, SMT. S. PADMAJA, STRONGLY DEFENDED THE CONCLUSION A RRIVED AT IN THE ASSESSMENT ORDER AS WELL AS IN THE IMPUGNED ORDER. THE CHART FOR AVAILABILITY OF FUNDS WAS ALSO OBJECT ED TO BE ENTERTAINED ON THE PLEA THAT IT WAS NOT FILED BEFOR E THE REVENUE AUTHORITIES. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRI EF, ARE THAT THE ASSESSEE GAVE RS.92,59,250/- TO HIBISCUS NET PV T. LTD. (IN SHORT HNPL) IN THE FINANCIAL YEAR 2000-01 FOR CARRY ING OUT NEW BUSINESS, WHICH COULD NOT BE STARTED AND THE IMPUGN ED AMOUNT GIVEN TO HNPL WAS WRITTEN OFF. FURTHER, THE ASSESSING OFFICER DISALLOWED INTEREST PAID TO THE EXTENT OF R S.5,20,450/- ON PROPORTIONATE BASIS ON THE PLEA THAT INTEREST BE ARING FUNDS WERE UTILIZED FOR THE PURPOSES OF GIVING INTEREST F REE ADVANCES. ON APPEAL, BEFORE THE LD. FIRST APPELLATE AUTHORITY , THE STAND TAKEN IN THE ASSESSMENT ORDER WAS AFFIRMED. IT WAS NOTICED AIMCO PESTICIDES LTD. 3 THAT THE ASSESSEE GAVE INTEREST FREE LOANS AMOUNTIN G TO RS.1,21,41,027/- TO ALL INDIA MEDICAL CORPORATION, WHEREAS THE ASSESSEE PAID INTEREST ON BANK LOAN TO OTHERS A MOUNTING TO RS.2,76,38,634/-. THE ASSESSEE BORROWED SECURED LOANS OF RS.22.33 CRORES FROM BANKS AND RS.6.10 CRORES FROM OTHERS. IT WAS ALSO FOUND THAT THE ASSESSEE GAVE CERTAIN AM OUNTS TO SISTER CONCERNS WITHOUT CHARGING ANY INTEREST FOR N ON- BUSINESS PURPOSES. IT WAS ALSO FOUND THAT THE ASSES SEE TOOK UNSECURED LOANS OF RS.1.56 CRORES FROM TEN PARTIES. THE FOUR PARTIES, MENTIONED IN PARA 3.1 (PAGE-5) OF THE IMPU GNED ORDER WERE ALSO GIVEN INTEREST FREE ADVANCES TO THE TUNE OF RS.1.53 CRORES. FINALLY, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THE ASSESSING OFFICER WAS JUSTIFIED IN D ISALLOWING INTEREST EXPENDITURE OF RS.5,20,450/- BY HOLDING TH AT INTEREST EXPENDITURE WAS NOT INCURRED FOR BUSINESS PURPOSES. BROADLY, WE ARE IN AGREEMENT WITH THE FINDING OF THE LD. COM MISSIONER OF INCOME TAX (APPEALS). HOWEVER, SINCE THE ASSESS EE HAS FILED A CHART SHOWING THE AVAILABILITY OF FUNDS (WH ICH WAS NOT FILED BEFORE THE ASSESSING OFFICER AND ALSO BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS)), REQUIRES VERIFICATION/EXAMINATION. THE ASSESSING OFFICER WI LL ALSO EXAMINE THE FACTUAL POSITION AS TO WHEN THE LOANS W ERE GIVEN AND TAKEN ALONG WITH THE NECESSITY OF SUCH TRANSACT ION WHETHER THE SAME WERE INCURRED FOR BUSINESS PURPOSE S OR NOT, THEREFORE, KEEPING IN VIEW, THE PRINCIPLE OF NATURA L JUSTICE, THE LD. ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CL AIM OF THE ASSESSEE AND AFTER PROVIDING DUE OPPORTUNITY OF BEI NG HEARD DECIDE AFRESH IN ACCORDANCE WITH LAW. THE APPEAL O F THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. AIMCO PESTICIDES LTD. 4 FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 19/03/2015. - ) +, . #/ 19 /0 3 /2015 ) 4 SD/- (D. KARUNAKARA RAO) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ( MUMBAI; . # DATED : 19/03/2015 F{X~{T? P.S/. #.. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. 6789 / THE APPELLANT 2. :;89 / THE RESPONDENT. 3. ( <' ( 67 ) / THE CIT, MUMBAI. 4. ( <' / CIT(A)- , MUMBAI 5. >? :'#$ , 67* 6$ , ( / DR, ITAT, MUMBAI 6. % @ / GUARD FILE. / BY ORDER, ;>7' :' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ( / ITAT, MUMBAI