M/s Star Tanning Industries, Kanpur V. Dy. Commissioner Of Income Tax-1, Kanpur

ITA 82/LKW/2015

• Counselvise Citation: 8223714 RSA 2015
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PINKI MAHAWAR
• Assessee Lawyers: PRADIP SETH
• Keywords: Opportunity of being heard

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 8 2 /LKW/201 5 ASSESSMENT YEAR: 2008 09 STAR TANNING INDUSTRIES , 1 9, 150 FT. ROAD , JAJMAU, KANPUR. PAN:A A N F S8853Q VS. DCIT I, KANPUR (APPELLANT) (RESPONDENT) APPELLANT BY SHRI PRADIP SETH, FCA RESPONDENT BY SMT. PINKI MAHAWAR, SR. DR DATE OF HEARING 01/07/2015 DATE OF PRONOUNCEMENT 2 8 /07/2015 O R D E R PER A. K. GARODIA, A.M. T HIS IS ASSESSEE S APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT( A ) DEHRADUN WITH CONCURRENT CHARGE OF CIT (A) II, KANPUR DATED 17 . 1 1 .201 4 FOR A. Y. 2008 09 . 2. THE ASSESSEE HAS RAISED AS MANY AS 4 GROUNDS BUT THE ONLY GRIEVANCE OF THE ASSESSEE IS FOR CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSE OF RS. 96,720/ - IN RESPECT OF INTEREST FREE ADVANCES TO MOHD. SAIF OF STAR SOAP PVT. LTD. 3 . LEARNED AR OF THE ASSESSEE SUBMITTED THAT ON PAGES 26 29 OF THE PAPER BOOK IS COPY OF TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR A.Y. 2006 07 IN ITA NO. 303/LKW/2014 DATED 13.01.2015 AND THE PRESENT ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS TR IBUNAL ORDER. HE 2 DRAWN OUR ATTENTION TO PARA 3 OF THIS TRIBUNAL ORDER. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER S OF THE LOWER AUTHORITIES . 4 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN A.Y. 2006 07, IT IS NOTED BY THE TRIBUNAL THAT T HE ASSESSEE FIRM IS NOT PAYING ANY INTEREST ON CREDIT BALANCE IN CURRENT ACCOUNT OF PARTNERS CAPITAL, WHICH WAS RS. 18.3 LACS IN THAT YEAR. AS PER THE ASSESSMENT ORDER, IN THE PRESENT YEAR, THE INTEREST FREE ADVANCES ARE RS. 8.06 LACS. HENCE, IF THE INTER EST FREE FUNDS AVAILABLE WITH THE ASSESSEE IS MORE THAN THIS AMOUNT, NO DISALLOWANCE OUT OF INTEREST EXPENDITURE IS CALLED FOR . THE BALANCE SHEET FOR THE CURRENT YEAR IS NOT MADE AVAILABLE TO US AND HENCE, IT IS NOT ASCERTAINABLE AS TO HOW MUCH INTEREST FR EE FUND IS AVAILABLE IN THE PRESENT YEAR BUT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT INTEREST FREE ADVANCE TO MOHD. SAIF WAS GIVEN IN F.Y. 2003 04 AND 2004 05 TO THE EXTENT OF RS. 8.10 LACS AND IT WAS REDUCED TO RS. 6 LACS IN THE PRESENT Y EAR. IT IS ALSO NOTED BY THE A.O. THAT ADVANCE TO M/S STAR SOAP OF RS. 2 LACS WAS GIVEN IN F.Y. 2006 07 AND IN THE PRESENT YEAR ALSO, IT REMAINED AT THE SAME AMOUNT OF RS. 2 LACS. IN A.Y. 2006 07, IT IS NOTED BY THE TRIBUNAL THAT INTEREST FREE ADVANCES WERE OF RS. 8.10 LACS AND IT WAS MUCH LESS THAN INTEREST FREE FUND AVAILABLE OF RS. 18.43 LACS IN THAT YEAR. THE TRIBUNAL IN THAT YEAR FOLLOWED THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. RADICO KHAITAN LTD., 274 ITR 354 A ND HELD THAT NO DISALLOWANCE OF INTEREST IS CALLED FOR WHEN INTEREST FREE FUND AVAILABLE IS MORE THAN INTEREST FREE ADVANCES GIVEN. HENCE, E FEEL THAT IN THE ABSENCE OF THE FIGURES OF AVAILABILITY OF INTEREST FREE FUNDS, THE MATTER HAS TO GO BACK TO THE A. O. FOR AFRESH DECISION AFTER EXAMINING THIS ASPECT. HENCE, WE SET ASIDE THE ORDER OF LEARNED CIT (A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO A.O. FOR AFRESH DECISION IN 3 THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KU MAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 /0 7 /201 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR