DCIT, CIR-2(1), KOLKATA, Kolkata V. M/s Axsys Technologies Ltd., Kolkata

ITA 827/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1669 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Keywords: Depreciation; Benefit of exemption; Commercial expediency
• Section: 2

Judgement Text

1 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAW SEEM AHMED, AM ] ITA NO.827/KOL/2015 ASSESSMENT YEAR : 2010-11 D.C.I.T., CIRCLE-2(1), -VERSUS- M/S. AXSYS TE CHNOLOGIES LTD. KOLKATA KOLKATA (PAN:AAGCA 4666 F) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI SAURABH KUMAR, ADDL. CI T(DR) FOR THE RESPONDENT: SHRI SUBASH AGARWAL, ADVOCATE DATE OF HEARING : 21.08.2017. DATE OF PRONOUNCEMENT : 25.08.2017. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 09.02.2015 OF CIT(A)-1, KOLKATA RELATING TO A.Y.2010-11. 2. GROUND NO.1 RAISED BY THE REVENUE READS AS F OLLOWS :- 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 1,87, 72,484/- CLAIMED AS EXEMPT U/S. 10A ON ACCOUNT OF INCOME FROM EXPORT OF SOFTWARE & IT ENABLED SERVICE. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSI NESS OF SOFTWARE DEVELOPMENT AND RENDERING OTHER IT SERVICES. FOR A.Y.2010-11 THE AS SESSEE CLAIMED THAT A SUM OF RS.1,87,72,484/- DOES NOT FORM PART OF THE TOTAL IN COME UNDER THE ACT AND EXEMPT U/S 10A OF THE INCOME TAX ACT, 1961 (ACT). UNDER THE PR OVISION OF SECTION 10A OF THE ACT, PROFITS AND GAINS DERIVED BY AN UNDERTAKING FR OM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE SHALL BE ALLOWED AS A DEDUCTIO N WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR A PERIOD OF TEN CONSECUT IVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS Y EAR IN WHICH THE UNDERTAKING BEGINS MANUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR C OMPUTER SOFTWARE. ONE OF THE CONDITIONS FOR MAKING EXEMPTION U/S 10A OF THE ACT AS LAID DOWN IN SECTION 10A(2)(II) OF THE ACT IS THAT THE UNDERTAKING WHICH CLAIMS EXEMPTION U/S 10A OF THE 2 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11 ACT SHOULD NOT HAVE BEEN FORMED BY SPLITTING UP OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. ACCORDING TO THE AO IN A.Y.20 09-10 THE ASSESSEE HAD CLAIMED EXEMPTION U/S 10A OF THE ACT AND IN THAT YEAR THE E XEMPTION SO CLAIMED BY THE ASSESSEE WAS DENIED ON THE GROUND THAT THE ASSESSEE WAS FORMED BY SPLITTING UP OR RECONSTRUCTION OF AN EXISTING BUSINESS IN THE NAME AND STYLE OF M/S VISION COMPTECH INTEGRATORS LTD. FOLLOWING THE VIEW TAKEN IN A.Y.20 09-10 THE AO DENIED THE BENEFIT OF EXEMPTION U/S 10A OF THE ACT TO THE ASSESSEE IN THE PRESENT ASSESSMENT YEAR ALSO. 4. BEFORE CIT(A), THE ASSESSEE POINTED OUT THAT ITS BUSINESS WAS COMPLETELY SEPARATE AND DISTINCT FROM THE BUSINESS OF M/S VISION COMPTE CH INTEGRATORS LTD AND BROUGHT THE FOLLOWING FACTS TO THE NOTICE OF CIT(A): I)IT IS CARRYING ON ITS BUSINESS FROM ASHRAM BUILDI NG, 5TH FLOOR, GN 34/2, SALT LATE, SECTOR-V, KOLKATA - 700 091. THUS, IT IS A PH YSICALLY SEPARATE INDUSTRIAL UNDERTAKING. WHILE VISION COMPTECH INTEGRATORS LTD. OPERATES FRO M PEKON BUILDING, 4TH FLOOR, BLOCK EP, PLOT Y-13, SALT LAKE SECTOR - V, K OLKATA - 700091. II) IT IS DULY REGISTERED WITH STP AUTHORITIES UNDE R THE SCHEME OF GOVT. OF INDIA AS AN INDEPENDENT UNIT. III) IT HAS PURCHASED AND INSTALLED NEW PLANT AND M ACHINERY OF SUBSTANTIAL GROSS VALUE OF RS. 310.98 LACS TILL 31.03.2011 COMPRISING OF :- COMPUTER & PERIPHERALS,' GROSS VALUE (RS. ) COMPUTER DESKTOPS 21,97,278 COMPUTER NETWORKING 17,05,024 COMPUTER SOFTWARE 1,38,82,260 LAPTOP 2,86,053 PRINTER 1,14,084 PROJECTOR 58,500 SCANNER 12,87,426 SERVER 4,19,686 UPS 12,17,947 BESIDES TO AFORESAID IT HAD ACQUIRED/INSTALLED SUBS TANTIAL INFRASTRUCTURAL FACILITIES LIKE FURNITURE, FITTINGS, ELECTRICAL INSTALLATION, OFFICE EQUIPMENTS ETC TO SMOOTHLY CARRY ON THE SAID BUSINESS. 3 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11 THUS, IT WAS EQUIPPED WITH ALL BASIC INFRASTRUCTURE TO CARRY ON SAID BUSINESS INDEPENDENTLY. THERE WAS NO TRANSFER OF ANY FIXED A SSETS FROM VISION. IV) IT HAS ITS OWN BANK FINANCING ARRANGEMENT IN RE GARD TO TERM LOAN AS WELL AS PACKING CREDIT. THE CLOSING BALANCE OF SECURED LOAN S WERE AS FOLLOWS FOR THE YEAR UNDER APPEAL AND IN IMMEDIATELY PRECEDING YEAR. 31.03.2011 31.03.2010 TERM LOAN 73.84 96.35 PACKING CREDIT 273.69 297.15 347.53 393.50 V) IT'S BUSINESS OF EXPORT OF SOFTWARE AND I. T. EN ABLED SERVICES CARRIED ON DURING THE YEAR IS ELIGIBLE FOR DEDUCTION U/S 10A 5. AS REGARD TO THE OBSERVATION OF LD. AO. IN ASST YEAR 2009-10 FOR TRANSFERRING OF STAFF OF VISION, IT WAS POINTED OUT THAT PERSONNEL MAY LEAVE ONE UNIT AND JOINT ANOTHER UNIT. FURTHER, IT WAS POINTED OUT THAT IT WAS JUDIC IALLY A SETTLED PROPOSITION THAT EVEN IF SOME EMPLOYEES ARE COMMON TO THE OLD AND NEW UNIT, IT WILL NOT BE A BAR ON ELIGIBILITY OF DEDUCTION U/S 10A AS THAT DOES NOT TANTAMOUNT OF SPLITTING UP OR RECONSTRUCTION OF BUSINESS. EMPLOYING OF PERSONNEL IS NOT THE CRITERI ON OR CONDITION FOR ALLOWING/NOT ALLOWING DEDUCTION U/S 10A. IT WAS REITERATED THAT THE ASSESSEE WAS AN INDEPENDENT ESTABLISHMENT SEPARATE FROM VISION AND IS NOT THE P ART OF THE VISION. IT WAS REITERATED THAT THE ASSESSEE WAS A COMPLETELY NEW INDUSTRIAL U NDERTAKING AFTER TAKING ITS OFFICE IN SECTOR - V, SALT LAKE ON LEASE AND ACQUIRING IT OWN PLANT & MACHINERIES, STERTED ITS OWN BUSINESS. IT WAS EMPHASISED THAT NO PLANT & MACHINERY WERE TRANSFERRED FROM VISION. IT HAS SEPARATE BOARD OF DIRECTORS. IT HAS PROCURED ITS REGISTRATION FROM STP AUTHORITI ES GOVT. OF INDIA. PLACE OF BUSINESS OF APPELLANT AND THAT OF VISION A RE ALTOGETHER DIFFERENT. IT WAS THUS ARGUED THAT THE BUSINESS OF THE ASSESSE E CANNOT BE TERMED AS 'FORMED BY SPLITTING UP OR RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE'. SINCE IT IS A NEW PHYSICALLY IDENTIFIABLE UNDERTAKING EXIST ON ITS OW N AS A VIABLE UNIT SEPARATE AND DISTINCT FROM THE VISION COMPTECH INTEGRATORS LTD. THE ASSESSEE ALSO BROUGHT TO THE NOTICE OF THE CIT(A) THAT IN A.Y.2009-10 CIT(A) -I, KOLKATA IN HIS ORDER DATED 4 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11 09.08.2012 FOR A.Y.2009-10 HELD THAT THE ASSESSEES CLAIM FOR EXEMPTION U/S 10A OF THE ACT WAS TO BE ALLOWED. 6. THE CIT(A) ON A CONSIDERATION OF THE ABOVE SUBM ISSIONS FOUND THAT CIT(A)-I, KOLKATA IN ASSESSEES OWN CASE IN HIS ORDER DATED 0 9.08.2012 FOR A.2009-10 GAVE THE FOLLOWING FINDINGS :- AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT ORDE R AND THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, IT IS NOTICED THAT THE ASSES SING OFFICER, DISALLOWED THE CLAIM OF ASSESSEE COMPANY AMOUNTING TO RS. 74,16,57 6/- U/S L0A OF THE ACT, SINCE THE APPELLANT COMPANY WAS FORMED BY SPLITTING UP OR BY RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE IN THE NAME OF VISION COMPTECH INTEGRATORS LTD.(VCIL) AND' SOME SOFTWARE PERSONNEL WERE SHIFTE D FROM VCIL TO ASSESSEE COMPANY AND ACCORDINGLY IT DID NOT FULFIL THE CONDI TIONS LAID DOWN IN SECTION 10A(2)(II) OF THE I. T. ACT. ASSESSEE IS A REGISTER ED UNIT UNDER SOFTWARE TECHNOLOGY PARK SCHEME OF GOVT. OF INDIA AS PER CER TIFICATE ISSUED ON 05.12.2007 AND ACQUIRED FIXED ASSETS TO THE TUNE OF RS.2.57 CRORES INCLUDING COMPUTER HARDWARE IN THE 1 ST YEAR OF OPERATION ENDING ON 31.03.2008 AND IN THE FINANCIAL YEAR UNDER CONSIDERATION FURTHER ACQUIRED FIXED ASSETS OF RS.31,08,215/- AND TOTAL EXPORTS FROM SALE OF SOFTWARE AND IT ENAB LED SERVICES IN THE YEAR WERE RS. 11.56 CRORES AND IT CLAIMED DEDUCTION U/S 10A A S PER AUDIT REPORT IN FORM NO. 56 ASSESSING OFFICER DID NOT DISPUTE THE FACT T HAT NO PLANT & MACHINERY WERE TRANSFERRED TO ASSESSEE COMPANY FROM VCIL AND THE P HYSICAL PLACE OF BUSINESS AND THE BOARD OF DIRECTORS IN THE TWO COMPANIES WER E DIFFERENT. THESE TWO COMPANIES WERE COMPLETELY SEPARATE AND DISTINCT. TH ERE IS NO RESTRICTION IN SECTION 10A(2)(II) REGARDING USE OF HUMAN RESOURCES . SUCH USE OF HUMAN RESOURCES BY THIS APPELLANT OF THE EMPLOYEES WHO AR E WORKING EARLIER WITH VCIL DOES NOT AMOUNT TO SPLITTING UP OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE AS PER SECTION 10A(2)(II). HENCE, GROUND NOS, 1,2, AND 3 ARE ALLOWED. 7. FOLLOWING THE VIEW TAKEN BUY CIT(A) IN ASSESSE ES OWN CASE FOR A.Y.2009-10 THE CIT(A) DIRECTED THE AO TO ALLOW THE CLAIM OF EXEMPT ION U/S 10A OF THE ACT TO THE ASSESSEE. 8. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 9. AT THE TIME OF HEARING THE LD. COUNSEL FOR TH E ASSESEE BROUGHT TO OUR NOTICE THAT AS AGAINST THE ORDER OF CIT(A) FOR A.Y.2009-10 DATED 0 9.08.2012, THE REVENUE PREFERRED AN APPEAL BEFORE HONBLE ITAT IN ITA NO.1639/KOL/20 12 AND THE TRIBUNAL BY ITS 5 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11 ORDER DATED 11.05.2016 WAS PLEASED TO CONFIRM THE D ECISION OF CIT(A). THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF CIT(A) :- 4.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. THE ISSUE BEFORE US IS THAT WHETHER THE AXSYS TECHNOLOGIES PVT. LTD HAS BEEN FORMED BY RECONSTRUC TION OR NOT. THIS IS BECAUSE SOME EMPLOYEES WERE TRANSFERRED FROM VCIL TO THE AS SESSEE ALONG WITH SOME LIABILITY WHICH WAS SHARED BY THE ASSESSEE COMPANY TOGETHER. THE AO ACCORDINGLY TREATED THAT THE ASSESSEE COMPANY WAS R ECONSTRUCTED AFTER SPLITTING THE VCIL. HOWEVER IN MANY CASES THE COURTS HAVE HEL D THE TRANSFER OF EMPLOYEES AND SHARING THE LIABILITY OF ONE COMPANY DOES NOT A MOUNT TO RECONSTRUCTION. HERE WE ARE REPRODUCING THE CITATION OF SOME CASE LAWS D EALING WITH SIMILAR ISSUES AS UNDER:- I) TEXTILE MACHINERY CORP. LTD. VS. CIT (1977)107 I TR 173 (SC) IT WAS HELD THAT NEW UNDERTAKING MAY MANUFACTURE THE SAME ARTICLES A S MANUFACTURED BY THE EXISTING UNIT. SO CONTENTION OF DR THAT BOTH THE CO MPANIES HAVING SAME NATURE OF BUSINESS AND SO THE ASSESSEE COMPANY HAS BEEN FORME D BY RECONSTRUCTION DOES NOT HOLD GOOD. II) CIT VS.MODI SPINNING AND MANUFACTURING 125 ITR 361 (ALL) IT WAS HELD THAT EVERY CREATION IN BUSINESS IS SOME KIND OF EXPANSIO N AND ADVANCEMENT. IF THE UNDERTAKING IS NEW AND IDENTIFIABLE UNDERTAKING, SE PARATE AND DISTINCT, FROM THE EXISTING BUSINESS THEN IT WILL NOT BE RECONSTRUCTIO N OF BUSINESS ALREADY IN EXISTENCE. III) CIT VS. QUALITY STEEL TUBES (P) LTD. (2006) 28 0 ITR 254 (ALL), WHERE HEAD NOTE AS UNDER:- DEDUCTION UNDER SS. 80HH AND 80JRECONSTRUCTION OF OLD BUSINESSMANUFACTURE OF NEW PRODUCT PARTLY USING EXISTING INFRASTRUCTURETRIBUN AL HAS FOUND THAT THE ASSESSEE HAS SET UP A NEW PROJECT FOR MANUFACTURING 4 INCH DIAMETER BLACK PIPE WHICH IS DIFFERENT FROM 2 INCH DIAMETER PIPE WHICH WAS ALREADY BEING MANUFACTURED BY ITMERELY BECAUSE SOME OF THE MANUFACTURING FACILITIES ARE COMMON, IT DOES NOT ME AN THAT THE NEW PROJECT IS SET UP BY RECONSTRUCTION OR SPLITTING UP OF THE EXISTING BUSI NESSDEDUCTION UNDER SS. 80HH AND 80J ADMISSIBLE IN RESPECT OF THE NEW PROJECTTEXTILE MA CHINERY CORPORATION LTD. VS. CIT 1977 CTR (SC) 151 : (1977) 107 ITR 195 (SC) APPLIED. IN THE CASE OF QUALITY STEEL TUBE LTD. (SUPRA), IT WAS HELD THAT EVEN IF SUBSTANTIAL PERSONS HAVE STARTED THE UNIT THEN IT CANNOT BE CON SIDERED AS RECONSTRUCTION OF THE COMPANY. THERE IS SUBSTANTIAL INVESTMENT IN THE PLANT & MACHINERY IN THE COMPANY. WE ALSO FIND FROM THE RECORDS THAT VCIL WA S STILL FUNCTIONING AND IN SUPPORT OF IT THE LD. AR HAS SUBMITTED THE COPIES O F THE FINANCIAL STATEMENTS AND COPIES OF ITR WHICH ARE PLACED ON RECORD. WE ARE RE LYING ON THE ABOVE JUDGMENTS OF HON'BLE SUPREME COURT AND HON'BLE ALLA HABAD HIGH COURT AND ACCORDINGLY CONCLUDE THAT EVEN THOUGH EMPLOYEES WER E TRANSFERRED FROM VCIL TO ASSESSEE WERE SHARING SOME COMMON LIABILITIES AND T HE SHAREHOLDERS OF BOTH THE 6 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11 COMPANIES ARE SAME, IT CANNOT BE TAKEN AS A GROUND FOR DENYING THE BENEFIT U/S 10A OF THE ACT BY HOLDING THE ASSESSEE AS RECONSTRU CTION COMPANY. THE ASSESSEE I.E. ASXYS TECNOLOGIES PVT. LTD. IS A SEPARATE LEGA L ENTITY WHICH IS NEWLY FORMED AND HAVING ITS OWN PLANT & MACHINERY. HENCE, WE UPH OLD THE ORDER OF LD. CIT(A) AND THIS GROUND OF REVENUE IS DISMISSED. 10. FOLLOWING THE CONCLUSION OF THE TRIBUNAL FO R A.Y.2009-10, WE UPHOLD THE ORDER OF CIT(A). WE MAY ALSO CLARIFY THE BASIS OF DISALLO WANCE IN THE PRESENT ASSESSMENT YEAR IS THE SAME AS IN A.Y.2009-10 AND THEREFORE TH E CONCLUSION ARRIVED AT BY THE TRIBUNAL IN A.Y.2009-10 WILL EQUALLY APPLY IN THE P RESENT ASSESSMENT YEAR. WITH THESE OBSERVATIONS, WE DISMISS GROUND NO.1 RAISED BY THE REVENUE. 11. GROUND NO.2 RAISED BY THE REVENUE READS AS FOLLOWS :- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.10,60,282/ - U/S. 36(1 )(III) OF INCOME TAX ACT, 1961. 12. THE AO DISALLOWED A SUM OF RS.10,60,282/- OU T OF THE INTEREST EXPENSES CLAIMED AS DEDUCTION BY THE ASSESSEE WHILE COMPUTING INCOME FROM BUSINESS. THE ADDITION WAS MADE BY THE AO ON THE GROUND THAT LOANS ON WHIC H INTEREST WAS PAID BY THE ASSESSEE AND CLAIMED AS A DEDUCTION HAVE NOT BEEN U SED FOR THE PURPOSE OF BUSINESS BUT HAD BEEN GIVEN AS INTEREST FREE LOANS TO THE AS SESSEES HOLDING COMPANIES NAMELY M/S VISION COMPTECH INTEGRATORS LTD., M/S. EUOLIX S HIPBUILDERS LTD. M/S. WELLMAN WACOMA LTD AND M/S. MIRADOR COMMERCIAL PVT. LTD. 13. BEFORE CIT(A) THE ASSESSEE POINTED OUT THE F OLLOWING DETAILS WITH REGARD TO THE INTEREST FREE ADVANCES GIVEN TO THE HOLDING COMPANI ES :- NAME OPENING BALANCE CLOSING BALANCE AS ON 01.04.2009 AS ON 31.03.2010 VISION COMPTECH INTEGRATORS LTD. 58,75,910.31 74 ,00,000.81 EUOLIX SHIP BUILDERS LTD. -- 96,050.0 0 MIRADOR COMMERCIAL PVT. LTD. --- 42,00,000.00 WELLMAN WACOMA LTD. 15,26,517.00 15,43,564.00 7 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11 14. IT WAS CONTENDED THAT THE ASSESSEE HAD SUFFICIE NT INTEREST FREE FUNDS WHICH WERE SUFFICIENT AND WERE USED TO GIVE INTEREST FREE ADVA NCES TO HOLDING COMPANIES. THE CIT(A) FOUND THAT THE NET PROFIT AFTER TAX INCLUDIN G DEPRECIATION OF THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR WAS A SUM OF RS.2,27,81, 969/-. THE TOTAL AMOUNT OF INTEREST FREE ADVANCES GIVEN TO THE HOLDING COMPANY WAS A SU M OF RS.1,32,39,615/-. THE CIT(A) ON A CONSIDERATION OF THE ABOVE FIGURES WAS OF THE VIEW THAT THE INTEREST FREE LOANS WERE GIVEN BY THE ASSESSEE NOT OUT OF BORROWE D FUNDS OUT OF OWN FUNDS THAT NO DISALLOWANCE CAN BE MADE U/S 36(1)(II) OF THE ACT. THE CIT(A) ALSO MADE A REFERENCE TO THE DECISION OF THE HONBLE ITAT, KOLKATA 3 RD MEMBER DECISION IN THE CASE OF S.P.JAISWAL ESTATES (P)LTD VS ACIT 140 ITD 19 (KOL) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UT ILITIES & POWER LTD. 313 ITR 340 (BOM). 15. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS PREFERRED GROUND NO.2 BEFORE THE TRIBUNAL. 16. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE IN A.Y.2009-10 IN ITA NO.1639/KOL/2012 ORDER DATED 11.05.2016. THE LD. DR RELIED ON THE ORDER OF AO. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF CIT(A) AND ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2009-10. 17. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. THE FINDINGS OF CIT(A) REGARDING THE AVAILABILITY OF OW N FUNDS IN THE FORM OF PROCEEDS IS NOT DISPUTED BY THE REVENUE. BESIDES THE ABOVE IT I S ALSO NOT DISPUTED THAT THE ENTITY TO WHICH LOANS WERE GIVEN WERE SISTER CONCERNS AND THE RE WAS COMMERCIAL EXPEDIENCY IN GIVING INTEREST FREE LOANS TO THE SISTER CONCERNS. THESE FACTS ARE NOT BEING DISPUTED BY THE REVENUE BEFORE THE TRIBUNAL NOR ANY OTHER ARGUM ENTS ADVANCED ON BEHALF OF THE REVENUE. IN THIS CIRCUMSTANCE, WE ARE OF THE VIEW T HAT THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UT ILITIES & POWER LTD. (SUPRA) WOULD BE APPLICABLE. IT HAS BEEN HELD BY THE HONBL E BOMBAY HIGH COURT IN THE AFORESAID DECISION THAT WHERE INTEREST FREE FUNDS A RE AVAILABLE WITH AN ASSESSEE WHICH ARE MORE THAN INTEREST FREE ADVANCES MADE TO THE SU BSIDIARY COMPANIES THEN THE 8 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11 PRESUMPTION SHOULD BE THAT INTEREST FREE ADVANCES W ERE GIVEN OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. BESIDES THE ABOVE, IN THE CASE OF S.P.JAISWAL ESTATES (P)LTD VS ACIT (SUPRA) IT HAS BEEN HELD BY THE TRIB UNAL THAT WHERE LOANS HAVE BEEN ADVANCED OWING TO COMMERCIAL EXPEDIENCY ESPECIALLY TO SISTER CONCERNS, IT CANNOT BE SAID THAT BORROWED FUNDS HAVE NOT BEEN USED FOR THE PURPOSE OF BUSINESS BY THE ASSESSEE. IN THE ABOVE FACTUAL AND LEGAL POSITION, WE ARE OF THE VIEW THAT THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE B Y THE AO. THE ORDER OF THE CIT(A) IS THEREFORE CONFIRMED AND GROUND NO.2 RAISED BY TH E REVENUE IS ALSO DISMISSED. 18. IN THE RESULT THE APPEAL BY THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 25.08.2017. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25.08.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. AXSYS TECHNOLOGIES LTD., BLOCK-EP, SECTOR-V, SALT LAKE, KOLKATA-700091. 2.D.C.I.T., CIRCLE-2(1), KOLKATA.. 3. CIT(A)-I, KOLKATA. 4. CIT-I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/DDO, ITAT KOLKATA BENCHES 9 ITA NO.827/KOL/2015 M/S. AXSYS TECHNOLOGIES LTD. A. Y. 2010-11