DCIT, CHENNAI V. DSM Soft Private Limited, CHENNAI

ITA 863/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8603 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 04-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHADEVAN
• Assessee Lawyers: HEMALATHA
• Keywords: Commercial expediency

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 863/MDS/2016 ( )( / ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI - 600 034. V. M/S DSM SOFT PVT. LTD., NO.1, 15 TH CROSS STREET, SHASTRI NAGAR, ADYAR, CHENNAI - 600 020. PAN : AAACD 3149 A (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI SAHADEVAN, JCIT -.+, / 0 / RESPONDENT BY : MS. HEMALATHA, CA 1 / 2% / DATE OF HEARING : 07.06.2016 3') / 2% / DATE OF PRONOUNCEMENT : 01.09.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1, CHENN AI, DATED 13.01.2016 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DIVERSION OF INTEREST-FREE FUNDS TO GROUP CONCERNS OF THE ASSESSEE. 2 I.T.A. NO.863/MDS/16 3. SHRI SAHADEVAN, THE LD. DEPARTMENTAL REPRESENTAT IVE, SUBMITTED THAT THE ASSESSEE BORROWED FUNDS FROM BAN KS AND OTHERS AND PAID INTEREST. THE ASSESSEE HAS GIVEN INTEREST -FREE LOANS TO SUBSIDIARY COMPANIES. ACCORDING TO THE LD. D.R., I N THE EARLIER ASSESSMENT YEAR, THIS TRIBUNAL EXAMINED THE ISSUE A ND FOUND THAT THE LOANS / ADVANCES WERE PAID ON COMMERCIAL EXPEDI ENCY, THEREFORE, THERE CANNOT BE ANY DISALLOWANCE. THE D EPARTMENT HAS ALREADY FILED AN APPEAL AGAINST THE ORDER OF THIS T RIBUNAL, THEREFORE, ACCORDING TO THE LD. D.R., JUST TO KEEP THE MATTER ALIVE, THE REVENUE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL. 4. ON THE CONTRARY, MS. HEMALATHA, THE LD. REPRESEN TATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE BORROWED FUNDS FOR THE PURPOSE OF BUSINESS AND THE SAME WAS ADVANCED TO SI STER CONCERNS ON COMMERCIAL EXPEDIENCY. THIS TRIBUNAL EXAMINED T HE ISSUE IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2004-05 AN D 2005-06 AND FOUND THAT THE ADVANCE PAID BY THE ASSESSEE WAS FOR COMMERCIAL EXPEDIENCY. REFERRING TO THE ORDER OF T HE ASSESSING OFFICER, THE LD. REPRESENTATIVE SUBMITTED THAT MERE LY BECAUSE THE ORDER OF THIS TRIBUNAL WAS CONTESTED BEFORE THE HIG H COURT, THAT CANNOT BE A REASON FOR NOT FOLLOWING THE ORDER OF T HIS TRIBUNAL. 3 I.T.A. NO.863/MDS/16 THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE AS SESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, AN IDENTICAL ISSUE OF DISALLOWANCE MADE BY THE ASSESSI NG OFFICER WAS EXAMINED BY THIS TRIBUNAL FOR ASSESSMENT YEARS 2004 -05 AND 2005- 06 IN I.T.A. NOS.11 & 12/MDS/2010. THIS TRIBUNAL B Y FOLLOWING THE JUDGMENT OF APEX COURT IN S.A. BUILDERS LTD. V. CIT (2007) 288 ITR 1, FOUND THAT THE ADVANCE MADE BY THE ASSESSEE TO S ISTER CONCERNS WAS FOR COMMERCIAL EXPEDIENCY. ACCORDINGLY, A SIMI LAR DISALLOWANCE OF INTEREST WAS DELETED BY THIS TRIBUN AL BY ORDER DATED 11 TH JUNE, 2010. WHEN THIS ORDER OF THE TRIBUNAL WAS B ROUGHT TO THE NOTICE OF THE ASSESSING OFFICER, HE SIMPLY OBSERVED THAT THE DEPARTMENT IS CONTESTING THE MATTER BEFORE HIGHER F ORUM. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THI S TRIBUNAL PASSED AN ORDER DELETING THE ADDITION ON IDENTICAL CIRCUMS TANCES, THE ASSESSING OFFICER IS BOUND TO FOLLOW THE SAME. MER ELY BECAUSE AN APPEAL IS FILED BEFORE THE HIGH COURT THAT CANNOT B E A REASON FOR NOT FOLLOWING THE ORDER OF THIS TRIBUNAL. THEREFORE, T HIS TRIBUNAL FINDS THAT THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDIT ION MADE BY THE 4 I.T.A. NO.863/MDS/16 ASSESSING OFFICER BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL. IN SUCH CIRCUMSTANCES, THIS TRIBUNAL DO NOT FIND AN Y REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 1 ST SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 1 ST SEPTEMBER, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-1, CHENNAI 4. PRINCIPAL CIT, CHENNAI-1, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.