M/S KHANDWA INDUSTRIES PVT. LTD., Khandwa V. THE ACIT, Khandwa

ITA 884/IND/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5690 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 23-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: S N AGRAWAL

Judgement Text

KHANDWA INDUSTRIES ITA NO 884/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO.884/IND/2016 ASSESSMENT YEAR: 2010-11 M/S KHANDWA INDUSTRIES PVT. LTD KHANDWA PAN AADCK 41403G :: APPELLANT VS ACIT KHANDWA :: RESPONDENT REVENUE BY SHRI R.P.MOURYA ASSESSEE BY SHRI SN AGRAWAL & PANKAJ MOGRA ! ' #$ DATE OF HEARING 6.10.2016 %&'( #$ DATE OF PRONOUNCEMENT 6.10.2016 * O R D E R PER SHRI D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-22, NEW DELHI, CAMP AT IN DORE, DATED 14.6.2016. KHANDWA INDUSTRIES ITA NO 884/IND/2016 2 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE FIL ED THE RETURN OF INCOME ON 15.9.2010. THE ASSESSEE DERI VES INCOME FROM GINNING AND PRESSING OF COTTON. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT T HE ASSESSEE HAS ADVANCED MONEY TO CERTAIN PERSONS OUT OF INTEREST BEARING LOANS. HOWEVER, THE ASSESSEE HAS NOT CHARGED IN ON THESE ADVANCES WHICH ARE AS UNDER :- NAME DATE AMOUNT TOTAL VIKASH SHARMA OPENING BALANCE 25,000 25,000 QUICK AND INSTA FOODD 22.1.2010 27.1.2010 1.2.2010 15.3.2010 2,00,000 8,00,000 5,00,000 5,00,000 20,00,000 ANGEL COMMODITY BROKING PVT. LTD. OPENING BALANCE 5,00,000 5,00,000 MRG INFRASTRUCTURE PVT. LTD. 11.5.2009 19.3.2010 RETURNED 8,00,000 4,00,000 4,00,000 UMASHANKAR HARI PRASAD 2.6.2009 10.6.2009 6.7.2009 8.7.2009 15.7.2009 2,00,000 2,00,000 3,00,000 4,00,000 4,00,000 15,00,000 KHANDWA INDUSTRIES ITA NO 884/IND/2016 3 THEREFORE, SINCE THE ASSESSEE HAS NOT CHARGED INTEREST , THE ASSESSING OFFICER HAS DISALLOWED INTEREST @ 12% ON DAI LY CUT BASIS WHICH COMES TO RS.3,06,890/-. ON APPEAL, TH E LEARNED CIT(A) CONFIRMED THE ADDITION. NOW THE ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS INTEREST FREE FUNDS BY WAY OF SHARE CAPITAL, RESERVE AND SURPLUS WHICH COMES TO RS.3,84,75,493/- WHEREAS THE INTEREST BEARING FUNDS T OTAL COMES TO RS.15,75,37,065/-. THE LEARNED CIT(A) HAS MAINTAINED THE ADDITION OFRS.2,33,061/-. THE ASSESSEE H AS NOT DIVERTED INTEREST BEARING FUNDS FOR NON-BUSINESS PURPOSES. AGAINST THE LOAN OFRS.63867323/- THE AMOUNT OF RS.78394477/- WAS INVESTED BY THE ASSESSEE TOWARDS FIX ED ASSETS. THE ASSESSEE HAS GIVEN MOST OF THE ADVANCES PRIO R TO JANUARY, 2010,THEREFORE, NO DISALLOWANCE CAN BE MADE. KHANDWA INDUSTRIES ITA NO 884/IND/2016 4 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDER OF THE LEARNED CIT(A) 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SI DES. IT IS AN ADMITTED FACT THAT AS PER THE BALANCE SHEET RS.15,77,92,897/- IS APPLICATION OF FUND WHILE UNSECU RED AND SECURED LOANS ARE RS.11,90,61,572/-. MOREOVER, THE ASSESSEE HAS RECEIVED FRESH SHARE CAPITAL OF RS.72 LACS DURING THE YEAR BESIDES THE SHARE PREMIUM OF RS.2.88 CRORES. THE UNSECURED LOAN OFRS.516 CRORES HAS BEEN RECEIVED DURING THE YEAR. THEREFORE, THE UNSECURED L OAN IS INCREASED TO RS.6.7 CRORES. AS AGAINST THIS FUND, TOTAL FUND INCREASED FROM RS.5.6 CRORES TO RS.15.78 CRORES. THE FUND OF RS. 1 CRORE IS LYING IN CASH AND BANK BALANCE. THE C LAIM OF THE ASSESSEE IS THAT THE INTEREST FREE ADVANCE SHOUL D BE CONSIDERED OUT OF SHARE CAPITAL AND SHARE PREMIUM AND NOT FROM THE BORROWED FUNDS. THE SECURED LOAN INCLUDES C ASH CREDIT ACCOUNT BALANCE OF CENTRAL BANK OF INDIA RS.2.7 KHANDWA INDUSTRIES ITA NO 884/IND/2016 5 CRORES AND RS.25 LACS TERM LOAN FROM MPFC. IN THIS BACKGROUND WHEN MAJOR MOVEMENT OF FUND HAS BEEN TAKEN DURING THE YEAR, THE ONLY FUND RECEIVED FROM COMMON HOTCHPOTCH OF FUNDS IN THE INDIVIDUAL FUND LOSES THE IR IDENTITY. THEREFORE, THE LEARNED CIT(A) HAS CONFIRME D THE INTEREST AND THE LEARNED CIT(A) IS JUSTIFIED IN HIS ACTION. THEREFORE, OUR INTERFERENCE IS NOT CALLED FOR. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 6 TH OCTOBER, 2016. SD/- SD/- ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER (') / DATED : 28 OCTOBER, 2016. DN/ KHANDWA INDUSTRIES ITA NO 884/IND/2016 6