M/S VSN INTERNATIONAL, Indore V. THE ACIT 4(1), Indore

ITA 899/IND/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5695 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 30-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: C P RAWKA

Judgement Text

M/S V.S.N. INTERNATIONAL ITA NO. 899/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. 899/IND/2016 ASSESSMENT YEAR: 2012-13 M/S VSN INTERNATIONAL INDORE PAN AAJFV 2824J :: APPELLANT VS ACIT 4(1) INDORE :: RESPONDENT ASSESSEE BY SHRI C.P. RAWKA REVENUE BY SHRI R.P. MOURYA ! ' #$ DATE OF HEARING 7.10.2016 %&'( #$ DATE OF PRONOUNCEMENT 7.10.2016 * O R D E R PER SHRI D.T. GARASIA, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 30.6.2016 OF THE LEARNED CIT(A)-II, INDORE. M/S V.S.N. INTERNATIONAL ITA NO. 899/IND/2016 2 2. THE ONLY GROUND IN THIS APPEAL IS DISALLOWANCE OF INTEREST. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE FILED THE RETURN OF INCOME ON 2.8.2013. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON PERUSAL OF PROFIT AND LOS S ACCOUNT, THE ASSESSEE HAS CLAIMED RS.898603/- ON ACCOUNT OF INTEREST EXPENSES FOR THE LOAN EXPECT BANK AND FURN ISHED A LIST OF PERSONS FROM WHOM LOAN WAS TAKEN. IT COMES TO RS.50,84,640/-. THE ASSESSEE HAS GIVEN LOAN AND ADVANCE OF RS.42,15,413/- TO VARIOUS ENTITIES INCLUDING SIST ER CONCERN WITHOUT INTEREST AND SHOWED THE INTEREST REC EIVED OF RS.2,50,000/- ONLY, THEREFORE, THE ASSESSING OFF ICER WAS OF THE VIEW THAT THE ASSESSEE HAS GIVEN THE ADVANCE TO HIS FAMILY MEMBERS WHICH READS AS UNDER :- SL.NO. NAME AMOUNT PURPOSE RATE OF INTEREST 1 VERSHA BIDASARIA 165000 ADVANCE NIL 2 BIDASARIA MILL PVT. LTD. 279274 ADVANCE NIL 3 BIDASARIA EXPORT P.LTD. 290364 ADVANCE NIL M/S V.S.N. INTERNATIONAL ITA NO. 899/IND/2016 3 4 SMT. ANJU BIDASARIA 13866 ADVANCE NIL TOTAL 748504 THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE I NTEREST. THE MATTER WAS CARRIED IN APPEAL AND THE LEARNED CIT(A) HAS CONFIRMED THE SAME. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAS GIVEN LOAN TO VARSHA BIDASARIA AGAINST THE SERVICES PROVIDED FOR ACCOUNTING OF THE FIRM. SHE IS QUALIFIED UPTO CA FINAL GROUP-I, THEREFORE, THIS ADVANCE WAS GIVEN TO HIM FOR HER SERVICES. WE ARE OF THE VIEW THAT VARSHA BIDASARIA IS C LOSE RELATIVE OF THE ASSESSEE. SIMILARLY, FOR THE ADVANCE T O MANJU BIDASARIA, THE ASSESSEE DID NOT GIVE ANY EXPLANATION WHILE THIS ADVANCE WAS GIVEN TO HER FAMILY MEMBERS. WE FIND T HAT IN CASE OF BOTH THESE ADVANCES, THE ASSESSEE COULD NOT PROVE ANY JUSTIFICATION FOR ADVANCING THE SAME. THE M/S V.S.N. INTERNATIONAL ITA NO. 899/IND/2016 4 ASSESSEE HAS GIVEN INTEREST BEARING FUNDS FOR RUNNING THE BUSINESS WHICH COMES TO RS.50,84,640/- AND THE ASSESS EE HAS GIVEN INTEREST FREE ADVANCE TO THESE PERSONS WHICH IS NOT AS PER THE LAW. THEREFORE, WE DISALLOW THE SAME. 4. IN RESPECT OF BIDASARIA MILLS AND BIDASARIA EXPORT PVT. LTD. THE ASSESSEE HAS GIVEN THIS ADVANCE TO SICK COMPANY AND PRINCIPAL RECOVERY IS DOUBTFUL, THEREFORE , THE INTEREST IS NOT CHARGED. THEREFORE, WE ARE OF THE VIE W THAT THE REVENUE IS NOT JUSTIFIED IN DISALLOWING THE CLAIM . THEREFORE, WE ALLOW THE CLAIM. SIMILARLY, IN RESPECT O F ADVANCE TO BIDASARIA EXPORT, THIS FIRM IS CLOSED AND THE ASSESSEE IS UNABLE TO RECOVER THE PRINCIPAL AMOUNT, THEREFORE, NO INTEREST HAS BEEN CHARGED, THEREFORE, T HE REVENUE IS NOT JUSTIFIED IN DISALLOWING THE CLAIM. WE , THEREFORE, ALLOW THE SAME. 5. WE FURTHER FIND THAT THE ASSESSEE HAS LENT THE AMOUNT OF RS.21,00,000/- TO JAIDEEP ISPAT & ALLOYS PVT . M/S V.S.N. INTERNATIONAL ITA NO. 899/IND/2016 5 LTD. AND CHARGED INTEREST @ 12% ONLY. THE ASSESSEE HAS TAKEN LOAN @ 15.6% BUT IT HAS CHARTED INTEREST @ 12%. SIMILARLY, THE ASSESSEE FIRM LENT RS.11,96,484/- TO G AMUT ELECTRONICS PVT. LTD. ON VARIOUS DATES AND CHARGED INTE REST @ 12%. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE DIRECT THE A.O. TO ALLOW THE CLAIM OF INTEREST @ 13.5 % IN BOTH THESE CASES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 7 TH OCTOBER, 2016. SD/- SD/-8 ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER (') / DATED : 28 OCTOBER, 2016. DN/ M/S V.S.N. INTERNATIONAL ITA NO. 899/IND/2016 6