M/s Torque Pharmaceuticals Pvt. Ltd., Chandigarh V. DCIT, Circle 1(1), Chandigarh

ITA 970/CHANDI/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4912 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Notional interest

Judgement Text

! , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 970/CHD/2017 / ASSESSMENT YEAR : 2012-13 M/S TORQUE PHARMACEUTICALS PVT LTD., PLOT NO. 693, INDUSTRIAL AREA, PHASE-2, CHANDIGARH VS. ! THE DCIT, CIRCLE-1(1), CHANDIGARH ' # ./ PAN NO: AABCT1244P '$/ APPELLANT &' '$ / RESPONDENT ()*+ /ASSESSEE BY : SH. PARIKSHIT AGGARWAL, CA *+ / REVENUE BY : SH. RITESH PARMAR, SR. DR , -*) .# /DATE OF HEARING : 24.09.2019 /0 *) .# / DATE OF PRONOUNCEMENT : 21. 10.2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 31.03.2017 OF THE COMMISSIONER OF INCOM E TAX (APPEALS )- 1, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)] . 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN PARTLY SUSTAINING THE ADDITION ON ACCOUNT OF NOTIONAL INTEREST ON BORROWED CAPITAL USED FOR CAPITAL WORK ITA NO. 970-CHD-2017- M/S TORQUE PHARMACEUTICALS (P) LTD., CHANDIGARH 2 IN PROGRESS U/S 36(1)(III) OF THE INCOME TAX ACT, 1961, WITHOUT PROPERLY APPRECIATING THE FACTS, SUPPORTING EVIDENCE AND SUBMISSIONS PLACED ON RECORD. THE CLAIM BE ALLOWED AND THE ADDITION BE DELETED. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND AND DELETE ANY OF THE GROUND OF APPEAL BEFORE THE SAME IS TAKEN FOR FINAL HEARING. 3. THE SOLE GRIEVANCE RAISED BY THE ASSESSEE IN THIS APPEAL IS RELATING TO THE PART SUSTENANCE OF THE ADDITION BY THE CIT(A ) OUT OF THE TOTAL ADDITION MADE BY THE ASSESSING OFFICER U/S 36(1)(II I) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). THE ASSESSING OFFI CER MADE THE IMPUGNED ADDITION OF RS. 91,01,423/- ON THE GROUND THAT THE ASSESSEE HAD USED BORROWED FUNDS FOR THE SET UP OF A NEW UNI T. IN THE APPEAL BEFORE THE CIT(A), THE ASSESSEE PLEADED THAT THE AS SESSEE WAS POSSESSED OF SUFFICIENT OWN FUNDS TO MEET THE CAPITAL WORK IN PROGRESS. THAT NO BORROWED FUNDS WERE USED. THAT SOME OF THE FUNDS W ERE USED OUT OF THE CURRENT ACCOUNT WHICH WERE DEPOSITED OUT OF THE SAL E PROCEEDS OF THE ASSESSEE AND NOT OUT OF THE BORROWED FUNDS. THAT TH E LD. CIT(A) PARTLY ACCEPTED THE CONTENTION OF THE ASSESSEE, HOWEVER, OBSERVED THAT THE ASSESSEE HAD ALSO USED THE CASH CREDIT LIMIT FOR CA PITAL INVESTMENT. HE, ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO RECAL CULATE THE OWN FUNDS / THOSE INVESTED FROM THE CURRENT ACCOUNT OUT OF THE TOTAL INVESTMENTS MADE AND WORK OUT THE PROPORTIONATE DISALLOWANCE AC CORDINGLY. ITA NO. 970-CHD-2017- M/S TORQUE PHARMACEUTICALS (P) LTD., CHANDIGARH 3 4. BEING AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) , THE ASSESSEE HAS COME IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET, HAS SUBMITTED THAT THE LD. CIT(A) MISTAKENLY OBSERVED THAT THE CASH CREDIT ACCOUNT WAS USED OF INVESTMENT. THAT NO AMOUNT WAS USED FROM TH E CASH CREDIT LIMIT FOR THE CAPITAL WORK IN PROGRESS. THE LD. COUNSEL, THEREFORE, HAS SUBMITTED THAT THE MATTER BE REMANDED TO THE ASSESS ING OFFICER FOR VERIFICATION OF THE ACTUAL FACTS ON THIS ASPECT. 6. THE LD. DR, ON THE OTHER HAND, HAS RELIED UPON T HE FINDINGS OF THE CIT(A). 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. SINCE THE ASSESSEE IS DISPUTING THE FACT THAT NO BORROWED FUNDS WERE USED FOR MAKING THE CAPITAL INVESTMENT AND THAT OBSERVATION OF THE LOW ER AUTHORITIES THAT THE CASH CREDIT LIMIT WAS USED FOR CAPITAL INVESTMENT W AS WRONG AND THAT REQUIRES FACTUAL VERIFICATION AT THE HANDS OF THE A SSESSING OFFICER, HENCE, WE RESTORE THIS MATTER ON THIS LIMITED ASPEC T TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AND EXAMINE THE ABOVE C ONTENTION OF THE ASSESSEE AND DECIDE THIS LIMITED ISSUE ACCORDINGLY AS PER THE PROVISIONS OF THE LAW. ITA NO. 970-CHD-2017- M/S TORQUE PHARMACEUTICALS (P) LTD., CHANDIGARH 4 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.10.2019. SD/- SD/- ( . . / N.K. SAINI) ( ! ' / SANJAY GARG) #$% / VICE PRESIDENT &' / JUDICIAL MEMBER DATED : 21.10.2019 .. 2*&)3454) / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &' '$ / THE RESPONDENT 3. , 6) / CIT 4. , 6) ( )/ THE CIT(A) 5. 47 &)8 , . 8 , 9:;< / DR, ITAT, CHANDIGARH 6. ;= - / GUARD FILE 2 , / BY ORDER, > / ASSISTANT REGISTRAR