Riddhi Siddhi Gluco Biols Ltd., Ahmedabad V. The ACIT, Central Circle-2(4), Ahmedabad

ITSSA 16/AHD/2015

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3442 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Proportionate interest; Capital expenditure
• Section: 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER 1. (SS) ./ I.T(SS).A. NO.16/AHD/2015 2. (SS) ./ I.T(SS).A. NO.17/AHD/2015 3. (SS) ./ I.T(SS).A. NO.18/AHD/2015 ( / AYS :2009-10, 2010-11 & 2011-12) RIDDHI SIDDHI GLUCO BIOLS LTD. 701, SAKAR-1 OPP. GANDHIGRAM RAILWAY STATTION ASHRAM ROAD, AHMEDABAD-380 009 / VS. THE ACIT CENTRAL CIRCLE-2(4) AHMEDABAD-380 009 # ./ ./ PAN/GIR NO. : AABCR 3417 Q ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI PRAKASH D. SHAH, AR '#& )( / RESPONDENT BY : SHRI M.S.A. KHAN, CIT-DR *+ ), / DATE OF HEARING 29/09/2017 -./0 ), / DATE OF PRONOUNCEMENT 09/ 10 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN FILED BY THE ASSE SSEE ARE DIRECTED AGAINST THE COMBINED ORDER OF THE COMMISSIONER OF I NCOME TAX(APPEALS)-2, AHMEDABAD [CIT(A) IN SHORT] DATED 28/11/2014 FOR IT(SS)A NO.16, 17 & 18/AHD/20 15 RIDDHI SIDDHI GLUCO BIOLS LTD. VS. ACIT ASST.YEARS 2009-10,2010-11 & 2011-12 - 2 - THE ASSESSMENT YEARS (AYS) 2009-10, 2010-11 & 2011 -12 IN THE MATTER OF ASSESSMENT ORDERS PASSED UNDER S.143(3) R.W.S. 1 53A(1)(B) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT'). 2. IN ALL THESE THREE YEARS, THE FACTS AND QUESTION F OR DETERMINATION ARE BROADLY SIMILAR. THEREFORE, IT(SS)A NO.16/AHD/2015 FOR ASSESSMENT YEAR 2009-10 IS TAKEN AS A LEAD YEAR FOR THE SAKE OF CONVENIENCE. 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE I N IT(SS)A NO.16/AHD/2015 READ AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN LAW AND FACTS BY NOT QUASHING THE ORDER PA SSED BY THE LEARNED ASSESSING OFFICER, AS THE PROCEEDINGS UNDER SECTION 132, 153A AND OTHER PASSED BY THE LEARNED AO IS WITHOUT JURISDICTION AND BAD IN LAW. WITHOUT PREJUDICE TO GROUND NO.1: 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE ACTION OF THE LEARNED AO IN MAKING DISALLOWANCE OF INTEREST EXPENSES OF RS.3 2,82,282/- BY APPLYING PROVISION TO SECTION 36(1)(III) OF RS.32,8 2,282/- THOUGH THE SAME HAS BEEN DELETED BY THE LEARNED CIT(A) IN THE APPEAL AGAINST THE ORDER PASSED U/S.143(3) OF THE ACT AND THEREFORE THE LEARNED ASSESSING OFFICER SHOULD BE DIRECTED TO ALL OW THE SAID INTEREST EXPENSES, WHILE COMPUTING THE TOTAL INCOME . 4. GROUND NO.1 IS NOT PRESSED BY THE LD.AR FOR THE ASSESSEE AT THE TIME OF HEARING AND ACCORDINGLY TREATED AS DISMISSE D. IT(SS)A NO.16, 17 & 18/AHD/20 15 RIDDHI SIDDHI GLUCO BIOLS LTD. VS. ACIT ASST.YEARS 2009-10,2010-11 & 2011-12 - 3 - 5. GROUND NO.2 CONCERNS DISALLOWANCE OF INTEREST EX PENSES OF RS.32,82,282/- ON THE TOUCHSTONE OF PROVISO TO SEC TION 36(1)(III) OF THE ACT. THE LD.AR FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT IDENTICAL ISSUES AROSE TOWARDS DISALLOWANCE OF INTEREST EXPEN DITURE BY INVOKING PROVISO TO SECTION 36(1)(III) IN AY 2009-10 BEFORE THE COORDINATE BENCH OF |ITAT IN ASSESSEES OWN CASE IN ITA NO.278/AHD/2 012 ORDER DATED 12/06/2015. 6. THE LD.AR SUBMITTED THAT THE ISSUE HAS BEEN SETT LED IN FAVOUR OF ASSESSEE BY THE COORDINATE BENCH. THE APPEAL FILED UNDER S.260A BEFORE THE HONBLE JURISDICTIONAL HIGH COURT BY THE REVENU E AGAINST THE AFORESAID ORDER OF ITAT HAS ALSO BEEN DISMISSED IN TAX APPEAL NO.956 OF 2015. THE LD.AR SUBMITTED THAT THE ASSESSING OF FICER (AO) HAS MADE THE DISALLOWANCE OF INTEREST ONLY TO KEEP THE ISSUE ALIVE ALONE AND THEREFORE NO SUBSTANTIVE APPEAL OF THE REVENUE SUBS ISTS. 7. THE LD.DR FOR THE ASSESSEE RELIED UPON THE ORDER OF THE CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE AUTHORITIES BELOW AND PRECEDENT CITED. THE AO HAS INVOKED PROVISO TO SECTION 36(1)(III) AND DISALLOWED PROPOR TIONATE INTEREST EXPENDITURE AS POSSIBLY ATTRIBUTABLE ON ACCOUNT OF FUNDS UTILIZED TOWARDS CORRESPONDING CAPITAL WORK IN PROGRESS OF CAPITAL N ATURE. IT IS THE CASE OF IT(SS)A NO.16, 17 & 18/AHD/20 15 RIDDHI SIDDHI GLUCO BIOLS LTD. VS. ACIT ASST.YEARS 2009-10,2010-11 & 2011-12 - 4 - THE REVENUE THAT THE PROPORTIONATE INTEREST IS REQU IRED TO BE EXCLUDED BEING IN THE NATURE OF CAPITAL EXPENDITURE ON ACCOU NT OF FUNDS DEEMED TO BE UTILIZED TOWARDS CREATING WORK-IN-PROGRESS. AS P OINTED OUT ON BEHALF OF THE ASSESSEE, WE FIND THAT THE ISSUE IS DECIDED IN FAVOUR OF ASSESSEE BY THE COORDINATE BENCH IN AY 2009-10 (SUPRA) AGAINST WHICH THE REVENUE COULD NOT SUCCEED BEFORE THE HIGH COURT. THE RELEV ANT OPERATIVE PARA OF THE ORDER OF THE ITAT IS REPRODUCED HEREUNDER. 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PACED BEFORE US. THE REVE NUE HAS NOT DISPUTED THE AVAILABILITY OF HUGE INTEREST FREE FUN D OF RS.289.08 CRORES WITH THE ASSESSEE. AS AGAINST THIS INTEREST FREE FUND, THE INVESTMENT IN CAPITAL WORK-IN-PROGRESS IS ONLY RS.2 6.01 CRORES AND ADVANCE TO OTHERS IS RS.12 LACS. THUS, THE INTERES T FREE FUND AVAILABLE WITH THE ASSESSEE IS MORE THAN 10 TIMES O F THE CAPITAL WORK-IN-PROGRESS AND ADVANCE TO OTHERS. ADMITTEDLY, THE ASSESSING OFFICER HAS NOT POINTED OUT THAT ANY BORROWED MONEY HAS BEEN UTILIZED FOR THE PURPOSE OF INVESTMENT IN CAPITAL W ORK-IN-PROGRESS OR FOR ADVANCE TO OTHERS. HE MADE PROPORTIONATE DI SALLOWANCE MERELY ON THE PRESUMPTION THAT THE PROPORTIONATE BO RROWED MONEY MUST HAVE BEEN UTILIZED FOR INVESTMENT IN CAPITAL W ORK-IN-PROGRESS, ETC. WE FIND THAT UNDER THE SIMILAR CIRCUMSTANCES , HONBLE GUJARAT HIGH COURT IN THE CASE OF RAGHUVIR SYNTHETI CS LTD (SUPRA) UPHELD THE DECISION OF ITAT. IN THAT CASE ALSO THE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE WAS MUCH MORE THAN THE INVEST FREE LOAN GIVEN BY THE ASSESSEE. THE ASSESSING OFF ICER HAS NOT PROVED THAT THE BORROWED MONEY HAS BEEN UTILIZED FO R GIVING OF INTEREST FREE ADVANCES. THE ASSESSING OFFICER DISA LLOWED THE INTEREST ON PROPORTIONATE BASIS. THE CIT(A) DELETE D THE ADDITION WHICH WAS UPHELD BY THE ITAT. ON APPEAL BY THE DEP ARTMENT, THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- IT(SS)A NO.16, 17 & 18/AHD/20 15 RIDDHI SIDDHI GLUCO BIOLS LTD. VS. ACIT ASST.YEARS 2009-10,2010-11 & 2011-12 - 5 - HELD, DISMISSING THE APPEAL, THAT WHEN THERE WAS N O EVIDENCE BROUGHT ON RECORD BY THE DEPARTMENT FOR TH E TRIBUNAL TO HOLD OTHERWISE THAN WHAT HAD BEEN CONCL UDED BY WAY OF ANY MATERIAL, THE ASSESSEE WAS ELIGIBLE FOR ALLOWANCE OF INTEREST. THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO T HE FACTS BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RA GHUVIR SYNTHETICS LTD. (SUPRA), WE, THEREFORE, RESPECTFULL Y FOLLOWING THE ABOVE DECISION OF HONBLE JURISDICTIONAL HIGH COURT , UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE GROUNDS NOS.2 & 3 OF THE REVENUES APPEAL. 12. IN THE RESULT, THE REVENUES APPEAL IS DISMIS SED. 9. WE ALSO TAKE NOTE OF THE OBSERVATION MADE IN TH E ASSESSMENT ORDER THAT AO HAS MADE DISALLOWANCE ON THE BASIS OF ADVER SE VIEW TAKEN IN THE EARLIER ASSESSMENT YEAR AND TO KEEP THE ISSUE ALIVE AS EMANATED. 10. ADMITTEDLY, THE ISSUE IS SQUARELY COVERED IN FA VOUR OF ASSESSEE AND NO SUBSTANTIVE GROUND HAS BEEN RAISED BY THE REVENU E TO DEFEND THE ORDER OF THE CIT(A). 11. IN THE RESULT, APPEAL OF THE ASSESSEE IN IT(SS) A NO.16/AHD/2015 FOR AY 2009-10 IS ALLOWED. IT(SS)A NOS.17 & 18/AHD/2015 FOR AYS 2010-11 & 2011 -12 IT(SS)A NO.16, 17 & 18/AHD/20 15 RIDDHI SIDDHI GLUCO BIOLS LTD. VS. ACIT ASST.YEARS 2009-10,2010-11 & 2011-12 - 6 - 12. WE FIND THAT THE CAPTIONED APPEALS OF THE ASSESSEE ARE IDENTICAL TO THE FACTS OF THE IT(SS)A NO.16/AHD/2015 FOR AY 2009 -10(SUPRA). IN VIEW OF THE PARI MATERIA FACTS CONCERNING THE IDENTICAL ISSUE, OUR DECISION IN IT(SS)A NO.16/AHD/2015 FOR AYT 2009-10 SHALL APP LY MUTATIS MUTANDIS TO BOTH THE CAPTIONED APPEALS. 13. IN THE RESULT, IT(SS)A NOS.17 AND 18/AHD/2015 F OR AYS 2010-11 & 2011-12 ARE ALLOWED. 14. IN THE COMBINED RESULT, ALL THE THREE APPEALS O F THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 09 / 10 /201 7 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 09/ 10 /2017 4..*,.*../ T.C. NAIR, SR. PS IT(SS)A NO.16, 17 & 18/AHD/20 15 RIDDHI SIDDHI GLUCO BIOLS LTD. VS. ACIT ASST.YEARS 2009-10,2010-11 & 2011-12 - 7 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-12, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 29.9.17 (DICTATION-PAD 7- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3.10.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.9.10.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 9.10.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER