M/S. Rashi Impex Pvt. Ltd., Kolkata V. D.C.I.T., CC-3(2), Kolkata, Kolkata

ITSSA 3/KOL/2023

AI Insights

The case involves M/s. Rashi Impex Pvt. Limited, which appealed against the orders of the Commissioner of Income Tax (Appeals)-21, Kolkata, concerning disallowances made by the Assessing Officer on interest expenditures for the Assessment Years 2014-2015 and 2015-2016. The disallowances were based on the Assessing Officer's observation that the credits taken from the bank were not used for business purposes. However, the Tribunal found that the Assessing Officer did not provide specific evidence to support this claim and noted that the interest expenditures had been consistently allowed in previous years. The Tribunal thus decided in favor of the assessee, allowing the appeals and deleting the disallowances.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302899 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-08-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 29-01-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 132; 153A

Judgement Text

IT(SS)A Nos. 3 & 4/KOL/2023 Assessment Years : 2014-2015 & 2015-2016 M/s. Rashi Impex Pvt. Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member I.T.(SS)A. Nos. 3 & 4/KOL/2023 Assessment Years: 2014-2015 & 2015-2016 M/s. Rashi Impex Pvt. Limited,...............Appellant C/o. M/s. Salarpuria Jajodia & Co., 7, C.R. Avenue, 3 rd Floor, Kolkata-700072 [PAN: AABCR4596G] -Vs.- Deputy Commissioner of Income Tax,......Respondent Central Circle-3(2), Kolkata, 110, Shantipally, E.M. Bypass, Kolkata-700107 Appearances by: Shri S. Jhajharia, A.R, appeared on behalf of the assesseee Sri S. Datta, CIT, D.R., appeared on behalf of the Revenue Date of concluding the hearing : August 21, 2023 Date of pronouncing the order : August 22, 2023 O R D E R Per Shri Rajpal Yadav, Vice-President (KZ):- The present two appeals are directed by the assessee against the separate orders of ld. Commissioner of Income Tax (Appeals)-21, Kolkata dated 30 th November, IT(SS)A Nos. 3 & 4/KOL/2023 Assessment Years : 2014-2015 & 2015-2016 M/s. Rashi Impex Pvt. Limited 2 2022 passed for Assessment Years 2014-15 & 2015-16 respectively. 2. The assessee has raised seven grounds of appeal in A.Y. 2014-15 and four grounds of appeal in A.Y. 2015- 16. The ld. Counsel for the assessee did not press any of the grounds except Ground No. 1 in both the years. Therefore, all other grounds are rejected. 3. The issue involved in Ground No. 1 in both the years is common except variation in the quantum. The grievance of the assessee is that the ld. CIT(Appeals) has erred in confirming the disallowance made by the ld. Assessing Officer of Rs.8,50,196/- and Rs.9,74,127/-. These amounts represent the interest expenditure. 4. Brief facts of the case are that a search under section 132 of the Income Tax Act was conducted on “UNIGLOBAL GROUP” of cases on 09.09.2015. The assessee appears to be one of the entities in the Group. Accordingly a notice under section 153A of the income Tax Act was issued to the assessee, which was duly served upon it. It has filed return of income on 20.11.2016 electronically declaring a loss of Rs.30,81,435/- and Rs.26,80,435/- in A.Y. 2014-15 and 2015-16 respectively. The ld. Assessing Officer has passed the assessment order on 31.12.2017. The finding IT(SS)A Nos. 3 & 4/KOL/2023 Assessment Years : 2014-2015 & 2015-2016 M/s. Rashi Impex Pvt. Limited 3 of the ld. Assessing Officer in both the years is verbatim except variation in the quantum mentioned by him. According to the ld. Assessing Officer, the assessee has net worth of Rs.14.34 crores and Rs.15.41 crores and it has non-current investments of Rs.9.15 crores and Rs.9.13 crores in these years respectively. The assessee further advanced long-term loans of Rs.25.51 crores and Rs.20.79 crores. The ld. Assessing Officer thereafter simply observed that from the financial it shows that credits taken from the Bank are not used for the purpose of business of the assessee and, therefore, interest paid on the credits cannot be allowed to the assessee. Accordingly he made a disallowance of Rs.8,50,196/- and Rs.9,74,127/- in A.Y. 2014-15 and 2015-16 respectively. The appeal to the ld. CIT(Appeals) did not bring any relief to the assessee. 5. The ld. Counsel for the assessee submitted that the assessee has not taken any fresh credit. The loan and other credits on which interest was paid are old credits. It has been paying interest on these and claiming deduction. The ld. Assessing Officer in earlier years has allowed this claim to the assessee. There is no change in the facts and circumstances except the angle with which the ld. Assessing officer has appreciated it. He took us through page no. 41 of the paper book filed in A.Y. 2014- 15. He also drew our attention towards page no. 17. He IT(SS)A Nos. 3 & 4/KOL/2023 Assessment Years : 2014-2015 & 2015-2016 M/s. Rashi Impex Pvt. Limited 4 brought to our notice the Note No. 17 exhibiting the finance cost. On the strength of these details, he contended that no disallowance ought to have been done by the ld. Assessing Officer. 6. The ld. CIT(DR), on the other hand, submitted that the assessee failed to demonstrate the user of these credits for business on which, it has paid interest. 7. We have duly considered the rival contentions and gone through the record carefully. The finding of the ld. Assessing Officer is not categorical. He has not pinpointed that cash credits have been taken by the assessee, which were not used for the business purposes. He only made reference to net worth, non- current investments and long-term loans and advances given by the assessee. The loans or other credits obtained by the assessee had interest cost or also not new in this year. They were existing credits upon them. Interest expenditure was allowed in earlier years. Therefore, in these years, such interest cost cannot be disallowed. The simple reason is that these credits were taken by the assessee and used for the purpose of the business. The ld. Assessing Officer has not made any inquiry in this connection. Therefore, we allow this ground of appeal in both the years and delete the disallowances. IT(SS)A Nos. 3 & 4/KOL/2023 Assessment Years : 2014-2015 & 2015-2016 M/s. Rashi Impex Pvt. Limited 5 8. In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on August 22, 2023. Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President(KZ) Kolkata, the 22 nd day of August, 2023 Copies to : (1) M/s. Rashi Impex Pvt. Limited, C/o. M/s. Salarpuria Jajodia & Co., 7, C.R. Avenue, 3 r d Floor, Kolkata-700072 (2) Deputy Commissioner of Income Tax, Central Circle-3(2), Kolkata, 110, Shantipally, E.M. Bypass, Kolkata-700107 (3) Commissioner of Income Tax (Appeals), Kolkata-21; (4) Commissioner of Income Tax , (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.