Sewani Infrastructure Pvt. Ltd., Ahmedabad V. DCIT Central Circle 1(3), Ahmedabad

ITSSA 363/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3656 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-03-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 14-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SHARMALD
• Assessee Lawyers: BIREN SHAH LD
• Keywords: Commercial expediency
• Section: 143(3); 153A

Judgement Text

ITA (SS) NO. 363/AHD/2017 SEWANI INFRASTRUCTURE PVT. LTD. ASSESSMENT YEAR : 2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE HONBLE SHRI MAHAVIR PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM IT(SS)/363/AHD/2017 ( / ASSESSMENT YEAR: 2011-12) SEWANI INFRASTRUCTURE PVT. LTD. 202/203, SHOPPERS PLAZA-III CG ROAD, AHMEDABAD-380 009 / VS. D CIT - CC - 1(3) 304, 3 RD FLOOR AAYKAR BHAVAN ASHRAM ROAD, AHMEDABAD ./ ./PAN/GIR NO. AAKCS-3357-B ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI BIREN SHAH- LD. AR REVENUE BY : SHRI O.P.SHARMA-LD. CIT-DR / DATE OF HEARING : 02/03/2020 / DATE OF PRONOUNCEMENT : 04/03/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2011-12 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-11, AHMEDABAD [IN SHORT REFERR ED TO AS CIT(A)], APPEAL NO. CIT(A)-I/1062/CC.1(3)/2013-14 DATED 15/0 5/2017 QUA CONFIRMATION OF INTEREST DISALLOWANCE U/S 36(1)(III ). THE PROVISIONS OF SEC. 36(1)(III) ENVISAGES DEDUCTION OF INTEREST PAID BY THE ASSESSEE IN RESPECT OF CAPITAL BORROWED FOR THE PURPOSES OF BUSINESS OR PROFESSION. ITA (SS) NO. 363/AHD/2017 SEWANI INFRASTRUCTURE PVT. LTD. ASSESSMENT YEAR : 2011-12 2 2. WE HAVE CAREFULLY HEARD THE ARGUMENTS ADVANCED B Y BOTH THE PARTIES. WE HAVE ALSO PERUSED RELEVANT MATERIAL ON RECORD INCLUDING ASSESSEES FINANCIAL STATEMENTS FOR YEAR UNDER CONS IDERATION. 3.1 THE PERUSAL OF ASSESSMENT ORDER DATED 26/12/201 7 PASSED U/S 143(3) R.W.S. 153A WOULD REVEAL THAT THE ASSESSEE W AS SADDLED WITH INTEREST DISALLOWANCE U/S 36(1)(III) FOR RS.10.96 L ACS. THE SAME STEM FROM THE FACT THAT IT AVAILED UNSECURED LOANS OF RS .118.64 LACS AND CLAIMED INTEREST EXPENDITURE OF RS.11.38 LACS. HOWE VER, IT ADVANCED LOANS OF RS.129.37 LACS TO ENTITIES OF ITS DIRECTOR S WITHOUT CHARGING ANY INTEREST. THEREFORE, IT WAS ALLEGED BY LD. AO THAT THE ASSESSEE DIVERTED INTEREST BEARING FUNDS FOR GIVING ADVANCES ON WHICH NO INTEREST WAS CHARGED. 3.2 THE ASSESSEE SUBMITTED THAT THE ADVANCES WERE G IVEN IN NORMAL COURSE OF BUSINESS AND TO GRAB BUSINESS OPPORTUNITY . HOWEVER, IT FAILED TO FILE ANY AGREEMENT / DOCUMENTS ETC. TO SUPPORT T HE SAME. THE ASSESSEE WAS STATED TO BE ENGAGED IN THE BUSINESS O F DEVELOPMENT AND CONSTRUCTION OF REAL ESTATE PROJECTS BUT NO LAND WA S PURCHASED FROM THE STATED ENTITIES. THEREFORE, A CONCLUSION WAS DRAWN THAT THE ASSESSEE PARKED ITS INTEREST-BEARING FUNDS WITHOUT CHARGING INTEREST AND THEREFORE INTEREST COULD NOT BE ALLOWED. RESULTANTLY, THE EXC ESS INTEREST OF RS.10.96 LACS WAS DISALLOWED. THE SAME UPON CONFIRM ATION BY LD. CIT(A) IS UNDER APPEAL BEFORE US. ITA (SS) NO. 363/AHD/2017 SEWANI INFRASTRUCTURE PVT. LTD. ASSESSMENT YEAR : 2011-12 3 4. AFTER GOING THROUGH ASSESSEES FINANCIALS FOR TH E YEAR UNDER CONSIDERATION, WE FIND THAT OUT OF TOTAL SOURCES OF RS.122.67 LACS SUBSTANTIAL AMOUNT OF RS.118.64 LACS CONSTITUTE UNS ECURED LOANS. AT THE SAME TIME, OUT OF AGGREGATE CURRENT ASSETS OF RS.13 1.28 LACS, SUBSTANTIAL AMOUNT OF RS.129.37 LACS CONSTITUTE LOA NS GRANTED BY THE ASSESSEE. THEREFORE, THERE WAS CLEAR NEXUS BETWEEN THE TWO AND INTEREST-BEARING FUNDS WERE DIVERTED TO VARIOUS ENT ITIES WITHOUT CHARGING ANY INTEREST. NO COMMERCIAL EXPEDIENCY OF ADVANCING SUCH LOANS HAVE BEEN SHOWN BY THE ASSESSEE. THE LD. AR HAS PLEADED THAT THE LOANS WERE SOURCED BY LIQUIDATING SUNDRY DEBTORS OF EARLI ER YEARS AND THERE WAS REDUCTION IN UNSECURED LOANS TAKEN BY THE ASSES SEE. WE DO NOT FIND ANY SUBSTANCE IN THE SAME. IT IS CLEAR FROM THE FIN ANCIAL STATEMENTS THAT SUNDRY DEBTORS HAVE MERELY BEEN CONVERTED INTO LOAN S GRANTED BY THE ASSESSEE BUT THE SOURCE REMAIN THE SAME I.E. INTERE ST-BEARING LOANS OBTAINED BY THE ASSESSEE. THEREFORE, NO FAULT COULD BE FOUND IN THE IMPUGNED ORDER, IN THIS REGARD. 5. THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/2020 SD/- SD/- (MAHAVIR PRASAD) (MA NOJ KUMAR AGGARWAL) ! ' / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER AHMEDABAD; D ATED : 04/03/2020 SS, PS ITA (SS) NO. 363/AHD/2017 SEWANI INFRASTRUCTURE PVT. LTD. ASSESSMENT YEAR : 2011-12 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. -./!!01 , 01 , 23'4' / DR, ITAT, AHMEDABAD 6. /567 / GUARD FILE / BY ORDER, // TRUE COPY // / ! (DY./ASSTT.REGISTRAR) !'# , 3 4 / ITAT, AHMEDABAD.