SHROFF TEXTILES LTD, MUMBAI V. DCIT 11(2)(1), MUMBAI

MA 03/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9046 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 02-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D G PANSARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH , VICE PRESIDENT AND SHRI RAJESH KUMAR , A M M.A. 0 3/MUM/201 7 (ARISING OUT OF ITA NO. 365 /MUM/201 6 ASSESSMENT YEAR 20 11 - 12 ) DCIT - CIRCLE - 8(3) MUMBAI. VS. M/S. SHROFF TEXTILES LTD. 303 - B - WING, KOTIA NIRMAN NEW LINK ROAD, ANDHERI (W) MUMBAI - 400 0 53 . PAN : A AAC S 6476 K ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY SHRI D.G. PANSARI - DR RESPONDENT BY SHRI NEELKANTH KHANDELWAL - AR DATE OF HEARING 12/10 /2 018 DATE OF PRONOUNCEMENT 16 / 10 /2018 O R D E R PER RAJES H KUMAR , ACCOUNTANT MEMBER : BY WAY OF THIS MISCELLANEOUS APPLICATION DATED 0 1/0 1 /201 7 , THE REVENUE IS SEEKING RECTIFICATION /RECALLING OF THE ORDER PASSED BY THE TRIBUNAL IN ITA NO. 512/365 /MUM /201 6 FOR ASSESSMENT YEAR 20 11 - 12 DATED 2 8/06/2016 , AS THERE IS APPARENT MISTAKE IN THE SAID ORDER . 2. THE LD. DR SUBMITTED BEFORE THE BENCH THAT OUT OF THE TWO GROUNDS IN ITA NO.365/M/2016, GROUND NO.2 AND 3 WERE INADVERTENTLY LEFT OUT FROM BEING ADJUDIC ATED . THE LD. DR SUBMITTED THAT SINCE NON ADJUDICATION OF ANY OF THE GROUND S OF APPEAL IS AN APPARENT MISTAKE IN THE ORDER , THEREFORE , THE SAME SHOULD BE RECTIFIED OR RECALLED. 3. ON THE OTHER HAND THE LD. AR FAIRLY CONCEDED THE CONTENTION S PUT FORTH BY THE LD. DR THAT G - 2 AND G - 3 WERE NOT ADJUDICATE D WHILE DECIDING THE ABOVE APPEAL AND THEREFORE, SAME IS REQUIRED TO BE RECTIFIED. THE LD. AR HOWEVER, SUBMITTED THAT THE COMMON ISSUE INVOLVED IN THE SAID GROUNDS IS A COVERED ONE AND THEREFORE, THE SAME SHO ULD BE RECTIFIED AND DECIDED IN THE ORDER OF MA ITSELF. MA NO.3/M/201 7 M/S. SHROFF TEXTILES LTD. 2 4 . THE LD. AR SUBMITTED THAT THE ONLY ISSUE INVOLVED IN BOTH THE GROUNDS IS IN RESPECT OF DELETION OF DISALLOWANCE OF INTEREST ON THE INTEREST FREE ADVANCES GIVEN BY COMPANY TO ITS STAFF AS PER THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT . AS PER THE DR A NY AMOUNT OF INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR THE PURPOSE OF BUSINESS IS ALLOWABLE AS DEDUCTION ONLY IF THE BORROWED FUNDS ARE UTILIZED FOR THE PURPOSE OF BUSINESS AND CONTINUES AS SUCH. THE LD. AR WHILE REFERRING TO COPY OF BALANCE SHEET FILED AT PAGE 222 TO 239 OF THE PAPER BOOK SUBMITTED THAT THE ASSESSEES OWN FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES WERE RS.2.81 CRORES WHEREAS THE INTEREST FREE ADVANCES GIVEN TO THE EMP LOYEES WERE ONLY TO THE TUNE OF RS.57,50,477/ - AND THE REMAINING ADVANCES WERE TO THE EXTENT OF RS.3.09 CRORES WERE TO THE SUPPLIER S OF SERVICES OR ON ACCOUNT OF ADVANCE TAX , CENTRAL EXCISE ETC. THE LD. AR THEREFORE SUBMITTED THAT SINCE ASSESSEES OWN FUNDS WERE FAR MORE THAN THE MONEY ADVANCED TO THE STAFF WHICH WAS RS.57,50,477/ - , THEREFORE , THE GROUND RAISED BY THE REVENUE SHOULD BE DISMISSED. 5 . AFTER HEARING THE RIVAL CONTENTIONS AND PERUSING THE RECORD WE FIND THAT ONLY ISSUE RAISED BY THE REVEN UE IS THAT OF NON ADJUDICATION OF GROUND NO. 2 AND 3 WHICH ARE AGAINST THE DELETION OF DISALLOWANCE OF INTEREST AS MADE BY THE AO TOWARDS THE INTEREST ON STAFF ADVANCES GIVEN BY THE ASSESSEE U/S. 36 (1)(III) OF THE ACT. AFTER PERUSING THE RECORD BEFORE US INCLUDING BALANCE SHEET AND LOAN & ADVANCES , WE OBSERVE THAT ASSESSEES OWN FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES A RE RS.2.81 CRORES WHEREAS THE ADVANCES TO THE STAFF WERE ONLY TO THE TUNE OF RS.57.58 LACS AND THEREFORE THERE IS NO JUSTIFICATION FOR THE AO TO MAKE THE ADDITION U/S 36(1)(III) OF THE ACT AS NO DISALLOWANCE IS REQUIRED TO BE MADE ON THIS COUNT. CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION S IN THE CASE OF HDFC BANK LTD. MA NO.3/M/201 7 M/S. SHROFF TEXTILES LTD. 3 (2014)(366 ITR 505) (BOM HC) A ND RELIANCE UTILITIES & POWER LTD (2009)(313 ITR 340)(BOM HC) . 6 . WE THEREFORE, RESPECTFULLY FOLLOWING RATIO LAID BY THE JURISDICTIONAL HIGH COURT IN THE ABOVE DECISIONS DECIDE THE GROUND NO.2 AND 3 AGAINST THE REVENUE AND ACCORDINGLY THE MA IS DECIDED AND DISPOSED OFF AS S TATED HEREIN ABOVE AND ORDER OF THE TRIBUNAL IN ITA NO. 365/MUM/2016 FOR ASSESSMENT YEAR 2011 - 12 DATED 28/06/2016 STANDS MODIFIED TO THAT EXTENT. IN THE RESULT, MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED AND IMPUGNED ORDER OF THE TRIBUNA L IS MODIFIED AS STATED ABOVE . ORDER PRONOUNCED IN THE OPEN COURT ON 16 . 10 .2018. SD/ - SD/ - ( JOGINDER SINGH ) ( RAJESH KUMAR ) VICE PRES IDENT ACCOUNTANT MEMBER MUMBAI ; DATED: 16 / 10/ 2018 JV.SR.PS. COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI. MA NO.3/M/201 7 M/S. SHROFF TEXTILES LTD. 4 THIS ORDER WAS DIRECTLY DICTATED TO THE SR.PS/PS ON COMPUTER 1. DRAFT DICTATED ON 12/10 /18 SR.PS /PS 2. DRAFT PLACED BEFORE AUTHOR 12/10/18 SR.PS /PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED B Y SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS /PS 6. DATE OF PRONOUNCEMENT SR.PS /PS 7. FILE SENT TO THE BENCH CLERK SR.PS /PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER