M/s. Avanthi Feeds Limited, Hyderabad V. Addl. CIT, Range-1, Hyderabad

MA 33/HYD/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1639 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADGIRI
• Assessee Lawyers: M V R PRASAD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER MISCELLANEOUS APPLICATION NO.33/HYD/2014 ARISING OUT OF ITA.NO.1295/HYD/2011 - ASSESSMENT YEAR 2006-2007 M/S. AVANTI FEEDS LIMITED HYDERABAD PAN AABCA7365E VS. ACIT, CIRCLE 8(1) HYDERABAD (APPLICANT) (RESPONDENT) FOR ASSESSEE : MR. MVR PRASAD FOR REVENUE : MR. B. YADGIRI DATE OF HEARING : 21.03.2014 DATE OF PRONOUNCEMENT : 21.03.2014 ORDER PER B. RAMAKOTAIAH, A.M. BY THIS MISCELLANEOUS APPLICATION, THE ASSESSEE COMPANY SEEKS FOR RECTIFICATION OF THE ORDER OF THE TRIBUNAL DATED 23.10.2013 IN ITA.NO.1295/HYD/2011 CONTENDING THAT THERE ARE SOME MISTAKES IN MENTIONING SOME RELEVANT FIGURES W ITH RESPECT TO INVESTMENTS AS ON 31.03.2006 OF THE ASSESSEE COMP ANY. IT WAS STATED THAT THE TRIBUNAL IN ITS ORDER DATED 23.10.2 013 HAS TAKEN THE FIGURES IN SCHEDULE-6 AT PAGE 60 OF THE ANNUAL REPO RT, INSTEAD OF SCHEDULE-6 AT PAGE 32. 1.1. FURTHER, WITH RESPECT TO RESERVES AND SURPLUS AS ON 31.03.2006, IT WAS SUBMITTED THAT THE TRIBUNAL HAS PROCEEDED ON THE BASIS OF THE FIGURES GIVEN IN SCHEDULE-2 AT PAG E 58 OF THE ANNUAL REPORT INSTEAD OF SCHEDULE-2 AT PAGE 30 OF THE ANNU AL REPORT. LD. COUNSEL CONTENDED THAT SCHEDULE-2 AT PAGE 58 RELATE S TO THE CONSOLIDATED BALANCE SHEET OF THE GROUP COMPANIES, WHEREAS, 2 MA.NO.33/HYD/2014 M/S. AVANTI FEEDS LTD., HYDERABAD. SCHEDULE-2 AT PAGE 30 RELATES TO THE ASSESSEE COMPA NY. THEREFORE, THE FIGURES MENTIONED IN PARA 9 OF THE ORDER OF THE TRIBUNAL DATED 23.10.2013 REQUIRED TO BE MODIFIED. 2. AFTER PERUSING THE RECORD, WE FIND THAT IN DEED THERE IS A MISTAKE IN ADOPTING THE FIGURES OF CONSOLIDATED B ALANCE SHEET INSTEAD OF ASSESSEES BALANCE SHEET. PARA NO.9 OF T HE ORDER OF THE TRIBUNAL DATED 23.10.2013 IN ITA.NO.1295/HYD/2011 R EADS AS FOLLOWS : 9. AS SEEN FROM THE PAPER BOOK AND PARTICULARLY THE COMPUTATION PLACED ON RECORD, IT IS A FACT THAT ASS ESSEE EARNED ONLY THE DIVIDEND INCOME OF RS. 13,94,065/-. FROM WHERE THE AO CONSIDERED THE DIVIDEND INCOME AT RS. 1,36,84,106/- IS NOT DISCERNIBLE FROM THE DOCUMENTS ON RECORD. FURTHER, AS SEEN FROM THE BALANCE SHEET PLACED ON RECORD, THE INVESTMENTS AS SHOWN IN THE BALANCE SHEET WAS RS. 15.73 CRORES AS ON 31-03-2005, WHICH HAS COME DOWN TO RS. 8.82 CRORES AS ON 31-03-2006. IN F ACT THERE IS A REDUCTION IN INVESTMENTS DURING THE YEAR . ASSESSEES SHARE CAPITAL AND RESERVES AND SURPLUS A RE AT RS. 6.54 CRORES AND 65.61 CRORES RESPECTIVELY AS AT 31-03-2006. IT IS SEEN THAT RESERVES AND SURPLUS INCREASED FROM 55.39 CRORES AS ON 31-03-2005 TO RS. 65.61 CRORES AS ON 31-03-2006. THUS, ASSESSEES CONTENTION THAT IT HAD MORE OF ITS OWN FUNDS THAN T HE INVESTMENTS MADE HAD VALIDITY. AS SEEN FROM THE SCH EDULE 3 OF SECURED LOANS, THE ASSESSEE HAD OBTAINED TER M LOANS TO THE TUNE OF RS. 30.19 CRORES DURING THE YEAR, WH ICH WERE BASICALLY SANCTIONED FOR PURCHASE OF ASSETS. ASSESS EE ALSO EXPLAINED TO THE CIT(A) DETAILS OF INTEREST PAID VI DE LETTER DATED 16-12-2008 PLACED IN PAPER BOOK AT PAGES 148 & 149. AS SEEN FROM THESE DETAILS, WE FIND THAT NONE OF THESE AMOUNTS PAID AS INTEREST ARE NOWHERE RELATED TO THE INVESTMENTS MADE BY ASSESSEE IN MUTUAL FUNDS DURING THE YEAR. AS FAR AS THE INVESTMENT IN OTHER GROUP CONCE RNS ARE 3 MA.NO.33/HYD/2014 M/S. AVANTI FEEDS LTD., HYDERABAD. CONCERNED, THESE HAVE BEEN COMING FROM EARLIER YEAR S AND THE CIT(A) VIDE HIS ORDER FOR AY 2005-06 HAD GIVEN A CLEAR FINDING THAT NO INVESTMENT HAS BEEN MADE OUT OF LOA N FUNDS ON WHICH INTEREST WAS BEING PAID. HE FURTHER HELD T HAT DISALLOWANCE MADE BY THE AO IN AY 2005-06 WAS PUREL Y ON ESTIMATE BASIS. SIMILAR ISSUE WAS ALSO DECIDED IN ASSESSEES OWN CASE FOR AY 2002-03 BY THE CIT(A). I N VIEW OF THIS TO THE EXTENT OF INVESTMENT MADE BY THE ASS ESSEE IN GROUP COMPANIES, THERE IS A FINDING THAT ASSESSEE H AS NOT BORROWED OR UTILIZED ANY BORROWED FUNDS FOR MAKING INVESTMENT. HENCE, THE SAME CANNOT BE CONSIDERED FO R DISALLOWANCE U/S 14A. 3. INCORPORATING THE ABOVE MISTAKES POINTED OUT, THE ORDER OF THE TRIBUNAL DATED 23.10.2013 IN ITA.NO.12 95/HYD/2011 TO THE EXTENT HIGHLIGHTED ABOVE MAY BE READ AS UNDE R : 9. FURTHER, AS SEEN FROM THE BALANCE-SHEET PLACED ON RECORD THE INVESTMENTS AS SHOWN IN THE BALANCE SHEE T WAS RS.16.73 CRORES AS ON 31.03.2005 WHICH HAS INCREASE D TO RS.25.93 CRORES AS ON 31.03.2006. THERE IS AN INCRE ASE IN INVESTMENTS DURING THE YEAR. ASSESSEES SHARE CAPIT AL AND RESERVES AND SURPLUS ARE AT RS.6.58 CRORES AND RS.6 3.97 CRORES RESPECTIVELY AS ON 31.03.2006. IT IS SEEN TH AT RESERVES AND SURLUS INCREASED FROM RS.57.24 CRORES AS ON 31.03.2005 TO RS.63.,97 CRORES AS ON 31.03.2006 4. IN THE RESULT, M.A. OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.03.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 21 ST MARCH, 2014 VBP/- 4 MA.NO.33/HYD/2014 M/S. AVANTI FEEDS LTD., HYDERABAD. COPY TO : 1. AVANTI FEEDS LTD., G-2, CONDORDE APARTMENTS, 6-3 -656, SOMAJIGUDA, HYDERABAD 500 082. 2. ADDL. CIT, RANGE-1, HYDERABAD 3. CIT(A)-II, HYDERABAD 4. CIT-I, HYDERABAD 5. D.R. ITAT B BENCH, HYDERABAD.