THE ACIT,CIRCLE-1, RAJAHMUNDRY., Rajahmundry V. M/s Asia Pacific Commodities Ltd, Tadepallegudem

MA 9/VIZ/2014

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4378 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SRINIVASA MURTHY
• Assessee Lawyers: C SUBRAHMANYAMAR
• Section: 14A

Judgement Text

M.P. NOS.8&9/VIZAG/2014 M/S. ASIA PACIFIC COMMODITIES, TADEPALLIGUDEM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER M.P. NO.8&9/VIZAG/2014 (ARISING OUT OF I.T.A.NOS.349&350/VIZAG/2012) ( / ASSESSMENT YEAR: 2008-09 & 2009-10) ACIT, CIRCLE - 1, RAJAHMUNDRY VS. M/S. ASIA PACIFIC COMMODITIES TADEPALLIGUDEM [PAN: AADCA6269K ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI P. SRINIVASA MURTHY, DR / RESPONDENT BY : SH R I C. SUBRAHMANYAM,AR / DATE OF HEARING : 22.04.2016 / DATE OF PRONOUNCEMENT : 22.04.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY T HE REVENUE U/S 254(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CAL LED AS 'THE ACT') PRAYING FOR RECALLING THE COMMON ORDER OF THE TRIBU NAL IN ITA NOS.349 & M.P. NOS.8&9/VIZAG/2014 M/S. ASIA PACIFIC COMMODITIES, TADEPALLIGUDEM 2 350/VIZAG/2012 DATED 6.12.2013 VIDE WHICH HONBLE I TAT DISMISSED THE APPEALS OF THE REVENUE AND SUBMITTED THAT THE ASSES SEE HAS ADVANCED CONSIDERABLE AMOUNTS TO THE SISTER CONCERN I.E. M/S . AUJASYA POWER PROJECTS PVT. LTD. AND NO INTEREST HAS BEEN CHARGED . THIS ASPECT AS CONSIDERED BY THE TRIBUNAL THAT INTEREST WAS NOT CH ARGED ON THE GROUND OF BUSINESS EXPEDIENCY AND THE TRIBUNAL BY FOLLOWIN G THE ORDER IN THE CASE OF S.A. BUILDERS 288 ITR 1(SC) OF HONBLE SUPR EME COURT JUDGEMENT ALLOWED THE CLAIM OF THE ASSESSEE. IT IS A MISTAKE APPARENT ON RECORD AND ORDER OF THE TRIBUNAL MAY BE RECALLED . ONE MORE GROUND RAISED BY THE REVENUE IS THAT THE HONBLE TRIBUNAL FAILED TO CONSIDER THE DISALLOWANCE U/S 14A OF THE ACT R.W.S. RULE 8D OF T HE INCOME TAX RULES, 1962. 2. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT THE TRIBUNAL HAS CONSIDERED ALL THE RELEVANT F ACTS AND BY FOLLOWING THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF S .A. BUILDERS (SUPRA), INTEREST CLAIM OF THE ASSESSEE IS ALLOWED. THEREFORE, THERE IS NO MISTAKE APPARENT ON RECORD. SO FAR AS DISALLOWANCE U/S 14A OF THE ACT R.W.S. 8D OF THE INCOME TAX RULES, 1962 IS CONCERNE D, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE OF DI SALLOWANCE U/S 14A OF THE ACT IS NEITHER BEFORE THE A.O. NOR BEFORE THE C IT(A). THEREFORE, THE M.P. NOS.8&9/VIZAG/2014 M/S. ASIA PACIFIC COMMODITIES, TADEPALLIGUDEM 3 ISSUE IS NOT DECIDED BY THE TRIBUNAL. THERE IS NO MISTAKE APPARENT ON RECORD. 3. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD. IN SO FAR AS FIRST OBJECTION RAISED BY THE DEPARTMENT IN RESPECT OF INTEREST CLAIM OF THE ASSESSEE IS CONCER NED, THE TRIBUNAL BY PASSING THE ORDER HAS CONSIDERED ALL THE FACTS AND BY CONSIDERING THE SUPREME COURT JUDGEMENT ALLOWED THE CLAIM OF THE AS SESSEE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREUNDE R: THERE IS NO DISPUTE TO THE FACT THAT M/S. AUJASYA P OWER PROJECTS PVT. LTD., AND M/S. ASIA RENEWABLE ENERGY (P) LTD., ARE SUBSIDIARIES OF THE ASSESSEE. IT IS ALSO THE CONSISTENT STAND OF THE AS SESSEE BEFORE THE AO AS WELL AS BEFORE LD CIT(A) THAT THE ADVANCES WERE MAD E TO THE SUBSIDIARIES ON ACCOUNT OF BUSINESS EXPEDIENCY FOR THE PURPOSE O F PURCHASE OF LAND AND TO DEVELOP POWER PROJECTS AS THE POWER GENERATE D BY THEM CAN BE UTILIZED BY THE ASSESSEE IN FUTURE. IT IS ALSO THE CASE OF THE ASSESSEE THAT INTEREST FREE ADVANCE ULTIMATELY WILL BE CONVERTED INTO SHARE CAPITAL WHEN THE PROJECTS FINALLY TAKE OFF. IN THIS CONTEXT, LD A.R. SUBMITTED THAT DURING THE CURRENT YEAR, THE INTEREST FREE ADVANCE HAS BEE N CONVERTED TO EQUITY. ON PERUSAL OF THE ASSESSMENT ORDER, IT BECOMES CRYS TAL CLEAR THAT THE AO HAS SUBSTANTIATED BUSINESS EXPEDIENCY OF ADVANCING INTEREST FREE MONEY TO THE SUBSIDIARIES. IN THIS CONTEXT, WE MAY REFER TO THE ORDER OF THE COORDINATE BENCH IN ASSESSEES CASE FOR ASSESSMENT YEAR 2006-07 (SUPRA). THE COORDINATE BENCH AFTER CONSIDERING THE CONTENTI ONS OF THE ASSESSEE THAT INTEREST FREE ADVANCE WAS MADE FOR THE PURPOSE OF BUSINESS AS ASSESSEE CAN UTILIZE THE POWER GENERATED BY IT ONCE THE PROJECT IS COMPLETE, HELD THAT IN VIEW OF THE RATIO LAID DOWN BY THE SUPREME COURT IN THE CASE OF S.A. BUILDERS (SUPRA), SINCE INTEREST F REE ADVANCES WERE FOR THE PURPOSES OF BUSINESS, NO PRESUMPTIVE ADDITION CAN B E MADE BY COMPUTING INTEREST ON THE SAID INTEREST FREE ADVANCE. WE FIN D THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS FOR THE ASS ESSMENT YEAR 2006- 07(SUPRA) ON THE BASIS OF WHICH, COORDINATE BENCH H AS DECIDED THE ISSUE. THE DEPARTMENT HAS NOT BROUGHT ANY OTHER MATERIAL O R EVIDENCE TO CONTROVERT THE FINDINGS OF THE COORDINATE BENCH. H ENCE, RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH (SUPRA), WHICH IS ON THE BASIS OF THE RATIO LAID DOWN IN THE CASE OF S.A. BUILDERS (SUPRA), WE UPHOLD THE M.P. NOS.8&9/VIZAG/2014 M/S. ASIA PACIFIC COMMODITIES, TADEPALLIGUDEM 4 ORDER OF LD. CIT(A) BY REJECTING THE GROUNDS OF APP EAL TAKEN BY THE DEPARTMENT. 4. THE REVENUE IS NOT ABLE TO ESTABLISH THAT THERE IS A MISTAKE APPARENT ON RECORD COMMITTED BY THE TRIBUNAL WHILE PASSING THE ORDER. THEREFORE, MISCELLANEOUS APPLICATION ON THIS ACCOUN T IS DISMISSED. 5. SO FAR AS DISALLOWANCE U/S 14A OF THE ACT IS CON CERNED, THIS ISSUE WAS NEITHER BEFORE THE A.O. NOR BEFORE THE CIT(A), THEREFORE, IT IS NOT CONSIDERED BY THE TRIBUNAL. WE FIND THAT THERE IS N O MISTAKE APPARENT FROM THE RECORD OF THE TRIBUNAL. IN VIEW OF THE AB OVE, THERE IS NO MISTAKE APPARENT ON RECORD COMMITTED BY THE TRIBUNA L. 6. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS FI LED BY THE REVENUE FOR BOTH THE YEARS ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND APR16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /VISAKHAPATNAM: # /DATED : 22.04.2016 VG/SPS M.P. NOS.8&9/VIZAG/2014 M/S. ASIA PACIFIC COMMODITIES, TADEPALLIGUDEM 5 ' ( /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CIRCLE-1, RAJAHMUNDRY 2. / THE RESPONDENT THE ASIA PACIFIC COMMODITIES LT D., TANUKU ROAD, TADEPALLIGUDEM, WEST GODAVARI DISTRICT, TADEPALLIGU DEM 3. ) ( ) / THE CIT, RAJAHMUNDRY 4. ) ( ) / THE CIT(A), VISAKHAPATNAM 5. , , , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , / ITAT, VISAKHAPATNAM