MAKSON HEALTH CARE PVT LTD MAKSON INDUSTRIES PVT LTD BEFORE MERGER,MANDIDEEP RAISEN V. THE DCIT -10-2 (2), MUMBAI, MUMBAI

ITA 213/IND/2024

AI Insights

The case involves Makson Health Care Pvt. Ltd., which appealed against the order of the Commissioner of Income-Tax (Appeals)-NFAC, Delhi. The appeal arose from an assessment order passed by the AO under section 143(3) of the Income-tax Act, 1961, for the Assessment Year 2012-13. The AO had made an addition of Rs. 72,08,562 on account of proportionate disallowance out of interest expenditure under section 36(1)(ii) of the Act, which the assessee contested. The Tribunal noted that a similar issue had been remanded to the AO in the assessee's own case for AY 2013-14 & 2014-15, and thus decided to remand the current case as well for a fresh examination in light of the Supreme Court's judgment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470288 (ITAT-INDORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Other Referred Cases: South Indian Bank Ltd v. CIT (2021) 438 ITR 1 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: FORASSESSEEMADEASTRAIGHTFORWARDSUBMISSIONTHATTHEAO; FORREVENUEAGREEDTOTHESUBMISSIONOFLD.; SHRIASHISHPORWAL
• Assessee Lawyers: SHRIGAGANTIWARI
• Keywords: Set aside; Proportionate interest; Revised return
• Section: 143(3)

Judgement Text

"Page 1 of 4 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI UDAYAN DAS GUPTA, JUDICIAL MEMBER ITA No.213/Ind/2024 Assessment Year:2012-13 Makson Health Care Pvt. Ltd. Plot No.6A, AKVN Industrial Area, Mandideep, Raisen (M.P.) बनाम/ Vs. DCIT 10(2)(2) Mumbai (Assessee/Appellant) (Revenue/Respondent) PAN: AADCM3354P Assessee by Shri Gagan Tiwari, AR Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 22.01.2025 Date of Pronouncement 31.01.2025 आदेश/ O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by order of first appeal dated 15.01.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 17.03.2015 passed by learned DCIT-10(2)(2), Mumbai [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the assessee has filed this appeal on the grounds mentioned in Form No. 36. Makson Health Care Pvt. Ltd. ITA No. 213/Ind/2024 – AY 2012-13 Page 2 of 4 2. The background facts leading to present appeal are such that the assessee-company filed return of income of AY 2012-13 declaring a total income of Rs. 2,60,65,630/- followed by a revised return declaring a total income of Rs. 3,20,87,240/-. The case was selected for scrutiny-assessment and the AO finally passed order u/s 143(3) after making an addition of Rs. 72,08,562/- on account of proportionate disallowance out of interest expenditure u/s 36(1)(ii) and thereby determining total income at Rs. 3,92,95,800/-. Aggrieved, the assessee contested the impugned disallowance in first-appeal before CIT(A) but did not get success. Now, the assessee has come in next appeal before us. 3. Ld. AR for assessee made a straightforward submission that the AO has made impugned disallowance by observing that the assessee has diverted interest-bearing loans taken by it for giving interest-free loans and advances. But the fact is such that the assessee was having sufficient net worth / interest-free funds available for giving loans and advances. Ld. AR further submitted that identical issue has already been decided by ITAT, Indore in assessee’s own case for AY 2013-14 & 2014-15 in ITA No. 34 & 35/Ind/2023 order dated 25.09.2023 whereby the Co-ordinate Bench has remanded this issue to AO for a fresh adjudication. Therefore, the present case should also be remanded to AO in the very same terms. 4. Ld. DR for revenue agreed to the submission of Ld. AR. Makson Health Care Pvt. Ltd. ITA No. 213/Ind/2024 – AY 2012-13 Page 3 of 4 5. We have considered submissions of both sides. We re-produce below the relevant paras of order of ITAT, Indore (supra) quoted by Ld. AR: “6. Ground No.6 is regarding disallowance of interest made on account of interest free advances given by the assessee to sister concern. Ld. Sr. counsel has submitted that the assessee has given total loan and advance of Rs.7,76,09,009/- whereas the assessee’s own non-interest bearing fund is more than Rs.15 crore. 6.1 He has referred to page 14 of the assessment order and submitted that the details of the share capital and reserve & surplus are reproduced by the AO which shows that the assessee’s own interest free funds are more than sufficient to advance the interest free loans to the sister concern. In support of his contention he has relied upon the Hon’ble Supreme Court in case of South Indian Bank Ltd v. CIT (2021) 438 ITR 1 (SC). Thus, the Sr. counsel has submitted that on the legal point this issue is now covered by the judgment of Hon’ble Supreme Court however, since the availability of interest free fund was not verified and examined by the authorities below ttherefore, this issue may be set aside to the record of the AO for limited purpose of verification of the availability of interest free fund with the assessee. 6.2 On the other hand, ld. DR has submitted that since this aspect has not been examined by the authorities below therefore, this issue may be remanded to the AO for fresh adjudication in the light of the judgment of Hon’ble Supreme Court. 6.3 Having considering the rival submissions as well as relevant material on record we note that the AO has made disallowance of the interest on account of interest free loans given to the sister concern in para 5.7 as under: “5.7 In view of the above, the contention of the assessee is not accepted and proportionate disallowance of interest is hereby made, the resulting amount being non-eligible for deduction u/s.36(1)(ii) of the IT Act, 1916. On a perusal of the details of secured loans furnished by the assessee, it is noticed that the assessee has taken the said loans at the rate ranging from 12.75% to 13%. Therefore, the proportionate interest on interest free loans advanced is worked out by adopting the interest rate @12.75% on the total interest free loans aggregating to Rs.7,76,09,009/- as the majority of these loans are opening balances and the assessee has not provided the details of dates of advancing these loans. The same works out to Rs.98,95,148/- (12.75% of Rs.7,76,09,009/-):” 6.4 Similar disallowance was also made for A.Y.2014-15. Since the AO has not examined the factual aspect of availability of interest free funds with the assessee for advancing these loans to the sister concern therefore, in the facts Makson Health Care Pvt. Ltd. ITA No. 213/Ind/2024 – AY 2012-13 Page 4 of 4 and circumstances of the case, the impugned order qua this issue is set aside and the same is remanded to the record of the AO for fresh adjudication in the light of the judgment of Hon’ble Supreme Court in case of South Indian Bank Ltd v. CIT (supra).” 6. As the issue is identical, respectfully following the above order of Co- ordinate Bench, we too remand this matter to the record of AO for a fresh adjudication in the very same terms. 7. Resultantly, this appeal is allowed for statistical purpose. Order pronounced in open court / by putting on notice board as per Rule 34 of ITAT Rules, 1963 on 31/01/2025 Sd/- sd/- (UDAYAN DAS GUPTA) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 31/01/2025 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore "