Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 0489 (ITAT-AGRA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 11 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
16-05-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
25-03-2013
Assessment Year
2008-2009
Appeal Filed On
29-05-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 244/AGRA/ 2012 ASSESSMENT YEAR 2008-09 PRAKASH COLD STORAGE VS. ADDL. COMMISSIONER OF 1165, NARAICH HATHRAS ROAD, INCOME-TAX, AGRA RANGE-4, AGRA (PAN AABFP9700B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHESH AGARWAL, C.A. RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 25.03.2013 DATE OF PRONOUNCEMENT : 04.04.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A) II AGRA DATED 16.03.2012 FOR A.Y.2008-09, C HALLENGING ADDITION ON THE GROUND OF DISALLOWANCE OF INTEREST TO THE EX TENT OF RS.1,47,815/- ON ADVANCE OF RS.24,63,584/- ITA NO.244/AGRA/2012 A.Y. 2008-09 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT ACCORD ING TO A.O. THE ASSESSEE HAS OBTAINED SECURED LOAN OF RS.74,85,474/ - AGAINST THE LAST YEARS FOR RS.29,75,185/-. AS PER SCHEDULE 15 OF BA LANCE SHEET, ASSESSEE HAS SHOWN NET PAYMENT OF INTEREST FOR RS.2,88,837/- . ASSESSEE WAS REQUIRED TO FILE DETAILS OF ADVANCES AS PER BALANCE SHEET AND THE PURPOSE OF THE ADVANCES. THE ASSESSEE IN THE REPLY SUBMITTE D THAT ADVANCES WERE FOR THE PURPOSE OF BUSINESS. ACCORDING TO A.O. ASSE SSEE COULD NOT CLARIFY AS TO WHY ADVANCE OF RS.24,63,584/- WAS GIVEN WITHO UT CHARGING INTEREST TO M/S. PRAKASH IRON FOUNDARY AGRA (SISTER CONCERN) . THE A.O. WAS THEREFORE OF THE VIEW THAT SINCE IT WAS AN ADVANCE INTEREST FREE GIVEN TO ASSESSEES CONCERN, ON THE OTHER HAND, ASSESSEE IS PAYING INTEREST TO THE BANK, THEREFORE, IT WAS MERELY AN ACCOMMODATION ENT RY AND INTEREST WAS PAID ON THE BORROWED FUND AND THE FUNDS HAVE BEEN D IVERTED THEREFORE, 6% INTEREST PAID TO THE PARTNERS WAS DISALLOWED AN D ADDITION WAS MADE OF RS.1,47,815/-. THE LEARNED CIT(A) CONFIRMED THE ADDITION. 3. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE WRITTEN SUBMISSION OF THE ASSESSEE HAS BEEN INCORPORATED IN THE APPELLATE ORDER BUT IT WAS NOT CONSIDERED BY THE LEARNED CIT(A). DURING FINANCIAL YEAR 2004-05 RELEVANT TO A.Y. 2005-06, ASSESSEE FIRM PURCHASED A GAS BASED GENERATOR ITA NO.244/AGRA/2012 A.Y. 2008-09 3 FOR BACKUP POWER ARRANGEMENT. GAS AUTHORITY OF INDI A LTD. DID NOT ACCEPT THE APPLICATION MADE FOR THE GAS CONNECTION, THEREFORE, THE GENERATOR WAS SOLD TO M/S. PRAKASH IRON FOUNDRY ANO THER GROUP CONCERN IN ADJOINING PREMISES DURING THE SAME FINANCIAL YEA R. AS PER ARRANGEMENT, THE COST OF GENERATOR SET WAS TO BE PA ID BY M/S. PRAKASH IRON FOUNDRY IN THE NEXT FIVE YEARS AND IN RETURN T HE BACKUP POWER SERVICES WERE MADE AVAILABLE TO THE ASSESSEE FIRM F OR KEEPING ITS STORED MATERIAL SAFE AT NO RUNNING COST. ULTIMATELY WHOLE PAYMENT IS RECEIVED AND ADJUSTED. THEREFORE, THE ADDITION IS WHOLLY UNJ USTIFIED. HE HAS FILED COPIES OF INVOICE OF PURCHASE OF GENERATOR AT PAGE 24 OF THE PAPER BOOK AND COPIES OF ACCOUNT OF M/S. PRAKASH IRON FOUNDRY, AGRA AT PAGES 25 TO 31 OF THE PAPER BOOK AND SUBMITTED THAT IT WAS A CL OSING BALANCE IN A.Y. 2005-06 FOR A SUM OF RS . 24,63,584 /- WHICH IS CARRIED FORWARD TO SUBSEQUENT ASSESSMENT YEAR INCLUDING THE ASSESSMENT YEAR UNDER APPEAL AND FURTHER NO DISALLOWANCE HAVE BEEN MADE UNDER SE CTION 36(III), THEREFORE, ADDITION IS WHOLLY UNJUSTIFIED. 4. ON THE OTHER HAND, LEARNED AUTHORISED REPRESENTA TIVE RELIED UPON ORDERS OF AUTHORITY BELOW AND RELIED UPON THE DECIS ION OF S.A. BUILDERS ITA NO.244/AGRA/2012 A.Y. 2008-09 4 LTD. VS. COMMISSIONER OF INCOME TAX (APPEALS) AND A NOTHER [2007] 288 ITR 1 (SC). 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS, PERUSED TH E FINDINGS OF THE BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE ASSESSEE HAS FILED COPY OF THE INVOICE FOR PURCHASE OF GENERATOR IN THE PAPER BOOK IN A SUM OF RS.24,41,800/- IN A.Y. 2005-06 AND IN THE SA ME YEAR THIS AMOUNT WAS DEBITED IN THE ACCOUNT OF M/S. PRAKASH IRON FOU NDRY, AGRA AND FURTHER SUM OF RS.41,784/- WERE ALSO DEBITED ON THE ACCOUNT OF FOUNDRY DIVISION IN THE ACCOUNT OF SAME PARTY AND AFTER GIV ING CREDIT OF RS.20,000/- THERE IS A DEBIT BALANCE OF RS.24,63,58 4/- IN A.Y. 2005-06 AGAINST M/S. PRAKASH IRON FOUNDRY, AGRA. THIS IS TH E SAME AMOUNT WHICH BECOME OPENING BALANCE IN A.Y. 2006-07, 2007-08, 20 08-09 AND CONTINUED THEREAFTER AND AFTER RECEIPT OF PART PAYM ENT THE AMOUNT WAS ADJUSTED. THUS, THE AMOUNT IN QUESTION WAS THE SALE PRICE OF THE GENERATOR WHICH WAS DEBITED IN THE ACCOUNT OF M/S. PRAKASH IR ON FOUNDRY WAY BACK FROM A.Y.2005-06. THE OPENING BALANCE OF EARLIER Y EARS THUS CANNOT BE CONSIDERED IN ASSESSMENT YEAR UNDER APPEAL. THUS, N O AMOUNT WAS ADVANCED TO M/S. PRAKASH IRON FOUNDRY WITHOUT INTER EST AS IS NOTED BY THE A.O. NO AMOUNTS HAVE BEEN DIVERTED FOR NON BUSINESS PURPOSES FROM THE ITA NO.244/AGRA/2012 A.Y. 2008-09 5 BORROWED FUND. THUS, NO DISALLOWANCE COULD BE MADE UNDER SECTION 36(1)(III) OF THE INCOME TAX ACT. FURTHER THE WHOLE BASIS OF INTEREST PAID TO THE PARTNERS OF 6% CANNOT BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCE MADE OUT OF THE INTEREST. CONSIDERING THE ABOVE DISCUSSION THE WHOLE BASIS OF THE A.O. IN DISALLOWING THE INTE REST IN A SUM OF RS.1,47,815/- IS WITHOUT AN JUSTIFICATION OR BASIS. THE ORDERS OF AUTHORITY BELOW ARE, THEREFORE, SET ASIDE AND ABOVE ADDITION IS DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (A.L. GEHLOT) (BHAVNE SH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCO ME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY
