M/S UNIWAYS AGRI COMMODITIES PVT. LTD., Mumbai v. THE ACIT-4(1), Bhopal

CO 16/IND/2016 | 2011-2012
Pronouncement Date: 28-09-2016 | Result: Dismissed

Appeal Details

RSA Number 1622723 RSA 2016
Assessee PAN AABCU0306P
Bench Indore
Appeal Number CO 16/IND/2016
Duration Of Justice 3 month(s) 15 day(s)
Appellant M/S UNIWAYS AGRI COMMODITIES PVT. LTD., Mumbai
Respondent THE ACIT-4(1), Bhopal
Appeal Type Cross Objection
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-09-2016
Assessment Year 2011-2012
Appeal Filed On 13-06-2016
Judgment Text
ACIT VS. UNIWAYS AGRI COMMODITIES PVT.LTD ITA NO. 596/IND/2015 & CO 16/IND/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI D.T. GARASIA JM & SHRI O.P. MEENA AM ITA NO.596/IND/2015 A.Y.2011-12 ACIT 4(1) BHOPAL ::: APPELLANT VS M/S UNIWAYS AGRI COMMODITIES PVT.LTD BHOPAL PAN AABCU 0306P ::: RESPONDENT CO NO. 16/IND/2016 ARISING OUT OF ITA NO.596/IND/2015 M/S UNIWAYS AGRI COMMODITIES PVT.LTD BHOPAL ::: OBJECTOR VS ACIT 4(1) BHOPAL ::: RESPONDENT APPELLANT BY SHRI MOHD. JAVED RESPONDENT BY SHRI ANIL KHABYA DATE OF HEARING 24.8.2016 DATE OF PRONOUNCEMENT 2 8 . 9 .2016 ACIT VS. UNIWAYS AGRI COMMODITIES PVT.LTD ITA NO. 596/IND/2015 & CO 16/IND/2016 2 O R D E R PER SHRI D.T. GARASIA JM THE REVENUE IS IN APPEAL WHEREAS THE ASSESSEE IS IN CROSS OBJECTION AGAINST THE ORDER OF THE LEARNED CIT(A ) BHOPAL-2 DATED 6.5.2015. 2. IN THE APPEAL THE ONLY ISSUE TAKEN BY THE REVENUE I S THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN RESTRICT ING THE DISALLOWANCE OF INTEREST EXPENSES TO RS.55 39 718/- INSTEAD OF RS. 79 13 354/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER NOTICED FROM THE P&L ACCOUNT THAT THE ASSESSEE HAS DEBITED RS.4 01 26 015/- ON ACCOUNT OF INTEREST EXPE NSES. IT WAS ALSO OBSERVED FROM THE BALANCE SHEET OF THE ASSE SSEE THAT THE ASSESSEE HAS GIVEN LOANS AND ADVANCES AMOUNTING TO RS. 25 08 63 996/-. THE ASSESSING OFFICER REQUIRE D THE ASSESSEE TO PROVIDE DETAILS OF LOANS AND ADVANCES GIVEN INTEREST CHARGED ON THEM DETAILS OF TDS AND THE BUSIN ESS ACIT VS. UNIWAYS AGRI COMMODITIES PVT.LTD ITA NO. 596/IND/2015 & CO 16/IND/2016 3 PURPOSE BEHIND GIVING THESE LOANS AND ADVANCES. IN RESPONSE THE ASSESSEE SUBMITTED DETAILS OF LOANS AND ADVANCES FROM WHICH THE ASSESSING OFFICER NOTED THAT T HE ASSESSEE HAS GIVEN INTEREST FREE LOANS AND ADVANCES OF RS.10 66 53 698/- TO THE GROUP COMPANIES. FROM THIS THE ASSESSING OFFICER INFERRED THAT ON THE ONE HAND THE ASSESSEE IS TAKING LOAN AND PAYING INTEREST ON THE SAME AND ON THE OTHER THE ASSESSEE IS GIVING INTEREST FRE E LOANS AND ADVANCES TO THE GROUP CONCERNS. THE ASSESSING OFF ICER THEREFORE ASKED THE ASSESSEE AS TO WHY INTEREST @ 12% ON INTEREST FREE LOANS AND ADVANCES OF RS. 10 66 53 698/- SHOULD NOT BE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE IN RESPONSE TO WHICH THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION EXCEPT GIVING THE AMOUNT OF INTEREST @ 12% ON INTEREST FREE LOANS AND ADVANCES WHI CH COMES TO RS. 79 13 354/- WHICH IS CALCULATED ON DAY T O DAY BALANCES. IN THIS SCENARIO THE ASSESSING OFFICER ADDED RS.79 13 354/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACIT VS. UNIWAYS AGRI COMMODITIES PVT.LTD ITA NO. 596/IND/2015 & CO 16/IND/2016 4 ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES. ON APPEAL THE LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO RS.55 39 718/-. THE LEARNED CIT(A) OBSERVED AS UNDER :- 3.2 APPELLANTS SUBMISSIONS ALONG WITH ASSESSMENT ORDER AND RECORDS OF THE A.O. HAVE BEEN CONSIDERED CAREFULLY. THERE IS NO DENYING THE FACT THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT H AS ENGAGED MAINLY IN SALE/PURCHASE OF SHARES AND INVESTMENTS WHICH ARE STATED TO BE ITS ANCILLARY OBJECTS ONLY. EVEN ITS CONCERNED SUBSIDIARY COMPANY I.E. UNIQUEWAYS REALTERS PVT. LTD. TO WHOM MAJOR PORTION OF SUCH INTEREST FREE ADVANCES BEEN MADE H AS DECLARED INCOME OF RS.41 53 863/- EARNED FROM DIVIDEND (RS.6 28 815/-) RENT (RS.7 89 238/-) INTEREST (RS.26 92 602/-) AND INCOME ON INVESTMENTS (RS.43 207/-). THUS NO BUSINESS ACTIVITIES HAVE BE EN CARRIED OUT BY ITS MAIN SUBSIDARY COMPANY ALSO TO ACIT VS. UNIWAYS AGRI COMMODITIES PVT.LTD ITA NO. 596/IND/2015 & CO 16/IND/2016 5 PROVE THE APPELLANTS CONTENTION OF COMMERCIAL EXPEDIENCY. AFTER PERUSAL OF ENTIRE MATERIAL ON RECORDS DISALLOWANCE OF INTEREST OF RS.55 39 718/- CALCULATED ON THE BASIS OF INTEREST FREE ADVANCES O F RS.9 95 29 915/- AS PER APPELLANTS FINANCIAL STATEMENT IS FOUND SUSTAINABLE AND ACCORDINGLY CONFIRMED. 4. BEFORE US THE LEARNED DR RELIED UPON THE ASSESSME NT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 5. AFTER CAREFUL EXAMINATION OF THE MATERIAL AVAILABLE ON RECORD IN VIEW OF THE SUBMISSIONS OF THE PARTIES WE FIND THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE IS ENGAGED MAINLY IN SALE/PURCHASE OF SHARES AND INVESTMENTS WHICH ARE STATED TO BE ITS ANCILLARY OBJECT S ONLY. EVEN ITS CONCERNED SUBSIDIARY COMPANY I.E. ACIT VS. UNIWAYS AGRI COMMODITIES PVT.LTD ITA NO. 596/IND/2015 & CO 16/IND/2016 6 UNIQUEWAYS REALTERS PVT. LTD. TO WHOM MAJOR PORTION O F SUCH INTEREST FREE ADVANCES BAD BEEN MADE HAS DECLARED INCOME OF RS. 41 53 863/- EARNED FROM DIVIDEND (RS.6 28 815/-) RENT (RS.7 89 238/-) INTEREST (RS.26 92 602/-) AND INCOME ON INVESTMENTS (RS.43 20 7/-). THUS NO BUSINESS ACTIVITIES HAVE BEEN CARRIED OUT BY ITS MAIN SUBSIDIARY COMPANY ALSO TO PROVE THE ASSESSEES CONTENTION OF COMMERCIAL EXPEDIENCY IS NOT PROVED. W E FIND THAT THE LEARNED CIT(A) HAS CALCULATED THE DISALLOWANCE OF INTEREST @ 9% AS THE ASSESSEE HAS BORROWED MAJOR PORTI ON FROM M/S SANWARIA AGROILS LIMITED. THEREFORE ON THAT BASIS THE DISALLOWANCE OF INTEREST WAS RESTRICTED TO RS.55 39 718/- ONLY BY THE LEARNED CIT(A) WHEREAS THE ASSESSING OFFICER HAS ADDED RS.79 13 354/- @ 12%. TH E LEARNED CIT(A) HAS GRANTED PARTIAL RELIEF I.E. ONLY DIF FERENCE OF RATE OF INTEREST I.E. 12% TO 9%. WE FIND FROM TH E ORDER OF THE LEARNED CIT(A) THAT HE HAS CONFIRMED THE FINANCIAL STATEMENT OF THE ASSESSEE AND GRANTED RELIEF. THEREFORE OUR ACIT VS. UNIWAYS AGRI COMMODITIES PVT.LTD ITA NO. 596/IND/2015 & CO 16/IND/2016 7 INTERFERENCE IS NOT CALLED. THIS GROUND OF THE REVEN UE IS THUS DISMISSED. 6. IN VIEW OF OUR ABOVE FINDINGS THE CROSS OBJECTI ON OF THE ASSESSEE BECOME INFRUCTUOUS AND DISMISSED AS SUCH. 7. IN THE RESULT THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 24 AUGUST 2016 SD SD (O.P. MEENA) (D.T. G ARASIA) ACCOUNTANTMEMBER JUDICIAL MEMB ER 28 SEPTEMBER 2016 DN/- ACIT VS. UNIWAYS AGRI COMMODITIES PVT.LTD ITA NO. 596/IND/2015 & CO 16/IND/2016 8