The DCIT, Circle-1(1), Guntur v. M/s Virat Crane Industries Ltd., Gudivada

ITA 106/VIZ/2010 | 2004-2005
Pronouncement Date: 27-09-2010 | Result: Dismissed

Appeal Details

RSA Number 10625314 RSA 2010
Assessee PAN AAACV7372B
Bench Visakhapatnam
Appeal Number ITA 106/VIZ/2010
Duration Of Justice 7 month(s) 8 day(s)
Appellant The DCIT, Circle-1(1), Guntur
Respondent M/s Virat Crane Industries Ltd., Gudivada
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 27-09-2010
Date Of Final Hearing 06-09-2010
Next Hearing Date 06-09-2010
Assessment Year 2004-2005
Appeal Filed On 18-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 106 /VIZAG/ 20 10 ASSESSMENT YEAR : 2004 - 05 DCIT CIRCLE - 1(1) GUNTUR M/S. VIRAT CRANE INDUSTRIES GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AAACV 7372B APPELLANT BY: SHRI SUBRATA SARKAR DR RESPONDENT BY: SHRI G.V.N. HARI CA ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.1 91 66 356/ - MADE BY THE A.O. HOLDING THAT THIS AMOUNT WAS GIVEN AS A LOAN BY M/S. VIRAT CRANE AGRITECH LTD. 2. THE FACTS IN BRIEF BROUGH T OUT FROM THE RECORD ARE THAT THE A.O. HAS ADDED THIS AMOUNT STATING THAT M/S. VIRAT CRANE AGRITECH LIMITED WAS FOUND TO BE A LOSS MAKING COMPANY AS PER COMPUTATION OF TOTAL INCOME OF VIRAT CRANE AGRITECH LIMITED FOR A.Y. 2004 - 05. THE A.O. HAS ALSO DOUBT ED THE CREDITWORTHINESS OF THE LENDER COMPANY. THE A.O. HOWEVER MADE AN ADDITION OF RS.66 57 651/ - AS AGAINST THE INCOME RETURN OF RS.1 83 990/ - BY THE ASSESSEE. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT A.O. HAS NOT PROVIDE D ANY DETAILS AS TO HOW FIGURE OF RS.66 57 651/ - WHICH WAS DETERMINED AS THE ASSESSEES TOTAL INCOME HAD BEEN ARRIVED AT . HE HAS ALSO FILED THE COPY OF ACCOUNT OF M/S. VIRAT CRANE AGRITECH LIMITED WHERE FROM IT IS EVIDENT THAT ENTIRE CLOSING BALANCE IS TR EATED 2 AS INCOME OF THE ASSESSEE WITHOUT CONSIDERING THE ACCOUNT COPY AND THEIR EXPLANATIONS FILED. M/S. VIRAT CRANE AGRITECH LIMITED WAS ALSO STATED TO BE ASSESSED TO TAX AND THE FINAL ACCOUNT OF THE SAID COMPANY ALONG WITH THE RETURN OF INCOME FILED BY T HEM WAS ALSO SUBMITTED BEFORE THE A.O. IT WAS FURTHER CONTENDED BEFORE THE CIT(A) THAT VARIOUS PAYMENTS HAD BEEN MADE ON BEHALF OF THE ASSESSEE BY THE SAID CREDITORS AND THAT ALL THE AMOUNTS HA D BEEN PAID THROUGH CHEQUES OR TRANSFERS. THERE WERE NO CASH TRANSACTIONS IN THE ACCOUNT AND THE BALANCE SHEET OF THE CREDITOR ALONG WITH THE DETAILS OF THE DEBTORS AS PER BOOKS OF CREDITORS WERE ALSO SUBMITTED BEFORE THE A.O. IT WAS FURTHER CONTENDED THAT PERUSAL OF THE INFORMATION FILED WOULD CLEARLY INDICATE THA T THE AMOUNT RECEIVED FROM THE SAID CONCERN WERE ALL PROVED TO BE GENUINE WERE ALL ACCOUNTED FOR IN THE BOOKS OF THE SAID COMPANY AND THE SAID COMPANY HAD PROVED THE AMOUNTS THROUGH THEIR BANK ACCOUNTS. THE CIT(A) EXAMINED THE ISSUE IN THE LIGHT OF THESE FACTS AND BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE THE CIT(A) DELETED THE ADDITIONS. FOR THE SAKE OF REFERENCE WE EXTRACT THE RELEVANT PORTION OF HIS ORDER AS UNDER: - THE PERUSAL OF ASSESSMENT RECORDS SHOWS THAT THE APPELLANT WAS ONLY A SKED TO PRODUCE DETAILS OF FRESH UNSECURED LOANS TAKEN DURING THE YEAR AND THAT THIS INFORMATION WAS FILED VIDE LETTER DATED 6.7.2006. IT IS SEEN THAT COPIES OF ACCOUNTS FROM THE PARTIES WERE ALSO FILED BEFORE THE ASSESSING OFFICER. A PERUSAL OF THE COPY OF ACCOUNT SHOWS THAT M/S. VIRAT CRANE AGRITECH LTD. HAS MADE CERTAIN PAYMENTS ON BEHALF OF THE APPELLANT COMPANY ALSO. FURTHER IT IS SEEN THAT THE ENTIRE AMOUNTS HAVE BEEN PAID THROUGH BANK. I AGREE WITH THE APPELLANTS CONTENTION THAT WHILE CONSIDERIN G THE CREDITWORTHINESS OF A PARTY IT IS NOT WHETHER THE LENDER IS MAKING A PROFIT OR A LOSS THAT IS RELEVANT. WHAT IS MORE IMPORTANT TO CONSIDER IS WHETHER ON THE DATE OF LENDING THE AMOUNTS THE LENDER HAD THE NECESSARY FUNDS WITH HIM OR NOT. IN THIS CA SE THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE LENDER DID NOT HAVE THE FUNDS TO MAKE THE PAYMENTS/ADVANCES THAT IT DID TO THE APPELLANT. AS STATED EARLIER ALMOST ALL OF THESE PAYMENTS ARE IN CHEQUES/THROUGH THE BANK. EX CEPT FOR THE FEW LINES REPRODUCED IN THE EARLIER PARAGRAPHS THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY FACT OR FINDING TO SHOW THAT M/S. VIRAT CRANE AGRITECH LTD. DID NOT HAVE THE CREDITWORTHINESS TO ADVANCE THE MONEYS TO THE APPELLANT COMPANY. I THEREFORE HOLD THAT THE ASSESSING OFFICER 3 ERRED IN HOLDING THAT THE AMOUNT OF RS.1 91 66 356/ - WAS TO BE TREATED AS INCOME OF THE APPELLANT ON THE GROUND THAT THE LENDER BEING A LOSS MAKING COMPANY DID NOT HAVE THE CREDITWORTHINESS TO ADVANCE THE SUMS TO THE APPELLANT. THE APPELLANT IS ALSO AGGRIEVED BY THE DISALLOWANCE OF UNABSORBED DEPRECIATION AND BUSINESS LOSS BROUGHT FORWARD FROM EARLIER YEARS. THE ASSESSING OFFICER HAS NOT GIVEN ANY DETAILS TO SHOW HOW THE LOSS HAS BEEN ARRIVED AT AND SET OFF. IT IS SEEN THAT VIDE ORDER 7.10.2009 THE DCIT CIRCLE - 1 GUNTUR (THE PRESENT ASSESSING OFFICER) HAS PASSED AN ORDER U/S 154 OF THE ACT. THIS ORDER WAS PASSED AFTER IT WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT THE LOSSES SET OFF IN THE ORIGI NAL ASSESSMENTS REPRESENTED THE LOSSES ARRIVED AT AS PER BOOKS OF ACCOUNTS FOR THE PURPOSES OF CALCULATION OF TAX U/S 115JB OF THE ACT. THE ASSESSING OFFICER AFTER CONSIDERING THESE SUBMISSIONS ARRIVED AT THE TOTAL LOSSES AVAILABLE TO BE CARRIED FORWARD A ND SET OFF IN THE ASSESSMENT YEAR 2004 - 05. SINCE THE ASSESSING OFFICER HAS ALREADY CONSIDERED THE APPELLANTS GRIEVANCE WITH REFERENCE TO THE DISALLOWANCE OF UNABSORBED DEPRECIATION AND LOSSES THE GROUNDS RELATING TO THIS ARE TREATED AS ALLOWED FOR STATI STICAL PURPOSES. 3 . NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE US BUT COULD NOT POINT OUT A SPECIFIC DEFECT IN THE ORDER OF THE CIT(A). HE SIMPLY PLACED THE RELIANCE UPON THE ORDER OF THE A.O. 4 . THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HAS SUBMITTED THAT THE ASSESSEE HAS PLACED THE RELEVANT EVIDENCE TO PROVE THE BASIC INGREDIENTS I.E. THE GENUINENESS OF THE TRANSACTIONS CREDITWORTHINESS AND THE IDENTITY OF THE CREDITOR BEFORE THE A.O. THEREFORE THE PRIMARY ONUS LAY UPON IT HAS BEEN D ULY DISCHARGED. 5 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RECORD WE FIND THAT IT IS NOT A CASE WHERE THE ASSESSEE HAS TAKEN A LOAN OR ADVANCED FROM A CREDITOR IN CASH. IT IS A CASE WHERE A SISTER CONCERN OF THE ASSESSEE HA D MADE CERTAIN PAYMENTS ON BEHALF OF THE ASSESSEES TO ITS CREDITORS THROUGH BANKING CHANNELS. IDENTITY AND THE GENUINENESS OF 4 TRANSACTIONS WERE NOT DISPUTED. THE A.O. HAS SIMPLY RAISED A DOUBT ABOUT THE CREDITWORTHINESS OF THE CREDITOR. BUT NO CONCRETE MATERIAL WAS BROUGHT ON RECORD BY THE A.O. TO DOUBT THE CREDITWORTHINESS OF THE SISTER CONCERN. IT WAS MERELY ON THE BAS IS OF CONJECTURES AND SURMISES WHICH ARE NOT SUFFICIENT TO HOLD AN ADDITION. WE THEREFORE FIND NO MERIT IN THE REVENUES APPEAL AND ACCORDINGLY WE DISMISS THE SAME AND CONFIRM THE ORDER OF THE CIT(A). 6 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 27 - 09 - 20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 27 - 9 - 2010. COPY TO 1 THE DCIT CIRCLE - 1(1) GUNTUR 2 M/S. VIRAT CRANE INDUSTRIES LTD. 25 - 2 - 1 MASTAN DARGA G.T. ROAD GUNTUR 3 THE CI T GUNTUR 4 THE CIT (A) GUNTUR 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM