The ACIT,GNR Circle,, Gandhinagar v. Gujarat Informatics Ltd.,, Gandhinagar

ITA 2507/AHD/2011 | 2008-2009
Pronouncement Date: 24-04-2015 | Result: Dismissed

Appeal Details

RSA Number 250720514 RSA 2011
Assessee PAN AABCG5863B
Bench Ahmedabad
Appeal Number ITA 2507/AHD/2011
Duration Of Justice 3 year(s) 6 month(s) 17 day(s)
Appellant The ACIT,GNR Circle,, Gandhinagar
Respondent Gujarat Informatics Ltd.,, Gandhinagar
Appeal Type Income Tax Appeal
Pronouncement Date 24-04-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 24-04-2015
Date Of Final Hearing 06-04-2015
Next Hearing Date 06-04-2015
Assessment Year 2008-2009
Appeal Filed On 07-10-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI SHAILEND RA K UMAR YADAV JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER . ITA. NO. 2507 /AHD/20 1 1 (ASSESSMENT YEAR: 2008 - 0 9 ) A SSTT . C OMMISSIONER OF I NCOME T AX GANDHINAGAR CIRCLE BLOCK NO.14 4 TH FLOOR UDHYOG BHAVAN SECTOR - 11 GANDHINAGAR APPELLANT VS. GUJARAT INFORMATICS LTD. BLOCK NO - 1 8 TH FLOOR UDH YOG BHAVAN SECTOR 11 GANDHINAGAR 382011 RESPONDENT & C.O. NO. 240 /AHD/201 1 (ASSESSMENT YEAR: 2008 - 0 9 ) GUJARAT INFORMATICS LTD. BLOCK NO - 1 8 TH FLOOR UDHYOG BHAVAN SECTOR 11 GANDHINAGAR 382011 APPELLANT I T A. NO. 2507 /AHD/11 & C.O. NO. 240 /AHD/11 FOR A.Y. 2008 - 0 9 (ACIT VS. GUJARAT INFORMATICS LTD.) PAGE 2 VS. ASSTT. COMMISSIONER OF INCOME TAX GANDHINAGAR CIRCLE BLOCK NO.14 4 TH FLOOR UDHYOG BHAVAN SECTOR - 11 GANDHINAGAR RESPONDENT PAN: A A BCG5863B / BY REVENUE :SHRI ROOPCHAND SR . D.R. / BY ASSESSEE : SHRI ANIL R. SHAH A.R. / DATE OF HEARING : 06 . 0 4 .201 5 / DATE OF PRONOUNCEMENT : 24 . 0 4 .201 5 ORDER PER SHAILENDRA KUMAR YADAV J . M: SIN CE BOTH THESE REVENUE S APPEAL S AND ASSESSEE S CROSS OBJECTION S ARE PERTAINED TO SAME ASSESSEE AND ARISING OUT FROM THE ORDER OF CIT(A) GANDHINAGAR AHMEDABAD DATED 11 . 0 7 .20 1 1 FOR A.Y. 0 8 - 0 9 S O THEY ARE BEING DISPOSED OF BY WAY OF COMMON ORDER FOR SAKE OF CONVENIENCE. 2. IN ITA NO. 2507 /AHD/20 1 1 FOR A.Y. 200 8 - 0 9 REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUND: I T A. NO. 2507 /AHD/11 & C.O. NO. 240 /AHD/11 FOR A.Y. 2008 - 0 9 (ACIT VS. GUJARAT INFORMATICS LTD.) PAGE 3 1. THE LEARNED CIT(A PPEALS ) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF INTEREST EXPENSES OF RS.1 30 16 252/ - ON UNUTILIZE D AMOUNT OF GRANTS RECEIVED BY THE ASSESSEE WITH NO OBLIGATION TO REPAY. 2. 1 IN CROSS OBJECTION NO. 240 /AHD/20 1 1 FOR A.Y. 200 8 - 09 ASSESSE E HAS FILED THE APPEAL ON THE FOLLOWING GROUND S : 1. THE LEARNED CIT(A) IN HIS SPEAKING ORDER HAS RIGHTLY HELD THAT EXPENDITURE AMOUNTING RS.1 30 16 252/ - CLAIMED BY YOUR RESPONDENT WAS RIGHTLY ALLOWABLE AS DEDUCTION U/S.36(1)(III) AND/OR 37(1) OF THE IT ACT. 2. THE DECISION OF THE LEARNED CIT(A) IS ON FACTS OF THE CASE AND PROVISIONS OF LAW AND IS COVERING THE VARIOU S ISSUES BACKED BY BINDING JUDGEMENTS AND IS THEREFORE REQUIRED TO BE UPHELD. 3. THE APPEAL FILED BY THE DY.CIT IS NOT SUSTAINABLE ON FACTS OF THE CASE AND AS PER PROVISO OF LAW AND THEREFORE IS REQUIRED TO BE DISMISSED. 3 . ASSESSING OFFICER ON PERUSAL OF PROFIT & LOSS ACCOUNT NOTICED THAT ASSESSEE HAS DEBITED A SUM OF RS.1 30 16 252/ - ON ACCOUNT OF INTEREST ON GRANTS/ADVANCES RECEIVED FROM THE DEPARTMENT OF SCIENCE AND TECHNOLOGY GOVERNMENT OF INDIA. HAVING CONSIDERED THE EXPLANATION IN THIS REGARD AS SESSING OFFICER HELD THAT THE AMOUNT OF INTEREST SHOULD BE ON BORROWED CAPITAL AND BORROWED CAPITAL SHOULD BE FOR THE PURPOSE OF BUSINESS OR PROFESSION AND AFTER DETAILED DISCUSSION THE INTEREST EXPENSES CLAIMED OF RS.1 30 16 252/ - WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASSESSEE. I T A. NO. 2507 /AHD/11 & C.O. NO. 240 /AHD/11 FOR A.Y. 2008 - 0 9 (ACIT VS. GUJARAT INFORMATICS LTD.) PAGE 4 3 . 1 MATTER WAS CARRIED BEFOR E THE FIRST APPELLATE AUTHORITY. CIT(A) FOLLOWING THE ORDER OF ITS PREDECESSOR FOR A.Y. 2006 - 07 AND 2007 - 08 ON THE ISSUE HELD THAT INTEREST WAS A CONTRACTUAL ASCERTAINABLE LIABILITY AND THIS AMOUNT OF RS.1 30 16 252/ - WAS HELD ASSESSABLE U/S. 37(1) OF THE ACT. NO NEXUS OF INTEREST EARNED IF ANY BY PARKING THIS FUND IS REQUIRED AS INTEREST AS PER CONTRACT. IN THE CIRCUMSTANCES INTEREST WAS HELD ALLOWABLE EVEN IF FUNDS WERE USED FOR ANY OTHER BUSINESS EXPEDIENCY OF ASSESSEE. ACCORDINGLY ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE. THIS VIEW OF CIT(A) IS FORTIFIED BY THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR A.Y. 2006 - 07. IN SIMILAR SET OF CIRCUMSTANCES ISSUE HAS BEEN DECIDED IN FAVOUR O F ASSESSEE BY HOLDING AS UNDER: 7. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF VOLUMINOUS COMPILATION FILED AND CASE LAWS CITED. THE ADMITTED FACTUAL POSITION IS THAT THE ASSESSEE - COMPANY IS A GOVERNM ENT UNDERTAKING INCORPORATED FOR THE IMPLEMENTATION OF IT POLICIES IN THE STATE OF GUJARAT AND TO PROVIDE CONSULTATION SERVICES TO VARIOUS GOVERNMENT DEPARTMENTS TOWARDS SOFTWARE DEVELOPMENT. CERTAIN GRANTS WERE GIVEN TO THE ASSESSEE. THERE WAS A CLAUSE AS PER CERTAIN GOVERNMENT REGULATIONS THAT IF AN AMOUNT REMAINS UNSPENT OUT OF THE GRANT THEN THE UNSPENT AMOUNT SHALL BEAR INTEREST @ 6% PER ANNUM. IN THE LIGHT OF THE SAID INSTRUCTIONS THE ASSESSEE HAS MADE THE PROVISION IN ITS BOOKS OF ACCOUNT. IN THIS REGARD FEW G.RS ARE PLACED ON RECORD. HOWEVER THE MAIN QUESTION BEFORE US IS THAT THE ACTION OF THE ASSESSEE OF PROVIDING 6% INTEREST ON THE UNSPENT AMOUNT OF GRANT IS ALLOWABLE WHETHER U/S.36(1)(III) OF IT ACT OR U/S.37(1) OF IT ACT. WE ARE OF THE VIEW THAT SINCE THE AMOUNT IN QUESTION WAS NOT IN THE NATURE OF BORROWINGS OR LOANS THEREFORE THE I T A. NO. 2507 /AHD/11 & C.O. NO. 240 /AHD/11 FOR A.Y. 2008 - 0 9 (ACIT VS. GUJARAT INFORMATICS LTD.) PAGE 5 PROVISIONS OF SECTION 36(1)(III) DO NOT APPLY ON THESE FACTS. WE ARE IN AGREEMENT WITH LD.CIT(A) THAT THIS PLEA OF THE ASSESSEE IS NOT ACCEPTABLE. ONCE WE HAVE H ELD SO AND THAT THIS VIEW HAS ALREADY BEEN EXPRESSED BY LD.CIT(A) THEREFORE THE OBJECTION OF THE REVENUE DEPARTMENT THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE EXPENDITURE U/S.36(1)(III) IS UNWARRANTED. BECAUSE OF THIS REASON WE HEREBY ALSO HOLD THAT THE CASE LAWS CITED BY LD.DR OF PEPSU ROAD TRANSPORTATION (SUPRA) DO NOT APPLY ON THE PRESENT FACTS OF THIS APPEAL BECAUSE OF THE REASON THAT THE HONBLE P&H HIGH COURT IN THAT CITED DECISION HAS SETTLED THE ISSUE WHICH REVOLVE AROUND THE PROVISIONS OF SECTION 36(1)(III) OF IT ACT. NOW THE QUESTION LEFT BEFORE US IS THAT WHETHER THE PROVISIONS SO MADE BY THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.37(1) OF IT ACT. IN THIS CONNECTION FEW DECISIONS WERE CITED BEFORE LD.CIT(A) AND CONSIDERING ALL THOSE D ECISIONS AS CITED SUPRA WE ARE OF THE CONSIDERED VIEW THAT ON ONE HAND THE ASSESSEE HAS EARNED INTEREST INCOME ON INVESTMENT OF THE SURPLUS FUND AND ON THE OTHER HAND MADE THE PROVISIONS OF INTEREST HENCE SUCH A CLAIM DOES FALL UNDER THE PROVISIONS OF SE CTION 37(1) OF IT ACT. WE HAVE BEEN INFORMED THAT THE UNSPENT SURPLUS FUNDS HAVE BEEN INVESTED AS PER THE GUIDELINES AND THEREUPON INTEREST WAS EARNED BY THE ASSESSEE. ON THE OTHER HAND THE ASSESSEE HAS TO PAY INTEREST THAT TOO AS PER THE DIRECTIONS OF TH E GOVERNMENT HENCE THE PROVISIONS MADE BY THE ASSESSEE IS THEREFORE MEANT FOR THE PURPOSE OF THE BUSINESS HENCE QUALIFY FOR CLAIM U/S.37(1) OF THE IT ACT. IN THE RESULT THE VIEW TAKEN BY THE LD.CIT(A) IS HEREBY CONFIRMED AND THIS GROU ND OF THE REVENUE IS DISMISSED. SIMILAR VIEW HAS BEEN TAKEN BY ITAT IN ASSESSEES OWN CASE FOR A.Y. 2007 - 08. IN VIEW OF THIS APPEAL OF REVENUE IS DISMISSED. 4 . THE CROSS OBJECTION FILED BY ASSESSEE IS ONLY IN SUPPORT OF VIEW TAKEN BY CIT(A) AND NO SPECIFIC LEGAL OBJ ECTION HAS BEEN I T A. NO. 2507 /AHD/11 & C.O. NO. 240 /AHD/11 FOR A.Y. 2008 - 0 9 (ACIT VS. GUJARAT INFORMATICS LTD.) PAGE 6 RAISED OR ANY LEGAL GROUND IS MENTIONED THEREFORE ISSUE RAISED BY WAY OF CROSS OBJECTION GOES REDUNDANT HENCE DISMISSED. 5 . IN RESULT REVENUE S APPEAL AND ASSESSEES CROSS OBJECTION BOTH ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF APRIL 201 5 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 24 /0 4 /2015 S.K.SINHA / COPY OF ORDER FORWARDED TO: - 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. / DR ITAT AHMEDABAD 6. / GUARD FILE. BY ORDER / /