Hem Kiran Diesels, Kolhapur v. DCIT,Cir.-2,, Kolhapur

ITA 303/PUN/2010 | 2005-2006
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 30324514 RSA 2010
Assessee PAN LLANT1227E
Bench Pune
Appeal Number ITA 303/PUN/2010
Duration Of Justice 1 year(s) 5 month(s) 5 day(s)
Appellant Hem Kiran Diesels, Kolhapur
Respondent DCIT,Cir.-2,, Kolhapur
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-07-2011
Assessment Year 2005-2006
Appeal Filed On 23-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI G.S. PANNU (AM) ITA NO. 303/PN/2010 (ASSTT. YEAR: 2005-06) HEM KIRAN DIESELS ... APPEL LANT 1227 E RAJARAM ROAD KOLHAPUR 416008 PAN : NOT AVAILABLE V. DY. COMMISSIONER OF INCOME TAX RESPONDENT CIRCLE 2 KOLHAPUR APPELLANT BY : SHRI NANI WADEKAR RESPONDENT BY : SHRI SANJAY SINGH ORDER PER I.C. SUDHIR JM THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS : 01. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -2 KOLHAPUR FAILED TO APPRECIATE THAT THE OUTSTANDING ADVANCES TO SISTER CONCERNS WERE GIVEN OUT OF THE PROFITS AND THE CAPITAL ACCOUNT BA LANCES OF THE PARTNERS. 02. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2 KOLHAPUR FAILED TO APPRECIATE THAT THE ADVANCES TO THE SISTE R CONCERNS WERE GIVEN FOR GENUINE BUSINESS CONSIDERATION OF THE ASSESSEE. 03. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2 KOLHAPUR HAS ERRED IN NOT APPRECIATING THAT THE LOSS FOR TH E ASSESSMENT YEAR 2005-06 IS NOT AFFECTED BY THE ADVANCES GIVEN TO THE SISTER CONCERNS AS THE ADVANCES WERE GIVEN DURING THE PERIOD 1994 TO 1999. 04. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -2 KOLHAPUR FAILED TO APPRECIATE THAT THE PROPORTIONATE INTERES T ON THE ADVANCES TO THE SISTER CONCERNS WAS DISALLOWED IN EARLIER A.Y. 2003 -04 AND 2004-2005 AND THAT THERE SHOULD BE NO FURTHER DISALLOWANCE OF THE PROPORTIONATE INTEREST IN EACH YEAR. THE ASSESSEE MAINTAINS THAT THE INTEREST DISALLOWED RS.968846/- IS ALLOWABLE UNDER SECTION 36(1) (III) OF THE INCOME TAX ACT 19 61. ITA . NO 303/PN/2010 HEN KIRAN DIESELS A.Y. 2005-06 PAGE OF 3 2 2. AT THE OUTSET OF HEARING THE LD. A.R. POINTED O UT THAT AN IDENTICAL ISSUE ABOUT THE VALIDITY OF DISALLOWANCE OF INTEREST CLAIMED U/ S. 36(1)(III) OF THE I.T. ACT HAS ALREADY BEEN ADJUDICATED UPON IN THE CASE OF ASSESS EE ITSELF BY THE TRIBUNAL FOR THE A.YS. 2003-04 AND 2004-05 VIDE ITA NOS. 155 & 156/P N/2008 ORDER DT. 15 TH DECEMBER 2009. A COPY OF THE SAID ORDER WAS ALSO S UPPLIED. 3. THE LD. D.R. DID NOT DISPUTE THE ABOVE SUBMISSIO N OF THE ASSESSEE. HE HOWEVER PLACED RELIANCE ON THE ORDERS OF THE AUTHO RITIES BELOW ON THE ISSUE. 4. AFTER HAVING GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW AND THE ORDER DT. 15 TH DECEMBER 2009 OF THE TRIBUNAL IN THE CASE OF ASSES SEE ITSELF (SUPRA) WE FIND THAT ON AN IDENTICAL ISSUE UNDER THE SIMILAR FACTS AND CIRCUMSTANCES THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE FILE OF TH E A.O FOR FRESH DECISION IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL BOMB AY HIGH COURT IN THE CASE OF CIT V/S. RELIANCE UTILITIES AND POWER LTD. (INCOME TAX APPEAL NO. 1398 OF 2008) AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F S.A. BUILDERS 388 ITR 1(SC) SINCE THERE WAS NO FINDING OF THE FACT BY THE REVEN UE AUTHORITIES ON THE ISSUE OF AVAILABILITY OF SUFFICIENT NON-INTEREST OWN FUNDS A ND AS WELL AS THE COMMERCIAL EXPEDIENCY OF GIVING THE ADVANCES TO SISTER CONCERN . UNDER SIMILAR CIRCUMSTANCES THE A.O HAS DISALLOWED INTEREST OF RS.9 68 846/- U/ S. 36(1)(III) OF THE ACT IN THE PRESENT CASE. THE CONTENTION OF THE ASSESSEE REMA INED THAT THE OUTSTANDING ADVANCES TO SISTER CONCERNS WERE GIVEN OUT OF THE PROFITS AND THE CAPITAL ACCOUNT BALANCES OF THE PARTNERS. IT WAS SUBMITTED THAT A DVANCES TO THE SISTER CONCERNS WERE GIVEN FOR GENUINE BUSINESS CONSIDERATION OF TH E ASSESSEE AND LOSS FOR THE A.Y. 2005-06 WAS NOT AFFECTED BY THE ADVANCES GIVEN TO T HE SISTER CONCERNS AS THE ADVANCES WERE GIVEN DURING THE PERIOD 1994-1999. IT WAS FURTHER CONTENDED THAT THE PROPORTIONATE INTEREST ON THE ADVANCES TO THE S ISTER CONCERNS WAS DISALLOWED IN EARLIER A.Y. 2003-04 AND 2004-05 AND THERE SHOULD BE NO FURTHER DISALLOWANCE OF ITA . NO 303/PN/2010 HEN KIRAN DIESELS A.Y. 2005-06 PAGE OF 3 3 THE PROPORTIONATE INTEREST IN EACH YEAR. WE FIND T HAT THE ABOVE CONTENTIONS OF THE ASSESSEE HAVE NOT BEEN CONSIDERED BY THE AUTHORITIE S BELOW IN VIEW OF THE AFORESAID DECISIONS OF HONBLE SUPREME COURT AND T HE HONBLE JURISDICTIONAL BOMBAY HIGH COURT. WE THUS FOLLOWING THE DECISION OF PU NE BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE A.YS. 2003-04 AND 2 004-05 (SUPRA) SET ASIDE THE MATTER TO THE FILE OF THE A.O WITH DIRECTION TO HIM TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF ABOVE DECISIONS OF HONBLE SUPREME COURT A S WELL AS HONBLE JURISDICTIONAL BOMBAY HIGH COURT AFTER AFFORDING OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. THE ISSUE RAISED IN THE GROUNDS IS THUS ALLOWED FOR STATISTICAL PURPOSES. 5. IN RESULT APPEAL IS ALLOWED FOR STATISTICAL PUR POSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29TH J ULY 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE DATED THE 29TH JULY 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -I KOLHAPUR 4. THE CIT(A)- KOLHAPUR 5. THE D.R. A BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE