M/s. Bansal Overseas, v. ACIT, Karnal

ITA 328/DEL/2009 | 2006-2007
Pronouncement Date: 23-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 32820114 RSA 2009
Bench Delhi
Appeal Number ITA 328/DEL/2009
Duration Of Justice 1 year(s) 2 month(s) 25 day(s)
Appellant M/s. Bansal Overseas,
Respondent ACIT, Karnal
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 23-04-2010
Date Of Final Hearing 13-04-2010
Next Hearing Date 13-04-2010
Assessment Year 2006-2007
Appeal Filed On 29-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI G.E.VEERABHADRAPPA VP AND SHRI H.S.SIDHU JM ITA NO.328/DEL/2009 ASSESSMENT YEAR : 2006-07 M/S BANSAL OVERSEAS G.T.ROAD KARNAL. PAN NO.AADFB3375L. VS. ADDL.COMMISSIONER OF INCOME TAX KARNAL RANGE KARNAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.GOEL ADVOCATE. RESPONDENT BY : SHRI RAJESH KUMAR KEDIA DR. ORDER PER H.S.SIDHU JM : ASSESSEE HAS FILED THE CAPTIONED APPEAL AGAINST TH E ORDER OF CIT(A) KARNAL DATED 22.12.2008 RELATING TO AY 2006-07 RAIS ING THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) IS AGAINST LAW AND FACTS. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING DISALLOWANCE OF INTEREST OF RS.101400/- IN RESPECT OF ALLEGED NON CHARGING OF INTEREST FROM TR ADING PARTIES IS HIGHLY ARBITRARY ILLEGAL VOID AND UNCALLED FOR. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING DISALLOWANCE OUR OF CAR EXP ENSES DEPRECIATION AND INSURANCE AT RS.36359/- IN RESPECT OF WHICH APPELLANT FIRM HAS BEEN CHARGED FRINGE BENEFIT TAX IS ALTOGETHER ARBITRARY ILLEGAL VOID AND UNCALLED FOR. 2. ASSESSEE FILED ITS RETURN OF INCOME AT RS.45 50 027/- ON 31.10.2006 ALONGWITH A COPY OF THE AUDIT REPORT DATED 20.6.200 6. ASSESSEE IS A REGISTERED ITA-328/DEL/2009 2 FIRM AND DERIVES INCOME FROM MANUFACTURE AND EXPORT OF RICE. DURING THE COURSE OF ITS BUSINESS THE ASSESSEE HAS MADE CERTA IN ADVANCES FOR PURCHASE OF GOODS. THE AO SELECTED THE CASE OF THE ASSESSEE FO R SCRUTINY AND ISSUED NOTICES U/S 143(2) AND 142(1) OF THE IT ACT. IN RESPONSE T O THE SAME AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME AND FURNISHED THE REQUIRED DETAILS. THE AO FOUND THAT ASSESSEE HAD G IVEN INTEREST FREE ADVANCES TO THE FOLLOWING FOUR PARTIES:- 1. M/S DURGA TRADING CO. KARNAL RS.3 75 000/- 2. M/S GOYAL TRADING CO. SMALKHA RS.24 50 000/- 3. M/S RAM GOPAL & SONS PEHOWA RS.60 00 000/- 4. M/S RAMA TRADING CO. KARNAL RS.5 59 044/- THE AO ALSO NOTICED THAT ASSESSEE HAD PAID INTEREST ON BORROWED FUNDS AND HE PROPOSED TO MAKE DISALLOWANCE OUT OF INTEREST PAID ON ACCOUNT OF INTEREST FREE ADVANCES. THE ASSESSEE PLEADED THAT ADVANCES ARE T RADING ADVANCES AND MADE IN THE COURSE OF BUSINESS BUT AO DID NOT AGREE WITH TH E EXPLANATION GIVEN BY THE ASSESSEE. THE AO FOUND THAT ADVANCES GIVEN TO M/S GOYAL TRADING CO. SAMALKHA AND M/S RAM GOPAL & SONS PEHOWA WERE NOT FOR BUSINESS PURPOSES AND THEREFORE HE MADE THE PROPORTIONATE DISALLOWAN CE OUT OF THE INTEREST PAID. 3. SECONDLY THE AO AFTER PERUSING THE PROFIT & LO SS ACCOUNT FOUND THAT ASSESSEE HAS CLAIMED A SUM OF RS.49 481/- UNDER THE HEAD CAR EXPENSES. THE ASSESSEE HAD ALSO CLAIMED DEPRECIATION ON CAR AMOUN TING TO RS.1 52 643/- AND CAR INSURANCE EXPENSES AMOUNTING TO RS.16 031/-. T HE AO WAS OF THE OPINION THAT USE OF FIRMS CARS BY THE PARTNERS FOR NON-BUS INESS PURPOSES CANNOT BE RULED OUT AND DISALLOWANCE OF 1/6 TH OF CAR EXPENSES DEPRECIATION AND CAR INSURANCE EXPENSES IS BEING MADE ON ACCOUNT OF USE OF FIRMS CARS BY THE PARTNERS FOR NON- BUSINESS PURPOSES AND MADE A DISALLOWANCE OF RS.36 359/- AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE IT ACT 1961 VIDE ORDE R DATED 10.7.2008. ITA-328/DEL/2009 3 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 10.7.200 8 THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY WHO VIDE ORDER DATED 22.12.2008 DISMISSED THE APPEAL FILED BY THE ASSESS EE. HENCE THE PRESENT APPEAL BEFORE US. 5. AT THE TIME OF HEARING LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE SIMILAR ISSUE INVOLVED IN GROUND NO.1 HAS ALREADY B EEN ADJUDICATED BY THE ITAT DELHI BENCH F NEW DELHI IN THE CASE OF RAJEEV GA RG PANIPAT VS. ACIT PANIPAT IN ITA NO.1067/DEL/2009 DATED 12.2.2010. H E HAS ALSO FILED A COPY OF THE SAID DECISION DURING THE COURSE OF HEARING AND REQUESTED THAT THE SAME ORDER BE PASSED ON THE ISSUE INVOLVED IN GROUND NO.1 IN T HE PRESENT APPEAL AS PASSED IN ITA NO.1067/DEL/2009 IN THE CASE OF RAJEEV GARG (SUPRA). 6. ON THE CONTRARY THE LEARNED DR RELIED UPON THE ORDER PASSED BY THE LEARNED FIRST APPELLATE AUTHORITY. 7. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE INVO LVED IN GROUND NO.1 REGARDING THE ADDITION ON ACCOUNT OF DISALLOWANCE O F INTEREST OF RS.1 01 400/- IN RESPECT OF ALLEGED NON-CHARGING OF INTEREST FROM TR ADING PARTIES AS WELL AS PERUSED THE IMPUGNED ORDER PASSED BY THE LEARNED FI RST APPELLATE AUTHORITY AND ORDER OF THE ITAT DELHI BENCH F NEW DELHI IN TH E CASE OF RAJEEV GARG (SUPRA). FOR THE SAKE OF CONVENIENCE RELEVANT OBS ERVATIONS AS CONTAINED IN PARAS 9 & 10 OF THE SAID ORDER ARE REPRODUCED BELOW :- 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT HAS BEEN TH E CASE OF THE ASSESSEE THAT NO INTEREST BEARING FUNDS WERE UTILIZ ED FOR THE PURPOSE OF MAKING INTEREST FREE ADVANCES THEREFORE ADDITION COULD NOT BE MADE ON THIS ACCOUNT. RELEVANT DATA WAS ALS O SUBMITTED ITA-328/DEL/2009 4 BEFORE LD. CIT(A) TO CONTEND THAT ONLY NON-INTEREST BEARING FUNDS WERE UTILIZED FOR ADVANCING THE INTEREST FREE FUNDS . THESE CONTENTIONS OF THE ASSESSEE HAVE NEVER BEEN EXAMINE D EITHER BY THE AO OR BY THE CIT(A). THEREFORE WE ARE OF THE OPINION THAT ASSESSEES CONTENTION HAS TO BE EXAMINED WITH REFER ENCE TO FACTS AVAILABLE IN THE BOOKS OF ACCOUNT. IN THE CIRCUMST ANCES WE CONSIDER IT JUST AND PROPER THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO WITH A DIRECTION TO EXAMINE THE F ACTUAL ASPECT OF THE MATTER AND THEN TO DECIDE THE ISSUE AS PER LAW AFTER GIVING ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. WE D IRECT ACCORDINGLY. 10. IN THE RESULT THE APPEAL IS CONSIDERED TO BE A LLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. 8. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE AND THE ORDER PASSED BY THE ITAT DELHI BENCH-F NEW DELHI IN THE CASE OF RAJEEV GARG SUPRA WE ARE OF THE CONSIDERED OPINION THAT FACTS OF THE CITED CASE BY THE ASSESSEE ARE IDENTICAL TO THE FACTS OF THE PRESENT CASE OF THE ASSESSEE. THEREFORE RESPECTFULLY FOLLOWING THE AFORESAID ORDER WE REST ORE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE FACTUAL ASPECT OF THE MATTER AND THEN TO DECIDE THE ISSUE INVOLVED IN GROUND NO.1 AS PER LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORD INGLY GROUND NO.1 OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. 9. AS REGARDS GROUND NO.2 THE ASSESSEE HAS AGITATE D THE DISALLOWANCE OF CAR EXPENSES DEPRECIATION AND INSURANCE AT RS.36 359/- . AS FAR AS THE IMPUGNED ITA-328/DEL/2009 5 ORDER IS CONCERNED THE ASSESSEE CLAIMED THAT FBT H AS BEEN PAID ON CAR EXPENSES AND THEREFORE NO DISALLOWANCE SHOULD HAVE BEEN MA DE. AFTER HEARING BOTH THE PARTIES ON THE ISSUE INVOLVED IN GROUND NO.2 AND PE RUSING THE RELEVANT RECORD AVAILABLE WITH US WE ARE OF THE CONSIDERED OPINION THAT REVENUE AUTHORITIES HAVE NOT BROUGHT ANY EVIDENCE ON RECORD WHILE DISALLOWIN G 1/6 TH OF CAR EXPENSES DEPRECIATION AND CAR INSURANCE EXPENSES ON ACCOUNT OF USE OF FIRMS CAR BY THE PARTNERS FOR NON-BUSINESS PURPOSES. THE REVENUE AU THORITIES HAVE DISALLOWED 1/6 TH OF EXPENSES MERELY ON THE BASIS OF ASSUMPTIONS AND SURMISES WITHOUT BRINGING ANY MATERIAL ON RECORD. THEREFORE NO DISA LLOWANCE OF 1/6 TH ON ACCOUNT OF CAR EXPENSES DEPRECIATION AND CAR INSURANCE IS CALLED FOR. WE DELETE THE ADDITION OF RS.36 359/-. GROUND NO.2 IS ACCORDINGLY ALLOWED. 10. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD APRIL 2010. SD/- SD/- (G.E.VEERABHADRAPPA) (H.S.SIDHU) VICE PRESIDENT JUDICIAL MEMBER DATED : 23.04.2010. VSK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR ITA-328/DEL/2009 6