DCIT, Chandigarh v. M/s A.B. Sugars Ltd., Chandigarh

ITA 370/CHANDI/2015 | 2010-2011
Pronouncement Date: 29-11-2017 | Result: Allowed

Appeal Details

RSA Number 37021514 RSA 2015
Assessee PAN AABCG3045M
Bench Chandigarh
Appeal Number ITA 370/CHANDI/2015
Duration Of Justice 2 year(s) 7 month(s) 19 day(s)
Appellant DCIT, Chandigarh
Respondent M/s A.B. Sugars Ltd., Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Department
Tags No record found
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-11-2017
Date Of Final Hearing 22-02-2017
Next Hearing Date 22-02-2017
First Hearing Date 22-02-2017
Assessment Year 2010-2011
Appeal Filed On 10-04-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH 'A' CHANDIGARH BEFORE SHRI. SANJAY GARG JUDICIAL MEMBER AND DR. B.R.R. KUMAR ACCOUNTANT MEMBER ITA NO.370/CHD/2015 ASSESSMENT YEARS: 2010-11 THE DCIT VS. A.B. SUGARS LTD. CIRCLE! (1) (M/S GURU TEG BAHADUR SUGAR LTD.) CHANDIGARH H.NO. 77 SECTOR 1 1-A CHANDIGARH PAN NO. AABCG3045M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.N. SINGLA DEPARTMENT BY : SMT. CHANDRAKANTA DATE OF HEARING : 28/11/2017 DATE OF PRONOUNCEMENT : 29/11/2017 ORDER PER DR. B.R.R. KUMAR. A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(AJ-1 CHANDIGARH DT. 23/01 /2015. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS & CONT RARY TO FACTS & LAW. 2. WHETHER THE HON'BLE ITAT WAS CORRECT IN DISMISSING THE APPEAL OF THE REVENUE AGAINST THE ORDER OF THE CIT(A) WHEREBY HE DELETED THE ADDITION OF DISALLOWANCES MADE BY THE A.O. TO THE BOOK PROFIT I N VIEW OF THE PROVISIONS CONTAINED IN EXPLANATION (L)(F) TO SECTION 115JB. 3. THE LD. CIT(A) HAS ERRED IN REFERRING BACK THE ISSU E OF DISALLOWANCE U/S 36(1)(III) AMOUNTING TO RS. 2 36 07 727/- FOR VERIF ICATION OF THE ASSESSEE'S CLAIM THAT ON SOME OF THE FUNDS DIVERTED INTEREST WAS CHARGED WHILE IN RESPECT OF OTHERS BUSINESS EXPEDIENCY EXISTED WHICH HAD ALREADY BEEN REJECTED BY THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. 4. THE LD. CIT(A) HAS ERRED IN REFERRING BACK THE ISSU E OF DISALLOWANCE U/S 36(1)(III) AMOUNTING TO RS. 2 36 07 727/- FOR VERIF ICATION OF THE ASSESSEE'S CLAIM THAT ON SOME OF THE FUNDS DIVERTED INTEREST WAS CHARGED WHILE IN RESPECT OF OTHERS BUSINESS EXPEDIENCY EXISTED WITHOUT BRINGING ON RE CORD ANY FRESH EVIDENCE AND THEREFORE THERE BEING NO GROUND FOR THE AO TO DIFFE R WITH THE CONCLUSION DRAWN BY THE AO IN THE ORIGINAL ORDER U/S 143(3). 5. THE LD. CIT(A) HAS ERRED IN REFERRING BACK THE ISSU E OF DISALLOWANCE U/S 36(1)(III) AMOUNTING TO RS. 2 36 07 727/- FOR VERIF ICATION OF THE ASSESSEES CLAIM THAT ON SOME OF THE FUNDS DIVERTED INTEREST WAS CHARGED WHILE IN RESPECT OF THE OTHERS 2 BUSINESS EXPEDIENCY EXISTED THEREBY JEOPARDIZING A VALID ADDITION MADE BY THE AO WHO HAD GIVEN A DETAILED FINDING AS TO THE DIVER SION OF FINDS AND THE APPLICATION OF THE PROVISIONS OF SECTION 36(1) (HI) AS INTERPRETED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD. IN 286 ITR 1. 6. THE LD.' CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS. 1 18 501/- U/S 36(1) (III) MADE ON ACCOUNT OF CWIP BY THE AO WITHOUT APP RECIATING THE FACTS OF THE CASE. 7. THE LD. CIT(A) HAS ERRED IN REFERRING BACK THE ISSU E OF DISALLOWANCE U/S 32(1)(IIA) ON ACCOUNT OF EXCESS DEPRECIATION CLAIME D BY THE ASSESSEE AMOUNTING TO RS. 32 48 020/- WITHOUT APPRECIATING THAT IN THE ASSESSMENT ORDER THE AO HAS MADEA COMBINED DISALLOWANCE ON ACCOUNT OF EXCESS DE PRECIATION & ADDITIONAL DEPRECIATION AMOUNTING TO RS. 32 45 820/- WHICH THE LD. CIT(A) HAS MISTAKENLY INTERPRETED AS ENTIRELY ON ACCOUNT OF ADDITIONAL DE PRECIATION. THE ASSESSEE WAS NOT BEEN ABLE TO PROVE HOW EXCESS RATES OF DEPRECIA TION WERE ALLOWABLE ON THE SAID ITEMS. 8. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE BY THE AO ON A/C OF DISALLOWANCE U/S 14A OF THE BOOK PROFIT DESPITE THE CLEAR PROVISIONS CONTAINED IN EXPLANATION (L)(F) TO SECTION 115JB. 3. GROUND NO. 2 STANDS WITHDRAWN BY THE REVENUE . 4. GROUND NO. 3 4 & 5 RELATES TO DISALLOWANCE OF INTE REST UNDER SECTION 36(L)(III) OF RS. 2 36 07 724/- HAS BEEN REMANDED T O THE ASSESSING OFFICER BY THE LD. CIT(A) TO VERIFY THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE ADVANCES GIVEN TO VARIOUS PARTIES. IT IS DIRECTED THAT THE A SSESSING OFFICER MAY LOOK INTO THE ADVANCES KEEPING IN VIEW THE JUDGMENTS IN THE CASE OF BRIGHT ENTERPRISES PVT. LTD. VS. CIT (PUNJAB & HARYANA HIGH COURT IN ITA NO . 224/2013 DT. 24/07/2015 WHEREIN IT WAS HELD THAT IF THERE ARE INTEREST FREE FUNDS AVAILABLE THEN IT WILL BE PRESUMED THAT THESE HAVE BEEN MADE OUT OF INTEREST FREE FUNDS. AND ALSO IN THE CASE OF CIT VS. KAPSONS ASSOCIATES INVESTMENT PVT. LTD. [2015] 381 ITR 204 (P&H) WHEREIN THE HON'BLE COURT HAS HELD THAT INTEREST O N INVESTMENT IN OTHER PROPERTIES NOT FOR BUSINESS PURPOSE CANNOT BE DISAL LOWED IF THE ASSESSEE IS HAVING SUFFICIENT INTEREST FREE FUNDS AT ITS DISPOS AL. THE ASSESSING OFFICER IS ALSO DIRECTED TO FOLLOW THE VIEW TAKEN IN THE CASE OF HE RO CYCLES PVT. LTD. 63 TAXMAN 308 (SUPREME COURT) 2015 WHEREIN THE HON'BLE SUPREM E COURT HELD THAT ONCE IT IS A ESTABLISHED THAT THERE IS A NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BUSINESS NO DISALLOWANCE IS CALLED FOR. 5. THEREFORE ALL THESE THREE GROUNDS ARE TREATED AS ALLOWED FOR STAT ISTICAL PURPOSES. 6. GROUND NO. 6 RELATES TO ADDITION OF RS. 118501/- UN DER SECTION 36(1)(III) MADE ON ACCOUNT OF CAPITAL WORK IN PROGRESS. THE DI SALLOWANCE MADE BY THE 3 ASSESSING OFFICER IN THE CASE OF THE ASSESSEE FOR T HE AY 2009-10 WAS DELETED BY THE ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGAR IN ITA NO. 651/CHD/2013 ON THE GROUNDS THAT ASSESSEE HAD UNIT COSTING MORE THAN RS. 200 CORES AND THE AMOUNT IS SPENT OF RS. 1.41 CRORES TOWARDS THE MINO R CAPITAL INVESTMENT CANNOT BE SAID TO BE FOR THE EXPANSION OF THE BUSINESS. 7. DURING THE YEAR THE ASSESSEE INCURRED AN AMOUNT OF RS. 1.13 CRORES. HENCE KEEPING IN VIEW THE EARLIER ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH IN ITA NO. 651/CHD/2013 THE ADDITION MADE OF RS. 11850 1/- IS HEREBY DELETED. 8. REGARDING THE GROUND NO. 7 DEALS WITH DISALLOWANCE ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE. THE AMOUNT TH OUGH MENTIONED AS RS. 32 48 020/- BUT THE ACTUAL ADDITIONAL DEPRECIATION CLAIMED WAS RS. 4 71 328/-. SINCE THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION UND ER SECTION 32(L)(IIA). THE ASSESSING OFFICER IS DIRECTED TO GO THROUGH THE SCH EDULE OF THE DEPRECIATION AND ALLOW THE CLAIM. 9. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PU RPOSES. 10. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE