The ACIT, Bhopal v. M/s Bhaskar Foods Private Ltd., Bhopal

ITA 389/IND/2009 | 2006-2007
Pronouncement Date: 22-07-2010 | Result: Dismissed

Appeal Details

RSA Number 38922714 RSA 2009
Assessee PAN AABCN1212L
Bench Indore
Appeal Number ITA 389/IND/2009
Duration Of Justice 11 month(s) 25 day(s)
Appellant The ACIT, Bhopal
Respondent M/s Bhaskar Foods Private Ltd., Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 22-07-2010
Date Of Final Hearing 21-07-2010
Next Hearing Date 21-07-2010
Assessment Year 2006-2007
Appeal Filed On 27-07-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI B.R. KAUSHIK ACCOUNTANT MEMBER ITA NO.389IND/2009 A.Y. - 2006-07 ASSTT. COMMISSIONER OF INCOME TAX 1(2) BHOPAL APPELLANT VS. M/S. BHASKAR FOODS PVT. LTD. T.T. NAGAR BHOPAL PAN AABCN 1212 L RESPONDENT APPELLANT BY : SHRI MANOJ KUMAR SR. DR RESPONDENT BY : SHRI S.S. DESHPANDE CA O R D E R PER JOGINDER SINGH THE REVENUE HAS CHALLENGED THE ORDER OF THE LEARNED CIT(A) DATED 14.5.2009 ON THE GROUND THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN DELETING THE ADDITION OF RS.34 09 025/- MADE ON ACC OUNT OF INTEREST FREE LOAN. 2 2. DURING HEARING WE HAVE HEARD SHRI MANOJ KUMAR LD. SR. DR AND SHRI S.S. DESHPANDE LD. COUNSEL FOR THE ASSESS EE. THE CONTENTION RAISED ON BEHALF OF THE REVENUE IS THAT THE ASSESSE E GAVE ADVANCES TO GROUP CONCERNS WHICH ARE NOT BUSINESS ADVANCES BUT ARE INTEREST FREE LOANS. THEREFORE THE ASSESSING OFFICER WAS JUSTIFI ED IN CALCULATING THE INTEREST @12%. ON THE OTHER HAND THE LD. COUNSEL F OR THE ASSESSEE STRONGLY DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE ASSESSEE SOLD GOODS AMOUNTING TO RS.5 59 69 622/- TO BHASKAR EXXOILS LTD. AND THE AMOUNT OF RS.1 51 95 366/- IS STILL OUTSTANDING . THE CRUX OF THE ARGUMENTS IS THAT THESE ARE PURE BUSINESS TRANSACTI ONS. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE DECLARED NIL INCOME IN ITS RETURN FILED ON 17.11.2006. THE ASSESSEE IS ENGAGED IN MAN UFACTURING PROCEEDINGS AND SALE OF DOC SOLVENT OIL AND REFINE D OIL. THE ASSESSEE GAVE ADVANCES TO GROUP CONCERNS NAMELY RS.4 24 50 256/- TO BHASKAR EXXOILS RS.2 50 952/- TO BHASKAR RELIEF FUND RS.5 4 12 079/- TO SHRI SUDHIR AGRAWAL AND RS.75 50 145/- TO SHRI GIRISH AG RAWAL. THE PAID UP CAPITAL AND FREE RESERVES OF THE ASSESSEE COMPANY A RE MORE THAN RS.14.50 CRORES ON WHICH NO INTEREST COST IS INCURR ED BY THE ASSESSEE COMPANY. THE ASSESSEE WAS AGGRIEVED ON THE NOTIONAL ADDITION OF RS.36 90 440/- BEING THE INTEREST WORKED @12% OF T HE AMOUNT WHICH 3 WAS ADVANCED TO GROUP CONCERNS/INDIVIDUALS. THERE I S NO DISPUTE TO THE FACT THAT TAXES ARE PAID ON THE REAL INCOME AND NOT ON NOTIONAL INCOME. ADMITTEDLY THE ASSESSEE IS HAVING THE PAID UP CAPI TAL AND FREE RESERVES OF MORE THAN RS.14.50 CRORES ON WHICH NO INTEREST C OST IS INCURRED OR CLAIMED BY THE ASSESSEE. THE EXPENSES CAN BE DISALL OWED ONLY WHEN THE SAME IS NOT EXCLUSIVELY FOR BUSINESS EXPENSES. IT IS NOT THE CASE THAT ASSESSEE COMPANY HAS UTILISED THE BORROWED FUNDS FO R NON-BUSINESS PURPOSES THEREFORE THERE IS NO JUSTIFICATION FOR ADDING THE NOTIONAL INTEREST. THE LD. CIT(A) HAS ALREADY PLACED RELIANC E UPON THE DECISION IN PREM HEAVY ENGG. WORKS P. LTD. (285 ITR 554) (ALL) . THERE IS A FURTHER MENTION OF UNCONTROVERTED FACT IN THE IMPUGNED ORDE R THAT THE NECESSARY DETAILS WERE FILED BY THE ASSESSEE. IN VIEW OF THIS FACT WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) THEREFORE IT IS UPHELD. FINALLY THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 22 ND JULY 2010. (B.R. KAUSHIK) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND JULY 2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE !VYAS!