Raymon Glues & Chemicals, Baroda v. The ACIT.,Circle-2(2),, Baroda

ITA 442/AHD/2008 | 1995-1996
Pronouncement Date: 13-08-2010 | Result: Dismissed

Appeal Details

RSA Number 44220514 RSA 2008
Assessee PAN AACCR4454L
Bench Ahmedabad
Appeal Number ITA 442/AHD/2008
Duration Of Justice 2 year(s) 6 month(s) 6 day(s)
Appellant Raymon Glues & Chemicals, Baroda
Respondent The ACIT.,Circle-2(2),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 13-08-2010
Date Of Final Hearing 09-08-2010
Next Hearing Date 09-08-2010
Assessment Year 1995-1996
Appeal Filed On 07-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH A AA A BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI BHAVNESH BHAVNESH BHAVNESH BHAVNESH SAINI SAINI SAINI SAINI JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING :9-8-2010 DRAFTED ON: 9-8-2010 I . T . A . NO S . 442 TO 444 /AHD/ 2008 ASSESSMENT YEARS :1995-96 96-97AND 97-98 M/S.RAYMON GLUES AND CHEMICALS (NOW KNOWN AS M/S. RAYMON PATEL GELATINE PVT. LTD. 61 HARIBHAKTI COLONY J.P. ROAD BARODA. VS. INCOME TAX OFFICER WARD 2(3) AAYAKAR BHAVAN NR.RACE COURSE CIRCLE BARODA. PAN/GIR NO. : A ACCR4454 L (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI M.K. PATEL. RESPONDENT BY: SHRI ANILKUMAR D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II BARODA DATED 26-11-2007. 2. THE COMMON GROUND OF APPEAL TAKEN IN ALL THESE A PPEALS IS AS FOLLOWS :- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE LEA RNED ASSESSING OFFICER IN HOLDING THAT THERE IS NO NEXUS BETWEEN THE INTEREST EARNED AND INTEREST PAID AND THEREFORE THE GROSS AMOUNT OF INTEREST IS REQUIRED TO BE EXCLUDED FROM THE PROFITS FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTIO N 80HHC AND NO DEDUCTION SHOULD BE GRANTED FOR EXPENS ES INCURRED FOR EARNING THE SAID INCOME DESPITE THE FA CT THAT THE APPELLANT HAS FULFILLED ALL THE CONDITIONS MENTIONE D IN THE ORDERS OF THE TRIBUNAL DATED 11-10-2005 FOR ASSESSM ENT YEAR 1995-96 ORDERS DATED 29-8-2003 FOR ASSESSMENT YEAR S 1996-97 AND 1997-98. ITA NOS. 442 TO 444/AHD/2008 ASSESSMENT YEARS: 1995 -96 TO1997-98 M/S. RAYMON GLUES & CHEMICALS (NOW KOWN AS M/S . RAYMON PATEL GELATINE PVT. LTD.) - 2 - 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ISSUE RELATES TO DEDUCTION OF INTEREST INCOME FROM PROFITS OF BU SINESS FOR COMPUTING DEDUCTION ALLOWABLE UNDER SECTION 80HHC O F THE ACT. IN THE INSTANT CASE THE TRIBUNAL VIDE ITS ORDER 11- 10-2005 IN ITA NO.1450/AHD/99 FOR A.Y. 1995-96 AND VIDE ITS CONSOL IDATED ORDER DATED 29-8-2003 IN ITA NOS.909 & 910/AHD/2001 FOR ASSESSMENT YEARS 1996-96 AND 1997-98 RESTORED THE I SSUE BACK TO THE FILE OF THE A.O. WITH THE FOLLOWING DIRECTIO N:- WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. AFTER CONSIDERING TH E TOTALITY OF THE FACTS OF THE CASE WE WOULD LIKE TO EXAMINE THE ISSUE ON THE BASIS OF ACCOUNTING PRINCIPLES. AS PER THE ACCO UNTING PRINCIPLES THE INTEREST ACCOUNT HAS TWO SIDES DEBIT AND CREDIT THE INTEREST RECEIVED IS REQUIRED TO BE CREDITED AN D THE INTEREST PAID IS REQUIRED TO BE DEBITED. ON THE BAS IS OF ACCOUNTING PRINCIPLES THE BALANCE IN THE INTEREST I S TO BE TAKEN IN THE FINAL STATEMENT I.E. PROFIT AND LOSS A CCOUNT. THIS ACCOUNTING PRINCIPLE SUPPORTS THE CLAIM OF THE ASSE SSEE. FURTHER THE CONTENTION OF THE ASSESSEE THAT THE FI XED DEPOSITS FROM WHERE THE ASSESSEE RECEIVED INTEREST INCOME WERE MADE OUT OF THE CASH CREDIT ACCOUNTS. IN SUCH A SITUATION WE ARE OF THE VIEW THAT IF THE INTEREST R ECEIVED AND PAID HAVE A DIRECT NEXUS THEN ONLY NET INTEREST CAN BE CONSIDERED IN THE PROFIT AND LOSS ACCOUNT. SINCE TH E RELEVANT MATERIALS ARE NOT READILY AVAILABLE FOR VERIFICATIO N WE THINK IT PROPER TO SEND BACK THIS ISSUE TO THE FILE OF THE L EARNED ASSESSING OFFICER TO VERIFY IF THE NEXUS BETWEEN IN TEREST RECEIVED AND PAID AND IF THE LEARNED ASSESSING OFFI CER FOUND SUCH NEXUS NETTING CLAIM OF THE ASSESSEE BE ALLOWE D AFTER GIVING REASONABLE OPPORTUNITY OF THE HEARING TO THE ASSESSEE. 4. IN PURSUANCE TO THE ABOVE DIRECTIONS OF THE TRIB UNAL THE LEARNED ASSESSING OFFICER HAS HELD AS UNDER :- ASSESSMENT YEAR 1995-96 . 6.4. ON PERUSAL OF THE DETAILS SUBMITTED ANY FDR W AS NOT FOUND PLACED WITH BANK AFTER OBTAINING LOAN OR BORR OWED FUNDS. THE FDRS WERE PLACED OUT OF CASH CREDIT ACCO UNT AS AND WHEN BUSINESS FUND WAS IN SURPLUS. THEREFORE N O NEXUS ITA NOS. 442 TO 444/AHD/2008 ASSESSMENT YEARS: 1995 -96 TO1997-98 M/S. RAYMON GLUES & CHEMICALS (NOW KOWN AS M/S . RAYMON PATEL GELATINE PVT. LTD.) - 3 - BETWEEN THE FDRS AND THE INTEREST BEARING FUNDS WAS FOUND. HENCE THE ASSESSEE FIRM IS NOT ELIGIBLE FOR NETTIN G OF INTEREST INCOME WITH INTEREST PAYMENT. ASSESSMENT YEARS 1996-97 AND 1997-98 THE ASSESSEE HAS NOT BEEN ABLE TO ELABORATE WITH TH E FACTS AND FIGURES ON ITS CONTENTION THAT THE FIXED DEPOSITS FROM WHERE THE ASSESSEE RECEIVED INTEREST INCOME WE RE MADE OUT OF CASH CREDIT ACCOUNTS. IN SUCH A SITUATI ON NO DIRECT NEXUS BETWEEN THE INTEREST RECEIVED AND PAID HAS BEEN ESTABLISHED. 5. THE LEARNED ASSESSING OFFICER OBSERVING AS ABOVE REDUCED 90% OF THE GROSS INTEREST INCOME FROM PROFITS AND GAINS OF BUSINESS FOR ALLOWING DEDUCTION UNDER SECTION 80HH C. 6. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) CONFIRMED THE ABOVE ACTION OF THE LEARNED ASSESSING OFFICER. 7. BEFORE US THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE FAIRLY CONCEDED THAT THE ASSESSEE IS NOT I N A POSITION TO SHOW THAT THERE WAS A NEXUS BETWEEN THE INTEREST EX PENSE INCURRED BY THE ASSESSEE AND INTEREST RECEIVED BY T HE ASSESSEE. 8. IN THE ABOVE CIRCUMSTANCES WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITI ES. THUS THE ABOVE GROUND OF APPEAL IN ALL THE THREE YEARS IS DI SMISSED. 9. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE A RE DISMISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 13 TH DAY OF AUGUST 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD; ON THIS 13 TH DAY OF AUGUST 2010 PATKI ITA NOS. 442 TO 444/AHD/2008 ASSESSMENT YEARS: 1995 -96 TO1997-98 M/S. RAYMON GLUES & CHEMICALS (NOW KOWN AS M/S . RAYMON PATEL GELATINE PVT. LTD.) - 4 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II BARODA. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 9-8-2010 ---------- --------- 2. DRAFT PLACED BEFORE AUTHORITY 9-8-2010 - ------------------ 3. DRAFT PROPOSED & PLACED 10-8-2010 ------ ------------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED -------------- ---JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -------------------- 6. KEPT FOR PRONOUNCEMENT ON ---------------- -------------------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- ---------------------