DCIT, Ludhiana v. M/s Rico Auto Industries Limited, Ludhiana

ITA 692/CHANDI/2016 | 2011-2012
Pronouncement Date: 10-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 69221514 RSA 2016
Assessee PAN AAACR8724R
Bench Chandigarh
Appeal Number ITA 692/CHANDI/2016
Duration Of Justice 1 year(s) 5 month(s) 7 day(s)
Appellant DCIT, Ludhiana
Respondent M/s Rico Auto Industries Limited, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 10-11-2017
Appeal Filed By Department
Tags No record found
Order Result Partly Allowed
Bench Allotted Not Allotted
Tribunal Order Date 10-11-2017
Date Of Final Hearing 07-02-2017
Next Hearing Date 07-02-2017
First Hearing Date 07-02-2017
Assessment Year 2011-2012
Appeal Filed On 02-06-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI SANJAY GARG JUDICIAL MEMBER AND DR. B.R.R. KUMAR ACCOUNTANT MEMBER ITA NO.692/CHD/2016 ASSESSMENT YEAR:2011-12 DCIT VS. M/S RICO AUTO INDUSTRIES LTD. CIRCLE-1 LUDHIANA B-26 FOCAL POINT LUDHIANA PAN NO. AAACR8724R CROSS OBJECTION NO. 33/CHD/2016 (IN ITA NO.692/CHD/2016) ASSESSMENT YEAR:2011-12 M/S RICO AUTO INDUSTRIES LTD. VS. DCIT B-26 FOCAL POINT LUDHIANA CIRCLE-1 LUDHIANA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI. SUBHASH AGGARWAL DEPARTMENT BY : SHRI. RAVI SARANGAL DATE OF HEARING : 17/08/2017 DATE OF PRONOUNCEMENT : 10/11/2017 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 (A)-I LUDHIANA DT. 31/03/2016. 2. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE G ROUNDS OF APPEAL: 1. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN REDUCING THE QUANTUM OF DISALLOWANCE M ADE U/S 14A OF THE ACT BY DIRECTING THE A.O. TO RECALCULATE THE DISALLOWANCE U/S 14A R/W RULE 8D? 2. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S 36( L)(III) OF THE INCOME-TAX ACT 196L ON INVESTMENTS? 3. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(AJ WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S 36( L)(III) OF THE INCOME-TAX ACT 1961 ON LAND ADVANCE? 4. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A} WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE ON FORE IGN TRAVEL EXPENSES? 2.1 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N ITS CROSS OBJECTION: 2 1. THAT THE LD. CIT(A)-I LUDHIANA HAS ERRED IN SU STAINING A DISALLOWANCE OF RS. 41 84 458/- UNDER SECTION 14A O F THE INCOME TAX ACT 1961 R.W. RULE 8D OF THE INCOME TAX RULES WITH OUT APPRECIATING THE FACTS OF THE CASE. 2. THAT IN ANY CASE THE CONFORMATION OF DISALLOWANC E OF RS. 41 84 458/- IS AGAINST THE LAW AND FACTS OF T HE CASE AND IGNORING THE SUBMISSIONS MADE BY THE APPELLANT. 3. GROUND NO. 1 IN THE APPEAL OF THE REVENUE AND CR OSS OBJECTION OF THE ASSESSEE DEALS WITH THE DISALLOWANCE MADE UNDER SEC TION 14A READ WITH RULE 8D. 4. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS DISALLOWED RS. 4 10 70 788/- UNDER SECTION 14A OF THE INCOME T AX ACT. THE TOTAL INVESTMENTS OF THE ASSESSEE WERE TO THE TUNE OF RS. 98 59 66 29 0/- AND THE DIVIDEND EARNED ON THIS INVESTMENTS WAS RS. 4 77 94 927/- . THE ASS ESSEE HAS ALREADY ADDED BACK RS. 40 48 874/- AS EXPENDITURE UNDER SECTION 14A. 5. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2010-11. THE ORD ER OF THE CIT(A) READS AS UNDER: I HAVE PERUSED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND THE ARGUMENTS OF THE AR MADE DURING THE ASSESSMENT AS W ELL AS APPELLATE PROCEEDINGS. A PLAIN READING OF RULE 8D(2)(II) CLEA RLY SHOWS THAT THE INTEREST WHICH IS NOT DIRECTLY ATTRIBUTABLE TO PARTICULAR INCOME S HOULD BE CONSIDERED FOR DISALLOWANCE. IT IS THEREFORE IMPERATIVE ON THE PAR T OF THE ASSESSING OFFICER TO EXCLUDE SUCH INTEREST FROM THE CALCULATIONS FOR WOR KING OUT DISALLOWANCE UNDER RULE 8D(2)(II). THE APPELLANT HAD MADE THIS ARGUMEN T BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AND OUT OF THE SAID C LAIM ONLY BANK CHARGES HAD BEEN REDUCED OUT OF THE TOTAL INTEREST AND NO SPEAK ING ORDER WITH REFERENCE TO NON EXCLUSION OF THE REST OF THE ITEMS HAD BEEN PAS SED BY THE ASSESSING OFFICER. THE CLAIM OF THE APPELLANT WITH REGARD TO THE TERM LOAN INTEREST INTEREST TO CUSTOMERS OVERDUE INTEREST ON LATE PAYMENT OF MATE RIAL AND BUYER'S CREDIT INTEREST ARE ITEMS WHICH ARE DIRECTLY ATTRIBUTABLE TO PARTICULAR INCOMES WHICH ARE NOT EXEMPT. THEREFORE THE ABOVE MENTIONED AMOUNTS ARE TO BE EXCLUDED FROM THE INTEREST TO BE DISALLOWED UNDER RULE 8D(2)(II). 10. THE AR OF THE APPELLANT HAS FURTHER MADE AN ARG UMENT THAT THE APPELLANT COMPANY HAD RECEIVED INTEREST AMOUNTING TO RS.5 85 19 831/- AND THE SAID INTEREST HAD BEEN RECEIVED ON SPECIFIC LOANS AND AD VANCES AND THE SAID ADVANCE HAD BEEN GIVEN OUT OF WORKING CAPITAL LIMIT AS WELL. THE SAID RECEIPT OF INTEREST THEREFORE REPRESENTED RECOVERY OF INTEREST PAID AND IT IS ONLY THE NET INTEREST THAT SHOULD BE CONSIDERED FOR THE PURPOSES OF DISALLOWANCE. THE DIRECT JUDGMENT OF HON'BLE JURISDICTIONAL ITAT CHANDIGARH BENCH IN THE CASE OF SH. SHIV PARSHAD AGGARWAL ITA NO.927/2012 DATED 27.03.2014 W AS ALSO RELIED UPON. IN THE CIRCUMSTANCES THE ASSESSING OFFICER IS DIRECTED TO TAKE INTO ACCOUNT THE NET INTEREST DEBITED TO PROFIT & LOSS ACCOUNT IN ORDER TO WORK OUT THE DISALLOWANCE AS PER RULE 8D(2)(II). 6. AGGRIEVED THE REVENUE FILED AN APPEAL BEFORE US. 3 7. DURING THE PROCEEDINGS BEFORE US THE LD. DR VEHE MENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 8. THE LD. AR ARGUED THAT NO DISALLOWANCE UNDER SEC TION 14A IS REQUIRED IF THE INVESTMENT IS OUT OF OWN CAPITAL AND RESERVES. HE FURTHER ARGUED THAT THE MATTER STANDS COVERED IN HIS OWN CASE FOR THE AY 20 10-11 BY THE ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH IN ITA NO. 1093 /CHD/2014 DT. 22/11/2016. THE ORDER OF THE TRIBUNAL ON THIS ISSUE READS AS UN DER: 9. HAVING GONE THROUGH THE ABOVE CITED DECISIONS W E FIND THAT IN ITS RECENT DECISION PRONOUNCED ON 15.2.2016 IN THE CASE OF HER O CYCLES LTD. VS. ACIT (SUPRA) THE CHANDIGARH BENCH OF THE TRIBUNAL FOLLOWING ITS EARLIER ORDERS IN THE A.Y. 2008- 09 HAS HELD THAT WHEN OWN FUNDS AND RESERVES OF THE ASSESSEE ARE MORE THAN SUFFICIENT TO COVER THE INVESTMENT MADE DURING THE YEAR IT CAN BE VERY CONVENIENTLY PRESUMED THAT ALL THE INVESTMENT HAVE MADE OUT OF OWN FUNDS AND HENCE DISALLOWANCE OF INTEREST IS REQUIRED TO BE MA DE. IN THIS REGARD THE TRIBUNAL HAS FOLLOWED THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF BRIGHT ENTERPRISES PVT. LTD. VS. CIT IN ITA NO. 624 OF 2013 (O&M) DATED 24.7.2015. THE HONBLE HIGH COURT HAS A LSO REFERRED THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (2009 313 ITR340(BOMBAY). IN VIEW OF THE ABOV E FINDING THAT NO DISALLOWANCE U/S 14A OF THE ACT ON ACCOUNT OF INTEREST CAN BE MA DE THE TRIBUNAL DID NOT CONSIDER ALTERNATIVE SUBMISSION OF THE ASSESSEE ON THE COMPUTATION MADE BY THE ASSESSING OFFICER UNDER RULE 8D OF THE INCOME TAX R ULES. IN THE PRESENT CASE BEFORE US THE CLAIM OF THE ASSESSEE HAS BEEN REITER ATED THAT IT WAS HAVING SUFFICIENT FUNDS TO COVER THE INVESTMENT WE THUS R ESPECTFULLY FOLLOWING THE ABOVE CITED DECISIONS IN THIS REGARD AND SUBJECT TO VERIF ICATION OF THE SUFFICIENCY OF ITS OWN FUNDS BY THE AO HOLD THAT NO DISALLOWANCE U/S 1 4A OF THE ACT ON ACCOUNT OF INTEREST CAN BE MADE. IN VIEW OF THIS FINDING THERE IS NO NEED TO COMMENT UPON THE COMPUTATION MADE BY THE ASSESSING OFFICER UNDER RULE 8D OF THE IT RULES AT THIS STAGE AND THE AO IS ALWAYS AT LIBERTY TO DO T HAT IF THE ASSESSEE DOES NOT SUCCEED IN ITS CLAIM OF HAVING SUFFICIENT OWN FUNDS . 9.1. SO FAR AS THE DIRECTION OF THE LD. CIT (A) TO THE ASSESSING OFFICER TO WORK OUT THE BOOK PROFIT BY EXCLUDING THE DISALLOWANCE TO BE MADE U/S 14A IS CONCERNED WE FIND THAT THIS ACTION OF THE LD. CIT (A) IS FULL Y SUPPORTED BY THE DECISION OF CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF ACI T VS. NAHAR CAPITAL AND FINANCIAL SERVICES LTD. ITA NO. 870/CHD/2013 DATED 6.6.2014 ITA NO. 1353/CHD/2012 DATED 16.4.2013 AND DCIT VS. INDO-SW IFT LTD. IN ITA NO. 729/CHD/2009 DATED 30.11.2009 FOLLOWED BY THE LD. C IT. THUS WE FIND DO FIND ANY REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER IN THIS. THE SAME IS UPHELD. 9.2. IN VIEW OF ABOVE DISCUSSION AND FINDING WE DIR ECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE SUSTAINED BY THE LD. CIT (A ) AND THE REMAINING DISALLOWANCE DELETED BY THE LD. CIT (A) IS UPHELD. IN RESULT GROUND NOS. 1(A) 2(B) AND 2 OF THE APPEAL OF THE REVENUE ARE REJECTED AND CROSS OBJECTION PREFERRED BY THE ASSESSEE SUBJECT TO THE ABOVE DIRECTED VERIF ICATION IS ALLOWED. 9. WE FIND THAT SINCE THE FACTS AND CIRCUMSTANCES F OR THIS YEAR REMAINS UNALTERED IN THE ABSENCE OF ANY OTHER CONTRARY JUD GMENT BROUGHT FORWARD BY THE REVENUE FOLLOWING THE ORDER OF THE ITAT FOR TH E AY 2010-11 BY THE ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH IN ITA NO. 1093/CHD/2014 DT. 22/11/2016 IN ASSESSEES OWN CASE THE MATTER IS BE ING REFERRED BACK TO THE FILE 4 OF ASSESSING OFFICER FOR RE-COMPUTATION BASED ON TH E PRINCIPLES LAID DOWN ABOVE. THUS THE GROUND NO. 1 OF THE REVENUES APPEA L AND THE CROSS OBJECTION OF THE ASSESSEE ARE TREATED AS ALLOWED. 10. THE SECOND GROUND RELATES TO DISALLOWANCE OF IN TEREST ON INVESTMENTS UNDER SECTION 36(1)(III) . 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAD MADE INVESTME NT TO THE TUNE OF RS. 98 59 66 290/- IN SHARES OF DOMESTIC GROUP COMPANIE S. THE ASSESSEE COMPANY WAS ASKED AS TO WHY DISALLOWANCE UNDER SECTION 36(1 )(III) SHOULD NOT BE MADE ON INVESTMENTS MADE SINCE MAKING OF INVESTMENTS WAS NOT THE BUSINESS OF THE ASSESSEE. THE ASSESSEE COMPANY FILED ITS REPLY WHIC H WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE DISALLOWED THE INTEREST OF RS. 3 27 39 859/- UNDER SECTION 36(1)(III) BY HOLDING THAT THESE FUNDS HAD BEEN UTI LIZED FOR NON BUSINESS PURPOSE AND THE INVESTMENTS IN THE GROUP COMPANIES COULD NO T BE CONSIDERED AS THE BUSINESS OF THE ASSESSEE. THEREFORE THE PROPORTION ATE INTEREST ON THE INVESTMENTS OF RS. 98 59 66 290/- WAS DISALLOWED. THE TOTAL DIS ALLOWANCE U/S 36(1)(III) CAME TO RS. 7 38 10 647/-. BUT THE DISALLOWANCE OF INTEREST UNDER SECTION 14A READ WITH RULE 8D AMOUNTING TO RS. 4 10 70 788/- HAD ALREADY BEEN MADE BY THE ASSESSEE. THEREFORE AN AMOUNT OF RS. 3 27 39 859/- WAS DISALL OWED. 12. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2010-11. THE ORD ER OF THE CIT(A) READS AS UNDER: 'THE ASSESSING OFFICER HAS BASED THE IMPUGNED DISAL LOWANCE OF CLAIM OF INTEREST ON THE LOGIC THAT IT WAS NOT ASSESSEE'S BUSINESS TO MAKE INVESTMENT INTO THE SHARES OF ITS SUBSIDIARY COMPANY. IT WAS HIGHLIGHTED THAT THE BUSINESS OF THE ASSESSEE COMPANY WAS TO MAKE SPARE PARTS AND THUS ANY OTHER SUCH INVESTMENT WAS TO BE TREATED AS FOR NON BUSINESS PURPOSE LEADING TO APPL ICABILITY OF JUDGMENT OF HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S ABHISHEK INDUSTRIES VS. CIT 268 ITR 1. IT IS ALSO SEEN THAT THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE DIRECT DECISION OF HON'BLE IT AT C HANDIGARH IN THE CASE OF UMESHTREHAN ITA NO.L022/CHD/2012. THE FACTS OF THE CASE CLEARLY SHOWS THAT THE AMOUNT WAS DUE BY THE ASSESSEE FROM ONE SH. AVINASH KAPOOR AND ANOTHER AMOUNT WAS IN RESPECT OF INVESTMENT WITH SISTER CON CERN NAMELY M/S GIAN RESIDENCY PVT. LTD. THE ASSESSEE HAD ARGUED THAT TH E INVESTMENT IN M/S GIAN RESIDENCY PVT. LTD. COULD BE SAID TO BE FOR BUSINES S PURPOSE AS M/S GIAN RESIDENCY PVT. LTD. HAD USED THE IMPUGNED FUNDS FOR THEIR BUSINESS PURPOSE. IT WAS ON THIS CRUCIAL DISTINCTION THAT THE SAID INVES TMENT BY THE ASSESSEE WAS TREATED AS SERVING NO BUSINESS PURPOSE LEADING TO D ISALLOWANCE OF CLAIM OF INTEREST ON BORROWED MONEY. HOWEVER THE FACTS OF T HE CASE UNDER CONSIDERATION ARE ON ENTIRELY DIFFERENT SET OF PARAMETERS AS ALL THE INVESTMENT AS HIGHLIGHTED IN THE ASSESSEE'S SUBMISSIONS ARE ON ACCOUNT OF VARIOU S SPECIAL PURPOSE VECHILES OR INVESTMENT IN SUBSIDIARIES WHEREIN THE APPELLANT HA S CONTROLLING INTEREST RANGING FROM 50% TO 100%. THE SAID INVESTMENTS HAD BEEN MAD E FOR THE PURPOSE OF 5 FURTHERING BUSINESS INTERESTS IN THE SPHERE OF MAKI NG OF SPARE PARTS AND THEREFORE CANNOT BE SAID TO BE FOR NON BUSINESS PURPOSE AS HI GHLIGHTED BY THE ASSESSING OFFICER. IT IS IN THE BUSINESS INTEREST OF APPELLAN T COMPANY TO EXPLORE THE POSSIBILITY OF EXPANDING ITS BUSINESS BY ENTERING INTO JOINT VE NTURES OR SPECIAL PURPOSE VECHILES WHEREIN IT HAS CONTROLLING INTERESTS. IN F ACT THE FACTS OF THE CASE ARE CLEARLY ON THE SAME LINES AS DECIDED BY THE HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S POOJA METAL P ROCESSORS (P) LIMITED IN ITA NO.388/2009. THE HON'BLE COURT IN THE SAID CASE IN PARA 7 OF THE ORDER HELD AS UNDER:- ' IT EMERGES THAT THE ASSESSEE-RESPONDENT HAD INVES TED THE AMOUNT OF RS.48.50 LACS IN THE SHARES OF M/S POOJA DECARB IT S SISTER CONCERN AND AS PER THE FINDINGS RECORDED THE INVESTMENT HAD DOUBLED BY 31 ST MARCH 2004. THE CIT(A) AS WELL AS THE TRIBUNAL HAD RECORDED THAT THE ASSESSEE HAD THOUGHT IT COMMERCIALLY EXPEDIENT TO INVEST IN THE SHARES OF ITS SISTER CON CERN M/S POOJA DECARB LIMITED. THE APEX COURT IN S.A BUILDERS LIMITED'S CASE (SUPR A) HELD THAT THE COMMERCIAL EXPEDIENCY AS ENVISAGED UNDER SECTION 37(1) OF THE ACT HAS ALSO TO BE KEPT IN VIEW WITH REGARD TO ASSESSEE'S DECISION IN ADVANCIN G BORROWED FUNDS TO A SISTER CONCERN OR SUBSIDIARY WHILE EXAMINING DEDUCTION UND ER SECTION 36(L)(III) OF THE ACT. IN THE ABSENCE OF ANY PERVERSITY SHOWN IN THE FINDINGS RECORDED BY THE CIT(A) AND THE TRIBUNAL THE ASSESSEE WAS ENTITLED TO DEDU CTION OF INTEREST PAID ON RS.48 50 000/-. ACCORDINGLY THE SUBSTANTIAL QUESTION OF LAW REPROD UCED IN PARA 1 ABOVE IS ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF TH E ASSESSEE.' IN VIEW OF THE ABOVE DETAILED ANALYSIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND ANALYSIS OF JURISDICTIONAL PRONOUNCEMENT O N THE ISSUE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 36(L)(I II) IS DIRECTED TO BE DELETED.' FOLLOWING THE SAID ORDER OF MY LD. PREDECESSOR IN T HE APPELLANT'S OWN CASE FOR A.Y 2010-11 IN APPEAL NO. 145/18/IT/CIT(A)-I/LDH/2013-1 4 DATED 11/09/2014 THE ASSESSING OFFICER IS HEREBY DIRECTED TO DELETE THE SAID DISALLOWING MADE U/S 36(1)(III) OF THE ACT. 13. BEFORE US IN SUPPORT OF THE GROUNDS THE LD. CI T DR PLACED RELIANCE ON THE ASSESSMENT ORDER. 14. THE LD. AR ON THE OTHER HAND TRIED TO JUSTIFY T HE FIRST APPELLATE ORDER ON THIS ISSUE. THE LD. AR ARGUED THAT NO DISALLOWANCE UNDER SECTION 36(1)(III) IS REQUIRED IF THE INVESTMENT IS OUT OF OWN CAPITAL AND RESERVE S. HE FURTHER ARGUED THAT THE MATTER STANDS COVERED IN HIS OWN CASE FOR THE AY 20 10-11 BY THE ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH IN ITA NO. 1093 /CHD/2014 DT. 22/11/2016. THE ORDER OF THE TRIBUNAL ON THIS ISSUE READS AS UN DER: 12. THE RELEVANT FACTS ARE THAT THE ASSESSING OFFIC ER NOTED THE INVESTMENT OF RS.63 94 66 380/- BY THE ASSESSEE IN THE SHARES OF DOMESTIC GROUP COMPANIES. HE THUS DISALLOWANCE U/S 36(1)(III) ON THE GROUND THAT MAKING OF INVESTMENT IN SISTER CONCERN WAS NOT THE BUSINESS OF THE ASSESSEE AND HE NCE BORROW FOR THE PURPOSES OF BUSINESS COULD NOT BE SAID TO BE USED FOR THE PU RPOSES OF BUSINESS. THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS NOT EN GAGED IN THE BUSINESS OF MAKING INVESTMENT IN SHARES AND MUTUAL FUNDS BUT WA S ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF AUTO PARTS. THE ASSESS ING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND MADE THE D ISALLOWANCE. HE ALSO PROCEEDED TO MAKE THE DISALLOWANCE TO THE TUNE OF R S. 6 09 15 435/- OUT OF WHICH DISALLOWANCE MADE U/S 14A WAS REDUCED. THE LD. CIT( A) AFTER DISCUSSING IN DETAIL THE CASE OF THE PARTIES HAS DELETED THE DISALLOWANC E. 6 13. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW WE FIND THAT ASSESSING OFFICER HAD MADE DISALLOWANCE OF THE ABOV E INVESTMENT BY THE ASSESSEE IN THE SHARES OF DOMESTIC GROUP COMPANIES ON THE BASIS THAT MAKING OF INVESTMENT IN SISTER CONCERN WAS NOT THE BUSINESS O F THE ASSESSEE AND HENCE FUNDS BORROWED FOR THE PURPOSES OF BUSINESS COULD NOT BE SAID TO BE USED FOR THE PURPOSES OF THE BUSINESS. THE LD. CIT (A) HAS DISCU SSED THE ISSUE IN DETAIL AND HAS ARRIVED AT THE FOLLOWING FINDING: 16. THE ASSESSING OFFICER HAS BASED THE IMPUGNED D ISALLOWANCE OF CLAIM OF INTEREST ON THE LOGIC THAT IT WAS NOT ASSESSEES BU SINESS TO MAKE INVESTMENT INTO THE SHARE OF ITS SUBSIDIARY COMPANY. IT WAS HIGHLIG HTED THAT THE BUSINESS OF THE ASSESSEE COMPANY WAS TO MAKE SPARE PARTS AND THUS A NY OTHER SUCH INVESTMENT WAS TO BE TREATED AS FOR NON-BUSINESS PURPOSE LEADI NG TO APPLICABILITY OF JUDGMENT OF HONBLE JURISDICTIONAL PUNJAB AND HARYA NA HIGH COURT IN THE CASE OF M/S. ABHISHEK INDUSTRIES VS. CIT 268 ITR 1. IT IS A LSO SEEN THAT THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE DIRECT DECISION OF HONB LE ITAT CHANDIGARH IN THE CASE OF UMESH TREHAN ITAT NO. 1022/CHD/2012. THE F ACTS OF THE CASE CLEARLY SHOWS THAT THE AMOUNT WAS DUE BY THE ASSESSEE FROM ONE SH. AVINASH KAPOOR AND ANOTHER AMOUNT WAS IN RESPECT OF INVESTMENT WIT H SISTER CONCERN NAMELY M/S GIAN RESIDENCY PVT. LTD. THE ASSESSEE HAD ARGUED TH AT THE INVESTMENT IN M/S. GIAN RESIDENCY PVT. LTD. COULD BE SAID TO BE FOR BU SINESS PURPOSE OF M/S. GIAN RESIDENCY PVT. LTD. HAD USED THE IMPUGNED FUNDS FO R THEIR BUSINESS PURPOSE. IT WAS ON THIS CRUCIAL DISTINCTION THAT THE SAID INVES TMENT BY THE ASSESSEE WAS TREATED AS SERVING NO BUSINESS PURPOSE LEADING TO D ISALLOWANCE OF CLAIM INTEREST ON BORROWED MONEY. HOWEVER THE FATS OF THE CASE UND ER CONSIDERATION ARE ON ENTIRELY DIFFERENT SET OF PARAMETERS AS ALL THE INV ESTMENT AS HIGHLIGHTED IN THE ASSESSEES SUBMISSIONS ARE ON ACCOUNT OF VARIOUS SP ECIAL PURPOSE VEHICLES OR INVESTMENT IN SUBSIDIARY WHEREIN THE APPELLANT HAS CONTROLLING INTEREST RANGING FROM 50% TO 100%. THE SAID INVESTMENT HAD BEEN MADE FOR THE PURPOSE OF FURTHERING BUSINESS INTERESTS IN THE SPHERE OF MAKI NG OF SPARE PARTS AND THEREFORE CANNOT BE SAID TO BE FOR NON BUSINESS PURPOSE AS HI GHLIGHTED BY THE ASSESSING OFFICER. IT IS IN THE BUSINESS INTEREST OF APPELLAN T COMPANY TO EXPLORE THE POSSIBILITY OF EXPANDING ITS BUSINESS BY ENTERING INTO JOINT VE NTURES OR SPECIAL PURPOSE VEHICLES WHEREIN IT HAS CONTROLLING INTEREST. IN FA CT THE FACTS OF THE CASE ARE CLEARLY ON THE SAME LINES AS DECIDED BY THE HONBLE JURISDI CTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S POONA METAL PROCESSOR S (P) LTD. IN ITA NO. 388/2009. THE HONBLE COURT IN THE SAID CASE IN PARA 7 OF THE ORDER HELD AS UNDER:- IT EMERGES THAT THE ASSESSEE RESPONDENT HAD INVE STED THE AMOUNT OF RS. 48.50 LACS IN THE SHARES OF M/S. POOJA DECARB ITS SISTER CONCERN AND AS PR THE FINDINGS RECORDED THE INVESTMENT HAD DOUBTED BY 31 ST MARCH 2004. THE CIT (A) AS WELL AS THE TRIBUNAL HAD RECORDED THAT THE ASSES SEE HAD THOUGH IT COMMERCIALLY EXPEDIENT TO INVEST IN THE SHARES OF I TS SISTER CONCERN M/S. POOJA DECARB LIMITED. THE APEX COURT IN S.A. BUILDERS LIM ITEDS CASE (SUPRA) HELD THAT THE COMMERCIAL EXPEDIENCY AS ENVISAGED UNDER SECTIO N 37(1) OF THE ACT HAS ALSO BE KEPT IN VIEW WITH REGARD TO ASSESSEES DECISION IN ADVANCING BORROWED FUNDS TO A SISTER CONCERN OR SUBSIDIARY WHILE EXAMINING D EDUCTION UNDER SECTION 36(1)(III) OF THE ACT. IN THE ABSENCE OF ANY PERVERSITY SHOWN IN THE FINDINGS RECORDED BY THE CIT (A) AND THE TRIBUNAL THE ASSESSEE WAS ENTITLED TO DEDUCTION OF INTEREST PAID ON RS. 48 50 000/-. ACCORDINGLY THE SUBSTANTIAL QU ESTION OF LAW REPRODUCED IN PARA 1 ABOVE IS ANSWERED AGAINST THE REVENUE AND I N FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE DETAILED ANALYSIS OF FACTS AND CI RCUMSTANCES OF THE CASE AND ANALYSIS OF JURISDICTIONAL PRONOUNCEMENT OF THE ISS UE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 36(1)(III) IS D IRECTED TO BE DELETED. 13.1. SINCE THE FIRST APPELLATE ORDER ON THE ISSUE IS COMPREHENSIVE AND REASONED ONE AS WELL AS ALSO SUPPORTED BY THE DECISION OF HO NBLE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF POOJA METAL PR OCESSORS (P) LTD. IN ITA NO. 388/2009 FOLLOWED BY THE LD. CIT(A) WE DO NOT FIND REASON TO INTERFERE THEREWITH. THE SAME IS UPHELD. WE ALSO NOTE THAT THE LD. CIT ( A) HAS ALSO DISCUSSED IN HIS FINDING THE DECISIONS RELIED UPON BY THE ASSESSING OFFICER AND HOW THOSE DECISIONS ARE NOT RELEVANT. 7 15. SIMILAR VIEW WAS HELD IN THE CASE OF CIT VS. KA PSONS ASSOCIATES INVESTMENT PVT. LTD. [2015] 381 ITR 204 (P&H) WHEREIN THE HON BLE COURT HAS HELD THAT INTEREST ON INVESTMENT IN OTHER PROPERTIES NOT FOR BUSINESS PURPOSE CANNOT BE DISALLOWED IF THE ASSESSEE IS HAVING SUFFICIENT INT EREST FREE FUNDS AT ITS DISPOSAL. WE FIND THAT SINCE THE FACTS AND CIRCUMSTANCES FOR THI S YEAR REMAINS UNALTERED IN THE ABSENCE OF ANY OTHER CONTRARY JUDGMENT BROUGHT FORWARD BY THE REVENUE FOLLOWING THE ORDER OF THE ITAT FOR THE AY 2010-11 BY THE ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH IN ITA NO. 1093/CHD/2014 D T. 22/11/2016 IN ASSESSEES OWN CASE THE MATTER IS BEING DISMISSED. 16. GROUND NO. 3 OF THE APPEAL RELATES TO DISALLOWA NCE OF RS. 77 18 583/- UNDER SECTION 36(1)(III) ON ACCOUNT OF INTEREST ON LAND ADVANCE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTICED THAT THE ASESSEE COMPANY HAD MADE ADVANCE FOR PURCHASE OF LA ND TO THE TUNE OF RS. 8 66 76 965/-. THE ASSESSEE WAS ASKED AS TO WHY DIS ALLOWANCE UNDER SECTION 36(1)(III) SHOULD NOT BE MADE ON ADVANCE FOR PURCHA SE OF LAND. THE ASSESSEE COMPANY HAD FILED ITS REPLY THAT THE PAYMENTS HAVE BEEN MADE OUT OF THE CASH-PROFIT OF THE COMPANY AND NO BORROWED MONEY HA S BEEN USED WHICH WAS NO ACCEPTED BY THE ASSESSING OFFICER AND DISALLOWED THE INTEREST AT THE RATE OF 9.69% OF RS. 8 66 76 965/- WHICH WORKED AT RS. 77 1 8 583/- AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 17. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2010-11. THE ORD ER OF THE CIT(A) READS AS UNDER: 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE THE BASIS OF THE ADDITION AND THE ARGUMENTS OF THE AR. THE APPELLANT COMPANY HAD MADE ADVANCE FOR PURCHASE OF LAND AMOUNTING TO RS. 8 66 76 965/-. THE APPELLANT'S REPLY WAS THAT THE SAID ADVANCE HAS NOT BEEN MADE O UT OF BORROWED FUNDS. THE ASSESSING OFFFICER HELD THAT THE APPELLANT HAD BOTH BORROWED FUNDS AS WELL AS ITS OWN FUNDS AND THAT INTEREST BEARING FUNDS WERE USED IN THE CONSTRUCTION OF THE BUILDING. THE ASSESSING OFFICER DID NOT ESTABLISH T HAT ANY SPECIFIC FUNDS WERE BORROWED FOR THE SAID ADVANCE AND ALSO THAT THE SAM E WAS FOR EXPANSION OF THE EXISTING BUSINESS. SIMILAR FACTS CAME UP BEFORE MY LD. PREDECESSOR FOR A.Y 2010-11 IN THE APPELLANT'S OWN CASE WHEREIN IT WAS HELD ON THE ISSUE OF INVESTMENT IN PURCHASE OF LAND AS UNDER: 'I HAVE CONSIDERED THE FACTS OF THE CASE THE BASIS OF DISALLOWANCE MADE BY THE ASSESSING OFFICER AND THE ARGUMENTS OF THE AR DURING ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEED INGS. IT IS IMPORTANT TO APPRECIATE THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY NEXUS BETWEEN BORROWED FUNDS AND THE IMPUGNED INVESTMENT IN THE PURCHASE OF LAND FOR THE PURPOSES OF BUSINESS. THE ASSESSING OFFICER HAS ONLY THEORIZED POSSIBILITY OF CERTAIN BORROWED FUNDS PROBABLY BEING USED BY THE ASSESSEE IN MAKING THE IMPUGNED 8 INVESTMENT. THE ASSESSEE ON THE OTHER HAND HAS CLEA RLY POINTED OUT THAT NO TERM LOAN HAD BEEN TAKEN FOR PURCHASE OF IM PUGNED LAND AND AT THE SAME TIME THE ASSESSEE HAD RESERVES AND SURPLUSES IN THE FORM OF PROFITS GENERATED DURING THE YEAR TO TH E TUNE OF RS.5031.00 LAC WHICH IS MUCH MORE THAN INVESTMENT I N LAND TO THE TUNE OF RS. 1264.64 LAC. THE FACTS OF THE CASE ARE ON SIMILAR LINES AS DECIDED BY THE HON'BLE IT AT CHANDIGARH BENCH IN TH E CASE OF M/S AMARTEXLNDS LTD 37 TAXMANN.COM 455. THE BRIEF FACTS OF THE CASE ARE AS UNDER- 'THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE AO VIDE PARA 2 NOTED THAT THE ASSESSEE HAD MADE ADVANCE PAY MENT FOR PURCHASE OF LAND. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHETHER THE INTEREST PAID UP TO THE DATE WHEN THE SAID ASSE TS WERE PUT TO USE HAD BEEN CAPITALIZED OR NOT. IN REPLY THE ASSE SSEE SUBMITTED THAT THE FIXED ASSETS WERE PURCHASED IN CONNECTION WITH THE EXISTING BUSINESS AND WERE BY WAY OF EXPANSION. FUR THER IT WAS EXPLAINED BY THE ASSESSEE THAT THE RESERVE AND SURP LUS OF THE ASSESSEE COMPANY HAD INCREASED FROM RS.4.82 CRORES TO RS.8.39 CRORES AND ALSO THE ASSESSEE HAD SOLD COMMERCIAL SI TE FOR RS.6 CRORES AND MONEY WAS UTILIZED FOR PURCHASE OF FIXED ASSETS. THE AO OBSERVED THAT AS THE ASSESSEE HAD MADE ADVANCE PAYM ENT FOR PURCHASE OF LAND BUT SINCE THE LAND WAS NOT PUT TO USE DURING THE YEAR UNDER CONSIDERATION THE PROPORTIONATE INTERES T WAS REQUIRED TO BE CAPITALIZED. THE AO ACCORDINGLY DISALLOWED SU M OF RS.6 50 911 UNDER SECTION 36(L)(III) OF THE ACT. THE CIT(A) DELETED THE ADDITION MADE BY THE AO IN T HE ABSENCE OF ANY NEXUS BEING ESTABLISHED BETWEEN THE PAYMENT MAD E FOR PURCHASE OF LAND HAVING DIRECT BEARING WITH THE SEC URED OR UNSECURED LOANS OBTAINED BY THE ASSESEE. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THE C IT(A). THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE AO. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT UNDER THE PROVISO TO SECTION 36(L)(III) OF THE ACT WHERE THE BORROWED FUNDS WERE UTILIZED FOR THE INVESTMENT IN THE ASSETS AND WHERE THE ASSETS WERE NOT PUT TO USE DISALLOWANCE IS TO BE MADE; BU T IN THE ABSENCE OF ANY NEXUS OF BORROWED FUNDS BEING UTILIZ ED NO DISALLOWANCE IS WARRANTED. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. UNDER THE PROVISIONS OF SECTION 36(L)(III) OF THE A CT WHILE COMPUTING THE INCOME FORM THE PROFITS AND GAINS OF BUSINESS D EDUCTION IS ALLOWED ON ACCOUNT OF AMOUNT OF INTEREST PAID IN RE SPECT OF CAPITAL BORROWED FOR THE PURPOSES OF BUSINESS OR PROFESSION . THE PROVISO UNDER THE SAID SUBSECTION FURTHER PROVIDES THAT THE INTEREST RELATABLE TO THE CAPITAL BORROWED FOR ACQUISITION O F ASSETS FOR EXPANSION OF EXISTING BUSINESS OR PROFESSION FOR A NY PERIOD BEGINNING FROM THE DATE ON WHICH CAPITALS WERE BORR OWED TILL THE DATE ON WHICH THE SAID ASSETS WERE PUT TO USE SHAL L NOT BE ALLOWED AS DEDUCTION. AS PER THE PROVISO TO SECTION 36(L)(III) OF THE ACT THE FIRST STEP TO BE SEEN IS WHETHER ANY CAPITAL BORROWED FOR THE ACQUISITION OF AN ASSET FOR EXPANSION OF THE EXISTING BUSINESS AND IN TEREST PAID ON SUCH BORROWED FUNDS IS TO BE DISALLOWED FOR THE PER IOD UP TO THE DATE ON WHICH THE ASSET IS FIRST PUT TO USE. IN THE ABSENCE OF ANY BORROWED BORROWALS FOR THE PURCHASE OF LAND ON WHIC H INTEREST IS BEING PAID NO DISALLOWANCE IS WARRANTED WHERE NO P ART OF THE BORROWED FUNDS ARE UTILIZED FOR THE PURPOSES OF INV ESTMENT IN SUCH ASSETS. IN THE FACTS OF THE PRESENT CASE BEFORE US THE ASSESSEE HAD MADE INVESTMENT IN LAND. THE CLAIM OF THE ASSESSEE WAS THAT THE POSSESSION OF THE LAND WAS VERY MUCH WITH THE ASSES SEE COMPANY 9 DURING THE YEAR UNDER CONSIDERATION AND ALL THE DOC UMENTS RELATING TO THE OWNERSHIP AND POSSESSION OF LAND WERE FURNIS HED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE SAID LAND WAS CLAIMED TO BE BUSINESS ASSET OF THE ASSESSEE AND WA S DECLARED IN THE SCHEDULE OF FIXED ASSET AT SERIAL NO.1. THE NEXT PLANT OF ARGUMENT OF THE ASSESEE WAS THAT IT HAD SUFFICIENT FUNDS OF ITS OWN FOR THE PURPOSES OF INVESTMENT IN THE SAID ASSETS. THE ASSESSEE CLAIMS TO HAVE SOLD ONE COMMERCIAL SITE IN SECTOR 43B CHANDIGARH FOR RS.6 CRORES DURING THE YEAR UNDER CO NSIDERATION AND THE SAID MONEY WAS SAID TO BE UTILIZED FOR PURCHASE OF THE FIXED ASSETS PTAL INVESTMENT IN THE LAND REFLECTED BY TH E ASSESSEE WAS AT RS.2.12 CRORES. IN ADDITION DURING THE YEAR UNDER CONSIDERATION THE RESERVES AND SURPLUS OF ASSESSEE COMPANY HAD INCREA SED FROM RS.4.81 CRORES TO RS.8.39 CRORES IMPLYING THEREBY GENERATIO N OF FUNDS BY THE ASSESSEE COMPANY ITSELF OUT OF ITS BUSINESS ACTIVIT IES. THE AO HAS FAILED TO BRING ON RECORD ANY EVIDENCE TO JUSTIFY T HE DISALLOWANCE UNDER THE PROVISO TO SECTION 36(L)(III) OF THE ACT. THE AO HAS FAILED TO REFER TO ANY BORROWED FUNDS UTILIZED FOR THE PURPOS ES OF INVESTMENT IN THE SAID FIXED ASSET AND IN THE ABSENCE OF THE S AME AND IN VIEW OF THE FACTS OF THE PRESENT CASE WHERE THE ASSESSEE HA D SUFFICIENT SELF- GENERATED FUNDS WE FIND NO MERIT IN GROUND NO.L RA ISED BY THE REVENUE AND THE SAME IS DISMISSED.' IN VIEW OF THE ABOVE DETAILED ANALYSIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND ANALYSIS OF JURISDICT IONAL PRONOUNCEMENT ON THE ISSUE THE DISALLOWANCE MADE B Y THE ASSESSING OFFICER IS DIRECTED TO BE DELETED.' FOLLOWING THE ABOVE OBSERVATIONS RELATING TO INVEST MENT IN PURCHASE OF LAND THE ADDITION RELATING TO ADVANCE GIVEN FOR PURCHASE OF LAND WAS ALSO DELETED IN THE SAID ORDER OF THE LD. CIT (APPEALS) BY HOLDING AS U NDER:- 'THE GROUND OF APPEAL AT SR.NO.8 PERTAINS TO DISALL OWANCE OF RS.69 35 995/- ON THE ADVANCE GIVEN FOR PURCHASE OF LAND. THIS DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER ON THE SAME BASIS AS IN RESPECT OF INVESTMENT IN PURCHASE OF LA ND DISCUSSED IN RESPECT OF GROUND OF APPEAL AT SR.NO.7. THE DISALLO WANCE IS THEREFORE DIRECTED TO BE DELETED IN VIEW OF THE DETAILED OBSE RVATION AT PARA 19 OF THE ORDER.' 18. BEFORE US IN SUPPORT OF THE GROUNDS THE LD. CI T DR PLACED RELIANCE ON THE ASSESSMENT ORDER. 19. THE LD. AR ON THE OTHER HAND TRIED TO JUSTIFY T HE FIRST APPELLATE ORDER ON THIS ISSUE. THE LD. AR ARGUED THAT NO DISALLOWANCE UNDER SECTION 36(1)(III) IS REQUIRED IF THE INVESTMENT IS OUT OF OWN CAPITAL AND RESERVE S. HE FURTHER ARGUED THAT THE MATTER STANDS COVERED IN HIS OWN CASE FOR THE AY 20 10-11 BY THE ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH IN ITA NO. 1093 /CHD/2014 DT. 22/11/2016. THE ORDER OF THE TRIBUNAL ON THIS ISSUE READS AS UN DER: 18. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW WE FIND THAT THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 69 35 99 5/- ON THE ADVANCE GIVEN FOR PURCHASE OF LAND U/S 36(1) (III) ON THE SAME BASIS AS DISCUSSED HEREIN ABOVE ON THE ISSUE IN GROUND NOS. 4(A) 4(B) AND 4(C). THE A SSESSING OFFICER HELD THAT THE MAKING OF SUCH ADVANCE WAS NOT THE BUSINESS OF THE ASSESSEE. THE LD. CIT (A) HAS DELETED THE DISALLOWANCE WITH THIS FINDING THAT THE ASSESSING OFFICER HAS MADE IT ON THE SAME BASIS AS IN RESPECT OF INVESTMENT IN PU RCHASE OF LAND DISCUSSED IN 10 RESPECT OF GROUND NO.7 OF THE FIRST APPEAL WHICH I S THE SUBJECT MATTER OF GROUND NOS. 4(A) 4(B) AND 4(C) BEFORE THE TRIBUNAL. WE TH US FOLLOWING OUR FINDING ON THE ISSUE RAISED IN GROUND NOS. 4(A) 4(B) AND 4(C) HOL D THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE. 20. CRISPLY TO SAY THAT THE DISALLOWANCE OF INTERES T UNDER SECTION 36(1)(III) ON THE LAND ADVANCE GIVEN PARTAKES THE NATURE OF DISAL LOWANCES MADE BY THE ASSESSING OFFICER ON THE PRINCIPLE THAT ASSESSEE HA S GOT INTEREST BEARING FUNDS. THE ASSESSING OFFICERS RELIANCE ON ABHISHEK INDUST RIES 286 ITR 1 CANNOT BE ACCEPTED IN VIEW OF THE FURTHER DEVELOPMENT OF THE JUDICIAL PRONOUNCEMENTS ON THE ISSUE. WHEN THE ASSESSEE HAS GOT OWN FUNDS AVAI LABLE AT THEIR DISPOSAL NO DISALLOWANCE IS CALLED FOR AS ENUNCIATED WHILE DEAL ING WITH THE GROUND NO. 2 & 3. 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. 21. HENCE KEEPING IN VIEW THE FACTS CIRCUMSTANCES F OR THIS YEAR REMAINS UNALTERED IN THE ABSENCE OF ANY OTHER CONTRARY JUD GMENT BROUGHT FORWARD BY THE REVENUE FOLLOWING THE ORDER OF THE ITAT FOR TH E AY 2010-11 BY THE ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH IN ITA NO. 1093/CHD/2014 DT. 22/11/2016 IN ASSESSEES OWN CASE THE MATTER IS BE ING DISMISSED. 22. GROUND NO. 4 RELATES TO DISALLOWANCE OF RS. 5 8 6 695/- ON ACCOUNT OF FOREIGN TRAVEL EXPENSES. DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEB ITED AN AMOUNT OF RS. 58 66 952/- UNDER THE HEAD DIRECTORS FOREIGN TRAVEL LING. THE ASSESSEE WAS ASKED TO PROVIDE DETAILS OF FOREIGN TRAVEL ALONG WITH VOU CHERS. THE ASSESSEE SUBMITTED THE DETAILS. THE ASSESSING OFFICER DISALLOWED 10% O F THE AMOUNT OF EXPENSES AMOUNTING TO RS. 5 86 695/- BY STATING THAT THE WHO LE EXPENDITURE WAS NOT MADE ON ACCOUNT OF BUSINESS EXPENDITURE ALONE. 23. THE LD. CIT(A) HAS DELETED THE ADDITION HOLDING AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE THE BASI S OF DISALLOWANCE MADE BY THE ASSESSING OFFICER AND THE ARGUMENTS OF THE AR DURING ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEED INGS. IT IS APPARENT THAT THE ASSESSING OFFICER HAS NOT BEEN AB LE TO PIN POINT ANY EVIDENCE OF PERSONAL EXPENSES DEBITED BY THE DI RECTORS ON THEIR FOREIGN TRAVEL AND IT IS PURELY ON THE SUSPI CION THAT IMPUGNED DISALLOWANCE HAD BEEN MADE. THE ASSESSEE AS OBSERV ED BY THE ASSESSING OFFICER HAS FILED ALL EVIDENCES IN THE FO RM OF VOUCHERS PERTAINING TO SAID EXPENSES. IN VIEW OF THESE FACTS THE IMPUGNED DISALLOWANCE PURELY ON ADHOC BASIS IS DIRECTED TO B E DELETED. 11 24. BEFORE US IN SUPPORT OF THE GROUNDS THE LD. CI T DR PLACED RELIANCE ON THE ASSESSMENT ORDER. 25. THE LD. AR ON THE OTHER HAND TRIED TO JUSTIFY T HE FIRST APPELLATE ORDER ON THIS ISSUE. THE LD. AR ARGUED THAT NO DISALLOWANCE WAS C ALLED FOR AS ASSESSEE HAS PRODUCED ALL THE DETAILS AND ASSESSING OFFICER DID NOT BRING ANYTHING ON RECORD THE FACTUM OF PERSONAL USE ON FOREIGN TRAVEL. 26. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE S IDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SIMILAR MATTER WA S BEFORE THIS TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2010-11 WHEREIN T HE ADDITION WAS DELETED AS THE ASSESSEE HAS FILED ALL EVIDENCES IN THE FORM OF VOUCHERS PERTAINING TO SAID EXPENSES. SINCE THE REVENUE HAS NOT BROUGHT ANYTHIN G ON RECORD CONTRA WE ARE NOT INCLINED TO INTERFERE IN THE ORDER OF THE LD. C IT (A) AND FOLLOWING THE DECISION OF ITAT CHANDIGARH BENCH IN CASE OF EBI CREMICA FOO D COTTINGS PVT. LTD. ITA NO. 886/CHD/2012 DATED 23.8.2013 HOLDING THAT AD HOC AD DITION CANNOT BE MADE UNLESS IT IS ESTABLISHED THERE WAS PERSONAL ELEMENT AND NON BUSINESS EXPENDITURE. THE ORDER OF THE LD. CIT(A) IS HEREBY UPHELD. 27. IN THE RESULT APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED WHEREAS CROSS OBJECTION OF THE ASSESSEE IS TREATED AS ALLOW ED FOR STATISTICAL PURPOSES. SD/- SD/- (SANJAY GARG) (DR. B.R.R. KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10/11/2017 AG COPY TO: THE APPELLANT THE RESPONDENT THE CIT TH E CIT(A) THE DR