M/s. Surat beverages Ltd.,, Surat v. The ACIT.,Circle-4,, Surat

ITA 705/AHD/2008 | 2001-2002
Pronouncement Date: 28-05-2010 | Result: Allowed

Appeal Details

RSA Number 70520514 RSA 2008
Assessee PAN AADCS0403K
Bench Ahmedabad
Appeal Number ITA 705/AHD/2008
Duration Of Justice 2 year(s) 3 month(s) 3 day(s)
Appellant M/s. Surat beverages Ltd.,, Surat
Respondent The ACIT.,Circle-4,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 28-05-2010
Date Of Final Hearing 19-05-2010
Next Hearing Date 19-05-2010
Assessment Year 2001-2002
Appeal Filed On 25-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP AHMEDABAD BEFORE SHRI T.K. SHARMA JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER ITA NO.705/AHD/2008 ASSESSMENT YEAR: 2001-02 DATE OF HEARING:19.5.10 DRAFTED:20.5.10 M/S. SURAT BEVERAGES LTD. 101-107 SAJNI COMPLEX NR. SCE COMPLEX CITY LIGHT ROAD SURT PAN NO.AADCS0403K V/S . ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-4 SURAST (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI RASESH SHAH AR RESPONDENT BY:- SMT. JYOTI LAXMI SR-DR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER:- THIS APPEAL FILED BY THE ASSESSEE RAISING FOLLOWIN G GROUNDS :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN NOT CONSIDERING THE GROUND OF VALIDITY OF ASSESSMEN T U/S.147 OF THE ACT RAISED IN THE APPELLATE PROCEEDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ISALLOWING THE INTEREST EXPENSE OF RS.8 66 825/- FOR ALLEGED INTEREST FREE ADVANCE GIVEN TO M/S. CHANDAN CORPORATION. ITA NO.705/AHD/2008 A.Y. 2001-02 M/S.SURAT BEVERAGES LTD. V. ACIT CIR-4 SRT PAGE 2 2. THE LD.AR FOR THE ASSESSEE DID NOT PRESS FOR GROUND NO.1 HENCE IT IS REJECTED AS NOT PRESSED. 3. THE ONLY ISSUE INVOLVED AS PER SECOND GROUND IN THIS APPEAL OF ASSESSEE IS THAT THE ASSESSING OFFICER HAS DISALLOW ED AND LD. CIT(APPEALS) HAS CONFIRMED INTEREST OF RS.8 66 825/- BEING INTER EST CALCULATED ON INTEREST FREE ADVANCE GIVEN TO M/S. CHANDAN CORPORATION A S ISTER CONCERN OF THE ASSESSEE. 4. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE AS SESSEE HAD OUTSTANDING INTEREST FREE ADVANCES TO ITS SISTER CONCERN M/S. C HANDAN CORPORATION GIVEN IN THE PRECEDING YEARS. ASSESSEE USED TO TRANSPORT TH E GOODS THROUGH THIS CONCERN AND ACCORDINGLY ASSESSEE WAS REQUIRED TO PA Y TRANSPORT CHARGES. ADVANCES GIVEN BY THE ASSESSEE WAS ACCORDINGLY ADJU STED AGAINST THE TRANSPORT CHARGES PAYABLE BY THE ASSESSEE TO THIS C ONCERN. ADVANCE OUTSTANDING TO THIS CONCERN WERE RS.79 81 097/- AS ON 31-03-2000 WHICH WAS REDUCED TO RS.34 53 072/- AS ON 31-03-2001. IT WAS CLAIMED BEFORE THE ASSESSING OFFICER THAT ASSESSEE HAD TOTAL INTEREST FREE FUNDS OF RS.18 11 16 610/- WHICH CONSISTED OF SHARE CAPITAL OF RS.2 29 40 000/- AND RESERVES OF RS.15 81 76 610/-. EVEN AS ON 31-03-200 1 INTEREST FREE FUNDS WERE RS.14 14 02 221/- CONSISTING OF SHARE CAPITAL OF RS.2 29 40 000/- AND RESERVES OF RS.11 84 62 221/-. THE ASSESSING OFFICE R DISALLOWED THE CLAIM OF INTEREST CALCULATED ON THE AMOUNT OUTSTANDING AGAIN ST M/S. CHANDAN CORPORATION FOR THE REASONS THAT THERE IS NO DIRECT NEXUS BETWEEN THE BORROWED FUNDS TAKEN FROM THE BANK ON INTEREST AND INTEREST FREE ADVANCES GIVEN TO THE SISTER CONCERN AND THAT AUTHORITIES RE LIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS. 5. LD. CIT(APPEALS) CONFIRMED THE DISALLOWANCE ON T HE GROUND THAT COMMERCIAL EXPEDIENCY IS NOT ESTABLISHED. ITA NO.705/AHD/2008 A.Y. 2001-02 M/S.SURAT BEVERAGES LTD. V. ACIT CIR-4 SRT PAGE 3 6. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW OF AUTHORITIES BELOW WERE NO T JUSTIFIED IN MAKING THIS ADDITION. THE REASONS ARE THAT NO NEW ADVANCES WER E GIVEN THIS YEAR. WHATEVER IS FOUND IN THE BALANCE-SHEET ARE BROUGHT FORWARD BALANCES FROM PRECEDING YEARS AFTER ADJUSTING THE TRANSPORT CHARG ES PAYABLE BY THE ASSESSEE. NO DISALLOWANCE OF INTEREST BY THE ASSESS ING OFFICER HAS BEEN MADE IN THE PRECEDING YEAR. EVEN OTHERWISE ASSESSE E HAD SUFFICIENT INTEREST FREE FUNDS WHICH SHOULD COVER THE ADVANCES GIVEN BY IT TO ITS SISTER CONCERN. FURTHER WE NOTICE THAT THERE IS CLEAR COMMERCIAL C ONNECTION BETWEEN THE ADVANCES GIVEN AND BUSINESS OF THE ASSESSEE. M/S. C HANDAN CORPORATION IS CARRYING OUT TRANSPORT WORK FOR THE ASSESSEE AND AD VANCES ARE ADJUSTED AGAINST THE TRANSPORT CHARGES PAYABLE BY THE ASSESS EE. 7. UNDER THESE FACTS WE BELIEVE THAT AUTHORITIES S HOULD HAVE FOLLOWED THE PRINCIPLES OF CONSISTENCY. ONCE NO DISALLOWANCE OF INTEREST HAS BEEN MADE IN EARLIER YEARS THEN DISALLOWANCE OF INTEREST THIS YE AR IS NOT WARRANTED. THE NEED FOR CONSISTENCY OF APPROACH AND UNIFORMITY IN THE EXERCISE OF JUDICIAL DISCRETION RESPECTING SIMILAR CAUSES AND THE DESIRA BILITY TO ELIMINATE OCCASIONS FOR GRIEVANCES OF DISCRIMINATORY TREATMENT REQUIRES THAT ALL SIMILAR MATTERS SHOULD RECEIVE SIMILAR TREATMENT. IT IS SO OBSERVE D BY HONBLE DELHI HIGH COURT IN THE CASE OF JYOSTNA SURI V. ITAT (1998) 232 ITR 395 (DEL). IN OTHER WORDS WHERE THE ISSUE HAS BEEN DECIDED CONSISTENTL Y IN A PARTICULAR MANNER FOR EARLIER ASSESSMENT YEARS THEN FOR THE SAKE OF C ONSISTENCY THE SAME VIEW SHOULD CONTINUE TO PREVAIL FOR SUBSEQUENT YEARS UNL ESS THERE IS MATERIAL CHANGE IN THE FACTS. SINCE IN THE INSTANT CASE TH ERE WAS NO SINGLE DISTINGUISHING FEATURES PROMPTING TO TAKE A DIFFERE NT VIEW THEN DISALLOWANCE OF INTEREST THIS YEAR WILL NOT BE PROPER. THE RULE OF CONSISTENCY IS AN IMPORTANT ASPECT IN TAX PROCEEDINGS AND VIEWS SHOULD NOT BE C HANGED ON THE SAME SET OF FACTS AND POSITION OF LAW REMAINING THE SAME. ITA NO.705/AHD/2008 A.Y. 2001-02 M/S.SURAT BEVERAGES LTD. V. ACIT CIR-4 SRT PAGE 4 8. IN ADDITION ABOVE WE NOTICE THAT THERE IS A COM MERCIAL CONNECTION BETWEEN THE MONEY ADVANCED BY THE ASSESSEE WITHOUT INTEREST AND ITS BUSINESS AND SECONDLY ASSESSEE HAD SUFFICIENT INTER EST FREE FUNDS AS DEMONSTRATED BY LD. AR. THE CASE OF THE ASSESSEE I S SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F S.A. BUILDERS LTD. V. CIT (2007) 288 ITR 1 (SC). AS A RESULT WE DELETE THE AD DITION AND APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 9. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28/05/2010 SD/- SD/- (T.K.SHARMA) (D. C.AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD DATED : 28/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-I SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD