M/s Arisudana Industries Ltd., Ludhiana v. ACIT, Ludhiana

ITA 745/CHANDI/2011 | 2007-2008
Pronouncement Date: 19-09-2011 | Result: Dismissed

Appeal Details

RSA Number 74521514 RSA 2011
Assessee PAN AABCA2449K
Bench Chandigarh
Appeal Number ITA 745/CHANDI/2011
Duration Of Justice 2 month(s) 4 day(s)
Appellant M/s Arisudana Industries Ltd., Ludhiana
Respondent ACIT, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 19-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 19-09-2011
Date Of Final Hearing 08-09-2011
Next Hearing Date 08-09-2011
Assessment Year 2007-2008
Appeal Filed On 15-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE MS. SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 745/CHD/2011 ASSESSMENT YEAR: 2007-08 M/S ARISUDANA INDUSTRIES LTD. V THE ACIT CIRCLE V LUDHIANA LUDHIANA PAN NO. AABCA2449K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJIV SHARMA RESPONDENT BY : SHRI AJAY SHARMA DATE OF HEARING : 08.09.2011 DATE OF PRONOUNCEMENT : 19.09.2011 ORDER PER SUSHMA CHOWLA JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-II LUDHIANA DATED 01.6.2011 RELATING TO ASSESSMENT YEA R 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT 1961. 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS UNDER:- THAT THE LD. CIT(A)-II LUDHIANA HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1 28 395/- ON ACCOUN T OF INTEREST DISALLOWED U/S 36(1)((III) BY THE ASSESSIN G AUTHORITY WITHOUT AND BASIS AND REASONS GIVEN IN TH E ORDER. THEREFORE THE ORDER PASSED BY THE ASSESSIN G OFFICER AND CONFIRMED BY THE CIT(A)-II LUDHIANA IS UNCALLED FOR UNWARRANTED AND MAY BE QUASHED. 3. SHRI RAJIV SHARMA APPEARED FOR THE ASSESSEE AND SHRI AJAY SHARMA APPEARED FOR THE REVENUE AND PUT FORTH THEIR CONTEN TIONS. 2 4. THE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMEN T WHICH WAS REFUND IN VIEW OF THE ISSUE RAISED IN THE PRESENT A PPEAL. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ISSUE OF DISALLOWA NCE OF INTEREST IS COVERED BY THE ORDER OF THE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT V ABHISHEK INDUSTRIES LTD [286 ITR 1 (P&H)]. 5. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD MADE CERTAIN ADVANCE S TO DIFFERENT CONCERNS AS ENLISTED AT PAGE 2 OF THE ASSESSMENT OR DER. THE ASSESSEE ON THE OTHER HAND DEBITED INTEREST AMOUNT OF RS. 99 57 962/- TO THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE WAS SHOW CAUSED TO PROV E AS TO WHY NO INTEREST HAD BEEN CHARGED ON THE AMOUNTS OUTSTANDIN G AND IN THE CASE OF TWO CONCERNS THE SAID AMOUNT WAS CARRIED FORWARD F ROM THE LAST YEAR. THE ASSESSEE FAILED TO EXPLAIN ANYTHING FURTHER. T HE ASSESSEE WAS ALSO SHOW CAUSED TO PROVE THE COMMERCIAL EXPEDIENCY IN A DVANCING THE SAID LOANS INTEREST FREE. IN THE ABSENCE OF ANY COMMERC IAL EXPEDIENCY BEING ESTABLISHED THE ASSESSING OFFICER COMPUTED THE IN TEREST RELATABLE TO SUCH ADVANCES AS TABULATED AT PAGE 3 OF THE ASSESSMENT O RDER AND DISALLOWED A SUM OF RS. 2 23 948/-. BEFORE THE CIT(A) THE CONT ENTION OF THE ASSESSEE WAS THAT THE ADVANCES WERE MADE AGAINST PURCHASES F ROM THE SAID PARTIES AND OUT OF THE FOUR PARTIES ENLISTED BY THE ASSESSI NG OFFICER LOANS DUE FROM THREE PARTIES WERE ADJUSTED AGAINST THE SUPPLY OF GOODS ON DIFFERENT DATES. THE CIT(A) ACCORDINGLY TREATED THE SAID ADVA NCES MADE TO THREE CONCERNS FOR BUSINESS PURPOSES EXCEPT IN THE CASE O F M/S VISHAL UDYOG PVT LTD WHICH ADVANCES WERE RETURNED BY THE SAID PA RTY. ACCORDINGLY DISALLOWANCE OF RS. 1 28 935/- WAS UPHELD BY THE CI T(A) . THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 3 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ISSUE RAISED IN THE PRESENT CASE IS IN CONNECTION W ITH THE DISALLOWANCE OF INTEREST BY INVOKING THE PROVISIONS OF SECTION 36(1 )(III) OF THE ACT. WE FIND THAT THE ISSUE IN QUESTION I.E. DISALLOWANCE O F INTEREST IS COVERED BY THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. ABHISHEK INDUSTRIES (SUPRA). THE HON'BLE COURT HAVE LAID D OWN THE RATIO THAT WHERE THE ASSESSEE IS UNABLE TO PROVE THE ONUS CAST UPON THE ASSESSEE TO ESTABLISH ITS CASE OF ADVANCING INTEREST FREE FUNDS AVAILABLE WITH IT FOR BUSINESS PURPOSES ON WHICH NO INTEREST WAS CHARGED THE INTEREST RELATABLE TO SUCH ADVANCES IS NOT TO BE ALLOWED AS AN EXPENDI TURE. THE ASSESSEE HAVING FAILED TO PROVE ITS CONTENTION OF ADVANCING THE SAID AMOUNT FOR BUSINESS PURPOSES WHICH IS FURTHER ESTABLISHED BY T HE FACT THAT THE SAID ADVANCES WAS RETURNED BY THE SAID PARTY WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A) AND CONFIRM THE DISALLOWANCE OF RS. 1 28 395/-. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS DIS MISSED. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF SEPTEMBER 2011. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH SEPTEMBER 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT CHANDIGARH 4