M/s. Krishna Terene Pvt.Ltd.,, Surat v. The ACIT.,Cent.Circle-3,, Surat

ITA 775/AHD/2010 | 2005-2006
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 77520514 RSA 2010
Assessee PAN AABCK0205B
Bench Ahmedabad
Appeal Number ITA 775/AHD/2010
Duration Of Justice 2 year(s) 18 day(s)
Appellant M/s. Krishna Terene Pvt.Ltd.,, Surat
Respondent The ACIT.,Cent.Circle-3,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-03-2012
Date Of Final Hearing 22-03-2012
Next Hearing Date 22-03-2012
Assessment Year 2005-2006
Appeal Filed On 12-03-2010
Judgment Text
-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI G C GUPTA VICE-PRESIDENT AND SHRI A MOHAN ALANKAMONY - AM ITA NO.775/AHD/2010 (ASSESSMENT YEAR:-2005-06) M/S KRISHNA TERENE PVT. LTD. KRISHNA HOUSE AGIYARI MOHALA B/H WORLD TRADE CENTRE RUSTAMPURA SURAT V/S THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3 SURAT PAN: AABCK 0205 B [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI M K PATEL AR REVENUE BY:- SHRI JAMES KURIAN SR. DR DATE OF HEARING:- 22-03-2012 DATE OF PRONOUNCEMENT:- 30-03-2012 O R D E R PER G C GUPTA (VICE-PRESIDENT) :- THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 IS DIRECTED AG AINST THE ORDER OF THE LEARNED CIT(A). THE ONLY GROUND OF APP EAL OF THE ASSESSEE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED CIT(A) HAS ERRED IN CONFIR MING THE ACTION OF THE AO IN MAKING ADDITION OF RS.3 02 834/- OF EXCES SIVE INTEREST U/S 40A(2)(B) OF THE ACT. 2 THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THA T THE ISSUE IN THE GROUNDS OF APPEAL OF THE ASSESSEE REGARDING ADDITION OF EXCESSIVE INTEREST U/S 40(A)(B) OF THE ACT IS COVE RED WITH THE DECISION IN THE EARLIER ASSESSMENT YEAR 2004-05 WHE REIN IN IDENTICAL FACTS THE ADDITION MADE BY THE AO WAS DEL ETED BY THE 2 2 LEARNED CIT(A) AND NO FURTHER APPEAL WAS PREFERRED BY THE REVENUE. HE HAS FILED THE COPY OF ASSESSMENT ORDER AS WELL AS COPY OF THE APPELLATE ORDER OF THE LEARNED CIT(A) F OR AY 2004- 05 IN SUPPORT OF HIS SUBMISSION. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO AND THE LEARNED CIT(A). 3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE ORDERS OF THE AO AND THE LEARNED CIT(A) AND ALSO TH E ORDERS OF THE AO AND THE LEARNED CIT(A) IN THE IMMEDIATELY PR ECEDING ASSESSMENT YEAR 2004-05. WE FIND THAT IN SIMILAR FA CTS THE ADDITION MADE U/S 40A(2)(B) OF THE ACT ON ACCOUNT O F EXCESSIVE INTEREST IN THE IMMEDIATELY PRECEDING ASSESSMENT YE AR 2004-05 WAS DELETED BY THE LEARNED CIT(A) IN THE CASE OF TH E ASSESSEE VIDE HIS ORDER DATED 29-01-2008. IT WAS STATED BY T HE ASSESSEE THAT NO FURTHER APPEAL WAS PREFERRED BY THE REVENUE AGAINST THE SAID ORDER OF THE LEARNED CIT(A). EVEN ON MERITS W E FIND THAT THE ISSUE HAS TO BE DECIDED IN FAVOUR OF THE ASSESS EE SINCE THE DISALLOWANCE WAS MADE ONLY FOR THE REASON THAT THE INTEREST WAS PAID TO THE DEPOSITORS AT THE RATE OF 18% WHEREAS I T WAS PAID TO THE BANK AT 13.5% PER ANNUM. THE INTEREST RATE OF 18% COULD NOT BE SAID TO BE EXCESSIVE IN THE FACTS OF THE CASE. W E FIND THAT THE LEARNED CIT(A) IN HIS APPELLATE ORDER FOR THE PRECE DING ASSESSMENT YEAR 2004-05 HAS RECORDED THAT OTHER PER SONS WHO ARE NOT COVERED BY SECTION 40A(2)(B) OF THE ACT WERE AL SO PAID INTEREST AT THE RATE OF 18%. THERE ARE OTHER FACTOR S ALSO JUSTIFYING HIGHER RATE OF INTEREST PAID TO THE CREDITORS AS CO MPARED TO THE RATE OF INTEREST PAID TO THE BANK SUCH AS NO NEED OF OFFERING SECURITY OR PLEDGING THE MOVABLE OR IMMOVABLE ASSET THE PERIOD 3 3 FOR WHICH THE LOAN WAS REQUIRED AND THE PURPOSE OF THE LOAN ETC. THERE IS NO MATERIAL BROUGHT ON RECORD ON BEHALF OF THE REVENUE TO SUGGEST THAT THE ASSESSEE HAS PAID A LOWER RATE OF INTEREST TO OUTSIDE PARTIES AS COMPARED TO THE DEPOSITORS COVER ED U/S 40A(2)(B) OF THE ACT. IN THESE FACTS OF THE CASE W E HOLD THAT THE ADDITION / DISALLOWANCE MADE U/S 40A(2)(B) ON ACCOU NT OF EXCESSIVE INTEREST IS NOT JUSTIFIED AND IS DELETED ACCORDINGLY AND THE GROUND OF APPEAL NO.1 IS ALLOWED. 4 IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT TODAY ON 30-03-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (G C GUPTA) VICE-PRESIDENT DATE : 30-03-2012 COPY OF THE ORDER FORWARDED TO: 1. M/S KRISHNA TERENE PVT. LTD. KRISHNA HOUSE AGI YARI MOHALA B/H WORLD TRADE CENTRE RUSTAMPURA SURAT 2. THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CI RCLE-3 SURAT 3. CIT CONCERNED 4. CIT(A)-II SURAT 5. DR ITAT AHMEDABAD BENCH-A AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD