ETP INTERNATIONAL P. LTD, MUMBAI v. DCIT (ISD) 8(1), MUMBAI

ITA 8330/MUM/2011 | 2008-2009
Pronouncement Date: 23-10-2013 | Result: Allowed

Appeal Details

RSA Number 833019914 RSA 2011
Assessee PAN AAACI4872K
Bench Mumbai
Appeal Number ITA 8330/MUM/2011
Duration Of Justice 1 year(s) 10 month(s) 15 day(s)
Appellant ETP INTERNATIONAL P. LTD, MUMBAI
Respondent DCIT (ISD) 8(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 23-10-2013
Date Of Final Hearing 23-10-2013
Next Hearing Date 23-10-2013
Assessment Year 2008-2009
Appeal Filed On 08-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI RAJENDRA SINGH ACCOUNTANT MEMBER AND SHRI SANJAY GARG JUDICIAL MEMBER ITA NO. 8330/M/11 ASSESSMENT YEAR: 2008 - 09 M/S. ETP INTERNATIONAL PVT. LTD. ETP HOUSE 124 SAKI VIHAR RO AD ANDHERI (E) MUMBAI - 400 072 PAN: AA AC I4872K VS. DEPUTY COMMISSIONER OF INCOME TAX (OSD) 8 (1) AAYAKAR BHAVAN M.K. MARG MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITE SH JOSHI REVENUE BY : SHRI K. GHOSH D.R. DATE OF HEARING : 23.10.13 DATE OF PRONOUNCEMENT : 23.10.13 O R D E R PER SANJAY GARG JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 02.0 9.11 RELEVANT TO ASSESSMENT YEAR 2008 - 09. THE GROUNDS OF APPEAL ARE REPRODUCED AS UNDER: 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)} HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.9 87 617/ - OUT OF INTEREST PAID ON THE GROUND THAT INTEREST BEING FUNDS ARE UTILIZED BY APPELLANT FOR ADVANCING INTEREST FREE LOANS TO ITS SUBSIDIARY ETP INTERNATIONAL PVT. LTD. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW THE SAID DISALLOWANCE OUGHT TO BE DELETED. 2. LEARNED CIT(A) HAS ERRED IN NOT A DJUDICATING GROUND 2 IN APPEAL BEFORE HIM EVEN THOUGH THE APPELLANT HAD MADE SUBMISSIONS BEFORE HIM. ITA NO .8330/M/11 M/S. ETP INTERNATIONAL P. LTD. 2 WITHOUT PREJUDICE TO GROUND 1 THE DISALLOWANCE U/S. 36(1)(III) OUGHT TO BE RESTRICTED TO RS.7 14 143/ - AS AGAINST RS.9 87 617/ - MADE BY THE AO. THE AO O UGHT TO HAVE EXCLUDED INTEREST PAID ON SPECIFIC PURPOSE LOANS WHILE COMPUTING DISALLOWANCE U/S.36(1)(III). 3. THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND AND/OR RESCIND ANY GROUNDS OF APPEAL DURING TH E COURSE OF THE HEARING. GROUND NO. 1 : 2. AT T HE OUTSET THE LD. A.R. HAS BROUGHT OUR ATTENTION TO THE FACT THAT THE VERY SIMILAR ISSUE HAS CROPPED UP IN THE CASE OF THE ASSESSEE FOR IMMEDIATELY PRECEDING YEAR I.E. ASSESSMENT YEAR 2007 - 08 WHICH HAS BEEN DECIDED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 29.08.12 PASSED IN ITA NO.6506/M/11. THE RELEVANT EXTRACT OF THE FINDINGS OF THE TRIBUNAL ON THE ISSUE IS REPRODUCED AS UNDER: 3. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD I T IS OBSERVED THAT THE ASSESSEE ENTERED INTO AGREEMENT WITH M/S.ETP INTERNATIONAL LIMITED SINGAPORE TO RECEIVE 55% OF REVENUE ON SALE OF ETP V5 PRODUCTS IN ASIA PACIFIC REGION. DURING THE YEAR THE ASSESSEE HAD SALES OF RS. 1.84 CRORE TO M/S.ETP INTERNATIO NAL LIMITED SINGAPORE. THIS CONTENTION OF THE ASSESSEE HAS BEEN RECORDED BY THE LEARNED CIT(A) IN PARA 3.3.4 OF THE IMPUGNED ORDER. THIS FACT INDICATES THAT THE MONEY WAS ADVANCED BY THE ASSESSEE TO ITS SUBSIDIARY COMPANY FOR BUSINESS PURPOSE. WE HAVE ALS O PERUSED THE BALANCE SHEET OF M/S.ETP INTERNATIONAL LIMITED SINGAPORE WHICH IS AVAILABLE ON RECORD. IT CAN BE SEEN FROM THE BALANCE SHEET OF THE SUBSIDIARY COMPANY THAT THE AMOUNT OWING TO THE ASSESSEE - COMPANY HAS BEEN SHOWN AS SINGAPORE DOLLARS 512648. FROM THE ASSETS SIDE OF THE BALANCE SHEET IT CAN BE OBSERVED THAT NO AMOUNT HAS BEEN TAKEN AWAY FROM THE COMPANY BY THE SHAREHOLDERS OR DIRECTORS FOR ANY PERSONAL PURPOSE. THERE IS ONE ITEM UNDER THE HEAD `CURRENT ASSETS' TITLED AS 'OTHER RECEIVABLE DEPO SITS & PREPAYMENTS' STANDING AT SINGAPORE $ 147010. THE BREAK UP OF THAT AMOUNT IS AVAILABLE ON PAGE 22 OF THE BALANCE SHEET OF M/S.ETP INTERNATIONAL LIMITED SINGAPORE. THE FURTHER DETAILS OF THE DEPOSITS AND PREPAYMENTS COVERED UNDER THIS HEAD HAVE ITA NO .8330/M/11 M/S. ETP INTERNATIONAL P. LTD. 3 ALSO BEEN MADE AVAILABLE. FROM SUCH DETAILS IT CAN BE SEEN THAT NO AMOUNT RECEIVED BY M/S.ETP INTERNATIONAL LIMITED SINGAPORE FROM THE ASSESSEE - COMPANY HAS BEEN USED FOR ANY PURPOSE OTHER THAN BUSINESS. THE HON'BLE SUPREME COURT IN THE CASE OF S.A. BUILDERS V S. CIT [(288) ITR 1 (SC)] HAS HELD THAT WHERE INTEREST FREE LOAN IS ADVANCED BY AN ASSESSEE TO ITS SISTER CONCERN WHICH AMOUNT IS IN FACT UTILIZED BY SUCH SISTER CONCERN FOR ITS BUSINESS PURPOSES THEN NO DISALLOWANCE OF INTEREST CAN BE MADE. THE FACTS AN D CIRCUMSTANCES OF THE INSTANT CASE ARE STRICTLY COVERED BY THE FACTS AND RATIO DECI DENDI IN THE CASE OF S.A.BUILDERS (SUPRA). HERE ALSO THE ASSESSEE ADVANCED INTEREST FREE LOAN TO SUBSIDIARY COMPANY FOR BUSINESS PURPOSE AND WHICH AMOUNT WAS IN FACT UTILI ZED BY SUCH SUBSIDIARY COMPANY FOR ITS BUSINESS PURPOSES. THE FURTHER FACT THAT THE ASSESSEE IS ALSO EARNING INCOME THROUGH ITS SUBSIDIARY COMPANY AMPLY GOES TO PROVE THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF INTEREST ON THE GROUND THAT THE INTEREST BEARING FUNDS WERE UTILIZED FOR NON - BUSINESS PURPOSES. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF S.A. BUILDERS (SUPRA) WE DE LETE THE ADDITION OF RS. 4.24 LAKH . 3. A PERUSAL OF THE ABOVE REPRODUCED EXTRACT REVEALS THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR THE IMMEDIATE PRECEDING YEAR HAS OBSERVED THAT NO AMOUNT RECEIVED BY M/S. ETP INTERNATIONAL PVT. LTD. SINGAPORE WAS USED BY IT FOR ANY PURPOS E OTHER THAN BUSINESS . R ELYING UPON THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS (SUPRA) T HE CO - ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT THE INTEREST FREE LOAN ADVANCED BY THE ASSESSEE TO THE SISTER CONCERN WAS FOR B USINESS PURPOSES AND DID NOT CALL FOR ANY DISALLOWANCE. THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR IN CONSIDERATION ARE IDENTICAL WITH THAT OF THE PRECEDING YEAR. RESPECTFULLY FOLLOWING THE FINDINGS OF THE TRIBUNAL GIVEN IN THE IMMEDIATELY PRECEDING YEAR IN THE CASE OF ASSESSEE ITSELF THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. GROUND NO.1 OF THE APPEAL IS THEREFORE ALLOWED ACCORDINGLY. ITA NO .8330/M/11 M/S. ETP INTERNATIONAL P. LTD. 4 GROUND NO.2 4. GROUND NO.2 OF THE APPEAL IS ALTERNATIVE TO GROUND NO.1. SINCE THE ISSUE RAISED IN GROUND NO.1 AS OBSERVED ABOVE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE HENCE THE GROUND NO.2 IN SUCH CIRCUMSTANCES DOES NOT SURVIVE AND THE SAME IS ACCORDINGLY DISMISSED. 5. IN THE RESULT THE APPEAL OF THE A SSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.10. 2013. SD/ - SD/ - ( RAJENDRA SINGH ) ( SANJAY GARG ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 23.10. 2013. * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT ( A) CONCERNED MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.