K.S.Agricultral Industies, Malerkotla v. Asstt Commissioner of Income Tax, Ludhiana

ITA 890/CHANDI/2016 | 2012-2013
Pronouncement Date: 07-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 89021514 RSA 2016
Assessee PAN AABFK5707H
Bench Chandigarh
Appeal Number ITA 890/CHANDI/2016
Duration Of Justice 1 month(s) 30 day(s)
Appellant K.S.Agricultral Industies, Malerkotla
Respondent Asstt Commissioner of Income Tax, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 07-10-2016
Assessment Year 2012-2013
Appeal Filed On 08-08-2016
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER ITA NO. 890/CHD/2016 ASSESSMENT YEAR: 2012-13 M/S K.S. AGRICULTURAL INDUSTRIES VS. THE ACIT C IRCLE-IV MALERKOTLA LUDHIANA PAN NO. AABFK5707H (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 06.10.2016 DATE OF PRONOUNCEMENT : 07.10.2016 ORDER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF LD. CIT(A)-2 LUDHIANA DATED 16.05.2016 FOR ASSESSM ENT YEAR 2012-13 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. 3. I HAVE HEARD LD. DR AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 4. THE ASSESSEES COUNSEL HAS FORWARDED A LETTER ST ATING THERE THAT ISSUE IS IDENTICAL AS HAVE BEEN DECIDED BY THE TRIB UNAL IN ASSESSEES CASE IN ITA NO. 825/CHD/2015 DATED 13.7.2016 COPY OF WH ICH IS PLACED ON RECORD. 2 5. ON GROUND NOS. 1 AND 2 THE ASSESSEE HAS CHALLEN GED THE ADDITION OF RS. 2 48 207/- U/S 40A(2)(B) OF THE INCOME-TAX A CT 1961 ON ACCOUNT OF ALLEGED EXCESS INTEREST PAID TO THE PERSONS COVE RED BY THE PROVISIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSING OFFICER OBSERVED THAT ASSESSEE HAD GIVEN INTEREST TO RELATE D PARTIES @ 18% PER ANNUM EXCEPT TO M/S K.S. AGROTECH (REGD) TO WHOM IN TEREST WAS PAID @ 12% PER ANNUM. THE ASSESSEE WAS ASKED TO EXPLAIN WH Y INTEREST AMOUNT PAID TO RELATED PARTIES OVER AND ABOVE 12% BE NOT D ISALLOWED. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE MADE THE ABOVE DISALLOWANCE. THE LD. CIT(A) ALSO CONFIRM ED THE ADDITION. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. DR I FIND THAT ISSUE IS SIMILAR AS HAVE BEEN DECIDED IN THE CASE OF THE ASSESSEE BY ITAT (SMC) CHANDIGARH BENCH IN ITA NO. 825/CHD/2015 FOR ASSESSMENT YEAR 2011-12 VIDE ORDER DATED 13.7.2016 WHEREIN THE IDE NTICAL ADDITION HAVE BEEN DELETED. PARA 5 OF THE ORDER OF THE TRIBUNAL I S REPRODUCED AS UNDER:- 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS I AM O F THE VIEW THAT ADDITION IS TOTALLY UNJUSTIFIED. THE ASSESSEE PLEADED BEFORE THE AUTHORITIES BELOW THAT INTERST @ 18% WERE NOT EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE. THE ASSESSE E ALSO SUBMITTED THAT FINANCIAL INSTITUTE CHARGE INTE REST @ 12% TO 15 % AFTER OBTAINING COLLATERAL SECURITIES A ND CHARGING COMPOUNDING INTEREST WHICH MAY VARY UP TO 24%. IN THE CASE OF ASSESSEE NO SECURITY HAVE BEEN GIVEN FOR OBTAINING UNSECURED LOANS. THEREFORE ASSESSING OFFICER SHOULD HAVE CONSIDERED THESE ASPE CTS 3 BEFORE MAKING DISALLOWANCE IN THE MATTER. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PB- 43 WHICH I S ASSESSMENT ORDER U/S 143(3) DATED 23.12.2011 FOR ASSESSMENT YEAR 2009-10 IN THE CASE OF ASSESSEE IN WHICH THE ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE OF INTEREST ON THE SAME ISSUE. HE ALS O REFERRED TO PB-46 WHICH IS ALSO ASSESSMENT ORDER OF THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 DATED 18.12.20 12 U/S 143 OF THE I.T. ACT IN WHICH ALSO NO DISALLOWAN CE HAVE BEEN MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESSIVE INTEREST PAID. PB-50 TO PB-52 ARE THE LE DGER ACCOUNTS OF INTEREST ON UNSECURED LOANS FOR THOSE PERIODS WHICH SHOWED THAT THE ASSESSEE PAID THE INTEREST TO RELATED PERSONS @ 18%. THESE FACTS THEREFORE WOULD CLEARLY PROVE THAT IN PRECEDING ASSESSMENT YEARS I.E. IN 2009-10 AND 2010-11 THE ASSESSEE WAS PAYING INTEREST @ 18% ON UNSECURED LOANS. THE ASSESSING OFFICER IN THE ASSESSMENT ORDE R U/S 143(3) DID NOT CONSIDER THE PAYMENT OF INTEREST @ 1 8% TO BE EXCESSIVE OR UNREASONABLE. THEREFORE CONSIDE RING THE HISTORY OF THE ASSESSEE I FIND THAT PAYMENT OF INTEREST @ 18% IS NOT EXCESSIVE OR UNREASONABLE HAV ING REGARD TO THE FAIR MARKET VALUE. I ACCORDINGLY SET ASIDE THE OF THE ASSESSING OFFICER AND DELETE THE ADDITIO N OF RS. 2 29 693/-. GROUND NO.1 OF THE ASSESSEES APPEA L IS ALLOWED. 7. FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE FOR PRECEDING ASSESSMENT YEAR 2011-12 I SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. GROUND NOS. 1 & 2 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 4 8. GROUND NO.3 IS GENERAL IN NATURE. 9. ON GROUND NO.4 THE ASSESSEE CHALLENGED THE ADD ITION OF RS. 98 607/- ON ACCOUNT OF DISALLOWANCE @ 20% ON ACCOUN T OF PERSONAL USE OUT OF CAR INSURANCE EXPENSES ETC. THE ASSESSING O FFICER HAVE DISALLOWED 1/5 TH OF THESE EXPENSES AND ADDED BACK TO THE INCOME OF THE ASSESSEE. ACCORDINGLY AFTER GIVING EFFECT OF RS. 3 2 271/- THE ADDITION OF RS. 98 607/ -WAS MADE. THE LD. CIT(A) CONFIRMED THE ADDITION AND DISMISSED THE APPEAL OF THE ASSESSEE. 10. AFTER CONSIDERING THE SUBMISSIONS OF LD. DR I FIND THAT THE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE E ARLIER ORDER DATED 13.7.2016 (SUPRA). THE ASSESSEE PLEADED BEFORE THE LD. CIT(A) THAT 1/10 TH DISALLOWANCE HAVE BEEN MADE IN PRECEDING ASSESSMEN T YEAR 2010- 11 THEREFORE THE SAME MAY BE MADE BY FOLLOWING RU LE OF CONSISTENCY. IN ASSESSMENT YEAR 2011-12 VIDE ORDER DATED 13.7.2016 THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE TO 10% AS AGAINST 20% M ADE BY THE ASSESSING OFFICER. THE ORDERS OF THE AUTHORITIES B ELOW TO THAT EXTENT ARE MODIFIED AND ADDITION IS RESTRICTED TO DISALLOWANCE OF 10% ONLY. THIS GROUND IS PARTLY ALLOWED. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 7 TH OCTOBER 2016 RKK 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR