M/s. Shree Balaji Pulse Mills, Dahod v. The ACIT.,Cent.Circle-1,, Baroda

ITSSA 34/AHD/2010 | 2002-2003
Pronouncement Date: 17-09-2010 | Result: Dismissed

Appeal Details

RSA Number 3420516 RSA 2010
Bench Ahmedabad
Appeal Number ITSSA 34/AHD/2010
Duration Of Justice 8 month(s) 3 day(s)
Appellant M/s. Shree Balaji Pulse Mills, Dahod
Respondent The ACIT.,Cent.Circle-1,, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 17-09-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 17-09-2010
Date Of Final Hearing 26-08-2010
Next Hearing Date 26-08-2010
Assessment Year 2002-2003
Appeal Filed On 13-01-2010
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI JM AND D.C.AGRAWAL A M M/S SHREE BALAJI PULSE MILLS GODI ROAD DAHOD (GUJARAT. VS. ASSTT. CIT CENTRAL CIRCLE-1 BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI DIVYAKANT PARIKH AR RESPONDENT BY:- SHRI K. M. MAHESH SR.D.R. O R D E R PER D. C. AGRAWAL ACCOUNTANT MEMBER . THESE ARE FOUR APPEALS FILED BY THE ASSESSEE FOR A SST. YEARS 2002- 03 TO 2005-06 RAISING FOLLOWING COMMON GROUNDS :- (1) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE U/S 40A(2)(B) OF THE INCOME-TAX ACT OF RS.17386/- ON TH E GROUND THAT INTEREST PAID TO THE DEPOSITORS AT 18% ARE EXC ESSIVE AND UNREASONABLE COMPARED TO THE MARKET RATE. THE LD. C IT(A) HAS ERRONEOUSLY AND INCORRECTLY HELD THAT INTEREST AT 1 5% P.A. IS THE FAIR MARKET RATE AND NOT THE CORRECT MARKET RATE OF 18% PAID BY THE ASSESSEE FIR. IT IS SUBMITTED THAT THE INTEREST PAID AT 18% TO ALL DEPOSITORS WHO ARE RELATIVE HAVE BEEN PAID INT EREST AT THE CORRECT AND APPROPRIATE MARKET RATE. THE LD. CIT(A) ARBITRARILY DECIDED THE MARKET RATE AT 15%. IT IS SUBMITTED THA T THE CONSEQUENTIAL DISALLOWANCE OF 3% P.A. WORKED OUT TO RS.17 386/- IS ABSOLUTELY INCORRECT ILLEGAL AND TH E SAME BE DELETED. (2) THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW AN D CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED TH AT THE SAME BE HELD SO NOW. IT(SS)A NOS.34 TO 37/AHD/2010 ASST. YEARS :2002-03 TO 2005-06 2 2. HOWEVER THE ASSESSEE IS AGGRIEVED AGAINST SUSTA INING ADDITION OF RS.14 113/- IN ASST. YEAR 2003-04 RS.14 313/- IN ASST. YEAR 2004-05 RS./14.043/- IN ASST. YEAR 2005-06 3. THE ASSESSEE HAS FILED THESE APPEALS AGAINST DIS ALLOWANCE OF INTEREST OF THE ABOVE AMOUNT UNDER SECTION 40A(2)(B ). IN THE ASSESSMENT ORDER THE AO NOTICED THAT ASSESSEE HAS PAID INTERES T @ 18% TO SMT. NAINABEN K. SHAH AS AGAINST 12% PAID IN ASST. YEAR 2001-02. THE PERSON TO WHOM SUCH INTEREST WAS PAID AGAINST HER DEPOSIT IS A PERSON SPECIFIED UNDER SECTION 40A(2)(B). SINCE INTEREST PAID TO HER IN THE PRECEDING YEAR WAS @ 12% THE AO CONSIDERED THE PAYMENT THIS YEAR H IGHER BY 6%. FINDING THE EXPLANATION NOT SATISFACTORY THE A.O. M ADE THE ADDITION BY DISALLOWING THE INTEREST @ 6% . 4. IN APPEAL LD. CIT(A) REDUCED THE ADDITION BY CON FIRMING THE DISALLOWANCE OF INTEREST @ 3%. ACCORDING TO THE LD. CIT(A) FAIR MARKET RATE OF INTEREST CAN BE 15% ON WHICH THE FUNDS CAN BE ARRANGED FROM THE MARKET. IN THE CASE OF M/S NUTAL PULSE MILLS THE CO NCERN DEALING IN PULSE AT DAHOD LIKE THE ASSESSEE FAIR MARKET RATE OF INT EREST BEING 15% WAS CONSIDERED REASONABLE. SIMILARLY IN THE CASE OF M/S LAXMI PULSE RICE & ROLLER FLOUR MILLS A SISTER CONCERN OF THE ASSESSE E MARKET RATE OF INTEREST AT 15% WAS CONSIDERED AS REASONABLE. CONSIDERING TH E ABOVE EXAMPLES THE LD. CIT(A) HELD THAT PAYMENT OF INTEREST @ 15% IS REASONABLE AND ACCORDINGLY HE CONFIRMED THE DISALLOWANCE @ 3%. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). THE ASSESSEE WAS NOT ABLE TO S HOW CONVINCINGLY AS TO WHY HE HAS INCREASED THE PAYMENT OF INTEREST FROM 1 2% TO 18% THIS YEAR 3 AND IN OTHER THREE YEARS IN APPEAL BEFORE US. THE A RGUMENT OF THE LD. AR THAT MARKET RATE OF INTEREST WAS VERY HIGH CANNOT B E ACCEPTED BECAUSE RATE OF INTEREST IS CONSISTENTLY FALLING. IF IN ASST. YE AR 2001-02 RATE OF INTEREST WAS AT 12% AT WHICH ASSESSEE HAS MADE PAYMENT THEN THERE IS NO REASON WHY SUCH RATE OF INTEREST THIS YEAR SHOULD BE HIGH. ON OUR ASKING THE LD. AR FAIRLY ADMITTED THAT LOAN COULD BE BORROWED FROM BANK @ OF 14% DURING THAT PERIOD. CONSIDERING THIS ASPECT WE HOLD THAT PAYMENT OF INTEREST @ 15% AS HELD BY LD. CIT(A) IS REASONABLE AND JUSTIFIED. THE ORDERS OF LD. CIT(A) ARE ACCORDINGLY CONFIRMED. THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 17/9/10 . SD/- SD/- (BHAVNESH SAINI) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R AHMEDABAD DATED :17/9/10 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 4 1.DATE OF DICTATION 26/8/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..