TMI Blog2014 (1) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... AO or CIT(A) that the Assessee has not paid any interest to Vijay Stationers - this factual aspect needs to be verified by A.O –the matter remitted back to the AO for verification. The assessee has not placed any material on record to substantiate its claim that the Assessee was having sufficient interest free advance which has been utilized for the purpose of advancing the aforesaid amounts – the CIT(A) has given a finding that Assessee’s total capital and reserves of Rs. 9.25 crore were invested in fixed assets and inventory exceeding Rs. 26 crore and therefore the same was not available for providing interest free advances - the Assessee can be granted one more opportunity to substantiate its claim of use of interest free funds for making advances – the matter remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee. - ITA No.2067/Ahd/2012 - - - Dated:- 25-10-2013 - Mukul Kr Shrawat And Anil Chaturvedi, JJ. For the Appellant : Shri A L Thakkar For the Respondent : Shri P L Kureel, Sr. DR ORDER:- PER : Anil Chaturvedi 1. This appeal is filed by the Assessee against the order of CIT(A)-6, Ahmedabad dated 16.07.2012 for A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . to examine the appellant's claim with the necessary documents in respect of advance given to Soham Integrated Textile Park Pvt. Ltd. when all such evidences material have been furnished at the time of assessment as well as appellate stage. Ground no. 1 is not pressed and therefore dismissed. Ground no. 2 is with respect to depreciation on car. 4. During the course of assessment proceedings, A.O. noticed that though the motor car was in the name of the Director of the company but the depreciation of Rs. 3,11,611/- and motor car expenses of Rs. 8,85,405/- was claimed by the Assessee. The Assessee was asked to justify its claim. The Assessee interalia submitted that the payment of vehicle was made by the Assessee Company though the company was not a registered owner but however it was the beneficial owner of the asset. It was further submitted that it is not necessary for the purpose of making the claim of depreciation that the registered owner-ship of the asset should be with the company. It also relied on certain judicial pronouncements. The submissions of the Assessee was not found acceptable to the A.O. He was of the view that for claiming depreciation on assets by the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment is made by finance company but it is not the beneficial owner. Since both appellant and its director are separate entities and directors are not permanent, it cannot be said that appellant company has got complete dominion over the motor car. Since motor car is in possession and control of the directors in whose name the same stand, there is no dominion or control of the appellant company on the said motor cars. Though purchased from the funds provided by it, appellant cannot be said to be beneficial owner for the purpose of claiming depreciation. Appellant relied upon the decisions of ITAT Ahmedabad and also certain High Courts including Supreme Court decision in the case of Mysore Minerals Ltd. It would be very relevant to refer three-member decision of honorable Supreme Court in the case of Tamil Nadu civil supplies Corporation Ltd versus CIT reported in 249 ITR 214. In this larger bench decision of apex court, earlier decision of Mysore Minerals Ltd was also considered. The said decision was distinguished on facts and it was held that since assessee has not acquired dominion over asset in question, claim of depreciation is not allowed. In another decision of Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee either before the A.O. or CIT(A) though the onus to prove the use of asset was on the assessee. He further submitted that the claim of an expense in the Companies account is not an evidence to prove the asset was used for the purpose of business. He thus supported the order of A.O. and CIT(A). 6. We have heard the rival submissions and perused the material on record. 7. It is an undisputed fact that the motor car on which the Assessee claims depreciation and expenses are in the name of the Director and not the Assessee. Before us, though the ld. A.R. has submitted that the funds of the Assessee were used for the purpose of acquisition of motor car and the motor car was used for the purpose of business but however, the ld. A.R. did not produce the copy of the annual accounts to substantiate its claim that the funds of the Assessee has been used for acquisition of motor car. Further the Assessee has neither brought any material on record to prove that the asset was used by the Assessee for the purpose of business and the Assessee was exercising its domain, possession and ownership over the asset to the exclusion of all others. . Further he has also not brought any material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after considering the submissions of the Assessee granted partial relief to the Assessee by holding as under:- 5.3 I have considered the facts of the case; assessment order and appellant's written submission. Assessing officer made disallowance of interest on the ground that appellant gave interest free advances and diverted interest-bearing business funds to non-business purposes. Appellant submitted that it had sufficient interest free funds in the form of share capital and reserves and also profit for the year which was sufficient to fund such interest free advances. Appellant also argued that interest free loan of RS 14.50 lakhs given to Sun insulators Private Ltd was given by cheque on 23-03-2009 which was cleared on 30-03 2009 and therefore funds were given only for two days in this financial year where assessing officer computed interest disallowance for the whole year. As regards Shree Ambica Geotechs Private Ltd the advance of RS 33 lakhs was given on 22-11- 2008 out of sale proceeds. In the case of Soham Integrated Textile Park Pvt Ltd, it was argued that advance given is only RS 30.50 lakhs and not RS 155.80 lakhs. Further it was given against booking of the unit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that advance to Soham Integrated Textile Park Pvt. Ltd was given for booking of unit in Textile Park, no interest disallowance will be made. If the advance given to Soham Integrated Textile Park Pvt Ltd is not found to be for business purpose, the interest disallowance is to be made for the period of advance remained outstanding during the year. 10. Aggrieved by the order of CIT(A), the Assessee is now in appeal before us. Before us, the ld. A.R. with respect to loan of Rs. 14.5 lacs given to Sun Insulators Pvt. Ltd. submitted that it was out of the loan receipt from Vijay Stationers Pvt. Ltd. He further submitted that no interest was paid of loans granted to Vijay stationers and therefore the question of disallowing interest does not arise. He further submitted that the loan was advanced only on 30.03.2009 and therefore interest if at all chargeable would be for one day and not for the entire year. With respect to the advance to Rs. 33 lacs to Shri Ambika Geo Tax Pvt. Ltd., he submitted that the same was out of the sale receipts by the company and therefore no interest bearing funds were used for the purpose of granting of advance. With respect to loan granted to Soham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding interest free advances. Before us, the ld. A.R. could not controvert the findings of CIT(A). In view of the aforesaid facts, however in the interest of justice and fair play, we are of the view that the Assessee be granted one more opportunity to substantiate its claim of use of interest free funds for making advances. We therefore remit the matter to the file of A.O. to decide the issue in accordance with law and after considering the submissions and evidence placed by the Assessee. Assessee is also directed to fully co-operate by furnishing the necessary evidence promptly so that the A.O. can decide the issue. 14. With respect to the advance given to Soham Integrated Textile Park Pvt. Ltd., we find that CIT(A) has directed the A.O. to verify the claim of Assessee that the advance granted by the Assessee was in the nature of business advance and if so then no disallowance of interest be made and thereafter to decide the issue. We find no infirmity in the order of CIT(A) with respect to this issue. Nothing has been brought on record to show that pursuant to the directions of CIT(A), an order has been passed by A.O. 15. In the result, this ground of the Assessee is part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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