TMI Blog2015 (1) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... , ITA No. 6144/Del/2012 - - - Dated:- 19-12-2014 - G. D. Agrawal, VP And H. S. Sidhu, JM,JJ. For the Appellants : Shri Pradeep Dinodia, CA Shri R K Kapoor, CA For the Respondent : Shri Vikram Sahai, Sr. DR ORDER Per: G D Agrawal: The assessee as well as the Revenue are in cross appeals against the order dated 4-9-2012 passed by the ld. CIT(Appeals)-XIII, New Delhi, in appeal no. 219/11-12 relating to A.Y. 2009-10. Both the appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. Ground no. 1 raised in the Revenue's appeal reads as under: On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the disallowance of interest made u/s 36(1)(iii) from ₹ 26,78,282/- in respect of interest free loans/advances given to its sister concerns and other to ₹ 1,36,234/- only by simply relying upon the submissions of the assessee. 3. The other grounds in the revenue's appeals are only arguments in support of ground no. 1. 4. Ground no. 1 of the assessee's appeal is of general nature and needs no adjudication. 5. Ground no. 2 of the assessee&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er books at ₹ 1,47,60,218/-, however the total funds as per books are at ₹ 6,17,61000/- therefore, the said figure has been taken here while working out disallowance) 9. The revenue, aggrieved with the relief allowed by the CIT(A), is in appeal before us, while the assessee, aggrieved with the disallowance sustained, is in appeal before us. 10. It was pointed out by the ld. counsel that in the immediately preceding year similar disallowance was made by the AO, because the total interest free advance in that year was ₹ 125.36 lacs mainly to Hivac / Starlite and MMPL. The CIT(A) recorded the finding that advance to Hivac was from assessee's own funds and advance to Starlite and MMPL was in respect of commercial transactions between them and assessee. He pointed out that in AY 2008-09, the above finding of the CIT(A) was accepted by the Revenue. Though the revenue had filed the appeal against the order of the CIT(A) in A.Y. 2008-09, but this ground was not taken. He, therefore, submitted that during the year under consideration also the advance is to these parties only and in fact in the case of Hivac there is no advance during the year under consideration, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of trade dues receivable from them in respect of commercial transactions the appellant had with them in earlier years and not on account of any loans and advances receivable from them as categorized in the annual accounts of the appellant. For these amounts, the appellant has submitted that no interest was stipulated to be charged and also that these amounts have been received by the appellant in subsequent years. It is also worth mentioning here that in earlier assessments years no addition/ disallowance on account of above outstanding amounts have been made. On going through the copies of accounts of respective 3 parties, I find that the appellant was having the commercial dealings in earlier years accordingly they cannot be treated as loans and advances. Hence keeping in view the facts of the case and also that there is no change in facts and circumstances of the case in the year under consideration as compared to earlier year) I hold that the AO was not correct in disallowing the sum of ₹ 16,75,588 on account of interest. 13. Though, the revenue had filed appeal against the said order of the CIT(A), however, the only ground raised in the revenue's appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44020 Hivac Wares Pvt. Ltd. 2500000 0 2500000 0 Total 5914859 160385 Receivable from Excise Department: 1260 - Advances to Employees 10919 - Prepaid Expenses 7771 - Advances for Supplies 3927923 - VAT Receivables 341066 - Advance to workers 27538 - Advance with ESI Deptt. 734418 - Claims/ Expenses receivables 2710769 - Import Export Licence Fee 150000 - Meridian Marketing Pvt. Ltd. 778787 - Starlite Synthetics Pvt. Ltd. 2887350 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it ought let the matter rest rather than spend the tax payers' money in pursuing litigation for the sake of it. 16. In view of the above observation of the Hon'ble Apex Court, we hold that the revenue was not justified in agitating the reduction in the disallowance of interest in the year under consideration on the same facts, which was accepted by them in the immediately preceding year. In view of above, ground no. 1 raised by revenue in its appeal is rejected, while ground no. 2 raised by the assessee in its appeal is allowed. 17. Ground no. 3, in assessee's appeal, reads as under: 3.0 That on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) has erred in upholding the action of the Assessing Officer holding that the new unit of the appellant commenced produced in December 2008 as against September 2008 and thereby disallowing 50% of the depreciation claimed on Building and Plant machinery. 18. At the time of hearing before us this ground of appeal was not pressed by the ld. counsel. Accordingly, the same is rejected. 19. Ground no. 4 of the assessee's appeal is against the sustenance of disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of a High Court has been shown to us. The Punjab and Haryana High Court in Commissioner of Income Tax, Faridabad Vs. M/s. Lakhani Marketing Incl., ITA No. 970/2008, decided on 02.04.2014, made reference to two earlier decisions of the same Court in CIT Vs. Hero Cycles Limited, [2010] 323 ITR 518 and CIT Vs. Winsome Textile Industries Limited, [2009] 319 ITR 204 to hold that Section 14A cannot be invoked when no exempt income was earned. The second decision is of the Gujarat High Court in Commissioner of Income Tax-I Vs. Corrtech Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj.). The third decision is of the Allahabad High Court in Income Tax Appeal No. 88 of 2014, Commissioner of Income Tax (Ii) Kanpur, Vs. M/s. Shivam Motors (P) Ltd. decided on 05.05.2014. In the said decision it has been held: As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Hence, what Section 14A provides is that if there is any income which does not form p ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
