TMI Blog2016 (6) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... and each and every purchase has been backed by the vouchers and there is evidence in the shape of GRs and delivery challans for finished products of Gagret which is duly authenticated on the border of Punjab & Himachal Pradesh and this documentary evidence has been admitted by the AO and simply copies were placed. Regarding electricity charges, which have been proved by the assessee beyond any doubt and how it can be assumed that electricity charges in H.P. are far less than electricity charges in Punjab and that finding has not been rebutted by the ld. CIT(A). - Decided in favour of assessee - ITA No. 534 (Asr) /2014, ITA No. 621(Asr)/2014 - - - Dated:- 13-6-2016 - Sh. A. D. Jain, Judicial Member And Sh. T. S. Kapoor, Accountant Member For the Appellant : Sh. Sudhir Sehgal For the Respondent : Sh. A.N. Mishra, DR ORDER Per A. D. Jain, JM These are the cross appeals one of the assessee and the other by the Revenue for the assessment year 2010-11, against the order dated 08.07.2014, passed by the ld. CIT(A), Jalandhar. 2. The assessee has raised the following grounds of appeal: 1. That the ld. CIT(A) has erred in confirming disallowance of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the AO and added to the income of the assessee. 5. On appeal, the ld. CIT(A) confirmed the disallowance made by the AO, holding as under: 8. I have considered the facts of the case, the basis of addition made by the Assessing Officer and the arguments of the AR on the issue during assessment as well as appellate proceedings. It is seen that the appellant had not even attempted to show that the investments in sister concerns serve any business purpose. The entire emphasis has been to support the claim that the impugned investment had been made from self owned funds and not from interest bearing sources. The appellant in order to prove its point highlighted that two separate accounts have been maintained for borrowed funds i.e. SBI term loan account and SBI cash credit account. The funds so received under both the sources have been used specifically for the said parties. However the investments have been made from separate current account in which the deposits represent the accruals from the business of the assessee company i.e. its sales. This to say that if such accrual had been credited/deposited in the cash credit account, the need to continue with or even raising su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for non-business purpose and has held that the funds to the extent diverted to the sister concern are for non-business purposes and the CIT (A) and Assessing Officer has totally relied upon on the judgment of Abhishek Industries as reported in 286 ITR 1 and on the judgment of the ITAT, Amritsar Bench in the case of M/s. Bright Enterprises in ITA No. 414/Asr/2010, for Asstt. Year 2005-06 and which stands over ruled now by the Punjab Haryana High Court. 6.3. The ld. counsel for the assessee drew our attention to the following contentions of the assessee made before the Assessing Officer and CIT (A):- i) The total investment s during the year under consideration as on 31.03.2010 were as under: - S. No. Name of the related parties Balance as on 31.03.2010 1. MBD Enterprises (P) Ltd. 1,000/-(Share allotted in earlier Year) 2. M.Gulab Singh Sons Pvt. Ltd. 3,50,000/- (Old amount outstanding in group concern having common directors) 3. AKM Enterprises Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the tune of ₹ 47,07,263/-. vi. Besides, the assessee having huge surplus funds as stated above. Your goodself attention is invited to the fact that the assessee has fixed deposits on the assets side of the balance sheet reflected as under and which is evident from page 11 of the paper book:- a) Fixed deposits receipt ₹ 8,35,94,607.00 b) FDR with SBI, Gagret ₹ 1,26,11,825.00 vi. On these FDRs, the assessee has disclosed interest income much more than the interest on cash credit limit as is evident from page 14 15 of the Paper book, whereas the interest of ₹ 85,57,462/- at page 15 and ₹ 14,47,789/- at page 26 has been disclosed as interest income and, thus, no disallowance of interest was required to be made, since the total interest disclosed is to the tune of ₹ 1,00,05,252/- (Rs. 85,57,462 + 14,47,789/-) is much more than the interest on cash credit limit to the tune of ₹ 47,07,263/-. 6.4. The ld. counsel submitted that all such facts had been addressed to the Assessing Officer and CIT (A) and the AO has discussed this issue in para 3.8 of the order at pages 2 to 5 and the CIT (A) has discussed our su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for one group company to advance amounts to another group company, if, for instance, as a result thereof the former benefits. In the present case, as we have already demonstrated, there would be a direct benefit on account of the advance made by the appellant to its sister company if the same improves the financial health of the sister company and makes it a viable enterprise. We hasten to add that it is not necessary that the advance results in a positive tangible benefit. So long, as the amount is advanced with that view in mind or with any other commercially expedient view in mind that is sufficient. 6.7 He submitted that the judgment of Abhishek Industries has also been overruled by the Hon ble Supreme Court in the case of Hero Cycles, for which, the copy is placed at pages 112 to 116, reported in 379 ITR 347. 6.8. Even in the judgment of ITAT, Chandigarh Bench in the case of Deepak Builders , following the judgment of Punjab Haryana High Court in the case of M/s Bright Enterprises and M/s Hero Cycles, the Hon ble Bench has deleted the disallowance of interest u/s 36(1)(iii)and judgment is placed at pages 117 to128 of the paper book and the relevant pages are 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit. So long, as the amount is advanced with that view in mind or with any other commercially expedient view in mind that is sufficient. 8.1. Further, the judgment in the case of Abhishekh Industries (supra) relied upon by both the Authorities below has also been overruled by the Hon ble Supreme Court in the case of Hero Cycles vs. CIT , 379 ITR 347 (SC) (copy placed at APB 112 to 116), in favour of the assessee by holding as follows: Company had reserve/surplus to the tune of almost 15 crores ad, therefore, assessee company could in any case, utilize those funds for giving advance to its directors Order of the High Court set aside and order of the ITAT was restored Appeal allowed. Assessee had a credit balance in the bank account when the said advance of ₹ 34 lakhs was given. Company had reserve/surplus to the tune of ₹ 15 crores and, therefore, the assessee company could in any case, utilize those funds for giving dvance to its directors. 8.2. Further, the reliance on the following judgments also supports the case of the assessee overruling the judgment of Abhishekh Industries , wherein it has been held that the disallowance u/s 36(1)(ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment has not filed any appeal before the Hon ble Punjab Haryana High Court. The second stand taken by the Income-tax Department is that the AO has allowed 20% deduction u/s 80IC of the Act for the assessment years 2005-06 to 2008-09 and under section 153A of the Act for the assessment year 2009-10. The ld. CIT(A) allowed 100% of the profit and gain in all the appeals for which the Revenue is in appeal before us. 15. Having heard the rival contentions in the light of the material placed on record, we are of the considered view that the issue in dispute is squarely covered by the decision of this Bench of the Tribunal, in assessee s own case, vide order dated 28.12.2012 for the assessment years 2005-06 to 2009-10. The relevant findings of the Tribunal are as follows: 18. We have gone through the arguments and brief synopsis filed before us by the ld. counsel for the assessee. The facts as emerging from the above said submissions/arguments, which has not been disputed by the ld. CIT(A) that investment in the fixed assets which was to the tune of ₹ 4,12,42,381/- as on 31.03.2005 had risen to ₹ 8,33,04,711/- as on 31.03.2009 which is based as per audited books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial was found. The AO has allowed deduction @ 20% of the profit from manufacturing for which he relied upon the order of the A.O. for all the years which have identical facts. 19.1. Before us, the ld. counsel for the assessee argued at length in ITA No.507(Asr)/2011 and other connected appeals. Since the facts were identical, he invited our attention to the facts starting from para 11 to 14 (pages 52 to 63) where the ld. CIT(A) has discussed each and every aspects and material found during assessment proceedings viz A-12, A-15, A-19 A-21 and argued at length which has been reproduced hereinabove. The arguments have been advanced by the ld. counsel for the assessee in shape of brief synopsis has not been rebutted by the ld. DR as mentioned above and we find no infirmity in the order of the ld. CIT(A) in para 11 to 14 of his order. 20. Regarding job work of printing material , the ld. counsel for the assessee placed reliance on the judgment of the Hon ble Gujrat High Court in the case of CIT vs. Harjivandas Juthabhai Zaveri 258 ITR 785 (Guj), judgment of Hon ble Mumbai high Court in the case of CIT vs. Paul Brothers 216 ITR 548 (Mum.(Nagpur Bench) and the judgment of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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