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Rajasthan Art Emporium Versus D.C.I.T., Circle, Jodhpur And Vice-Versa

2017 (5) TMI 263 - RAJASTHAN HIGH COURT

Diversion of business funds to an associate concern without interest - Tribunal held that the assessee failed to point out any service having been rendered by the associate company to the assessee firm - Held that:- We do not find that the Tribunal arrived at the conclusions on basis of surmises and conjectures, but the Tribunal noticed that an agreement between the assessee and M/s Singhal’s Resourcing and Marketing Pvt. Ltd. was there and further that the profit and loss account of M/s Singhal .....

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may be a device adopted to ignore the tax liability. Pertinent to notice that the assessee and M/s Singhal’s Resourcing and Marketing Pvt. Ltd. though are separately assessed to tax, but are closely knitted concerns and the partners are either close relatives or the same persons. In entirety, we do not find any wrong with the findings arrived by the Income Tax Appellate Tribunal. We find force in the argument advanced by learned counsel that the appeal as a matter of fact is having no substanti .....

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ax Appeal No.67/2007, Rajasthan Art Emporium v. DCIT, Circle, Jodhpur. The questions for adjudication before us under this Income Tax Appeal are as follows:- 1. Whether the finding of the Tribunal that amount paid to M/s. Singhal Resources and Marketing Pvt. Ltd. and M/s. Mewar Security Services Pvt. Ltd. is possibly a device to raise capital of the concerned associates of the assessee firm, for substaining additions made by the Assessing Officer, are finding based on conjectures and surmises wh .....

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lass, brass etc. For the assessment year 1993-94, a return of income in a tune of ₹ 9,95,553/- was filed by the assessee on 3.2.1994. The Assessing Officer determined the same as of ₹ 13,18,320/- by arriving at the conclusion that no satisfactory explanation is given to divert the business funds to an associate concern without interest, as such, the interest free advance is not allowable. While making assessment as per Section 143(3) of the Income Tax Act, 1961 (hereinafter referred .....

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hold that the A.O was not justified in disallowing the interest because appellant had sufficient funds at this disposal on which no interest is received. Appellant had given amount to sister concern out of non interest bearing funds. A.O had not proved the fact that interest bearing funds were diverted by the appellant for giving amount to M/s Singhal Bros. Accordingly, in view of the decisions of under mentioned cases, I hold that the A.O was not justified in making the disallowance of interest .....

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to infer even impliedly that the services at all were given. The discussion made by the Tribunal in this regard reads as follows:- After carefully considering the facts and circumstances and legal position, we give our findings on this issue as under. It is true that there was an agreement between the assessee and M/s Singhal s Resourcing and Marketing Pvt. Ltd. It is also true that the P & L a/c of M/s Singhal s Resourcing and Marketing Pvt. Ltd. reveals that it incurred revenue expenditure .....

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latives are the masters to the affairs. What is required by the assessee to prove is that exact services which were provided by the said M/s Singhal s Resourcing and Marketing Pvt. Ltd. concern/ company. Despite the detailed calculations made by the Assessing Officer, as we have discussed in our former part of the order, the assessee was not in a position to tell the exact services provided by the said company. The assessee also failed to tell the Assessing Officer as to what were the exact orde .....

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d not point out to any evidence on record wherefore it could be inferred that the service in that respect was rendered by the company. The ld. AR has been beating about the bush by submitting that the department has not disputed the agreement in question. The department has not denied the payments through cheques. So the findings of the Assessing Officer are not correct. The ld. AR has further submitted that as per the agreement the said company has to perform computerized services, marketing se .....

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een rendered by the company are that the said company performed its duties as per the agreement by further employing highly paid persons in administration. But, to our exclamation, the ld. AR has not been able to point out any particular services having been rendered on record by the said company to the assessee firm. The ld. AR has invited our attention to the particular clause in the agreement which refers to various acts which are to be performed by the said company. The ld. AR has relied on .....

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e actually rendered by M/s. Singhal Resources and Marketing Pvt. Ltd. entitling it to claim service charges from the appellant firm. Per contra, Shri K.K.Bissa, learned counsel appearing on behalf of the revenue, submits that the Income Tax Appellate Tribunal has considered each and every aspect of the matter and then gave a finding of fact which is not required to be interfered by this Court in its appellate jurisdiction. It is asserted that the questions formulated by the Court are not even su .....

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