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Income Tax Appellate Tribunal, INDORE SMC BENCH, INDORE
Before: SHRI KUL BHARAT
M/s. Maa Gaumati Iron P. Ltd., ITO-3(2), Indore Indore बनाम/ (Appellant) (Revenue ) Vs. P.A. N. – AAECM 8999 H Appellant by Shri Venus Rawka, CA Revenue by Shri Puneet Kumar, Sr. DR Date of Hearing: 22.10.2020 Date of Pronouncement: 24 .11.2020 आदेश / O R D E R
This appeal by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals-1), Indore dated 13.12.2018 challenging the confirmation of the addition of Rs.3,33,041/- on account of disallowance of interest made u/s 36(1)(iiI) of the Income Tax Act.
SMC - I.T.A. 92 of 2019 2 Maa Gaumati Iron 2. Facts, in brief, are that the AO noted that the assessee had advanced an amount of Rs.1.70 crores to M/s. Somiya Ispat P. Ltd. and the assessee had huge borrowed funds an amount of Rs.31,83,570/- was found paid as interest. The assessee submitted that the impugned amount was in the nature of trade credit instead of loan. However, the AO disallowed the proportionate interest on the ground that loan bearing funds were utilized for advancing the loan.
Being aggrieved, the assessee filed an appeal before the ld. CIT(A) who also confirmed the action of the AO on the ground that the assessee failed to establish the business exigencies with the aforesaid party.
Still aggrieved, the assessee has filed an appeal before this Tribunal. Before me, the ld. Counsel for the assessee submitted that M/s. Somiya Ispat P. Ltd. is also in the same trade i.e. scrap trading and the amount of Rs.1.70 crores is not a loan but an advance given for the purchase of steel scrap. The said co. made a bid to purchase a sick unit of industry which comprised of old plant & machinery, factory building shed etc. as a lot which was in the form of scrap now. The said party had agreed to pass on the scrap out of the said lot to the SMC - I.T.A. 92 of 2019 3 Maa Gaumati Iron assessee on payment of certain interest free advance amount, therefore, the business exigency cannot be doubted. Further, in the assessment year 2012-13, the same amount of advance to suppliers i.e. Rs.19,20,000/- was in dispute and the same was decided in favour of the assessee by ld. CIT(A)-1, Indore. The facts of the case of assessment year 2012-13 and the year under consideration i.e. assessment year 2011-12 are same and hence, judgment of that year should have been followed by the ld. CIT(A). Thus, the addition u/s 36(1)(iii) is unjustified.
On the contrary, ld. Departmental Representative (DR) relied upon the order of the ld. CIT(A).
I have heard rival submissions and perused the material available on record and gone through the orders of authorities below. I find that throughout the contention of the assessee has been that the advance of Rs. 1.70 crores made to M/s Somiya Ispat P. Ltd. for purchase of the scrap. Ld. counsel for the assessee during the course of hearing has drawn my attention to the paper book pages 6 to 8 wherein the relevant pages of the balance sheet of the assessee company are enclosed. The reasoning for giving interest free advance
SMC - I.T.A. 92 of 2019 4 Maa Gaumati Iron to the said entity was for purchasing the scrap. However, the assessee has not filed any information from the said party in respect of the averment made before this Tribunal. It is incumbent upon the assessee to prove with supporting evidences that the advance was made for the purpose of business expediency. The assessee has failed to do so as there is no evidence supporting the claim of the assessee except the bald averments. Therefore, under these facts and circumstances as recorded by the authorities below, I do not see any infirmity in the impugned order. Thus, grounds raised in this appeal are rejected.
In result, the appeal filed by the assessee is dismissed.
Order was pronounced in the open court on 24 .11.2020.