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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
आयकर अपील�य अ�धकरण, इ�दौर �यायपीठ, इ�दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.528/Ind/2019 Assessment Year: 2013-14 Total Diagnosis Pvt. Ltd. ITO Ward-4(2) 203, Zone-1, M.P. Nagar Bhopal बनाम/ Bhopal Vs. (Appellant) (Revenue ) P.A. No.AAACT5844N
Appellant by Shri Sumit Nema, A.R. & Shri Gagan Tiwari, A.R. Respondent by Shri Punit Kumar, Sr. D.R. Date of Hearing: 21.01.2020 Date of Pronouncement: 22.01.2020 आदेश / O R D E R PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of
the CIT(A)-2, Bhopal dated 28.3.2019 pertaining to the
assessment year 2013-14. The assessee has raised
following grounds of appeal:
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
There is no jurisdiction either in law or on facts for the Ld. CIT(A) to sustain the disallowance of Rs.45,11,593/- under section 36(1)(iii) out of interest payment on the ground that borrowed funds has not been utilised for business purpose. 2. That the Ld. CIT(A) was not justified in completely discarding the specific submission regarding the fact that advances to SKIPL were not given in the A.Y. 2013-14 and thus the order of Ld. CIT(A) is perverse and deserves to be set aside. 3. The Ld. CIT(A) was not justified in sustaining the disallowance of Rs.45,11,593/- under section 36(1)(iii) out of interest payment on the ground that borrowed funds has not been utilised for business purpose without appreciating the ratio of decision rendered by the Supreme Court in S.A. Builders Ltd. Vs. CIT (2007) 288 ITR 1 (SC) AND Sundaram Fastners Ltd. (1984) 149 ITR 773 Madras. 4. That the Ld. CIT(A) was not justified either in law or on facts in arriving at the conclusion that the money advances to SKIPL was not for the purpose of commercial expediency without appreciating the fact that the amount was given interest free to the SKIPL in the F.Y. 2009-10 for the reason that SKIPL has purchased land at prime place located at Punjiyan Bhawan, Malviya Nagar, Bhopal and has started commercial construction with a view to let it out on lease to the appellant and SKIPL had executed the lease agreement dated 15.1.2009 for the lease of 10,000 sq.ft. in the said building. 5. That the Ld. CIT(A) was not justified in sustaining the impugned addition of Rs.1,38,437/- made on account of undisclosed interest income due to difference between interest income shown by the appellant and as per form 26AS and without property appreciating the submission filed before the CIT(A). 2. Ground No.1 is against sustaining the addition of
Rs.45,11,593/-. The facts giving rise to the present appeal
are that the case of the assessee was picked up for scrutiny
assessment and the assessment u/s 143(3) of the Income
Tax Act, 1961 (hereinafter called as ‘the Act’) was framed
vide order dated 29.3.2016. The A.O. during the course of
assessment proceedings noticed that on perusal of audited
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
accounts for the year under appeal and material available
on record, the assessee company claimed a sum of
Rs.6,91,59,001/- as other advances from M/s. S.K.
Infrastructure Pvt. Ltd. in the schedule 12 of the Loans and
advances forming part of the audited accounts. The A.O.
therefore, called upon the assessee to explain vide
questionnaire u/s 142(1) of the Act dated 25.2.2016. In
response thereto, the assessee company replied that the
amount was given for constructing building which would
be used by the assessee company in future. However, the
A.O. did not accept this contention of the assessee and
therefore made disallowance of Rs.45,11,593/- u/s
36(1)(iii) of the Act. Further, the A.O. also noticed that
there was a difference in the interest as disclosed by the
assessee accrued on FDR and as reflected in form 26AS.
As per the assessee, the interest was of Rs.9,10,138/- and
as per the form 26AS, the amount received was
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
Rs.10,48,575/-. Therefore, the difference of Rs.1,38,457/-
was added back into income of the assessee as undisclosed
income. Aggrieved against this, the assessee preferred
appeal before Ld. CIT(A), who after considering the
submissions confirmed the additions made by the A.O.
Now the assessee is in further appeal before this Tribunal.
Ground No.1 is against sustaining addition of
Rs.45,11,593/-. Ld. Counsel for the assessee submitted
that admittedly, this amount was not advanced in the year
under consideration. This amount was given in the earlier
years. Ld. Counsel reiterated the submissions as made in
the written submissions.
Ld. D.R. opposed these submissions and supported
the orders of the authorities below.
We have heard the rival submissions, perused the
materials available on record and gone through the orders
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
of the authorities below. The contention of the assessee is
that the amount was not given in the year under
consideration. Therefore, the question of genuineness,
creditworthiness and business expediency is to be verified
in the year when this advance was given. It is also
contended that if genuineness, creditworthiness and
business expediency is not proved in that year, in that
event, the A.O. would be at liberty to make addition in this
year. To buttress this contention, reliance is made on the
decision of the coordinate bench rendered in the case of
ACIT Vs. Auto Light (India) Ltd. (2016) 180 TTJ 228
(Jaipur). We find force in this contention of the assessee.
Under the identical facts, the coordinate bench of this
Tribunal in the case of ACIT Vs. Auto Light (India) Ltd.
(supra), has observed that from perusal of balance sheet, it
is clear that though there is increase of share capital, but
simultaneously, there is also increase in the loan and fixed
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
assets of the assessee company. Therefore, the assessee
was required to prove whether on the date of making
investment or giving the interest free amount to the sister
concern, the assessee was having sufficient interest free
funds available with it. For that purpose, the assessee
should demonstrate from its cash flow statement and bank
account that it has date-wise availability of interest free
funds on the date of making advances to the sister
concern. It is further held by the coordinate bench that
what is provided u/s 36 of the Act the deduction on the
amount of interest paid on the capital borrowed for the
purpose of business or profession, the provision is made
applicable on the capital borrowed and has not restricted to
the capital borrowed during the year. Therefore, the
Tribunal did not accept the contention that restricting
disallowance only for the amount borrowed during the
assessment year. Therefore, in the light of above, we
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
hereby set aside the assessment order and restore the
assessment to the file of the A.O. on this issue for deciding
it afresh after verifying whether on the date of making
advance or giving the interest free amount to the sister
concern, the assessee was having sufficient interest free
funds available with it and also whether such amount was
given out of any business expediency. In case the A.O.
finds that there was no business expediency or availability
of interest free funds when the advances were given, he
would be free to sustain the impugned addition.
Ground No.1 of the assessee’s appeal is allowed for
statistical purposes.
Ground No.2 is against sustaining the addition of
Rs.1,38,437/- in respect of the difference between interest
income shown by appellant as per form 26AS and without
properly appreciating the submissions filed before the Ld.
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
CIT(A). It is contended that the interest received on fixed
deposit was Rs.9,10,138/- only, whereas during the earlier
previous year it was Rs.90,33,638/-. Basically, the
difference pointed out by the A.O. is due to the maturity of
the fixed deposit of substantial amount of Rs.8.21 crores
during the first quarter of financial year 2012-13.
However, Ld. D.R. opposed these submissions.
We have heard the rival submissions, perused the
materials available on records. Considering the contention
of the assessee that the fixed deposit was matured in the
first quarter of financial year 2012-13 relevant to
assessment year 2013-14, the A.O. would verify the
interest related to the year under consideration and decide
this ground afresh.
[ITA No.528/Ind/2019] [M/s. Total Diagnosis Pvt. Ltd., Bhopal]
In the result, appeal filed by the assessee is allowed for
statistical purposes.
Order was pronounced in the open court on 22.01.2020.
Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; �दनांक Dated : 22/01/2020 VG/SPS
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order
Assistant Registrar, Indore