KIRAN AGRITECH PVT.LTD,AURANGABAD vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 1, AURANGABAD

PDF · subscribers
ITA 1109/PUN/2018Status: DisposedITAT Pune01 March 2019AY 2014-153 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) had ignored the availability of sufficient interest-free funds. Therefore, the matter was remanded to the CIT(A) for fresh adjudication, considering the availability of interest-free funds.

What were the facts?

The assessee company made an advance of Rs. 98,45,000/- to another company. The Assessing Officer disallowed Rs. 8,86,050/- under Section 36(1)(iii) of the Act, considering it as an advance from interest-bearing funds for non-business purposes. The CIT(A) upheld this addition.

What were the issues?

Whether the disallowance of interest under Section 36(1)(iii) was justified when the assessee had sufficient interest-free funds available for making advances.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI D. KARUNAKARA RAO, AM

For Appellant: Shri M. K. Kulkarni
For Respondent: Shri M. K. Verma
Hearing: 11.02.2019Pronounced: 01.03.2019

PER D. KARUNAKARA RAO, AM : This appeal is filed by the assessee against the order of CIT(A)-1, Aurangabad dated 03.04.2018 for the Assessment Year 2014-15. 2. The grounds raised by the assessee are as under :- “1) On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the assessment made by the A.O. making addition of Rs.8,86,050/- invoking the provisions of S.36(1)(iii) of the Act. The addition is not sustainable in law. The same be deleted. 2) On the facts and circumstances of the case and in law the Ld. CIT(A) was under bounden duty to consider the statutory presumption that once on the basis of final accounts duty audited the assessee shown availability of interest-free funds then statutory it has to be presumed that the interest-free advances were made out of interest-free funds any. In view of this statutory presumption the addition made of Rs.8,86,050/- is not sustainable. It be deleted. 3) On the facts and circumstances of the case and in law the decision of the Hon’ble Delhi High Court (supra) relied upon by the Ld. CIT(A) was decided on the facts of that case only. It cannot be relied as a “precedent” applicable to the facts of this case. The confirmed addition by Ld. CIT(A) is unsustainable. The same be deleted. 4) The appellant craves to leave, add/amend or alter any of the above grounds of appeal.”

3.

Briefly stated the relevant facts include that the assessee is a private limited company engaged in the business of ginning, pressing of cotton and oil mill. The assessee filed the return of income declaring total income of Rs.64,81,899/-. At the end of the assessment, the Assessing Officer disallowed a sum of Rs.8,86,050/- invoking the provisions of section 36(1)(iii) of the Act on account of interest bearing fund for non-business purposes as advance given by the assessee to M/s Radhekiran Pulses Pvt. Ltd. amounting to Rs.98,45,000/- and added the same to the total income of the assessee. Aggrieved with this action of the Assessing Officer, the assessee carried the matter before the First Appellate Authority. The CIT(A) sustained the said addition as made by the Assessing Officer and dismissed the appeal of the assessee.

4.

Aggrieved with the said decision of the CIT(A), the assessee is in further appeal before me with the above extracted grounds of appeal.

5.

At the outset, ld. Counsel for the assessee submitted that this is a case of making addition of Rs.8,86,050/- invoking the provisions of section 36(1)(iii) of the Act on account of ad-hoc basis ignoring the fact of availability of sufficient interest-free funds. In this regard, ld. Counsel brought my attention to the availability of interest-free funds and interest- bearing funds tabulated in para 6.6 of the assessment order (Table). The ld. Counsel submitted that both the Assessing Officer and the CIT(A) ignored the fact of non-interest-bearing funds and secured loans to the tune of Rs.2.17 crores out of total unsecured loans of Rs.2.86 crores.

6.

On considering the above submission of the ld. Counsel for the assessee and after hearing the ld. DR for the Revenue, I am of the opinion, for this limited purpose, the matter should be remanded to the file of the CIT(A) for considering the availability of the interest-free funds of Rs.2.17 crores while adjudicating the issue in the remand proceedings. The CIT(A) shall grant a reasonable opportunity of being heard to the assessee. Therefore, the grounds raised by the assessee in this appeal are allowed for statistical purposes.

7.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on this 01st day of March, 2019. (D. KARUNAKARA RAO) लेखा सद" / ACCOUNTANT MEMBER पुणे / Pune; "दनांक Dated : 01st March, 2019. Sujeet आदेश क" "ितिलिप अ"ेिषत/Copy of the Order is forwarded to : अपीलाथ" / The Appellant;

1.

""यथ" / The Respondent;

2.3.

The CIT(A)-1, Aurangabad;

4.

The CCIT, Nashik; िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, पुणे “एक-सद"य मामला” /

5.

DR ‘SMC’, ITAT, Pune; गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स"यािपत "ित //// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

More judgments on Section 36(1)(iii)

All 3,665 judgments and leading authorities on Section 36(1)(iii) →

Recent GST High Court judgments

Search GST case law →