SMT. JAGJIT KAUR CHAWLA,MOHALI vs. DCIT, MOHALI

आदेश/ORDER Per Annapurna Gupta, Accountant Member

The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Gurgaon (in short ‘CIT(A)’ dated 21.11.2016 passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’).

2 . T h e s o l e i s s u e i n t h e p r e s e n t a p p e a l r e l a t e s t o d i s a l l o w a n c e m a d e o f i n t e r e s t u / s 3 6 ( 1 ) ( i i i ) o f t h e A c t .

3 . B r i e f f a c t s r e l a t i n g t o t h e c a s e a r e t h a t t h e A s s e s s i n g O f f i c e r ( A . O . ) n o t e d t h a t t h e a s s e s s e e h a d d e b i t e d i n t e r e s t e x p e n s e s t o t h e t u n e o f R s . 2 5 , 7 7 , 0 9 6 / - t o i t s P r o f i t & L o s s A c c o u n t a n d h a d

2 ITA No.189/Chd/2017 A.Y.2011-12

a t t h e s a m e t i m e g i v e n i n t e r e s t f r e e , n o n b u s i n e s s

p u r p o s e l o a n s a n d a d v a n c e s t o t h e t u n e o f

R s . 6 9 , 3 2 , 6 9 2 / - t o h e r s i s t e r c o n c e r n s a n d f a m i l y

m e m b e r s . I n t h e a b s e n c e o f a n y e x p l a n a t i o n g i v e n b y

t h e a s s e s s e e f o r t h e s a m e a n d r e l y i n g o n t h e d e c i s i o n

o f t h e j u r i s d i c t i o n a l H i g h C o u r t i n t h e c a s e o f C I T v s

A b h i s h e k I n d u s t r i e s L t d . ( 2 0 0 6 ) 2 8 6 I T R 1 ( P & H ) , t h e

A . O . a c c o r d i n g l y , d i s a l l o w e d p r o p o r t i o n a t e i n t e r e s t

e x p e n d i t u r e r e l a t i n g t o t h e s a i d l o a n s a n d a d v a n c e s

c o m p u t e d @ 1 2 % p e r a n n u m o n t h e a v e r a g e d a i l y a t

R s . 5 , 9 0 , 9 7 6 / - a n d t h e s a m e w a s a d d e d t o t h e t o t a l

i n c o m e o f t h e a s s e s s e e .

4 . A g g r i e v e d b y t h e s a m e , t h e a s s e s s e e w e n t i n

a p p e a l b e f o r e t h e L d . C I T ( A ) w h e r e t h e a s s e s s e e

c o n t e n d e d t h a t s i n c e i t h a d s u f f i c i e n t o w n i n t e r e s t

f r e e f u n d s t h e r e w a s n o q u e s t i o n o f a n y d i s a l l o w a n c e

u / s 3 6 ( 1 ) ( i i i ) o f t h e A c t . F o r t h i s p r o p o s i t i o n r e l i a n c e

w a s p l a c e d u p o n n u m e r o u s c a s e l a w s a s r e p r o d u c e d a t

p a r a 4 . 2 o f t h e C I T ( A ) ’ s o r d e r . A l t e r n a t i v e l y , i t w a s

a l s o c o n t e n d e d t h a t t h e d i s a l l o w a n c e o u g h t t o b e

c a l c u l a t e d b y a p p l y i n g a v e r a g e c o s t o f d e b t f u n d s

w h i c h c a m e t o 5 . 2 6 % a s a g a i n s t 1 2 % a p p l i e d b y t h e

A . O . T h e L d . C I T ( A ) d i s m i s s e d b o t h t h e c o n t e n t i o n s o f

t h e a s s e s s e e h o l d i n g t h a t t h e e x p l a n a t i o n r e l a t i n g t o

s u f f i c i e n c y o f o w n f u n d s a v a i l a b l e , w a s a n e w

a r g u m e n t m a d e b e f o r e h i m a n d s i n c e n o a p p l i c a t i o n

u n d e r R u l e 4 6 A p r a y i n g f o r a d m i s s i o n o f a d d i t i o n a l

3 ITA No.189/Chd/2017 A.Y.2011-12

e v i d e n c e w a s f i l e d , t h e , a d d i t i o n a l e v i d e n c e f i l e d

a l o n g w i t h w i t h t h i s n e w e x p l a n a t i o n c o u l d n o t b e

t a k e n o n r e c o r d . H e f u r t h e r p o i n t e d o u t f r o m t h e

a s s e s s m e n t o r d e r t h a t t h e a s s e s s e e h a d a g r e e d t o t h e

i m p u g n e d d i s a l l o w a n c e a n d , t h e r e f o r e , h e l d t h a t n o

a p p e a l l a y a g a i n s t t h e a g r e e d a d d i t i o n . H e , t h e r e f o r e ,

d i s m i s s e d t h e a p p e a l o f t h e a s s e s s e e f o r t h e a b o v e

r e a s o n s .

5 . A g g r i e v e d b y t h e s a m e , t h e a s s e s s e e h a s c o m e u p

i n a p p e a l b e f o r e u s , r a i s i n g t h e f o l l o w i n g g r o u n d s :

“1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) in Appeal No. 678/2013-14 dated 21.11.2016 has erred in passing that order in contravention of the provisions of Section 250(6) of the Income Tax Act, 1961. 2. That on law, facts and circumstances of the case, the Worthy CIT (A) was not justified in confirming the action of Ld. AO of addition of Rs. 5,90,976/- u/s 36(l)(iii) in respect of following parties with respective average daily balances : Name of the Party Average daily Balance For the year (in Rs.) a. Dr. Sahib Singh & Sons Rs.18,57,814/- b. Reliant Power Pvt. Ltd. Rs.15,56,862/- c. Reliant Megastructure Pvt. Ltd. Rs.11,32,833/- d. Mr. H. S. Chawla Rs.3,78,294/- 3. That on law, facts and circumstances of the case, the Worthy CIT(A) was unjustified in holding that the alternate plea about sufficiency of owned funds for making interest free advance in respect of addition u/s 36(1)(iii) amounts to furnishing of additional evidence u/r 46A. 4. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.” 6 . D u r i n g t h e c o u r s e o f h e a r i n g b e f o r e u s t h e L d .

c o u n s e l f o r a s s e s s e e c o n t e n d e d t h a t t h e c o n t e n t i o n

4 ITA No.189/Chd/2017 A.Y.2011-12

r a i s e d b e f o r e t h e L d . C I T ( A ) , r e g a r d i n g s u f f i c i e n c y o f

o w n f u n d s w a r r a n t i n g n o d i s a l l o w a n c e u / s 3 6 ( 1 ) ( i i i ) o f

t h e A c t , w a s a l e g a l g r o u n d w h i c h c o u l d b e r a i s e d

d u r i n g t h e a p p e l l a t e p r o c e e d i n g s . I t w a s f u r t h e r

p o i n t e d o u t t h a t n o a d d i t i o n a l e v i d e n c e s w e r e r e q u i r e d

t o b e f i l e d s i n c e t h e f a c t o f s u f f i c i e n c y o f o w n f u n d s

e m a n a t e d f r o m t h e d o c u m e n t s a l r e a d y o n r e c o r d b e i n g

f i l e d d u r i n g a s s e s s m e n t p r o c e e d i n g s i t s e l f i . e . B a l a n c e

S h e e t a n d P r o f i t & L o s s A c c o u n t . T h e r e f o r e , t h e

c o n t e n t i o n o f t h e L d . C I T ( A ) t h a t t h e a s s e s s e e h a d

r a i s e d a n e w g r o u n d a l o n g w i t h d o c u m e n t a r y e v i d e n c e s

w h i c h c o u l d n o t b e a d m i t t e d i n t h e a b s e n c e o f a n

a p p l i c a t i o n p r a y i n g f o r a d m i t t i n g t h e s a m e i s i n c o r r e c t

a n d o u g h t t o b e r e j e c t e d . T h e L d . c o u n s e l f o r a s s e s s e e

f u r t h e r c o n t e n d e d t h a t t h e L d . C I T ( A ) c o u l d n o t h a v e

r e f u s e d t o e n t e r t a i n i t s o t h e r w i s e l e g a l l y t e n a b l e c l a i m

b e c a u s e t h e a d d i t i o n w a s a g r e e d t o d u r i n g a s s e s s m e n t

p r o c e e d i n g s i n i g n o r a n c e o f t h e p r o p o s i t i o n o f l a w i n

t h i s r e g a r d .

7 . T h e r e a f t e r t h e L d . C o u n s e l f o r t h e a s s e s s e e

r e i t e r a t e d t h e c o n t e n t i o n s m a d e b e f o r e t h e l o w e r

a u t h o r i t i e s t h a t s i n c e i t h a d s u f f i c i e n t o w n i n t e r e s t

f r e e f u n d s a m o u n t i n g t o R s . 7 5 . 4 3 l a c s i n t h e f o r m o f

p r o p r i e t o r s ’ c a p i t a l s a s a g a i n s t t h e i n t e r e s t f r e e

a d v a n c e s g i v e n o f R s . 4 9 . 2 4 l a c s , n o d i s a l l o w a n c e u / s

3 6 ( 1 ) ( i i i ) o f t h e a c t w a s c a l l e d f o r . R e l i a n c e w a s p l a c e d

o n t h e f o l l o w i n g c a s e l a w s :

5 ITA No.189/Chd/2017 A.Y.2011-12

i. Hero Cycles P Ltd. vs. CIT, 379 ITR 347 (SC) ii. Gurdas Garg vs. CIT(A), ITA No.413 of 2014, P&H High Court iii. CIT vs. Kapsons Associates, 381 ITR 204 P&H High Court. iv. Bright Enterprises P Ltd. vs. CIT, 381 ITR 107 P&H High Court. v. CIT vs. Rakesh Gupta, ITA No.37 of 2014 P&H High Court. vi. Aarti Steel Ld. Vs ACIT dtd. 771/2011, Chandigarh Tribunal. vii. Hero Cycles P Ltd. vs CIT, 379 ITR 347 SC ix. SA Builders vs CIT, 288 ITR 1 SC. 8 . T h e L d . D R , o n t h e o t h e r h a n d , r e l i e d u p o n t h e

o r d e r o f t h e C I T ( A ) . a n d d r e w o u r a t t e n t i o n t o h i s

f i n d i n g s a t p a r a o f t h e o r d e r a s u n d e r :

“4.3. I have given careful consideration to the facts of the present case and find that in the course of assessment proceedings while the Assessing Officer was seeking explanation for not charging of interest, the appellant did not provide any explanation that sufficient interest free funds are available with the appellant. This is a new argument put up in the stage of appeal along with the documentary evidence which was not filed before the Assessing Officer. There is no application under rule 46 A interalia praying for admission of additional evidence and therefore no such document can be taken on record at this stage. 4.3.1. On the contrary, it is mentioned in the assessment order that: ''The counsel was not able to offer any plausible explanation on this issue and agreed for the said disallowance. The computation of the same is as under:……………." 4.3.2. It transpires from the above that there was no suitable explanation entered in the course of assessment proceedings rather the applicant has agreed for making of addition against the agreed addition. Reference in this regard may be made to the following cases: Pullangode Rubber Products Co. Ltd. Vs. State of Kerala & Anr, 91 ITR 18 (SC), wherein, it was held that admission made was an extremely important piece of evidence and though it was not conclusive the statement made by the assessee could form basis of assessment.

6 ITA No.189/Chd/2017 A.Y.2011-12

(2) Dewan Bahadur Seth Gopal Das Mohta Vs. The Union of India & Ors. (SC) 26 ITR. Where the petitioner entered into a voluntary settlement with the Government and his liability to pay arose from such settlement, he cannot question the settlement -unless and until he can establish that his consent was improperly procured. (3) Narayan Bhagwantrao Gosavi Batajiwale Vs. Gopal AIT 1960 SC 100, wherein, it is held that an admission is the best evidence that an opposing party can rely upon and though not conclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous. Judgement of Hon'ble Jurisdictional High Court of Punjab and Haryana in the case of Bachhitar Singh Vs. CIT & Anr (2010) 236 CTR (P&H) 587, where it is held that the voluntarily statement that too recorded in the presence of family members and counsel is an important piece of evidence which simply cannot be brushed aside unless and until otherwise proved. Banta Singh Kartar Singh, 125 ITR 239 (P&H) Wherein it was held that the assessee cannot turn around after he has agreed to some additions. By agreeing to the addition, the assessee precludes the Assessing Officer for making any further investigation. (6) Rameshchandra & Co. vs. CIT (Bom) 168 ITR 375. It said, in answer, that it could not be held as a matter of. law that the remedy of appeal under the Act could not be availed of by the assessee without having filed a rectification application before the Income-tax Officer in a case where the order of the Income-tax Officer showed that the assessee had agreed to the addition to the income. There was no provision in the Act wherein the remedy of appeal against the order of the Income- tax Officer or of the Appellate Assistant Commissioner was barred if the impugned order mentioned that the order had been passed on the agreement of the assessee. the provisions- of the Act entitled an assessee to file an appeal against the order of the Income-tax Officer before the Appellate Assistant Commissioner where the assessee denied his liability to be assessed under the Act. It was a different matter if the Appellate Assistant Commissioner came to the conclusion that the order was passed on the admission of the assessee and the assessee was unable to explain that the admission was wrongly recorded under some mistaken belief of fact and law. In that case, the Appellate Assistant Commissioner could dismiss the appeal on merits but it could not be held as matter of law that no appeal was competent. It was no doubt true that in a case where the admission of the assessee had been wrongly recorded in the assessment order, it was open to the assessee to file a petition for rectification; but if the order was appealable, it was equally open to the assessee to avail of the remedy of appeal and the appellate authority would have to decide the appeal on merits. Nor was it necessary for the assessee to file an affidavit in support of his

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submissions in all cases. The assessee might choose to file an affidavit in support of his submissions and. if he chose not to file it. the circumstances appearing on the file had to be judged in the light of the material available and if there were sufficient circumstances on the file to come to the conclusion that the admission made by the assessee was not binding on him, he would be entitled to the relief in appeal. With great respect to the learned judges of the Punjab and Haryana High Court who decided Chhat Mull Aggarwal's case [1979] 116 ITR 694, we are unable to agree. Where an assessee has made a statement of facts, he can have no grievance if the taxing authority taxes him in accordance with that statement. If he can have no grievance, he can file no appeal. Therefore, it is imperative, if the assessee's case is that his statement has been wrongly recorded or that he made it under mistaken belief of fact or law , that he should make an application for rectification to the authority which passed the order based upon the statement. Until rectification is made, an appeal is not competent. (7) Ramanlal Kamdar Vs. CIT (Mad) 108 ITR 73. We are of the opinion that the appeals to the Appellate Assistant Commissioner and to the Tribunal, by the assessee, were incompetent. We have already referred to the fact that one of the partners of the assessee, viz., Shri Chandulal Kamdar, appeared before the Income-tax Officer on October 27, 1967, and stated that the assessee had no objection to the proposed revision. Once the assessee had stated that it had no objection to the proposed revision and the Income-tax Officer had also revised the original assessment as proposed by him, the assessee could not be said to have been aggrieved by the order of the Income-tax Officer. Only if the assessee was aggrieved by the order of the Income-tax Officer, he had the right to file an appeal before the Appellate Assistant Commissioner and once the assessee could not have had any grievance in view of the statement made by the partner, the appeal to the Appellate Assistant Commissioner was incompetent and equally the appeal to the Tribunal was incompetent. If so, the reference to this court of the two questions said to arise out of the order of the Tribunal is also incompetent. We may point out in this context the fact that one of the partners of the assessee appeared before the Income-tax Officer and stated that the assessee had no objection to the proposed revision has not been disputed at any stage and even before us, and every one of the authorities, viz., the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal has referred to this fact in the course of their orders. 4.4 The fact that the AO has initiated the penalty proceedings u/s 271(l)(c) does not vitiate the action of the AO in making addition on the issue where the appellant had no explanation to offer and agreed to the surrender.

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4.5. Keeping in view the aforesaid factual and legal position, the addition made by the AO is confirmed. This ground of appeal is accordingly dismissed.” 9 . W e h a v e h e a r d t h e r i v a l c o n t e n t i o n s a n d p e r u s e d

t h e o r d e r s o f a u t h o r i t i e s b e l o w . T h e i s s u e b e f o r e u s

r e l a t e s t o d i s a l l o w a n c e o f i n t e r e s t e x p e n s e s u / s

3 6 ( 1 ) ( i i i ) o f t h e A c t . T h e L d . C I T ( A ) , w e f i n d , h a s n o t

a d j u d i c a t e d t h e i s s u e o n m e r i t s b u t h a s u p h e l d t h e

d i s a l l o w a n c e f o r t h e r e a s o n t h a t t h e a s s e s s e e h a d

a g r e e d t o t h e d i s a l l o w a n c e d u r i n g a s s e s s m e n t

p r o c e e d i n g s a n d , t h e r e f o r e , h e w a s n o t e n t i t l e d t o

a p p e a l a g a i n s t t h e s a m e a n d a l s o f o r t h e r e a s o n t h a t

t h e a s s e s s e e h a d t a k e n u p t h e n e w p l e a / e x p l a n a t i o n

b e f o r e h i m a s t o w h y t h e d i s a l l o w a n c e o u g h t n o t t o b e

m a d e s u p p l e m e n t e d w i t h d o c u m e n t a r y e v i d e n c e s w h i c h

w e r e a d d i t i o n a l e v i d e n c e s a n d n o p r a y e r w a s m a d e f o r

a d m i s s i o n o f t h e s a m e a s p r e s c r i b e d b y R u l e 4 6 A o f

t h e A c t .

1 0 . W e a r e n o t i n a g r e e m e n t w i t h t h e L d . C I T ( A ) o n

b o t h t h e c o u n t s . T h e A c t a l l o w s t h e r e m e d y o f a p p e a l

i f t h e a s s e s s e e i s a g g r i e v e d b y a n o r d e r p a s s e d .

T h o u g h o n t h e f a c e o f i t , t h e r e c a n b e n o g r i e v a n c e i n

c a s e o f a n a g r e e d a d d i t i o n , b u t i f t h e a s s e s s e e i s a b l e

t o d e m o n s t r a t e t h a t t h e a g r e e m e n t w a s m a d e u n d e r

s o m e m i s t a k e n b e l i e f / i g n o r a n c e o f l a w , t h e a s s e s s e e

t h e n c a n v e r y w e l l b e s a i d t o b e a g g r i e v e d b y t h e

a d d i t i o n s o m a d e . A f t e r a l l t h e e n t i r e e x e r c i s e o f

a s s e s s m e n t a n d a p p e a l i s a i m e d a t d e t e r m i n i n g t h e

t r u e a n d c o r r e c t i n c o m e w h i c h i s l i a b l e t o t a x a s p e r

9 ITA No.189/Chd/2017 A.Y.2011-12

t h e p r o v i s i o n s o f t h e I n c o m e T a x A c t a n d n o

a d d i t i o n / d i s a l l o w a n c e c a n b e m a d e / u p h e l d , m e r e l y

b e c a u s e t h e s a m e w a s a g r e e d t o b y t h e a s s e s s e e i n

i g n o r a n c e o f t h e l a w . A n a s s e s s e e c a n , i n a p p e a l , v e r y

w e l l r e t r a c t i t s a g r e e m e n t m a d e b y e x p l a i n i n g t h a t i t

w a s r e c o r d e d u n d e r a m i s t a k e n b e l i e f o f l a w .

1 1 . T h e c a s e l a w s r e f e r r e d t o b y t h e L d . C I T ( A ) d o n o t

s u p p o r t h i s c o n t e n t i o n t h a t n o a p p e a l l i e s a g a i n s t

a g r e e d a d d i t i o n . I n f a c t m o s t o f t h e d e c i s i o n s h a v e

b e e n r e n d e r e d i n a d i f f e r e n t c o n t e x t r e l a t i n g t o

r e t r a c t i o n o f a n a d m i s s i o n d u r i n g a s s e s s m e n t

p r o c e e d i n g s o r q u e s t i o n i n g a s e t t l e m e n t a g r e e m e n t

e n t e r e d i n t o w i t h t h e g o v e r n m e n t , b u t i n a l l t h e c a s e

l a w s t h e c o u r t s h a v e u n a n i m o u s l y h e l d t h a t t h o u g h

a d m i s s i o n i s t h e b e s t p i e c e o f e v i d e n c e , i t i s n o t

c o n c l u s i v e a n d a n a s s e s s e e c a n r e t r a c t t h e s a m e b y

s h o w i n g t h a t i t w a s i n c o r r e c t l y m a d e .

1 2 . I n t h e f a c t s o f t h e p r e s e n t c a s e , w e f i n d t h a t

b e f o r e t h e A . O . t h e a s s e s s e e h a d o f f e r e d n o p l a u s i b l e

e x p l a n a t i o n a s t o w h y t h e d i s a l l o w a n c e o f i n t e r e s t

e x p e n s e s u / s 3 6 ( 1 ) ( i i i ) o f t h e A c t b e n o t m a d e b u t

b e f o r e t h e L d . C I T ( A ) h e p l e a d e d t h a t t h e s a m e b e

a l l o w e d i n v i e w o f t h e p r o p o s i t i o n o f l a w l a i d d o w n b y

v a r i o u s H i g h C o u r t s i n c l u d i n g t h e A p e x C o u r t a n d t h e

j u r i s d i c t i o n a l H i g h C o u r t , t h a t w h e r e s u f f i c i e n t o w n

i n t e r e s t f r e e f u n d s a r e a v a i l a b l e , n o d i s a l l o w a n c e u / s

3 6 ( 1 ) ( i i i ) c a n b e m a d e . T h e a s s e s s e e a l s o s h o w e d f r o m

10 ITA No.189/Chd/2017 A.Y.2011-12

h e r f i n a n c i a l s t a t e m e n t s t h a t t h e r e w e r e s u f f i c i e n t o w n

f u n d s a v a i l a b l e i n t h e f o r m o f o w n c a p i t a l o f t h e

p r o p r i e t o r f o r m a k i n g t h e i n t e r e s t f r e e a d v a n c e s .

U n d o u b t e d l y , t h e a s s e s s e e h a d d e m o n s t r a t e d t h a t i t s

a d m i s s i o n w a s w r o n g l y m a d e a s p e r l a w a n d f a c t s a l s o .

T h e r e f o r e , w e h o l d , t h a t t h e L d . C I T ( A ) o u g h t t o h a v e

c o n s i d e r e d t h e s a m e o n m e r i t s a n d h i s a c t i o n o f

h o l d i n g t h a t n o a p p e a l l a y a g a i n s t t h e a g r e e d

d i s a l l o w a n c e i s t h e r e f o r e s e t a s i d e .

1 3 . M o r e o v e r , w e d o n o t a g r e e w i t h t h e L d . C I T ( A ) t h a t

t h e c o n t e n t i o n r a i s e d w a s n o t a d m i s s i b l e s i n c e i t w a s

a n e w g r o u n d a n d a d d i t i o n a l e v i d e n c e s w e r e f i l e d

w h i c h w e r e n o t a c c o m p a n i e d b y a n a p p l i c a t i o n f o r

a d m i t t i n g t h e s a m e a s p r e s c r i b e d b y t h e I n c o m e T a x

r u l e s u n d e r R u l e 4 6 A i n t h i s r e g a r d . I n f a c t w e f i n d

t h a t t h e a s s e s s e e h a d r a i s e d a c o n t e n t i o n b a s e d o n

p r o p o s i t i o n o f l a w l a i d d o w n b y c o u r t s , w h i c h i t w a s

e n t i t l e d t o r a i s e i n a p p e a l . A l s o t h e f i n a n c i a l

s t a t e m e n t s s h o w i n g t h e a v a i l a b i l i t y o f s u f f i c i e n t o w n

f u n d s w a s a l r e a d y a v a i l a b l e o n r e c o r d h a v i n g b e e n

f i l e d d u r i n g a s s e s s m e n t p r o c e e d i n g s i t s e l f . T h e

d o c u m e n t s r e f e r r e d t o b y t h e a s s e s s e e f o r e s t a b l i s h i n g

t h e f a c t o f a v a i l a b i l i t y o f s u f f i c i e n t o w n f u n d s w e r e n o t

a d d i t i o n a l e v i d e n c e s a t a l l , t h e r e f o r e , a n d t h u s , w e

h o l d t h a t t h e L d . C I T ( A ) w a s w r o n g i n s t a t i n g t h a t t h e y

w e r e a d d i t i o n a l e v i d e n c e s a n d , t h e r e f o r e , r e f u s i n g t o

11 ITA No.189/Chd/2017 A.Y.2011-12

a d m i t t h e m s i n c e n o p r a y e r f o r a d m i s s i o n o f t h e s a m e

w a s f i l e d b y t h e a s s e s s e e .

1 4 . N o w c o m i n g t o t h e m e r i t s o f t h e c a s e , w e a r e i n

a g r e e m e n t w i t h t h e c o n t e n t i o n o f t h e L d . C o u n s e l f o r

t h e a s s e s s e e t h a t i t i s s e t t l e d l a w t h a t w h e r e s u f f i c i e n t

o w n i n t e r e s t f r e e f u n d s a r e a v a i l a b l e , n o d i s a l l o w a n c e

u / s 3 6 ( 1 ) ( i i i ) o f t h e A c t c a n b e m a d e . T h e H o n ' b l e A p e x

C o u r t i n a r e c e n t d e c i s i o n i n t h e c a s e o f CIT vs Reliance

Industries Ltd. in Civil Appeal no.10 of 2019 dated

02.1.2019 has held that the presumption in such a case is

that own funds have been used for making the advances,

calling for no disallowance of interest u/s 36(1)(iii) of the

Act. The question of law before the Hon’ble Court was :

“1. Whether the High Court is correct in holding that interest amount being interest referable to funds given to subsidiaries is allowable as deduction under Section 36(1)(iii) of the Income Tax Act, 1961 (for short ‘the Act’) when the interest would not have been payable to banks, if funds were not provided to subsidiaries; “ The relevant findings of the Hon’ble High Court in

respect to the same are as under:

“Insofar as the first question is concerned, the issue raises a pure question of fact. The High Court has noted the finding of the Tribunal that the interest free funds available to the assessee were sufficient to meet its investment. Hence, it could be presumed that the investments were made from the interest free funds available with the assessee. The Tribunal has also followed its own order for Assessment Year 2002-03. In view of the above findings, we find no reason to interfere with the judgment of the High Court in regard to the first question. Accordingly, the appeals are dismissed in regard to the first question.” 15. The assessee has also placed the relevant facts before

us reflecting the same from its financial statement. Since the

said facts need to be verified, we consider it fit to restore the

12 ITA No.189/Chd/2017 A.Y.2011-12

issue back to the CIT(A) to consider the submissions of the assessee and after verification of the facts adjudicate the same in accordance with law.

1 6 . In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court.

Sd/- Sd/- संजय गग� अ�नपूणा� गु�ता (ANNAPURNA GUPTA) (SANJAY GARG) �याय�क सद�य/Judicial Member लेखा सद�य/Accountant Member �दनांक /Dated: 29th March, 2019 *रती* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar