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PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by Revenue under Section 253 of Income-tax Act is directed against the order of ld. CIT(A)-13, Mumbai dated 31.08.2016 for Assessment Year 2010-11 which in turn arises from the assessment order dated 28.03.2013 passed under section 143(3) of the Act. The Revenue has raised the following grounds of appeal:
1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the disallowance of Rs. 13,22,54,824/- made by the Assessing Officer u/s. 36(1)(iii) of the Income Tax Act?”
At the outset of hearing, the ld. Authorized Representative (AR) of the assessee submits that the ground of appeal raised by Revenue is covered in Mum 2016-M/s Sprit Infrapower & Multiventures Pvt. Ltd. favour of assessee and against the Revenue, as the ld. CIT(A) while passing the impugned order followed the order of Tribunal in Assessment Year 2009-10. The ld. AR of the assessee furnished the copy of decision of Tribunal in ITA No. 1655/Mum/2013 for Assessment Year 2008-09 and in ITA No.4416/Mum/2014 for Assessment Year 2009-10. The ld. AR of the assessee also furnished the details of interest free funds available with the assessee as on 31.03.2010 and submits that the facts for the year under consideration is not different form assessment year 2009-10.
On going through the grounds of appeal and the order of Tribunal, the ld. DR for the Revenue submits that he relied upon the order of Assessing Officer.
We have considered the rival submission of the parties and have gone through the orders of authorities below. We have also gone through the details of interest free funds available as on 31.03.2010 with the assessee furnished by ld. AR of the assessee which as under:
Interest Free Funds As on 31.03.2010 Amount in Rs. Crore Share capital 0.68 Reserves & Surplus 2,306.86 Share Application Money Received 121.04 Interest Free Loans 100.43
Total Interest Free Funds 2,529.01 Interest Free Advances Interest Free Loan -Considered Good 175.13 -Doubtful 46.44 Total 221.57 2 Mum 2016-M/s Sprit Infrapower & Multiventures Pvt. Ltd.
Less: Advance considered for suo- 175.13 moto interest disallowance Less: Covered by ITAT order in 46.44 assessee’s own case for A Y 2008-09 & 2009-10 Share Application Money Advanced 62.39 Total Interest Free Advances 62.39
We have seen that during the assessment proceeding, the Assessing Officer noted that the assessee made interest payment of Rs. 57.25 Crore (approx) while the assessee received interest of Rs. 39.05 Crore (approx).
The assessee also availed secured and unsecured loan of Rs. 771 Crore.
The Assessing Officer issued show-cause notice to the assessee as to why the excess interest paid over interest received should not be disallowed.
The assessee furnished its explanation and contended that they have sufficient interest free fund and no addition was required under section 36(1)(iii). The assessee also furnished the details of interest free funds available with them. The contentions of the assessee were not accepted by assessing officer. The Assessing Officer on the basis of the fact that similar addition/ disallowance was made against the assessee in Assessment Year 2008-09 and 2009-10 disallowed Rs. 13.22 Crore under section 36(1)(iii). On appeal before the ld. CIT(A), the assessee contended that the similar addition was in Assessment Year 2008-09 and 2009-10 and on appeal the order of ld. CIT(A) deleted the addition/ disallowance and on further appeal before Tribunal the order of the CIT(A) was Mum 2016-M/s Sprit Infrapower & Multiventures Pvt. Ltd. sustained. The assessee also furnished the copy of order of Tribunal dated 26.05.2016 before ld CIT(A). The ld. CIT(A) by following the order of Tribunal dismissed the appeal of Revenue.
We have seen that while dismissing the appeal of Revenue for Assessment Year 2008-09, the co-ordinate bench of Tribunal held as under:
After considering the submission of the assessee and the assessment order, the FAA held that the AO had made disallowance of interest of Rs. 50 lakhs on account of advance share application money made to its sister concern, that AO had made the disallowance by following the findings of AY.2007-08, that the examination of the assessment records revealed that no scrutiny assessment took place for the AY.2007-08,that in the assessment order for the AY.2006-07 there was no scrutiny,that the AO had made the disallowance without any basis. He further held that the assessee had made investment which would yield income in form of dividend,that the investment had been made for purpose of earning income,that interest expenditure incurred for earning income had to be allowed u/s.36 (1) (iii) of the Act. Finally, he deleted the disallowance made by the AO. 4.During the course of hearing before us, the Departmental Representative (DR) stated that issue could be decided on merits. The Authorised Representative (AR) supported the order of the FAA.After considering the rival submissions we are of the opinion that the order of the FAA does not suffer from any legal or factual infirmity.The AO had made the disallowance on the basis that in the earlier assessment year his predecessor had made the identical disallowance. The FAA had examined the assessment records of the earlier years and had found that the- then-AO had not made any disallowance under the head interest attributable to share application money of the sister concern. Thus, the whole base of making the addition goes.Therefore, confirming the order of the FAA first ground of appeal is decided is the AO. And in appeal for Assessment Year 2009-10, the Tribunal followed the order of Assessment Year 2008-09, operative part of which is extracted below: -AY.2009-10: 13.The effective Ground of appeal is about deleting the addition of Rs. 7.74 crores made by the AO under section 36(1)(iii) of the Act. We find that the issue is identical to the issue raised by the AO in the earlier year. Following our order for the previous year, we dismiss the effective ground raised by the AO.
4. Mum 2016-M/s Sprit Infrapower & Multiventures Pvt. Ltd.
Considering the decision of Tribunal in Assessment Year 2008-09 and 2009-10, which were followed by ld. CIT (A), hence, we do not find any illegality or infirmity in the impugned order. No contrary fact or decision is brought to our notice.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 19/09/2018.