Income Tax Appellate Tribunal - Chandigarh
Monte Carlo Fashions Ltd., Ludhiana vs Acit, C-7, Ludhiana on 5 March, 2021
आयकर अपील य अ धकरण, च डीगढ़ यायपीठ "बी", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B', CHANDIGARH
ीमती दवा संह, या!यक सद"य एवं, एवं ीमती अ नपण
ू ा& ग(ु ता, लेखा सद"य
BEFORE: SMT.DIVA SINGH, JUDICAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.1159/Chd/2019
नधा रण वष / Assessment Year : 2014-15
Monte Carlo Fashions Ltd., बनाम The A.C.I.T.,
106, G.T. Road, Sherpur, Circle-7,
Ludhiana. Ludhiana.
थायी लेखा सं./PAN NO: A A F C M 7 8 8 8 Q
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Navdeep Sharma, Adv.
राज व क ओर से/ Revenue by : Shri Ashok Khanna, Addl.CIT
सन
ु वाई क तार$ख/Date of Hearing : 24.02.2021
उदघोषणा क तार$ख/Date of Pronouncement: 05.03. 2021
(Virtual Court)
आदे श/Order
Per Annapurna Gupta, Accountant Member :
Th e a b ov e a p pe a l h a s b ee n p re fe r re d b y the a ss e ssee a ga i n st t he or d e r of th e C om mi ssi on e r of I n co me Ta x (A p pe a ls )- 3, Lu dh i a na d a te d 28 . 0 6. 2 0 19 r e l a ti ng to a sse s sme n t ye ar 2 0 14 -1 5 pa s se d u/s 2 5 0 (6 ) ) of t he I n co me Ta x A ct, 1961 ( he re in a f te r re fe rr e d to a s 'A ct'.
ITA No.1159/Chd/2019
A.Y. 2014-15 Page 2 of 5
2. Th e sol i ta r y is su e in t he p res e nt a p pe a l re la te s to d is a l low a n ce of in te re st e xpe n se s f or the re a s on t ha t the y we re n ot f oun d to ha v e bee n i n cu rr e d for the p ur p ose of b us in e ss a s p e r the p r ovi si on of se c ti on 3 6 (1) ( ii i ) of the A ct. The g r oun d r a i se d by the a sse s see i n th is re ga r d r e a d s a s u nde r :
"1 . T h at th e Wo r th y C IT (A ) -3 , L ud h i an a er red in l a w an d o n f ac ts in uph ol d ing th e ad d i ti on /d is all o wa n c e of Rs.5 , 6 7 ,6 4 9 /- be in g d is all o wan c e of in tere s t of CC ac c ou n t f or pu rch a se of f ixed as se t s. "
3. B ri e f l y s ta te d, t he AO d u r in g a sse ssme nt p roce e d in gs n ote d th a t t he asse ssee h a d ma d e a d d i tio n to th e a ss e ts to t he e x te n t o f Rs. 7 8 .1 8 c r or e s a nd ha d a l so sh ow n ca p i ta l w or k i n p r ogr e s s to th e ex te n t of R s.2 0 . 21 cr or e s, a l l pa y me n ts h a vi ng b ee n ma de ou t of th e ca s h cr e d i t a c cou nt of th e c omp a ny on w hi c h i n te re s t wa s be in g c ha r ged . Acc or d in gl y, he con f ro nte d th e a sse ssee a s t o wh y th e i nt e re st pe r ta i n in g to th e fu nd s ut il i ze d f or a c q ui r in g th e sa i d a s se t s be n ot d isa l lo we d a n d ca p i ta l iz e d a s pe r the pr ov is o to se c ti on 36 ( 1 )( iii ) of the Ac t. D ue re p ly w a s f il e d b y t he a sse ss ee c on te n di n g th a t s in ce it h a d suf fi c ie n t own f un ds i n th e for m of i nte r na l a cc r ua l s a s w e l l a s the re se rve s a nd sur p l us , th e pa y me n ts fo r th e a sse ts w a s ma d e ou t of the sa me a n d , t h e re f ore , no d i sa l l ow a nc e u/s 3 6 (1 ) (i i i) of the Ac t of i nte re s t wa s w a r r a n te d . Th e AO di d not a gr e e w i th t he con te n ti on of t he a sse ssee . N ot in g th a t t he Ld .C I T(A ) i n t he ca s e of the a s se s se e h a d a p p lie d the de bt e q u i ty r a t io i n si mil a r f a ct s a nd c i rc ums ta nc e s i n it s o rde r ITA No.1159/Chd/2019 A.Y. 2014-15 Page 3 of 5 d a te d 1 8 . 12 . 2 014 i n Ap p e a l N os .1 3 5 , 1 5 1 & 1 5 2/I T/C I T(A ) - 2 / Ld h /2 0 14 , th e AO a l so a p p l ie d the sa i d ra t io a nd w or k e d out th e d i sa l lo w a nce a t R s. 5, 6 7 ,6 4 9 /- . Th e s a me w as up he ld by th e Ld. C I T( A ).
4. B e f ore us a t the ou tse t i tse lf , the Ld. C ou ns e l for t he a ss e s see p oi nte d ou t th a t id e n ti ca l i ss ue ha d come up be for e th e I TA T i n c a s e of the a ss e ssee i tse lf f or a s se ssme nt ye ar 2 0 12 -1 3 wh e re in ta k in g no te of th e a sse ssee 's a rgume nt s tha t i t h a d su ff i ci e nt ow n fu n ds a va i l a b le fo r ma k in g t he i nve stme nt and fu r th e r tak i ng n ote of th e de ci si on of t he H on' ble j ur i sd i cti ona l Hi gh C o ur t i n th e c a se of H e r o C yc le P vt. Lt d. V s. C I T, Lud h ia n a , C A N o. 51 4 of 2 00 8 d a te d 5 .1 1 .2 0 1 5 a nd B r i ght En te r p r i se s P vt. Ltd . Vs . C I T, J a la n d ha r ( 2 0 16 ) , 3 81 I TR 1 0 7 ( P& H ) w he re in i t w a s h e l d tha t no d i sa l l ow a nc e i s ca ll e d f or w he re the a s se sse e h a d ow n s uf fi ci e n t fu nd s, the I TA T h a d r e s tore d the is su e t o the AO to go thr ou gh th e f un d p osi ti on a n d d e te r mi n e the re a fte r w he the r a n y b or r ow e d fund s ha d b e e n ut il i ze d a nd the re a f te r ta ke a de c is ion o n the i ss ue . C op y of t he sa i d or d e r d a te d 1 2 -1 0 -1 7 in I TA N o. 1 3 4 1 /C hd / 2 0 16 , w as p la ce d be f ore us. O ur a t te n ti on wa s d r a w n to th e re le v a nt f in d in gs of th e I TA T a t p a r a s 10 a nd 11 of th e or de r a s u nd e r :
"10. We have heard Ld. Representatives of both the parties and perused the material available on record.ITA No.1159/Chd/2019
A.Y. 2014-15 Page 4 of 5
11. It is also to be noted that the Finance Act 2003 has amended Section 36(1)(iii) by inserting a proviso to the existing provision w.e.f. 01.04.2004 relevant to assessment year 2004-05. The proviso inserted in the existing provision of section 36(1 j [ill] is reproduced as under:
"Provided that any amount of the interest paid. In respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of account or not): for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction.."
The judgment of various Courts in the case of Hero Cycles Pvt. Ltd. Vs. CIT. Ludhiana C.A. No. 514 of 2008 dt. 05/11/2015, Bright Enterprises Pvt. Ltd. Vs. CIT, Jalandhar (2016} 381 ITR 107 (P&H) held that no disallowance of interest is called for where the assessee has got sufficient own funds. The Assessing Officer is directed to go through the fund position namely capital and interest free advances, reserves and surplus to determine whether any borrowed funds have been utilized more than available own funds and take a decision keeping in view the decisions rendered above. If sufficient own funds are available, no disallowance is called for. This ground may be treated as set aside to the file of the Assessing Officer."
5. Th e Ld . C ou nse l for t he a sse ssee , t he re fore , p le ade d tha t si n ce th e fa c ts of th e pr e se n t cas e a re p a r a me t e ria to th a t i n a ss e s sme n t ye a r 20 1 2 -1 3 , th e i ss ue sta n d s cov e re d b y t he d e c is ion of t he ITA T a n d n e e de d t o be re l ooke d in to b y th e AO in co mpl i a nc e w ith th e di r e c ti ons g iv e n by th e I TA T in a ss e s sme n t ye a r 20 1 2 -1 3 .
6. Th e Ld . DR d i d n ot o bj e c t to t he sa me .
ITA No.1159/Chd/2019
A.Y. 2014-15 Page 5 of 5
7. I n vie w of t he ab ov e si nce a d mi tte d l y ide nti ca l issu e , in th e b a ck d ro p of i d e n ti ca l f a cts , al r e a d y sta n d s a dj u di ca t e d b y th e I TA T i n the ca se o f the a s ses see it se l f i n A .Y 2 0 12 -1 3 ,t he i ssu e sta n d s c ove re d b y the s a id or de r a s pe r w hich t he ma tte r n ee d s to be re cons id e re d b y the AO i n a cc or dan ce w i th t he d ir e cti on s of the I TA T i n th e s a id or d e r . Th e i ss ue i s th e re fore r e s tore d b a ck to the AO to be de c ide d in a cc or da nc e w it h t he d ir e cti on s of th e I TA T i n a s se s sm e n t ye a r 2 0 12 -1 3 . Th e gr oun d of a pp e a l r a i se d b y t he a s se sse e i s, the re f ore , a ll ow e d f or st a ti sti ca l p u rp os e s .
8. I n t he re sul t, the a b ove a p pe a l of the a s se sse e i s a l lo we d f or s ta ti sti ca l p u r po se s .
O r de r p r on oun ce d on 0 5 .0 3 .2 0 2 1 .
Sd/- Sd/-
(DIVA SINGH) (ANNAPURNA GUPTA)
या!यक सद"य/ Judicial Member लेखा सद"य/ Accountant Member
Dated: 5th March, 2021
*रती*
आदे श 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 न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar