Income Tax Appellate Tribunal - Chandigarh
M/S Stelco Strips Ltd., Ludhiana vs Acit, Cc-Ii, Ludhiana on 30 April, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B' , CHANDIGARH
ी संजय गग , याय क सद य एवं ीमती अ नपण
ू ा ग'ु ता, लेखा सद य
BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.1041/Chd/2017
नधा रण वष / Assessment Year : 2008-09
The A.C.I.T., बनाम M/s Stelco Strips Ltd.,
Central Circle II, C-122, Focal Point, Phase-V,
Ludhiana. Ludhiana.
थायी लेखा सं./PAN NO: AACCS5084K
&
CO No.49/Chd/2017
In
आयकर अपील सं./ ITA No.1041/Chd/2017
नधा रण वष / Assessment Year : 2008-09
M/s Stelco Strips Ltd., बनाम The A.C.I.T.,
C-122, Focal Point, Phase-V, Central Circle
Ludhiana. II,Ludhiana.
थायी लेखा सं./PAN NO: AACCS5084K
आयकर अपील सं./ ITA No.1531/Chd/2017
नधा रण वष / Assessment Year : 2011-12
The A.C.I.T., बनाम M/s Stelco Strips Ltd.,
Central Circle II, Phase-V, Focal Point,
Ludhiana. Ludhiana.
थायी लेखा सं./PAN NO: AACCS5084K
&
CO No.33/Chd/2018
In
आयकर अपील सं./ ITA No.1531/Chd/2017
नधा रण वष / Assessment Year : 2008-09
M/s Stelco Strips Ltd., बनाम The A.C.I.T.,
Phase-V, Focal Point, Central Circle
Ludhiana. II,Ludhiana.
थायी लेखा सं./PAN NO: AACCS5084K
2 ITA Nos. 1041& 1531/Chd/2017
C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018
A.Ys.2008-09 & 2011-12
नधा रती क ओर से/Assessee by : Shri Ashwani Kumar CA
राज व क ओर से/ Revenue by : Shri G.S. Phani Kishore, CIT DR
& Shri Manjit Singh, Sr.DR
सन
ु वाई क तार!ख/Date of Hearing : 14.03.2019
उदघोषणा क तार!ख/Date of Pronouncement:30.04.2019
आदे श/ORDER
Per Anna pur na Gupta, Account ant Member Both the capti oned appeal s rel ate to the same assessee and have been fi l ed by the Revenue agai nst the separate orders of the Commi ssi oner of I ncome Ta x ( Appeal s) -2, Chandi garh ( i n s hort 'CI T( A) ' date d 10.6.2016 and 23.8.2017 rel ati ng to assessment years 2008-09 and 2011-12 respecti vel y, passed u/s 250( 6) of the I ncome Ta x Act, 1961 ( herei nafter referred to as 'Act') . The assessee has fi l ed Cross Objecti ons agai nst the same.
I t was common ground that the i ssues i nv ol ved in both the appeal s were i denti cal . The y were therefore taken up together for heari ng and are bei ng deal t by way of thi s common consol i dated order.
The appeal of the Revenue in ITA No.1041/Chd/2017 was delayed for filing by 284 days. An application for condoning the delay was filed before us dated 15.10.2019, which is reproduced hereunder:
F.No.DCIT/CC-II/Ldh./Misc./2018-19/1256 Dated 15.01.2019 To, The Assistant Registrar, income Tax Appellate Tribunal, Chandigarh Bench, Kendriya 3 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 Sadan,Sec-9-A , Chandigarh-
160009.
Sir.
Sub: Filing of application for condonation of delay in appeal filed before the ITAT in the case of M/s Stelco Strips Limited, C-122, Focal Point , Ludhiana for the A.Y. 2008- 09 in ITA No. 1041/Chd/2017 - reg- Kindly refer to the above.
In this regard, it is informed that appeal in the above said case was required to be filed within 60 days from the receipt of the CIT(A)'s order i.e. till 12.09.2016 before the Hon'ble ITAT Chandigarh Bench, Chandigarh in ITA No. 1041/Chd/2017. However appeal in the above said case was filed on 21 .06.201 7 which is delayed by 282 days, due to inadvertent mistake in calculation of tax effect. Inadvertently the mistake was occurred because of wrongly mentioning the tax effect in CIT(A) order dated 10.06.2016 and therefore the appeal was not filed within time. But as soon as the mistake was found, the appeal was filed in ITAT on 21 .06.2017.
Therefore, it is humbly requested that the delay is condoned. The case is listed for hearing on 17.01.2019.
Sd/-
(Bhupinder Singh, I.R.S.) ACIT, Central Circle-II, Ludhiana.
2. Referring to the same, the Ld. DR contended that the appeal was not filed earlier since it was mistakenly noted that the tax effect involved in the impugned appeal was below the limit prescribed by the CBDT for filing appeals to the ITAT vide Circular N o . 3/2018 dated 11.07.2018. I t w a s p o i n t e d o u t t h a t t h e mistake occurred because of wrong mentioning of the tax effect in the CIT(A)'s order, from where the calculation was worked out. But when the mistake was discovered later, appeal was immediately filed to the I.T.A.T. on 21.6.2017. Hence, the delay in filing the present appeal. The Ld. DR contended therefore, that the delay be condoned and the appeal be heard. 4 ITA Nos. 1041& 1531/Chd/2017
C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12
3. The Ld. counsel f or assessee vehe mentl y objected t o the same.
4. Consi deri ng the contenti on of the Ld. DR we fi nd that there was a rea sonabl e cause f or the del a y i n fi l i ng the appeal before us by the Department, and the same coul d not be attri buted to the Assessi ng Offi cer( A.O) i nvol ved, who fi l ed the appeal , si nce i t al l r esul ted from th e i ncorrect menti oni ng of the ta x effect i n the order of the CIT( A) , whi ch fact has remai ned uncontroverted before us. We, therefore, condone the del a y and admi t the appeal of the R evenue for heari ng. The or der was pronou nced i n open c ourt i n the presence of both the parti es.
We shal l fi rst be taki ng up the a ppeal of the Rev enue pertai ni ng to assessment year 2011-12 in ITA No.1531/Chd/2017 .
5. The ground No.1 rai sed by the Revenue reads as under:
"1. Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in restricting the addition of Rs.2,16,57,987/- to Rs.12,21,415/- on account of disallowance of expenses by ignoring the fact that the sales of the company has reduced to roughly five times as compared to the sales of preceding year i.e. from Rs.2,16,97,18,651/- to Rs.44,26,43,269/- whereas the personal expenses i.e. expenses on salary & wages have reduced very negligibly as compared to preceding year (from Rs.2,92,17,403/- to Rs. 2,76,20,723/-)."
6. Bri ef facts rel ati ng to the i ssue are that the A.O. noted that the assesse e was cl ai mi ng v er y hi gh e xpense s vi z-a-vi z i ts sal e and al so i n compari son to precedi ng year. Th e assessee was asked to justi f y the cl ai m of the e xpenses 5 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 speci al l y the 'salar y and the wages'. I n repl y, the assessee submi tted that duri ng the year the assessee company i ncurred e xpense s of Rs. 2,4 0,79, 161/- on 'sal ar y and wages' as compared to e xpenses of Rs. 2,52,38,593/- i ncurred duri ng the precedi ng year. It was submi tted that the company had to bear sal ar y and wages cost though the producti on was do wn due to fi nanci al crunch, but the Company coul d not negoti ate with workers to accept l o wer wages as vari ous l a ws were appl i cabl e to thi s i ssue. I t was al so submi tted that total e xpendi ture of sal ar y and wages was dul y accounted i n the books and ESI and Provi dent Fund law were al so appl i cabl e and proper and regul ar returns under t hose provi si on were bei ng fi l ed wi th the respecti ve Department whi ch woul d justi f y the sal ary and wages pai d to th ese workers. The repl y of the ass essee was not found convi nci ng by the A. O. The A.O. me nti oned that the sal es of the precedi ng year were al most 5 ti mes of the sal e of current year but the personal e xpenses were onl y 1.05 ti mes. Hence, the rati o of 4.9 was appl i e d on the personal e xpenses cl ai med by the assessee and di sall o wance was worked out at Rs. 2,16,57,987/-. The Ld.CI T( A) del eted the addi ti on made after hi msel f veri f yi ng the genuineness of the sal ar y and wages e xpenses cl ai med by the assessee wi th the hel p of the I nspector of the I ncome Ta x, who reported that out of the total amount of expenses cl ai med amounti ng to Rs.2.40 crores, Rs.12,21,415/- were not veri fi abl e and whi ch when confronted to the assessee, no e xpl anation was 6 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 offered. He, therefore, uphel d the addi ti on onl y to t hi s e xtent del eti ng the bal ance, hol di ng as under:
"The facts of the case, the basis of addition/disallowance made by the A.O. and the arguments of the AR during the appellate proceedings have been considered. The AR has repeated the arguments that the company cannot retrench its work force arbitrarily without clearing their dues and it was also argued that there is always shortage of skill and trained workers in the market so the company needs to keep them even if scale of operation has come down. The AR argued that Company is maintaining proper and complete record of the work force as the provisions of Provident Fund and ESI are also applicable so there is no reason to disallow the salary and wages which is paid in regular course of its business. There appears to be merit in the arguments of the AR that the workers can be discharge only as per the provisions under the Labor Laws. Some labor has to be maintained even if the production is stopped or reduced drastically and the ESI and PF expenses are to be made irrespective of the production by the Company. The AR argued that the books of accounts and vouchers are maintained on day to day basis and same were produced before the AO also. During the appellate proceedings, the AR was asked to show the ledger and vouchers for the expenses claimed under salary & wages. The same were got examined in this office with the help of the Inspector of Income Tax and it has been reported that from the registers and vouchers an expenditure amounting to Rs. 12,21,415/- was not verifiable because neither the revenue stamp was affixed nor there were signature of the recipients. This fact was confronted to the AR also but no satisfactory explanation was given. It is a fact that the factory was not locked out and all the labor could not be laid off suddenly. However, the assessee is required to maintain the proper vouchers for claiming the expenses. During the appellate proceedings, the AR was required to produce the proper vouchers in support of claim of salary & wages expenses could not fully show the vouchers for the payments amounting to Rs. 12,21,415/-, therefore this amount is held to be not allowable. Hence the disallowance to the extent of Rs. 12,21,415/- for which proper vouchers were not shown is upheld and the appellant gets a relief of the balance amount."
7. Before us the Ld. DR argued that the A.O. had rightl y made di sal l o wance of e xpenses o n fi ndi ng that d espite drop i n sal es by fi ve t i mes i n the i mp ugned year as c ompared to the precedi ng year, the e xpenses i ncurred by the assessee had remai ned the same.
7 ITA Nos. 1041& 1531/Chd/2017
C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12
8. The Ld. counse l for assessee, on the other hand, poi nted out that the di sal l o wance rel ated onl y to sal ar y and wages e xpenses whi ch had al l bei ng got veri fi ed a nd checked by the Ld.CI T( A) hi msel f wi th th e hel p of the I nspector of I ncome Ta x and, therefore, the o rder of the CI T( A) del eti ng the e xpenses to the e xtent of Rs.2,16,57,987/- was correct.
9. We have heard th e ri val contenti o ns, perused the o rders of both the parti es. We do not fi n d any reason to i nterfere i n the order of the Ld.CI T( A) on thi s i ssue. Undi sputedl y, the di sal l o wance made by the A.O. rel ated to onl y sal ary and wages e xpenses that too for the reason that though the sal es had reduced fi ve ti mes i n the i mpugned year as compared to the precedi ng year, these e xpenses had remai ned more or l ess the same. The assess ee, w e fi nd, had e xpl ai ned the stagnanc y i n these e xpenses by stati ng that i t was not eas y to retrench the workers and busi nesses were requi red to keep ski l l ed and trai ned workers even if the scal e of operati on came d o wn because the re was al wa ys a shortage of ski l l ed and trai ned workers. The assessee had al so got al l i ts books of account and documents and other regi sters rel ati ng to sal ar y and wages veri fi ed by the CI T( A) , who had found no di screpanc y i n the same e xcept to the e xtent sal ar y and wages pai d amounti ng to Rs.12,21,415/-. The a bove facts have not been controverted by the Revenue, nor any i nfi rmi t y poi nted out i n the same.
10. I n vi e w of the same, we agree wi th the Ld.CI T( A) that the genui neness of these e xpenses had been de monstr ated 8 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 by the assessee and even the e xpl anati on of the assessee for non reducti on of sal ar y and wages e xpenses was reasonabl e . We, therefore, uphol d the order of the Ld.CI T( A) restri cti ng the di sal l o wance of e xpenses to Rs.2,16,57,987/-.
The ground of appeal No.1 rai sed by the Revenue i s, therefore, di smi ssed.
11. Ground No.2 rai sed by the Revenue reads as under:
"2. Whether on facts and in circumstances of the case, the Ld. C1T(A) has erred in deleting the addition of Rs.4,80,000/- on account of disallowance of interest u/s 36(l)(iii) of the Income Tax Act, 1961 by ignoring that the assessee has advanced Rs.40,00,000/- interest free to "Sundry Assets" and in contrary claiming Rs.15,32,722/- as interest on loans. Moreover, the identity of Sundry Assets has not been established by assessee neither before AO nor before the Ld. CIT(A)."
12. Thi s ground i s agai nst del eti on of di sal l o wance made of i nterest u/s 36( l ) ( i i i ) of the Act amounti ng to Rs.4,80,000/-.Bri ef facts rel ati ng to the same ar e that the A.O. had noted that the assessee had advanced sum of Rs.92,66,629/- to four persons i .e. Sundr y Assets Rs.40,00,000/- ; Abhi shek Ji ndal Rs.19,13,249/-, BMJ Real Estate Pvt. Ltd. Rs.33,18,000/- and B.B. Ji ndal HUF Rs. 35,380/- wi thout chargi ng of i nterest whi l e on the other hand, i t was cl ai mi ng i nterest of Rs.15,32,722/- on l oans. Accordi ngl y he di sal l o wed proporti onate i nterest @ 12% on the same , whi ch came to Rs.10,46,007/-. The Ld.CI T( A) d el eted the di sal l o wance of i nterest made vi s-à-vi s sundr y recei vabl e of Rs.40 l acs 9 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 whi l e he uphel d the bal ance pertai ni ng to the remaini ng advances hol di ng as under:
"T he f ac ts of the c ase, th e b as is of add i tion/d is al l o wan ce made by the A. O. and the argu men ts of the AR dur ing the appel l ate proceed ings h av e been consider ed. T he AR has sub mi tted th at the A. O. d is al l o we d in teres t in res pec t of v ar io us ite ms incl ud ing the Sundr y rece iv abl es of Rs. 40, 00, 000/- al so. As per AR , there was a surv ey u/s 133A in th is c ase and the assessee co mp an y surrendere d a su m of Rs. 40, 00, 0007- as sundr y rece iv abl es bu t no d if f erence in s tock or an y o th er docu men t wa s f ound. As per AR d is al l o wan ce on accoun t of sundry deb tors i s no t covered u/ s 36( l )( ii i). Under the f ac ts and th e c ircu ms tances of the c ase, the argu men ts of th e AR appe ar ac ce p tabl e and th e d is al l o wan ce of Rs. 4, 80, 000/-, c al cul ated in res pec t of sundry asse ts of Rs. 40, 00, 000/- is no t f ound sustain abl e and hence del e ted.
As reg ards the o ther d is al l o wan c es in res pec t of adv ances to S h. Abh ishek J ind a!, M/s. BMJ Re al es tate Pv t. L td. and Sh. BB J ind al HUF amo un tin g to Rs. 59, 694/-, Rs. 3, 96, 980/- and Rs. 1, 09, 333/- res pec tivel y the AR coul d not subs tan ti ate the bus iness pur pose . T he nexus bet ween in teres t f ree f unds f or giv in g as l o an cou l d al so no t be es tabl ished b y the AR and hence the d is al l o wan c e in res pec t of the se three persons / p ar ties is f ound sus tain abl e and hence conf ir med. "
13. Before us the Ld . DR rel i ed upon the order of the A.O. whi l e the Ld. counsel for assessee rel i ed upon the order of the CI T( A) .
14. We have gone through the order of the CI T( A) on thi s i ssue. We do n ot fi nd any i nf i rmi t y in the s ame. The Ld.CI T( A) has del eted the di sal l o wance of i nterest wi th respect to a su m of Rs.40 l acs on fi ndi ng that the sam e pertai ned to sundr y recei vabl es/sundr y debtors. Th e Revenue has not controverted thi s fi ndi ng of the Ld.CI T( A) before us. I n vi ew of the same, therefore, we agree wi th the 10 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 Ld.CI T( A) that th e i nterest pertai ni ng to the same cannot be di sal l o wed u/s 3 6( 1) ( i i i ) even on proporti onate ba si s because sundr y debtors e ven i f consi dered to be l oans and advances, are for the purpose of busi ness onl y and, therefore, cannot be di sal l o wed as on account of non busi ness purpose u/s 36( 1) ( i i i ) of the A ct. The order of the Ld.CI T( A) on thi s i ssue i s, therefore, uphel d.
Ground No.2 rai sed by the Re venue is accordi ngl y di smi ssed.
I n effect the appeal of the Revenue i s di smi ssed. C.O.No.33/Chd/2018:
15. The assessee has rai sed fol l o wi ng grounds:
"1. That the relief allowed by the Learned Commissioner of Income tax (Appeals- 5) Ludhiana on account of restricting the disallowance of expenses to Rs.12,21,414/- as against disallowances made by the Assessing Officer at Rs.2, 16, 57,987/- being based on the reduced turnover of the assessee Company.
2. That the relief allowed by the Learned Commissioner of Income Tax (Appeals 5,) Ludhiana on account of disallowance of interest expenditure of Rs. 4, 80,000/- on the amount of Rs.40,00,000/- surrendered by the assessee company as sundry receivable during the course of survey under section 133 A of the IT Act 1961.
3. The appellant craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed off."
16. The Ld. counsel for assessee contended that the Cross Objecti on was onl y i n support of the order of the Ld.CI T( A) .
Si nce no gri evan ce has been rai s ed by the assess ee i n i ts Cross Objecti on, the same i s not mai ntai nabl e and i s, therefore, di smi ssed.
11 ITA Nos. 1041& 1531/Chd/2017
C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 We shal l no w take up the Revenues appeal i n ITA No.1041/Chd/2017 pertai ni ng to A.Y 2008-09:
17. Ground No.( i ) to ground No.( i i i ) ( a) & ( b) ,i t was urged, rel ated to the same i ssue and read as under:
"(i) That Ld.CIT(A) has erred both in law and on facts in directing the AO to recompute the income of the assessee after taking revised value of closing stock as on 31.03.2008 to be the same as was taken for calculating the value of stock of different items as on 01.04.2008, relevant for A.Y.2009-10 (as per order of CIT(A) for the A.Y.2009-10 which was confirmed by the Hon'ble ITAT and the Department has challenged the order of ITAT in Punjab and Haryana High Court in ITA No.200 of 2016),thereby the assessee reduced the closing stock and returned income by Rs.27,60,00,000/- on account of re-
valuation of the closing stock, ignoring the specific findings given in the assessment order of A.Y.2008-
09.
(ii) That the Ld.CIT(A) has erred both in law and on facts in not appreciating that the original return was filed on the basis of data verified both by the management and the auditors of the assessee company whereas no revised audit report was filed.
(iii) That the Ld.CIT(A) has erred both in law and on facts in not appreciating the facts that valuation of closing stock in the revised computation of income cannot be accepted inter alia on account of following reasons:
(a) The assessee has duly verified particulars of income shown in the income tax return filed by it on 08.10.2008 under signature of Managing Director, as correct and particulars shown therein as truly stated and in accordance with the provision of the I.T. Act 1961. Also the accounts of the assessee were subjected to statutory audit.
(b) The assessee has revised its computation of income by submitting re-computation during the assessment proceedings on 24.12.2010 which is almost after 26 months and the assessee had not filed any proof in terms of any bills to justify the revision of valuation of stock by giving its quantity and rates either with the revised computation of income or during the assessment proceedings. Even revised audit report was not filed.12 ITA Nos. 1041& 1531/Chd/2017
C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12
18. The i ssue, i t wa s contended, pe rtai ned to revi si on of computati on of income made during assessment proceedi ngs by the assessee, on account of di screpanc y i n v al uati on of stock of ' work i n process'. Bri efl y stated The A.O. noted that a surve y u/s 133 A was conducted i n thi s case on 11. 09.2007 and duri ng assessment proceedi ngs the assessee was asked to furni sh the 'manufacturi ng and tradi ng account' for the pre-surve y and post-surve y peri ods. The assess ee fil ed the manufacturi ng/tradi ng account f or the pre-surve y and post- surve y peri od an d further submi t ted that the per usal of the manufacturi ng/tradi ng account sho wed a di fference of Rs.27,60,00,000/- in cl osi ng stock of ' work-i n-progress' ( WI P) . As per assessee, the act ual val uati on of 2611.941 Tons of ' work-i n- progress' was Rs. 11,60,58,856/- (i .e. @ Rs. 44,434/- per To n) i nstead of val ue wrongl y taken i n the bal ance sheet fo r 2611.941 Tons at Rs. 39,20,58 ,857/- ( i .e. @ Rs. 1,50,102/- per Tons) as per the detai l ed worki ng made by the assesse e company on the basi s of m onth wi se purchase of ra w materi al as wel l as sal es of fi ni shed goods. The assessee su bmi tted that on the basi s of actual stock posi ti on whi ch was prepared b y the surve y pa rt y duri ng surve y conducted on 11.09.2007; the revi sed computa ti on of ta xabl e i ncome on account of di screpanc y of stock of ' work- i n-progress' had been prepared whi ch ma y be consi dered i nstead of the i n come decl ared i n the return of i n come. The assessee contended that i t ma y be appreci ate d that the quanti t y menti oned i n the ta x aud i t report i n quanti tati ve as wel l as fi nanci al statement were correct and onl y val uati on 13 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 had wrongl y been taken by mi stake. The content i on of the assessee was not found acceptabl e by the A.O. and the same was re jected.
19. The Ld.CI T( A) al l o wed the revi si o n , on fi ndi ng th at i n the succeedi ng assessment year i denti cal i ssue wi th respect to the openi ng stock of the WI P was there, whi ch was adjudi cated by the I . T.A. T. i n favour of the assessee. The Ld.CI T( A) hel d that the openi ng st ock of the succe edi ng year was to be treate d as the cl osi ng stock of the i mp ugned year and accordi ngl y, di rected the A .O. to do the s ame. Th e rel evant fi ndi ngs of the CI T( A) are as under:
"T he f ac ts of the c ase, the b as is of re jec tion of the reques t of the assessee b y the A. O. and th e argu men ts of the AR dur ing the course o f assess men t as wel l as appel l ate proceed ings h ave been cons idered. T he AR h as f il ed a co p y of th e appel l ate order dated 02. 11. 2012 p assed b y my Ld. Predecessor in the c ase of the assessee itself f or the A. Y. 2009-10 wh ere the s ame is sue of revis ion of the v al u atio n of cl osing s tock of ' work- in- progress' was d ec ided in f avour of the assessee . T he de par tme n t's appe al ag ains t the order of the C IT ( A) [f or A. Y. 2009-10 in the c ase of the assessee ] h as be en d is missed by the Hon'bl e 1T AT Ch and ig arh Be nch Ch and ig ar h in IT A No. 89/CHD/2013 v ide order d ated 05. 01. 2016 , hol d ing as under-
"9. Cons ider ing the above d iscu ss ion in the l igh t of the mater ial on record, p ar ticul arl y wh e n the Assess ing Of f icer d id n o t ob jec t to the ev idence of the assessee in re man d re por t, we do no t f ind an y mer i t in th i s ground of appe al of the rev enue, the s ame is accord ingl y d is missed. "
T he issue invol v ed in the presen t appe al f or A. Y. 2008-09 is the s ame as was there in the A. Y. 2009-10. Fur ther , the o pen ing s to ck f or A. Y. 2009- 10 i. e. as on 01. 04. 2008 wo ul d h ave to be the s ame as the cl os ing s tock f or A. Y. 2008-09 i. e as on
31. 03. 2008. T heref ore, if the rev i s ion of val ue of s tock as on 01. 04. 2008 is hel d to be v al id an d 14 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 acce p tabl e then the s ame f igure wo u l d h ave to b e ado p ted as the v al ue of cl osing s tock as on
31. 03. 2008( i. e. the f igure on the b as is of revis io n of val ue of stock ) . Accord ingl y, the con ten tion of the assessee th at th e o pen ing s tock of the assesse e co mp an y as on 01. 04. 2008 was the cl os ing s tock as on 31. 03. 2008 wh ich was dul y been acce p ted b y the f in al f ac t f ind ing au thor i ty i. e. Inco me T ax Appel l ate T ribun al , and the reque s t th at the rev ise d co mpu tation of tax abl e inco me of the assessee co mp an y on the b as is of revised cl os ing s tock, is f ound acce p tabl e as per the dec is ion of my Ld. Predecessor in A ppe al No. 358/Cl T ( A)-l /Ldh/2011- 12 p assed in th e c ase of the assessee f or A. Y. 2009-10 ( wh ich h as been uphel d by the Hon'bl e 1T AT as men tion ed above ). It is a se ttl e d pr inc ipl e th at the v al ue of cl os ing s tock of the preced ing ye ar h as to be taken as the v al ue of o pen ing s tock of th e succeed ing ye ar. T heref ore, the as sessee is en ti tl ed f or tak ing the rev ised v al ue of th e cl os ing s tock as on 31. 03. 2008 at the s ame r ate as was ado p ted f or c al cul ating the o pen ing s tock as on 01. 04. 2008. T he AO is accor d ingl y d irec ted to reco mpu ted th e inco me of the assessee af ter tak ing the rev ised v al u ation of cl osing s tock as on 31. 03. 2008 to be the s ame as was taken f or cal cul ating the v al ue o f s tocks of d if f erent i te ms as on 01. 04. 2008, rel ev an t f or A. Y. 2009-10 ( as per the order of CIT ( A) f or A.Y. 2009-10 wh ich was conf ir med b y the Hon'bl e IT AT ). A re ason abl e o ppor tun i ty of course" may be prov ided to the assessee at the ti me of c arr ying ou t th is exerc ise and the inco me of th e A. Y. 2008-09 be reco mpu ted b y tak ing the v al ue of cl os ing s tock as on 31. 03. 2008 to be the s ame f ig ure as h as been taken b y the assessee as o pen ing s tock o n
01. 04. 2008 f or co mpu ting the rev ised inco me f or A. Y. 2009-10.
Accord ingl y, th is ground of appe al is al l o we d f or s tatis tic al pur pos e. "
20. The onl y content i on rai sed by the Ld. DR agai nst the di recti ons and fi ndi ngs of the Ld.CI T( A) was that si nce the Revenue had go ne i n appeal bef ore the Hon'bl e Hi gh Court agai nst the orde r of the I . T.A. T. i n the succeedi n g year, the di recti on of the CI T( A) i n thi s regard was i ncorrect.
21. Havi ng gone through the order of the Ld.CI T( A) and taki ng note of the contenti on of the Ld. DR, we do not fi nd 15 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 any meri t i n the present ground rai sed before us. There i s no di spute vi s-à-vi s the fact that the val uati on of WI P was an i ssue of di spute i n the succeedi n g year whi ch ha d travel l ed upto the I . T.A. T. and the same had been deci ded i n favour of the assessee. Si nce the openi ng stock of the succeedi ng year has been deci ded by the I . T.A. T., i t automati call y fol l o ws that the same figure i s to be treated as the cl osing stock of the i mpugned year, bei ng the i mmedi atel y precedi ng year.
We, therefore, fi nd no i nfi rmi t y i n the di recti ons of the Ld.CI T( A) for treati ng the openi ng stock of the succeedi ng year as the cl osi ng stock of the i mpugned year. There i s no meri t i n the argument of the Ld. DR that the Revenue has gone in appeal agai nst the order of the I . T.A. T., si nce pendi ng adjudi cati on of the i ssue by the Hon'bl e H igh Court, the order of the I . T.A. T. stands a nd i s to be fol l o wed by al l l o wer authori ti es. The ground of appeal Nos.( i ) to ( i i i ) ( a) & ( b) rai sed by the Revenue are accordi ngl y di smi ssed.
22. Ground No.( i v) rai sed by the Revenue reads as under:
(iv) That the Ld.CIT(A) has erred both in law and on facts in deleting the addition of Rs.5,55,913/-
made on account of disallowance of interest expenditure on account of interest free loan given to Smt. Kamal Kanta Jindal ignoring the fact that the assessee has not maintained any separate account%>r interest free / interest bearing funds.
23. Thi s ground pe rtai ns to del eti on of di sal l o wa nce of i nterest e xpendi ture of Rs. 5,55,913/- ,on account of i nterest free l oan gi ven to Smt. Kamal Kanta J i ndal. The A.O. had menti oned that the assessee had gi ven i nterest free l oan to Smt. Ka mal Kanta Ji nda l and the bal an ce i n thi s 16 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 account was Rs. 46,32,609/-. The A.O. observe d that the assessee had not charged any i nt erest on thi s l oa n amount whereas on the other hand th e assessee was cl ai mi ng e xpendi ture on a ccount of i nteres t pai d. A.O. ment ioned that the assessee was requi red to e xplai n as to why proporti onate amount of i ntere st ma y not be d i sal l o wed as was done for A.Y. 2007-08 and after consi deri ng the repl y of the assessee, di sal l o wance of Rs. 5,55,913/- w as made by the AO as was done for the A.Y. 2007-08.
24. The Ld.CI T( A) de l eted the di sal l o wance made on fi ndi ng that the assessee had pai d no i nterest on outstanding l oans taken and that i t had suffi ci ent o wn i nterest free funds for maki ng the i mpugned advances. The rel evant fi ndi ngs of the Ld.CI T( A) are as under:
"The facts of the case, the basis of disallowace & addition made by the A.O. and the arguments of the AR during the course of appellate proceedings have been considered. The AO has disallowed the proportionate amount out of the interest expenses because the assessee did not charge any interest on the outstanding amount in the name of Smt. Kamal Kanta Jindal. The AR has argued that this amount was given in the earlier years and the balance during the year was Rs. 46,32,609/-. The AR has argued that this loan was given during the F.Y. 2005-06 out of interest free funds received from various parties during that period. In support of this the AR has filed the copy of accounts of Smt. Kamal Kanta Jindal, M/s Allied Steels, M/s Allied Agro Implements Work, M/s Stelco Ltd. and M/s B.M.J. Real Estates Pvt. Ltd. The AR has further argued that there is no nexus between the borrowed funds and the amount advanced to Smt. Kamal Kanta Jindal and therefore there was no valid basis for making the disallowance/addition.
A perusal of the records and documents filed during the appellate proceedings shows the assessee has not paid any interest on the amount outstanding in the name of various parties from whom money was received during the F.Y. 2005-06. The facts of this case are similar to the facts for A.Y. 2007-08 which has been decided in favour of the 17 ITA Nos. 1041& 1531/Chd/2017 C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12 assessee on this issue. The contention of the assessee that it has sufficient interest free funds to give as loan to Smt. Kamal Kanta Jindal, was found to be correct, therefore the argument of the AR is found acceptable. The AO was not correct in disallowing any interest as there is no nexus between the interest bearing borrowed fund and the sum advanced to Smt. Kamal Kanta Jindal. The disallowance made by the A.O. is therefore deleted.
Accordingly, this ground of appeal is allowed."
25. Before us, the L d. DR rel i ed upo n the order of th e A.O. and the Ld. counsel for assessee rel i ed upon the order of the CI T( A) .
26. We have heard t he ri val contenti ons and gone thr ough the order of th e l o wer authori ti es. We do not fi nd any i nfi rmi t y i n the order of the Ld. CI T( A) . The factu al fi ndi ngs of the CI T( A) that there were no i nterest beari ng borro wi ngs by the assessee and i t had suffi c i ent o wn i nterest free funds for maki ng advances have remai ned uncontroverted be fore us. I n vi e w of the same, we hol d that the Ld.CI T( A) had ri ghtl y del eted the di sal l o wance made of i nterest expendi ture of Rs.5,55,913/-. Ground of appeal No.( i v) i s, therefore, di smi ssed.
The appeal of the Revenue i s di smi ssed.
C.O.No.49/Chd/20187
27. The assessee has rai sed fol l o wi ng grounds:
1. That the relief allowed by the Learned Commissioner of Income tax (Appeals-5) Ludhiana on account of recomputing the income of the assessee after taking the revised calculation of closing stock as on 31.03.2008being based on the facts and circumstances as well as judgment in assessee's own case for the assessment year 2009-2010 by the Hon'ble ITAT Chandigarh Bench Chandigarh in appeal No ITA 89/CHD/2013 dated 5th day of January 2016 and other various judgments as discussed in the said order.
2. That the relief allowed by the Learned Commissioner of Income Tax (Appeals 5) Ludhiana on account of disallowance of interest expenditure on account of interest free loan given to Smt Kamal Kanta Jindal being based on the facts and circumstances of the case and judgment of ITAT Chandigarh Bench Chandigarh in assessee's own case.18 ITA Nos. 1041& 1531/Chd/2017
C.O.No.49/Chd/2017 &C.O. Nos.33-Chd/2018 A.Ys.2008-09 & 2011-12
3. That the appeal has been filed by the department after the expiry of statutory period as provided under the Income Tax Act 1961 as is apparent from the Form No 36 filed by the department, the order of the Learned Commissioner of Income Tax (Appeals 5) Ludhiana was received on 13.07.2016 where as the appeal has been filed on 22.06.2017 just after a period of about one year. Hence it is requested that no benefit of delay in filing the appeal be given to the appellant. It is requested that the appeal of the department may kindly be considered late and filed."
28. The Ld. counsel for assessee contended that the Cross Objecti on was onl y i n support of the order of the Ld.CI T( A) .
Si nce no gri evan ce has been rai s ed by the assess ee i n i ts Cross Objecti on, the same i s not mai ntai nabl e and i s, therefore, di smi ssed.
29. In the resul t, the appeal s of the Revenue in I TA No.1041/Chd/2017 & I TA No.1531/Chd/2017 and the Cro ss Objecti ons fi l ed by the assessee i n CO No.33/Chd/2018 & CO/49/Chd/2017 are al l di smi ssed.
O r d e r p r on o u n c ed i n t h e O p e n Cou r t .
Sd/- Sd/-
संजय गग अ नपण
ू ा ग'ु ता
(SANJAY GARG) (ANNAPURNA GUPTA)
याय क सद य/Judicial Member लेखा सद य/Accountant Member
+दनांक /Dated: 30th April, 2019
*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