Income Tax Appellate Tribunal - Chandigarh
M/S International Fresh Farm Products ... vs Dcit, C-1(1), Chandigarh on 30 September, 2021
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी" च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH 'B' CHANDIGARH BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI R.L.NEGI, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 1507/CHD/2019 नधा रण वष / Assessment Year : 2013-14 M/s International Fresh Farm Versus The DCIT, Products (India) Ltd., Circle-1(1), H.No. 3, Secstor-5, Chandigarh.
Chandigarh.
थायी लेखा सं./PAN NO: AAACI5038D
अपीलाथ /Appellant यथ /Respondent
(Virtual Court)
नधा रती क ओर से/Assessee by : Shri Parikshit Agarwal, CA राज व क ओर से/ Revenue by : Smt.Priyanka Dhar, JCIT सन ु वाई क तार$ख/Date of Hearing : 28.09.2021 उदघोषणा क तार$ख/Date of Pronouncement : 30.09.2021 आदे श/Order PER ANNAPURNA GUPTA, AC COUNTANT 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 the or de r of the Le a r ne d C o mmi s si one r of I nc ome Ta x ( Ap p e a l s) -I , C ha n d ig a r h [(in short the ( ' L d. C I T( A ) ] d a te d
2 5 .0 9 .2 0 1 9 r e l a ti ng to a s se s sme nt ye a r 2 0 13 -1 4 p a s se d u/s 2 5 0( 6 ) of the I ncome Ta x Act , 1 9 6 1 (h e re i n a fte r re fe rre d to a s 'A ct'.
ITA -1507/CHD/2019 A.Y. 2013-14 Page 2 of 16
2. Gr ou nd N o. 1 & 6 r a i se d by the a ss e ssee a re gen e r a l in n a tur e a nd nee d n o a dj ud i ca t ion .
Gr ou nd N o. 2 r a i se d b y the a s se sse e re a d s a s un de r :
"2. T hat on f acts, circumstances and legal position of the case, Worthy CIT (A) has erred in conf irming the action of Ld. AO wherein he made addition of Rs. 3,15,616/- u/s 36(l)(iii) of the Ac t on estimated, arbitrary, presumptive and prejudiced basis without assigning any logical reasons and had erroneously disallowed the proportionate interest on advance given f or business purpose to M/s T emptation Foods as interest f ree advance."
3. Th e i s sue re l a te s to d i sa l l ow a nce of i nte re st a moun ti ng to Rs. 3 ,1 5 , 61 6 /-, a s p e r p r ovi si ons of S e ct ion 3 6 (1 ) ( ii i ) of the Ac t, p e r ta i ni ng to in te re st fre e a d va nce s ma de to M/s Te mp ta ti on Foo d s a moun ti ng t o Rs. 50 l a cs t re a ti ng t he s a me to b e n ot fo r the p ur p ose of b u si ne ss of the a sse ssee .
4. Th e ld . cou ns e l fo r the a ss e ssee d re w our a tte n tion to th e fa c t tha t t he i mp ug n e d a d va n ce to M /s Te mp ta t ion F o od s ha d b ee n ma d e i n th e p r e ce d in g ye a r i .e . a s se ssme nt ye ar 2 0 1 2- 13 a nd id e nti ca l di s a ll ow a nc e ha d be e n ma d e i n th e sa i d ye a r a l so w hi ch i ssu e h a d tr a ve l le d up to the I TA T w h o ha d r e s tore d the ma tte r t o th e AO w i th th e d i r ect ion to d e t e r min e t he f un ds us e d for the p ur p ose of ma k i ng th e a d va n ce a nd th e re a f ter a d ju d ic a te the i ss ue i n a c cor d a nce w i th l a w . Th a t the A O on r e -co ns ide r a ti on of the i ssue ha d de le te d t he di sa l l ow a nce ITA -1507/CHD/2019 A.Y. 2013-14 Page 3 of 16 no tin g tha t th e ad v a nc e h a d bee n ma d e out of cu rr e n t a cc ount a nd th a t a l l th e i nt e re s t be a r in g f un ds ha d b ee n us e d for the p ur p ose of b u si ne ss of th e a sse ss ee . I n thi s re ga r d he d r ew our a tte nti on t o th e fo ll ow i ng :
i) C op y of l e d ge r acc oun t of M /s Te mp ta t ion F ood s i n th e b oo ks of th e a sse ssee fo r the i mp ug ne d a ss e s sme n t ye a r r e f le ct in g Rs . 5 0 l a c s r e ce ive d fr om M /s Te mp ta t ion Foo ds a s a n op e n i ng b a l a nc e ou t of w hi c h Rs . 2 5 l a cs wa s r e tu r ne d o n 1 9 .4 . 2 01 2 . Th e sa i d d ocu me n t w a s p la c e d b e f ore u s a t P a p e r B ook p a ge 2 2 .
ii ) Th e o rd e r of th e Ld . C I T( A) f or t he p re ce d in g a ss e s sme n t ye ar ,i .e A. Y 20 1 2 -1 3 , a ga i n st or d e r p a ss e d u /s 1 4 3 (3 ) f or th e sa i d ye a r ma k in g a d d it ion /d is a ll o w a n ce of in te rest on the i mp ug ne d a d va n ce . Sa me w a s p l a ce d be f ore us a t P a pe r B ook p a ge 73 -7 8 . Ou r a tte nti on w a s d r a w n to P a p e r B ook p a ge 7 5 -7 7 w h e re imp u gn e d or d e r w a s d is cu sse d b y th e l d . CI T( A ) a t p a r a 3 to 3 .3 .1 a n d di s a ll ow a n ce ma d e w a s up he ld.
ii i ) Th e or d e r of th e I TA T in a p p e a l fi l e d b y th e a sse ssee a ga i n st th e a fo re sta te d or de r o f th e Ld . C I T( A) for A. Y 2 0 12 -1 3 p l a c e d be fo re u s a t P a p e r B oo k p a ge 79 - 1 0 8. O ur a tte n tion w a s d r a w n to p a ge s 1 0 2 to 105 w he re the i ss ue of di sa l l ow a nc e u/s 3 6 (1 ) ( ii i ) of the Ac t f or a sse ssme nt y e a r 2 0 10 -1 1 w a s a d j ud ic a te d b y th e I TA T r e ma n d i n g th e ma tt e r to th e A O to v e r if y th a t n o i nte re st b e a r in g f un d s h ad b ee n u se d f or the p ur p ose of ma k i n g th e a d va n ce a n d t he re a fte r to ITA -1507/CHD/2019 A.Y. 2013-14 Page 4 of 16 P a p e r B ook p a ge N o. 10 7 w h e re i n i de n ti ca l i ssue r e l a ti ng to a sses sme n t ye a r 2 01 2 -1 3, p e r ta i ni n g to a d va n ce s ma d e to M /s Te mp ta t io n F ood s, w a s a l so r e s tore d b a ck to th e A O f or ve r if yi ng t he fu nd s u se d f or th e p ur p ose of ma k i n g a d v a nc e .
iv ) Th e or d e r o f the AO i n r e s tor e d p r oce e d i ngs p l a ce d b e f ore us a t P a pe r B ook pa ge 1 21 -1 2 9 , p oi nti n g o ut th e re f r om a t pa g e 12 9 th e fi nd i ngs of t he A O to th e e f fe ct th a t, aft e r c ons ide ri ng t he a sse s see 's su b mis si ons ,i n vi e w of t he di re cti ons of t he I TA T i n th e or de r p a s sed f or a ss e ss me nt ye a r 20 1 2 -1 3, th e a d va n ce s h a d b ee n g iv e n fr om th e cu r r e n t a cc ount of th e a sse ssee a nd n o c a sh c re d it f a ci li ty h a d bee n a va i l e d , tha t the a sse ssee wa s ha vi ng s uf fi ci en t i nte re st free fu nd s a nd th a t the a s se sse e h a d onl y te rm l oa ns w h ic h we re u se d fo r a cq u i si tio n of fi xe d a ss e ts . Tha t a fte r fi nd i n g so , t he AO ma d e no a d d it ion s/ d i sa l l ow a n ce of i nte res t u/s 36 ( 1 )( i ii ) of th e Ac t to the i ncome of th e a s se sse e .
5. The ld . co un se l f or the a sse ss ee con te n de d th a t s in ce the ye a r i n w hi ch th e a d va n ce w a s gi ve n , i t w a s fou nd th a t the a d va n ce s h a d b ee n ma de f ro m i nt e re st fre e f un d s, th e re w a s no r e a s on to ma ke an y d is a ll ow a n ce of i nte re st u /s 3 6 ( 1) ( ii i ) of th e Ac t i n th e imp u gn e d ye a r a nd th a t th e is sue w a s cl e a r l y co ve re d b y t he a for e s ta te d or de r s for th e p re ce d i ng ye a r .
6. Th e ld . D R on th e ot he r h a nd re lie d on the o rde r of the C I T( A ) th a t t he a s se s se e ha d ne ith e r de mon str a te d b us ine ss ITA -1507/CHD/2019 A.Y. 2013-14 Page 5 of 16 p ur p ose f or ma k in g the i mpu gn e d a d va n ce n or th at i t ha d u se d i nte re st f re e fu nd s fo r ma k in g th e a d va n ce . S he fur t he r p oin te d ou t th a t i de nt ica l d i sa l l ow a nc e ma d e i n AY 2 0 14 -1 5 w a s n ot d e le te d i n a p pe a l b y th e I TA T.
7. Th e Ld. C ou ns e l for the a sse ssee cou n te re d b y sta tin g th a t i n A. Y 20 1 4 -1 5 t he a s se s se e h a d no t p r e sse d t he gr ou nd r a i se d co ns id e r i ng the in si gn if i ca n t a m ou nt in vol v e d of Rs .2 6 ,9 2 6 /-. H e d re w our a tten ti on to t he o rde r o f the I TA T in A. Y 2 0 1 4 -15 p la ce d a t p a p e r b ook p a ge no. 1 30 -1 3 5 b ri n gi ng o ut th e s a i d f a cts .
8. We ha ve he a r d b ot h th e p a r tie s. I t i s no t de nie d th at i de nt ic a l di s a ll ow a n ce of in te re st on the sa i d a d vanc e of Rs . 50 l a cs to M /s Te m p ta t ion F ood s h a d be e n ma de in t h e p re ce d in g a ss e s sme n t ye a r a l so a nd a f te r va r i ous r ou nd s of li ti ga ti on , w he n t he is sue h a d b e e n re sto re d to the A O b y the I TA T d ir e cti ng h im to d e te r mi n e the na t ur e of fu nd s us e d f or the p ur p ose of ma k i ng th e a d v a nce , i t w a s fo un d by t h e AO th a t n o i nte re st be a r i ng f un d s h a d bee n us e d a n d i nf a ct i nte re st f ree f un ds i n the cu r re n t a cc oun t of the a sse s see h a d bee n u se d for th e p u rp ose of ma k i ng the a d va n ce . Th is con cl us i v e f i nd i ng of f a ct, th e re f ore , put s a n e n d to a ll d i sp ut e v is -à -vis the i ssue of d is a l low a n ce of in te re st on the a d v a nce gi ve n to M/s Te mp ta ti on F ood s , si nc e it h a s b ee n f a ct ua l ly f oun d b y th e ITA -1507/CHD/2019 A.Y. 2013-14 Page 6 of 16 d e p a r tme n t t ha t in te re st fr ee fun ds h a d b e e n u se d f or th e p ur p ose of ma k i ng th e a d va n ce . N o occ a si on a r i se s, t he re fore , f or ma k in g a ny d i sa l l ow a nc e o f i n te re s t u /s 3 6 ( 1 )( i ii ) of th e A ct w i th r e ga r d t o th e sa me . Th e re li an ce p la ce d b y th e Re ve nue on th e de ci s ion of th e I TA T in A. Y 2 0 14 -1 5 , i s of no r e le v a nce si n ce t he gr oun d w a s n ot a dj ud i ca t e d be i ng not pre sse d b y the a ss e s see .
Gr ou nd of a p p e a l N o. 2 i s th e re f ore, a l l ow e d .
9. Gr ou nd N o. 3 r a i se d b y the a s se s se e re a d s a s un de r :
"3. That on facts, circumstances and legal position of the case, the worthy CIT(A) has erred in confirming the action of the Ld. AO wherein he made addition of Rs. 27,20,000/- u/s 2(22)(e) even when the appellant company is not a shareholder of Punjab Metallics P. Ltd. and there is only common shareholders between the 2 companies.
10. Th e is su e re l a te s to tre a tme n t of an a mo un t of Rs . 2 7 ,2 0 ,0 0 0 /-, r e ce ive d by the a s se s se e f r om M /s P u n ja b Me t a ll i cs d u ri n g the ye a r , a s de e me d d i vi de nd a s p e r the p r ovi si on s of Se cti on 2 ( 2 2) ( e ) of the A ct.
11. Th e a dd i ti on w a s ma d e b y the AO a n d up he l d b y the Ld .C I T(A ), on f in d in g th a t the M a na gi n g Di r e c tor ( MD) of the a ss e s see c omp a ny , Sh . Su kh i nd e r S in gh , w a s ho ld i ng 7 2 . 26 % sh a r e s i n th e ass e s see c omp a ny a n d 4 5 .3 9 % sh a r e s i n M /s P un j a b M e ta l l ic s P .l td , th us ha vin g s ub sta n ti a l in te re st i n M/s P un j a b Me ta l l ic s P . lt d. a n d ow ni n g mor e tha n 1 0 % s h a r e s i n ITA -1507/CHD/2019 A.Y. 2013-14 Page 7 of 16 th e a s se s se e compa n y a n d fu r the r on f i nd i ng tha t the re w a s su ff i ci e n t re se r ve s a n d s ur p lu s of R s. 1 , 28 , 6 2, 6 90 /- i n M /s P un j a b Me ta ll i cs P . lt d. fo r tr e a ti ng th e a mou nt a d v a nc e d by i t to th e a sse ssee comp a n y a s de e me d d iv ide n d .
12. Th e c on te n tio n of l d . c oun se l f or th e a s se s see w a s t ha t th e l d . C I T( A) h a d ma d e di s a ll ow a nc e ba s is th e or de r p a sse d b y th e CI T( A) i n a ss e ss me n t ye a r 20 1 4-1 5 w h ic h ord e r h a d bee n a gi ta te d be fore the I TA T wh o i n t u rn ha d d e ci de d th e i ssue in f a vou r of t he a s se s see by f ol low i ng t he or d e r of th e j ur i sd i cti ona l H i gh C our t i n the c a se o f CI T Vs Sh a r ma n W ool e n Mil l s Lt d . (2 0 1 2) 2 0 4 Ta xma n 8 2 ( P & H) no tin g th at d iv i de nd cou l d be ta xe d onl y i n the h a n ds of the s ha r e hol de r s and it was th e MD w ho was s ha r e hol de r in M /s P un ja b Me t a ll i cs P. l td . a n d n ot th e a sse sse e c omp a ny a nd t he re fore , th e de e me d d i vide nd c oul d be ta xe d i n t he ha nd s of th e MD on ly . C op y of th e or de r w a s p la ced be fore u s a t P .B 1 3 0 -1 3 5.
13. Ld. D R on th e oth e r ha n d re l ied on th e or de r of th e Ld .C I T(A ) c on te n di n g th a t th e con d i tio ns s p e ci f ie d i n se c ti on 2 (2 2 ) (e ) of the A ct a d mit te d l y s tood f ul fi l le d i n the p r e se nt ca se a n d th e re f ore t he a mou nt re ce ive d b y the a sse s see f r om P un j a b Me t a ll i cs h a d b ee n r i ght ly tre a te d a s d ee me d di vid e n d in i ts h a nd s.
ITA -1507/CHD/2019 A.Y. 2013-14 Page 8 of 16
14. Th e L d . C oun se l f or th e a s se s se e w a s a s k e d at b ar to e x pl a i n the p os it ion of la w v is a vi s the i ss ue c on si de r in g the d e c is ion of the a p e x c our t i n t he c a se of Na ti on a l Tr a ve l S e r vi ce s vs CI T C A N o.2 0 6 8-2 0 7 1 of 2 0 1 2 d a te d Ja nu a ry 18 2 0 18 .
15. To th is , the L d .C o un se l f or th e a sse ssee p la c e d a co mpi l a ti on of ju d gme n ts b e fo re us c on si sti ng of 1 1 j ud gme nts . Re fe rr i ng to th e sa me h e co nte nde d th a t th e i ssue i n th e ca se of N a ti on a l Tr a ve l Se r v ice s Vs . C I T ,w h i ch tr a v e l le d up to the S up r e me C o ur t a n d w a s r e fe r red to a l a r ge r be n ch w as a d if f e re n t a s pe ct r e l a ti ng to in te rp r e t a tio n of the p r ovi si on s of se cti on 2 ( 2 2) (e ) of th e Act . H e poin te d out t ha t i n th e ca s e of C I T Vs . An ki te ch P r iv a te Li mi te d & O the r s, 3 40 I TR 14 (D e l ) , th e H on 'bl e H i gh cou rt ha d i de nti f ie d t hree li m b s of se c ti on 2 (2 2 ) (e ) a s be i ng :
A ny pa y me n t b y a c o mp a ny, n ot b e i ng a co m pa n y i n wh i ch the p ub l ic a r e s ub st a nti al ly in te re ste d , by wa y of a dv a nc e or l oa n 1 ) to a s ha r e hol d e r , b e i ng a pe r son w h o i s th e b e ne fici a l ow n e r of sh a re s;
2 ) to a ny con ce rn in w hi ch s uch s ha r e h ol de r is a me mb e r or a p a r tne r a n d h a s sub sta n tia l in te re st;
ITA -1507/CHD/2019 A.Y. 2013-14 Page 9 of 16 3 ) or a n y p a y me n t b y su ch co mpa n y on be ha l f or for t he i nd i vi d ua l b e ne f it o f a ny su ch s ha r e hol de r .
16. He p oin te d o ut t ha t wh i le in A nk i te c h ( su p ra ) an d C I T V s. Ma d h ur H ous in g & D e v e l op ment C omp a ny (Del HC) I TA N o. 7 21 /2 0 1 1, th e H on'b le De l h i H i gh C our t dea l t w i th t he se con d l i mb and i nte rp re te d it to be onl y e nl a rg in g t he d e f in i tio n o f d i vid e n d, h ol di n g tha t the dee me d d iv id e nd c a n be ta xe d onl y i n t he h a n ds of s ha r e hol de r a n d n ot th e c onc e r n r e ce i vi ng it , w h ich pr op os it ion h e p oi n te d ou t wa s up h e ld by th e A pe x c our t in C I T Vs . M a d h ur Hou si ng & D e ve l opme nt C omp a n y 40 1 I TR 1 5 2 (S C ) . I n the ca se of N ati ona l Tr a v e l S e r vi ce s V s. CI T 34 7 I TR 3 0 5 (D e l ) ,h e p oi n te d ou t tha t th e i ssue r e l a te d to the fi r st li mb w he re l oa n or a d v a nce gi ve n to a "sh areh ol d er be in g a per son wh o is th e ben ef ic i al h ol de r of sh are", was to be in te r p re te d as to r e fe r rin g to b oth a r e gi s te re d sh a reh old e r a n d a ben e f ic ia l sh a re ho ld e r or on l y a b e ne f ic ia l sh a re hol de r . I t w a s th is is su e w hi ch trave lle d to t he H on' bl e s up re me c our t w h o n ote d t he v ie w ta k e n b y t he H on' bl e De l hi H igh C ou rt i n one of th e ca se s of th e g ro up in w hi c h the l e a d ca s e w a s An ki te ch P r iv a te Li mite d a s r e f e r r i ng b oth to re gi ste re d a nd be ne f ic ial sh a r e h olde r , a nd e xp re sse d th e i r d i sa gre e men t w it h the sa me . The ma tt e r wa s a c cor d i ng ly r e fe r re d to a la r ge r be nc h, h e p oint e d out . Th e L d .C o un se l f or th e a sse ssee t he re a fte r p oi n te d out t ha t su b s e q ue n tl y thi s ITA -1507/CHD/2019 A.Y. 2013-14 Page 10 of 16 ma tte r w a s di s mi ss e d a s w it hd r a w n wh e n i t c a me u p b e f ore t he l a r ge r Be n ch si nc e the a sse s see ha d se ttle d the d is pu te i n the 'Vi v a d se Vi sv a sh Sc he me , 2 0 20 '. Th e Ld .C o un se l f or the a ss e s see f ur the r p oi nte d ou t t he de c is io n of th e H on 'ble B omb a y H ig h C our t in the c a se of P CI T Vs . Su nj e we ls I n te rn a ti on a l Limi te d, 4 1 1 I TR 6 1 3 a n d C I T Vs . M /s T. A b d ul W a hi d & C omp a ny , 4 2 8 I TR 4 2 6 p o in ti ng o ut t he re fr om t ha t i n b oth th e de c is ion s t he Ho n'b le H i gh C our t h a d d is tin gu is he d th e c a se be fore th e H on' ble Su pr e me C ou r t in th e c ase of N a ti on a l Tr a v e l s e r vi ce s ( su pr a ) b e i ng in r e l a ti on to a di f fe r e nt i ssu e a s o pp ose d to th a t a s de c ide d b y the H on' ble De l h i H i gh C ou r t in the ca se of An k ite ch P r iv a te Li mi te d & Ot he r s (s up r a) p e r ta i ni n g to t he ta x a bi l it y t o d e e me d d i vi de n d b e i ng p os si ble on ly i n t he ha n ds of s ha re hol de r . H e , the re f ore , co nte nde d tha t th e de ci s ion of th e H on 'b le De lh i H i gh C o ur t i n th e ca se of An k i te ch P r iv a te Li mi te d & O the r s ( sup r a ) w a s go od la w a n d h a d b ee n re i te ra te d b y the H on 'b le Jur i sd i cti on a l Hi gh C ou r t i n th e c a se o f S he rma n W ool l e n Mil l s ( su pr a ) , fol l ow in g w h ic h t he I TA T h a d d e l e ted the a d d it ion in th e ca se of the a sse ssee for a ss e s sme n t ye a r 20 1 4 -1 5 .
17. We h a ve he a r d b oth t he p a r tie s a nd ha ve a ls o go ne th r oug h th e de c is i ons ci te d b y the Ld .C oun se l f or the a sse ssee b e f ore u s. W e a re c onv in ce d th a t th e i s sue r e fe r red b y th e a p e x co ur t to a l a r ge r be nc h is n ot r e lev a nt on a c cou nt of w i thd r a w a l ITA -1507/CHD/2019 A.Y. 2013-14 Page 11 of 16 of th e a p pe a l b y t he a sse ssee h a ving op te d for se ttle me n t u nde r th e D ire ct ta x V iv a d s e Vi sh w a s Ac t, 20 2 0 a nd a l s o on a ccou nt of the fa c t th a t th e is sue i nv olved r e l a te d to a d if fe re nt a s pe ct of s e ct io n 2 (2 2 )(e ) of the A ct a s op p ose d to th a t b e f ore us. As r i ght ly p oi nte d ou t b y th e Ld . C ou n se l fo r the a sse ss ee w hi le t he i ssu e be f ore u s i s whe t he r l oan s a n d a d va n ces gi ve n to a co nc e r n w h ic h q ua l if i e s a s dee me d d iv id e nd as pe r se cti on 2 (2 2 ) (e ) o f the A ct, w oul d be ta xa b l e i n the h a n ds of t he co nc e r n w hi c h itse l f i s n ot a sh a r e ho lde r of the c omp a ny a d va n ci ng t he s a me . I n th e ca se o f N a ti on a l Tr a ve l se r v ices ( su pr a ) h ow e ve r the is su e w a s d if fe re nt w he t he r s har e hol de r , r e ce i vi ng l oa n or a d va n ce fr om a c ompa ny q ua l i fyi ng a s dee me d d iv i de nd , i s to be a r e gi s te re d a nd/or be ne fi ci a l s ha r e h ol de r .
18. As f or t he i ss ue b e f ore us , the H on' bl e A pe x cou rt i n t he ca s e o f M a dh ur Hou si n g ( su pr a ) h a s a ff ir me d the p r op osi ti on of l a w l a id d ow n b y t he H on'b l e De lh i hi gh c our t i n th e s a id c a se th a t d e e me d di vi d e n d ca n be tax e d on l y i n the ha n d s o f a p e r so n w h o i s a s ha r e hol de r of the le n de r c omp a ny a nd n ot i n th e h a nd s of th e b or r ow i ng con ce r n i n w h ic h s uch sh a r e h ol de r i s me mb e r o r p a r tne r h a vi ng s ub st a nti a l i nt e re s t.
19. Ha v in g sa i d s o, s in ce i n the p res e nt c a se the ass e s see is n ot a sh a r e ho lde r of M /s Pu nj a b Me ta l ic s Li mi te d f r om w h ic h it h a s r e ce ive d the imp ug ne d a d va n ce of Rs. 2 7 ,2 0 ,0 0 0 /- a n d t he sa me th oug h q ua l i fi e s a s de e me d i n come u/s 2 (2 2 )( e ) o f t he ITA -1507/CHD/2019 A.Y. 2013-14 Page 12 of 16 Ac t, b ut i s not ta xa b l e i n t he ha n d s of th e a s se sse e . The a d d it ion s o ma de i s, t he re fore , d ire c te d to be de le te d .
Gr ou nd of a pp e a l N o. 3 ra i s e d by the a sse ssee s ta nd s a l lo we d .
20. Gr ou nd N o. 4 r e l a te s to d i sa l lo w a nce ma d e of Rs . 3 9 ,2 4 ,2 2 8 /- u /s 40 A (i a ) on a c cou nt of ta x d e d ucted a t s our ce . Th e l d. co un se l f or the a sse ssee po in te d ou t th a t t hi s f ig ur e of Rs . 39 , 2 4, 2 2 8/- w a s pi ck e d up from the d i sc los ur e ma d e b y the ta x a ud i tor in h i s t a x a u d it r e p or t. Ou r a tt e nt ion wa s d r a w n to P a p e r B ook pa ge 4 4 w h e re i n the sa i d a moun t w a s r e p or te d a s d is a l low a b l e u/s 4 0 A( ia ) b y th e ta x a ud i tor , i n h is ta x a u di t r e p or t. Ld . cou ns e l fo r the a s se sse e p oi nte d ou t th a t t he ta x a u di tor ha d mi st a ke nl y comp ut e d the di sa l l owa nc e at Rs . 3 9 ,2 4 ,2 2 8 /-. A s p e r the l d . cou nse l for the a s se s se e the d is a l low a n ce re la te d to t wo bi l ls i s su e d b y on e M/ s Mo ha n La l C on tr a ct or a ggr eg a ti ng to Rs . 78 8 6 8 0/- on w h i ch TD S w a s d e d uc te d by the a s se sse e @ 10 % b ut was r eq u ir e d to be d e d uc te d @ 2 %. O ur a tt e nt ion wa s dr a w n to t he sa i d tw o b i ll s p la ce d be f ore us a t p a ge 5 3 -54 . Th e ld . cou ns e l for the a ss e s see p oi n te d out th a t th e ta x a ud i tor h a d on th e ba s i s of TD S de d uct e d b y t he a sse s see w r ong ly @ 1 0 % a mo u nti n g t o Rs . 7 8 86 8 /- had c a l cul a te d t he a moun t of di s a ll ow a nc e by a ss umi n g th e TD S to ha v e b ee n de du cte d @ 2 % a n d w or k e d the a mou nt di sa l l ow a b le a t Rs . 3 9 ,24 , 22 8 /-. He sta t e d th a t the ITA -1507/CHD/2019 A.Y. 2013-14 Page 13 of 16 d is a l low a n ce a c tua l l y a mo un te d to on l y R s. 7, 8 8, 6 8 0/- and p le a de d t ha t i t be re s tr ic te d to the s a id e xte nt .
21. Th e ld . D R, how e ve r , p oin te d out tha t Ld .C IT( A) ha d n ote d th a t n o a ffi d a vi t of ta x a ud it or to the e ffec t of ha v in g ma d e su ch a w ro ng c a lc ul a ti on h a d be e n fi le d by the a sse ssee a n d th e re f ore , i t w a s not p oss ib l e to b e l ie ve the e xp l a na t ion .
22. Th e l d . cou ns e l for t he a sse ssee a t th i s j un ctu re s ta ted th a t tho ugh h e ha d tr i e d p r ocu rin g su ch a n a f f id a vi t b ut ha d f a il e d to do so. H e p le a de d f or a n o pp or tu ni ty to p r ove hi s e x pl a n a tio n a n d r e q ue s te d the ma tte r be r e ma n d e d to the AO f or th e sa i d p ur pos e .
23. We h a ve he a rd b oth t he p a r ti e s . We fi n d tha t the co nte nti on of the a sse ssee tha t the a moun t d i sal l ow a bl e u /s 4 0 (a ) ( ia ) h a s b ee n mi s ta k e nl y r e po rt e d b y the ta x a ud i tor a t a h ig he r f igu r e can no t be s imp l y d is ca r d e d . Th e Ld . C ou nse l h a s ma d e ce r ta i n f a ctu a l con te n ti ons w h il e e xp l a in i ng th e mi sta ke n r e p or ti ng , to the e ffe c t th a t wh i le the a s se sse e had d e d uc te d ta xe s @ 1 0% on the c ont ra c tua l p a yme n ts to b e di sa l l ow e d of Rs . 7 ,8 8 , 68 0 /-, a mo un tin g to Rs .7 8 8 6 8/-, th e a ud i tor ha d a ss ume d tax d e d ucte d @ 2% and ca l cu la t e d th e a moun t d is a l low a b l e b asi s t hi s r a te of TD S, w hi ch a moun te d co ns e q ue ntl y to Rs .3 9 , 24 , 22 8 /- . Th e e xp l a na tion of th e Ld .C o un se l f or t he a sse ssee is n ot out ri gh tl y p e rve r se or ITA -1507/CHD/2019 A.Y. 2013-14 Page 14 of 16 un b e l ie va b le , b ut th e f a ct s w e fi n d, a s p oi nt e d ou t b y hi m n e e d to be v e r i fie d . Th e r e f or e a g ree i n g w i th th e pl e a of th e Ld .C o un se l f or th e a sse s see , we r e s tore th i s i ss ue to th e A O to e x a min e it a f re sh in t he l ig ht of th e con te nti on s ma d e b y the Ld .C o un se l f or th e a sse s see bef or e us a s a f ore s ta te d, d ul y ve r if yi ng a l l re le va n t f a cts a n d th e re a f te r de ci de th e i s sue i n a cc or d a nc e w it h l a w . N ee d le s s to a d d th e a s se s se e be gr a n te d d ue op p or tu ni ty of h e a r i ng.
Gr ou nd of a p p e a l N o. 4 i s a l low e d for s ta ti sti ca l pu r po se s .
24. Gr ou nd N o. 5 r e ads a s u nd e r :
"5. That on facts, circumstances and legal position of the case, the worthy CIT(A) has erred in confirming the action of the Ld. AO wherein he made addition of Rs. 1,64,846/- u/s 43B in respect of service tax and PF Payable on estimated, arbitrary, presumptive and prejudiced basis without assigning any logical reasons and has erroneously disallowed some of the expenses outstanding as payable at the end of the year even when the appellant company had paid/setoff these liabilities and documents in respect of these were already submitted."
25. Th e i ss ue r e la te s t o di s a ll ow a nc e ma d e o f se r vi ce ta x a nd P F n ot ha v in g be e n de p os ite d b y th e due da te a s pr e scr i be d u /s 4 3 B o f th e Act a mou nt in g to Rs. 1 , 6 4, 8 4 6 /-. Th e ld . c oun se l f or t he a s se sse e p oi nte d o ut tha t b r e a k -up of fi gu re w a s a s un d e r :
Se r v ice Ta x Rs. 4 0 0 0/-
PF pa y a bl e Rs. 1 6 0 84 6 /-
ITA -1507/CHD/2019
A.Y. 2013-14
Page 15 of 16
26. He sta te d th a t he was n ot pr e s si ng the i ss ue of
a l lo wa b i l ity of se r v ice ta x p a ya b le . Vi s-à -v is i s sue of PF
p a ya b l e he po in te d o ut tha t he ha d f il e d c op y of le d ge r a cc ount of suc ce e d in g ye a r b e fore t he Ld .C I T( A) d e mo n s tr atin g th e p a yme n t of P F i n th e s uc ce e d in g ye a r .
27. Th e l d. D R, h ow e ve r , sta te d t ha t th e le d ge r a c cou nt w a s n ot su ff ic ie nt a nd th e a sse ssee n ee de d t o su bs ta n tia te i ts e x pl a n a tio n w ith ne ce s sa r y d ocu me nt a r y e vi de n ce .
28. To t hi s ld. c oun se l f or the a ss e ssee s oug ht f ur ther op p or tun i ty a n d r e q ue ste d the ma tte r be re st ore d to th e A O for th e sa i d p ur p ose .
29. We h a ve he a r d bo th the p a r tie s. W e fi n d tha t the a sse ssee had a t te mp te d d e mon st ra t in g th e co mpl i a nc e w it h the r e q u ire me nt s of se c ti on 4 3 B of th e Ac t v is a v is t h e is sue of P F p a ya b l e , b ut ha d fa i l e d t o f il e cl i nc hi ng th i rd pa rt y e vi de nce for w hi c h h e h a s s oug ht fu rt he r op po rt un ity . I n the in te re st of j us tic e the re f ore we c on si de r it fit to gi ve t he a sse ssee a d e q u a te o pp or tu ni ty to s ub sta n ti a te i ts cl a i m a n d a c cor d in gl y r e s tore t he i ssu e of a l l ow a nc e of P F a s p e r th e p r ovi s ion s of se cti on 4 3 B of the A ct a mou nti n g to Rs. 1 ,6 0 ,8 4 6 /-, to th e AO to e xa mi n e i t a fre s h a nd the re a f te r de ci de i t in a cco rd a n ce w it h l a w . N ee d le ss to a dd th e a ss e ssee b e g iv e n d ue op p or tun i ty to ITA -1507/CHD/2019 A.Y. 2013-14 Page 16 of 16 p r od uce a l l e vi de n ce s i t see k s to r e ly up on i n sup p or t of i ts cl a i m.
Gr ou nd o f a ppe a l N o. 5 is p a r tly a l l ow e d f or s ta ti sti c a l p ur p ose s.
30. I n the re s ul t, a pp e a l o f t he a sse ss ee i s p a r tly a l low e d for st a ti sti ca l p u rp os e s .
O r de r p r ono un ced on 3 0 t h Se p te mb e r , 2 0 2 1 .
Sd/- Sd/-
( R. L. NEGI) (ANNAPURNA GUPTA)
या यक सद य/ Judicial Member लेखा सद य/ Accountant Member
"पूनम"
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 न4ध, आयकर अपील$य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानुसार/ By order, सहायक पंजीकार/ Assistant Registrar