Commissioner Of Income Tax, Bhopal v. Bhaskar Foods Pvt. Ltd

HIGH COURT OF MADHYA PRADESH, JABALPUR Income Tax Appeal No.113 of 2014 Commissioner of Income Tax, Bhopal Vs. Bhaskar Foods Pvt. Ltd. Present : Hon. Shri Justice Rajendra Menon Hon. Shri Justice S.K.Seth Shri Sanjay Lal, counsel for appellant. Whether approved for reporting: Yes/No. J U D G M E N T(10.9.2015) This is revenue’s appeal under section 260-A of the Income Tax Act, calling in question the concurrent orders passed by the Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal, in the matter of permitting deletion of certain amounts on account of the fact that they were interest bearing term loan advance. 2. During the assessment year 2010-11 notices under section 143(2) of the Income Tax Act, 1961 was issued to the respondent/assesse and during the process of assessment it was found that a sum of Rs.17,88,70,571/- was shown under the head loans and advances. A questionnaire was issued to the assesse, he was required to furnish details of the advances and deposits in a prescribed format. After considering the material adduced the Assessing Officer disallowed an amount of Rs.27,02,55,133/- out of total interest expenses and debited in profit and loss account and passed the assessment order. The aforesaid disallowance of Rs.83,24,881/- having been deleted by the Commissioner of Income Tax (Appeals) and the Tribunal, challenging the concurrent finding recorded by the Tribunal and the Commissioner (Appeals), this appeal by the revenue. 3. On going through the order passed by the appellate authorities namely the Commissioner (Appeals) and Tribunal, the reasons indicated by the Commissioner (Appeals) and the Tribunal, we find that both these authorities have found that there was no evidence on record to suggest that the interest bearing funds were utilized for providing interest free advances. Accordingly it was held there was no question of making disallowance on the total closing balance of advance given after observing so the disallowance was deleted :- “From the above, it was clear that in this case there has no evidence on record to suggest that interest bearing funds were utilized for giving interest free advances to other group concerns. Hence, there was no justification for making disallowance of interest @ 12% on the total closing balance of advances given at Rs.8,70,66,549/- by the Assessing Officer. Therefore, considering the facts of the case and legal position on the issue, I am of the considered opinion that no disallowance under section 36(1)(iii) out of interest expenses claimed by the appellant was called for, as there was no evidence/material on record to demonstrate that interest bearing funds were utilized for giving interest free advances to other group concerns. Thus, the disallowance of Rs.1,04,47,986/- out of interest claimed is deleted. If the totality of facts available on record, conclusion drawn in the impugned order, observation made in the assessment order are kept in juxtaposition and analyzed, first of all, the factual finding recorded in the impugned order was not controverted by the Revenue with the help of any positive material. Secondly, no evidence was brought on record that interest bearing funds were utilized for providing interest free advances. Therefore, there is no justification for making the disallowances on presumptive basis. The stand of the ld. CIT(A) is affirmed.“ 4. When the matter went to the Tribunal, the Tribunal again examined the same and refused to interfere. The concurrent orders passed by the authorities concerned are based on due appreciation of facts and material that have come on record and we see no substantial question of law involved in this appeal warranting interference by this Court. 5. The appeal is therefore dismissed. (RAJENDRA MENON) (S.K.SETH) JUDGE JUDGE M