Tca/791/2018 Of Commissioner Of Incometax v. M/S. Sri Jayajothi Textile Mills Pvt Ltd

In the High Court of Judicature at MadrasDated : 18.12.2018Coram :The Honourable Mr.Justice T.S.SIVAGNANAMand The Honourable Mr.Justice N.SATHISH KUMAR Tax Case Appeal No.791 of 2018 Commissioner of Income Tax, Corporate Circle 2, Madurai. ...Appellant M/s. Sri Jayajothi Textile Mills Pvt. Ltd.,154, Reddiapatti Road,KeelarajakularamanRajapalayam-626 136PAN:AABCS 5352 B ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961against the order dated 02.05.2018 in ITA No.1896/CHNY/2017 onthe file of the Income Tax Appellate Tribunal Chennai 'C' Benchfor the assessment year 2013-14. against the order ofCommissioner of Income Tax (Appeal-I) in ITA.No.61/2016-17dt:08/05/2017 and against the order of Deputy Commissioner ofIncome Tax, Corporate Circle-2,/ No.2, V.P.R. Rathinasamy NadarRoad, Madurai. For Petitioner : Ms.V. Pushpa & S. Premalatha Judgment was delivered by T.S.SIVAGNANAM,JWe have heard learned Standing Counsel for the Revenue andcarefully perused the materials placed on record. 2. This Appeal by the Revenue challenges the order passed bythe Income Tax Appellate Tribunal, which decided the issue infavour of the assessee, by raising the following substantialquestion of law : “ Whether the Income Tax AppellateTribunal was right in deleting disallowancemade under section 36(1) (iii) that theinterest free advance paid to the sisterconcern was considered as commercialexpediency without noting that there were https://hcservices.ecourts.gov.in/hcservices/ excess advance were given to the sisterconcern by the assessee ?” 3. The assessee was successful before the Commissionerof Income Tax (Appeals)-1 [for short the CIT(A)], who, by orderdated 08.05.2017 allowed the assessee's appeal and deleted allthe additions made by the Assessing Officer in his order dated31.03.2016. This order was confirmed by the Tribunal when theRevenue filed an appeal before it. Now, the Revenue has comebefore us challenging the order passed by the Tribunal. 4. The question would be whether the amounts advanced bythe assessee to the sister concern would have considered ascommercial expediency. 5. The Revenue would contend that there was an excessadvance, which was given to the sister concern and it cannot betaken as commercial expediency. 6. The CIT(A), while re-appreciating the factual position,held hereunder: “When the Assessing Officer himselfadmitted that the sister concern has notutilized the funds received from theappellant for any non-business purpose, Ifind that there is no scope for addition asthe advance has been made only as a measureof commercial expediency. In view of theabove, i direct the Assessing Officer todelete the addition of Rs.7,54,67,339/-. Apart from the above, it is seenthat the appellant's case was selected forscrutiny for AY 2014-2015 and whilecompleting the scrutiny assessment u/s 143(3)on 22.12.2016, the Assessing Officer did notmake any addition on the ground that borrowedfunds were diverted for non business purposeas on 31.03.2014, even though the amountoutstanding as on 31.03.2015 to SITPL atRs.54,08,41,068/- This means that theAssessing Officer himself, while completingthe subsequent year's scrutiny assessment,accepted that there was adequate own funds ofthe company and the advance made to SITPL wasonly for the purpose of commercial expediencyand not for non business purpose. In thecircumstances, I find that the addition madeby the Assessing Officer for this assessmentyear is not correct and the same is deleted” 7. When the above factual position was re-examined,the Tribunal noted that the Assessing Officer himself hasrecognized that the assessee has done a total value of powerpurchase from M/s. Ishwarya Textiles Mills Private Limited from2006 to 2013 at Rs.53.16 Crores and this being so, it clearly 7. When the above factual position was re-examined,the Tribunal noted that the Assessing Officer himself hasrecognized that the assessee has done a total value of powerpurchase from M/s. Ishwarya Textiles Mills Private Limited from2006 to 2013 at Rs.53.16 Crores and this being so, it clearly shows that the advance has been given only for the purpose ofcommercial expediency. Thus, we find that the 1[st] AppellateAuthority and the Tribunal had considered the factual issue andarrived at a conclusion. We find that there are no substantialquestion of law arisen for consideration in this appeal. 8. Accordingly, the appeal is dismissed. Sd/- Assistant Registrar(CS VIII) //True Copy// Sub Assistant Registrar To 1.The Income Tax Appellate Tribunal, Chennai 'C' Bench. 2.The Commissioner of Income Tax,Corporate Circle-2, Madruri.3.The Deputy Commissioner of Income Tax,Corporate Circle-2, No.2V.P.R.Rathinasamy Nadar Road,Marduri. 4.The Commissioner of Income Tax,Appeals-1, Madurai. TCA.No.791 of 2018 KK(CO)GSP(24/01/2019)