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M/s. Umiya Automobiles, Mehsana v/s The Asstt. Commissioner of Income


Company & Directors' Information:- N E C C AUTOMOBILES PRIVATE LIMITED [Active] CIN = U74899DL1991PTC043600

Company & Directors' Information:- C M AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50300CH2005PTC028233

Company & Directors' Information:- J P M AUTOMOBILES LIMITED [Active] CIN = U74899DL1995PLC068910

Company & Directors' Information:- K N AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50404OR2013PTC016730

Company & Directors' Information:- J AND K AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50401JK2004PTC002447

Company & Directors' Information:- K. S. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50300RJ2009PTC028204

Company & Directors' Information:- K N R AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50300WB2006PTC111199

Company & Directors' Information:- K P AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50404JH2012PTC000824

Company & Directors' Information:- Y J AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50401MP2013PTC031920

Company & Directors' Information:- N S AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50102MH2012PTC226814

Company & Directors' Information:- S K S AUTOMOBILES INDIA PRIVATE LIMITED [Strike Off] CIN = U50100TZ2009PTC014979

Company & Directors' Information:- J D AUTOMOBILES PVT. LTD. [Strike Off] CIN = U34300WB1987PTC042066

Company & Directors' Information:- B K AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50200AP2009PTC064484

Company & Directors' Information:- N. K. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50102GJ2006PTC049307

Company & Directors' Information:- G M S AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50101DL1997PTC089284

Company & Directors' Information:- N U AUTOMOBILES PVT LTD [Active] CIN = U74899DL1982PTC013126

Company & Directors' Information:- D K AUTOMOBILES PRIVATE LIMITED [Active] CIN = U29246CH1989PTC009607

Company & Directors' Information:- K Y AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50400JK2021PTC012549

Company & Directors' Information:- A K AUTOMOBILES LIMITED [Amalgamated] CIN = U34100WB1984PLC038001

Company & Directors' Information:- UMIYA AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50100GJ2005PTC047109

Company & Directors' Information:- A AND S AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U51103DL1997PTC085147

Company & Directors' Information:- M. H. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50200HP2015PTC000946

Company & Directors' Information:- R. K. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U74899DL1995PTC071719

Company & Directors' Information:- R. J. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50100BR2020PTC047409

Company & Directors' Information:- M R AUTOMOBILES (INDIA) PRIVATE LIMITED [Active] CIN = U34300DL1998PTC094488

Company & Directors' Information:- V. M. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U35911UP1995PTC018136

Company & Directors' Information:- P D AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50400RJ2021PTC074633

Company & Directors' Information:- A R AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U50404PY2011PTC002555

Company & Directors' Information:- K P V AUTOMOBILES PVT LTD [Active] CIN = U50300KL1991PTC006035

Company & Directors' Information:- J B S AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U34101OR2005PTC008397

Company & Directors' Information:- S. N. S. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50500WB2018PTC224868

Company & Directors' Information:- M P AUTOMOBILES PVT LTD [Strike Off] CIN = U50404MP1957PTC000842

Company & Directors' Information:- G. E. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50400DL2018PTC341171

Company & Directors' Information:- P K AUTOMOBILES PVT LTD [Strike Off] CIN = U50300UP1979PTC004841

Company & Directors' Information:- P L AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50300RJ2014PTC046516

Company & Directors' Information:- S G K R AUTOMOBILES PRIVATE LIMITED [Active] CIN = U60210TN1960PTC004283

Company & Directors' Information:- N R AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U50400MH2014PTC255882

Company & Directors' Information:- S. N. J. AUTOMOBILES PRIVATE LIMITED [Active] CIN = U50400MH2017PTC299238

Company & Directors' Information:- M R K AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U50102UP2011PTC045868

Company & Directors' Information:- I B AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U29253DL2008PTC172205

Company & Directors' Information:- T K AUTOMOBILES PRIVATE LIMITED [Active] CIN = U74899DL1984PTC017940

Company & Directors' Information:- V R AUTOMOBILES PRIVATE LIMITED [Active] CIN = U34200DL2007PTC170076

Company & Directors' Information:- K T AUTOMOBILES PVT LTD [Strike Off] CIN = U99999UP1959PTC002730

Company & Directors' Information:- M B AUTOMOBILES PVT LTD [Strike Off] CIN = U35923WB1966PTC026743

Company & Directors' Information:- B M AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U50200DL2007PTC162611

Company & Directors' Information:- H A AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U34102DL2007PTC163030

Company & Directors' Information:- P A AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U34101DL2007PTC161483

Company & Directors' Information:- K G AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U34200DL2007PTC162859

Company & Directors' Information:- P R AUTOMOBILES PRIVATE LIMITED [Strike Off] CIN = U34201DL2007PTC161053

Company & Directors' Information:- AUTOMOBILES PVT. LTD. [Strike Off] CIN = U99999DL2000PTC000916

    ITA No. 2740/Ahd of 2016

    Decided On, 31 August 2018

    At, Income Tax Appellate Tribunal Ahmedabad

    By, THE HONOURABLE MR. RAJPAL YADAV
    By, JUDICIAL MEMBER & THE HONOURABLE MR. WASEEM AHMED
    By, ACCOUNTANT MEMBER

    For the Appellant: Mehul S. Thakker, AR. For the Respondent: Apoorva Bhardwaja, Sr.DR.



Judgment Text

Rajpal Yadav, Judicial Member:

1. Present appeal is directed at the instance of the assessee against order of ld.CIT(A), Gandhinagar, Ahmedabad dated 22.8.2016 for the assessment year 2013-14.

2. In the first ground of appeal, the assessee has pleaded that the ld.CIT(A) has erred in confirming the disallowance of interest expense amounting to Rs.13,20,000/-.

3. Brief facts of the case are that the assessee firm at the relevant time was an authorised dealer of two wheelers of Hero Motocarp. It has filed its return of income electronically on 28.9.2013 declaring total income at Rs.29,23,680/-. On scrutiny of the accounts, it revealed to the AO that the assessee has advanced a sum of Rs.1.10 crores to Shri Chandrakant Tulsibhai Patel on which no interest was charged by it. He confronted the assessee as to why a notional interest on the above loan should not be calculated and disallowed out of interest expenses claimed by the assessee. The assessee filed its submissions, which have been reproduced by the AO. The ld.AO, thereafter assigned seven reasons for holding that interest income on such advances ought to be calculated by the assessee. In other words, he held that the assessee has misused interest bearing funds by making interest free advances to Shri Chandrakant Tulsibhai Patel. Accordingly disallowance of Rs.13.20 lakhs was made which has been upheld by the ld.CIT(A).

4. With the assistance of the ld.representatives, we have gone through the record carefully. Apart from other submissions; that loans were given for the purpose of business, in the past interest was charged by the assessee for F.Y.2010-11 and 2011-12, this year it was not charged on account weak financial position of Shri Chandrakant Tulsibhai Patel. It was pointed out that a sum of Rs.2,95,84,048/- was available in the shape of interest free capital. Our attention was drawn to page no.46 of the paper book wherein capital contribution by Shri Jaswantbhai N. Patel, Manubhai N. Patel and Rajendrakumar N. Patel is available. It is also demonstrated that the accounts out of which such advances were given, had never been a negative balance except on the first advances of Rs.35lakhs given on 27.4.2010. It was a cash credit account and interest liability in this account was of Rs.1.00 lakh. Thus, it was demonstrated before us that interest bearing funds were not used by the assessee for making such advances. On the other hand, the ld.DR relied upon the order of the Revenue authorities.

5. On due consideration of the above facts, we are of the view that the assessee has sufficient interest free funds available, out of which it could be assumed that these advances were given to Shri Chandrakant Tulsibhai Patel. Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities P.Ltd. reported in 313 ITR 340 has considered almost similar situation and held that if an assessee demonstrates availability of sufficient interest free funds which can take care of alleged advancement of interest free loans, then it is to be assumed that such advances were given out of interest free funds. Considering the above details, we are of the view that no disallowance out of interest expenditure is to be made in the case of assessee. We allow first ground of appeal and delete disallowance of Rs.13,20,000/-.

6. In ground no.2, grievance of the assessee is that the ld.CIT(A) has erred in confirming the disallowance of Rs.36,212/- on the ground that payment of employees' contribution to PF & ESIC was made after due date as prescribed under the relevant Act.

7. This controversy has been silenced by the Hon'ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transport Corpn, 265 CTR 64 (Guj) wherein it is held that if Employees' Co

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ntribution towards PF and ESICI are not deposited within time limit provided in the respective Acts, i.e. Provident Fund and ESI Act, then deduction will not be admissible to the assessee. Hence, respectfully following the decision of Hon'ble High Court cited (supra), we do not find any merit in the ground of appeal. It is rejected. 8. In the result, appeal of the assessee is partly allowed.
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