M/s Rahul Agritech Pvt. Ltd. v. DCIT , Khandwa
[Citation -2016-LL-1006-54]

Citation 2016-LL-1006-54
Appellant Name M/s Rahul Agritech Pvt. Ltd.
Respondent Name DCIT , Khandwa
Court ITAT-Indore
Relevant Act Income-tax
Date of Order 06/10/2016
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags interest free advance • individual capacity • interest free fund • common hotchpotch • rate of interest • working capital • unsecured loan • share capital • interest paid
Bot Summary: This is the clear cut case of diverting the interest bearing funds for advancing the same on lesser rate of interest or without interest i.e. utilization of fund for other than business purposes. 3 M s Rahul Agritech ITA No. 851 Ind 2016 interest of Rs.15,10,204 - as above is disallowance and shall be added to the income of the assessee. The learned counsel for the assessee submitted that the assessee has substantial interest free fund in the form of share capital, reserve and surplus and unsecured loan from the current liabilities. The assessee has paid interest on working capital loan borrowed for non-business purposes. There cannot be uniform rate of interest in case of all loans and advances. The borrowed funds constitute 69 of total fund. The learned CIT(A) presumed that the interest free advance has 69 component interest bearing fund.


M s Rahul Agritech ITA No. 851 Ind 2016, IN INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE, BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER . . . I.T.A. No. 851 Ind 2016 Assessment Year: 2011-12 M s Rahul Agritech Pvt. Ltd. Burhanpur PAN AAECA 4445J :: Appellant Vs DCIT KHANDWA :: Respondent Revenue by Shri SN Agrawal & Pankaj Mogra Assessee by Shri R.P. Mourya 6.10.2016 Date of hearing 6.10.2016 Date of pronouncement ORDER PER SHRI D.T. GARASIA, JM This appeal has been filed by assessee against order of learned CIT(A)-22,New Delhi, Camp at Indore, dated 15.6.2016. 1 M s Rahul Agritech ITA No. 851 Ind 2016 2. short facts of case are that assessee is private limited company doing business of soya oio, F.P. Cotton bales, Toor, Mustard, Cotton seed and commodities future business. assessee filed return of income on 27.9.2011. During year, Assessing Officer found as under :- 3.1 During course of assessment proceedings it is noticed that assessee has advanced interest bearing funds to some of persons from which either interest is charged on lesser rate than interest paid by assessee on loans taken i.e. @ 12%. Therefore, this is clear cut case of diverting interest bearing funds for advancing same on lesser rate of interest or without interest i.e. utilization of fund for other than business purposes. table giving details where interest either not charged or charged on 2 M s Rahul Agritech ITA No. 851 Ind 2016 lesser rate and working of disallowance is given as under : Name of Period Int. 12% Int. charted Less Intt. concerned @ 9% Charted Nayasa World, 365 days 23,53,150 17,64,863 5,88,287 Mumbai Aar Ess 365 days 1,81,478 1,36,110 45,370 Commodities Pvt. Ltd., Delhi Bhandari 365 days 2,07,743 Not charged 2,07,743 Hospital & Research Centre Kamal Krishna 365 days 33,544 Not charged 33,544 Agrotech Asthlaxmi 90 days 1,530 Not charged 1,530 Power Company Pvt. Ltd. Resurgent India 365 days 1,92,000 Not charged 1,92,000 Pvt. Ltd., New Delhi M s Shri Omkar 365 days 2,79,620 2,09,715 69,905 Enterprises Coal Company Arvindo 365 days 2,2,9,142 1,90,952 38,190 Ins.Management K.K.Oil Refinery 365 days 8,89,963 5,56,068 3,33,635 Total 15,10,204 3.2 Therefore, it is deemed that assessee has diverted interest bearing funds for advancing same without interest or interest on lesser side. Therefore, 3 M s Rahul Agritech ITA No. 851 Ind 2016 interest of Rs.15,10,204 - as above is disallowance and shall be added to income of assessee. Penalty proceedings u s 271(1) are initiated for furnishing inaccurate particulars of her income. matter was carried in appeal before learned CIT(A) and learned CIT(A) partly allowed same. Now assessee is in appeal before Tribunal. 3. learned counsel for assessee submitted that assessee has substantial interest free fund in form of share capital, reserve and surplus and unsecured loan from current liabilities. assessee has paid interest on working capital loan borrowed for non-business purposes. 4. On other hand, learned DR relied upon orders of authorities below. 5. 4 M s Rahul Agritech ITA No. 851 Ind 2016 6. We have considered submissions of both sides. We find that assessee has charged and paid interest @ 9% and also 15%. There cannot be uniform rate of interest in case of all loans and advances. total advance in respect of four persons comes to Rs.4,34,817 -. total borrowed funds are Rs.26.44 crores and share capital and reserve constitutes 11.75%. Therefore, borrowed funds constitute 69% of total fund. In absence of specific fund flow from all firms of common hotchpotch, funds in Individual capacity is lost. learned CIT(A) presumed that interest free advance has 69% component interest bearing fund. Therefore, disallowance was rightly reduced to 69% of Rs.4,34,817 - i.e. Rs.3,00,024 -. Our interference is, therefore, not called for. 7. In result, appeal of assessee is dismissed. 5 M s Rahul Agritech ITA No. 851 Ind 2016 order has been pronounced in open Court on 6th October, 2016. (O.P.Meena) (D.T.Garasia) Accountant Member Judicial Member Dated : October, 2016. Dn 6 M s Rahul Agritech ITA No. 851 Ind 2016 order has been pronounced in open Court on 6th October, 2016. Sd sd (O.P.Meena) (D.T.Garasia) Accountant Member Judicial Member Dated : 6th October, 2016. Dn 7 M/s Rahul Agritech Pvt. Ltd. v. DCIT , Khandwa
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