The Principal Commissioner of Income-tax (Central), Ludhiana v. MBD Printographics Pvt. Ltd
[Citation -2017-LL-0808-27]

Citation 2017-LL-0808-27
Appellant Name The Principal Commissioner of Income-tax (Central), Ludhiana
Respondent Name MBD Printographics Pvt. Ltd.
Court HIGH COURT OF PUNJAB & HARYANA
Relevant Act Income-tax
Date of Order 08/08/2017
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags disallowance of interest • interest expenditure • business activity • business purpose • working capital • sister concern • share capital • legal heir
Bot Summary: Put shortly, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee is engaged in the business activity of publication and printing of books and manufacturing of paper. Subsequently, statutory notices dated 29.9.2013 and 21.11.2013 under Section 142(1) of the Act along with questionnaires were issued to the assessee followed by queries vide order sheet entries dated 6.12.2013 and 18.12.2013. Accordingly, the Assessing Officer vide assessment order dated 30.12.2013 disallowed the expenditure of 1,94,74,037/- of bank interest on CC Limit and added the same to the income of the assessee. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax for brevity the CIT. The CIT(A) vide order dated 27.2.2015 confirmed the disallowance of interest expenditure made by the Assessing Officer and dismissed the appeal. Against the order, Annexure A-II, of the CIT(A), the assessee filed an appeal before the Tribunal, who vide order dated 24.6.2016 (Annexure A- 3 of 4 ::: Downloaded on - 29-08-2017 11:01:53 ::: ITA-20-2017 -4- III) allowed the appeal and deleted the additional on account of disallowance of interest expenditure. M/s Modern Publishers, MBD House, Railway Road, Jalandhar decided on 17.4.2017 and ITA No. 31 of 2017 The Pr. Commissioner of Income Tax, Ludhiana v. M/s Malhotra Book Depot, MBD House, Railway Road, Jalandhar decided on 23.2.2017 wherein the appeals filed by the revenue on similar issues have been dismissed. In view of the above, both the appeals are dismissed.


ITA-20-2017 (O&M) -1- IN HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-20-2017 (O&M) Date of Decision: 8.8.2017 Principal Commissioner of Income Tax (Central), Ludhiana ....Appellant. Versus M/s MBD Printographics Pvt. Ltd., Jalandhar ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE AMIT RAWAL. PRESENT: Mr. Rajesh Katoch, Senior Standing Counsel for appellant. Mr. Pankaj Jain, Senior Advocate with Mr. Sachin Bhardwaj, Advocate for respondent. AJAY KUMAR MITTAL, J. 1. This order shall dispose of two appeals bearing ITA-20 and 21- 2017 as according to learned counsel for parties, similar issues arise for consideration in these appeals. For brevity, facts are being extracted from ITA-20-2017. 2. ITA-20-2017 has been filed by revenue under Section 260A of Income Tax Act, 1961 (in short Act ) against order dated 24.6.2016 (Annexure A-III) passed by Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as Tribunal ) in ITA No. 195(Asr)/2015 for assessment year 2011-12, claiming following substantial questions of law:- 1 of 4 ::: Downloaded on - 29-08-2017 11:01:52 ::: ITA-20-2017 (O&M) -2- (i) Whether on facts and in circumstances of case, Hon'ble Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has erred in deleting addition of ` 1,94,74,037/- on account of disallowance of interest expenditure, ignoring specific finding of CIT(A) that assessee had not even attempted to show that investments in sister concerns served any business purpose? (ii) Whether on facts and in circumstances of case, Hon'ble Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has erred in deleting addition of ` 1,94,74,037/- on account of disallowance of interest expenditure without appreciating finding of CIT(A) that funds raised on interest for working capital requirements had to be raised to make up for shortfall caused by interest free investments in sister concerns which did not serve any business purpose for assessee company? (iii) Whether Hon'ble ITAT, while allowing relief to assessee, has erred in law in ignoring important issue that investment made by assessee in shape of 'Share Application Money' in those sister concerns, share capital of which was almost fully subscribed, was colorable 2 of 4 ::: Downloaded on - 29-08-2017 11:01:53 ::: ITA-20-2017 (O&M) -3- transaction of interest free loans/advances to its sister concerns and such colorable transactions are not permissible in eyes of law? 2. Put shortly, facts necessary for adjudication of present appeal as narrated therein are that assessee is engaged in business activity of publication and printing of books and manufacturing of paper. assessee filed its return of income electronically on 30.9.2011 declaring total income at ` (-) 1,64,95,079/-. case was selected for scrutiny under CASS and notice dated 28.8.2012 under Section 143(2) of Act was issued. Subsequently, statutory notices dated 29.9.2013 and 21.11.2013 under Section 142(1) of Act along with questionnaires were issued to assessee followed by queries vide order sheet entries dated 6.12.2013 and 18.12.2013. During course of assessment proceedings, it was noticed that amount of ` 67,25,52,955/- was standing as investments in various related sister concerns but assessee had not received any interest to its sister concern in shape of 'Share Application Money'. assessee had claimed expenditure on account of bank interest. Accordingly, Assessing Officer vide assessment order dated 30.12.2013 (Annexure A- I) disallowed expenditure of ` 1,94,74,037/- of bank interest on CC Limit and added same to income of assessee. Feeling aggrieved, assessee filed appeal before Commissioner of Income Tax (Appeals) [for brevity CIT (A) ]. CIT(A) vide order dated 27.2.2015 (Annexure A-II) confirmed disallowance of interest expenditure made by Assessing Officer and dismissed appeal. Against order, Annexure A-II, of CIT(A), assessee filed appeal before Tribunal, who vide order dated 24.6.2016 (Annexure A- 3 of 4 ::: Downloaded on - 29-08-2017 11:01:53 ::: ITA-20-2017 (O&M) -4- III) allowed appeal and deleted additional on account of disallowance of interest expenditure. Hence, present appeals by revenue. 3. We have heard learned counsel for parties. 4. It is not disputed by learned counsel for revenue that issue raised herein stands concluded by decisions of this Court in ITA No. 163 of 2017 [The Pr. Commissioner of Income Tax (Central), Ludhiana v. Shri Satish Bala Malhotra, Legal Heir of Shri Ashok Kumar Malhotra, Prop. M/s Modern Publishers, MBD House, Railway Road, Jalandhar] decided on 17.4.2017 and ITA No. 31 of 2017 [The Pr. Commissioner of Income Tax (Central), Ludhiana v. M/s Malhotra Book Depot, MBD House, Railway Road, Jalandhar] decided on 23.2.2017 wherein appeals filed by revenue on similar issues have been dismissed. 5. In view of above, both appeals are dismissed. (AJAY KUMAR MITTAL) JUDGE August 8, 2017 (AMIT RAWAL) gbs JUDGE Whether Speaking/Reasoned Yes Whether Reportable Yes 4 of 4 ::: Downloaded on - 29-08-2017 11:01:53 ::: Principal Commissioner of Income-tax (Central), Ludhiana v. MBD Printographics Pvt. Ltd
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