M/S Commercial Installments, Kanpur vs Department Of Income Tax

Dy.C.I.T.-II, Vs M/s Commercial Installments, Kanpur. 84/105, G. T. Road, Kanpur. PAN:AABFC5043J (Appellant) (Respondent)

Appellant by Shri C. P. Singh, D. R. Respondent by None Date of hearing 16/12/2014 Date of pronouncement 23/01/2015

ORDER

PER A. K. GARODIA, A.M.

This is Revenue's appeal directed against the order passed by learned CIT(A)-II, Dehradun holding concurrent charge of CIT(A)-II, Kanpur dated 31/01/2014 for the assessment year 2005-2006.

2. In this appeal, the Revenue has raised the following grounds:

"1. The Ld. Commissioner of Income Tax (Appeals)-II, Dehradun holding concurrent charge of Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the addition of Rs.24,85,625/- made by the Assessing Officer on account of disallowance of interest by ignoring the fact that there was no business expediency between the assessee and its sister concerns whose shares were purchased by the assessee.

2 2. Ld. Commissioner of Income Tax (Appeals)-II, Dehradun holding concurrent charge of Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the addition of Rs.24,85,625/- made by the Assessing Officer, without bring out any factual finding with regards to as to how the assessee derived the impugned shares of its sister concerns from existing capital and profits available at that point of time.

3. The order of the Ld. Commissioner of Income Tax (Appeals)-II, Dehradun holding concurrent charge of Commissioner of Income Tax (Appeals)-II, Kanpur dated 31.01.2014 being erroneous in law and on facts, be vacated and the order dated 31.12.2007 passed under section 143 (3) of Income Tax Act, 1961 by the Assessing Officer be restored."

3. None appeared on behalf of the assessee on the appointed date of hearing in spite of notice and hence, we proceed to decide this appeal of the Revenue ex-parte qua the assessee.

4. Learned D.R. of the Revenue supported the orders of the authorities below.

5. We have considered the submissions of Learned D.R. of the Revenue, perused the material available on record and gone through the orders of the authorities below. We find that disallowance was made by the Assessing Officer of Rs.24,85,625/- in respect of interest expenditure for making investment in shares. This disallowance was deleted by CIT(A) on the basis that the funds used for buying the impugned shares were derived from existing capital and profits available at that time. For giving this finding, the CIT(A) has not given the quantum of such own funds available with the assessee at the time of acquisition of shares and the amount of investment in shares. Under these facts, we are of the considered opinion that the order of CIT(A) is not sustainable but at the 3

same time, we also feel that the matter should go to the file of CIT(A) for fresh decision by way of passing speaking and reasoned order. We, therefore, set aside the order of CIT(A) and restore the matter to his file for fresh decision. The CIT(A) should give clear finding as to what is the date of acquisition of shares and how much own funds were available on that date in the form of liquid funds for making investment in shares. The CIT(A) should pass necessary order as per law after providing reasonable opportunity of being heard to both the sides.

6. In the result, the appeal of the Revenue stands allowed for statistical purposes.

(Order was pronounced in the open court on the date mentioned on the caption page)

Sd/. Sd/.

(SUNIL KUMAR YADAV) ( A. K. GARODIA ) Judicial Member Accountant Member

Dated:23/01/2015. *C.L.Singh

Copy of the order forwarded to : 1.The Appellant 2.The Respondent. 3.Concerned CIT 4.The CIT(A) 5.D.R., I.T.A.T., Lucknow Asstt. Registrar