COMMISSIONER OF INCOME TAX

High Court of Punjab and Haryana, Chandigarh

Indian Supreme Court Cases / Judgements / Legislation

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COMMISSIONER OF INCOME TAX-I, LUDHIANA v. M/S VARINDER AGRO CHEMICALS LTD. - ITA-327-2004 [2006] RD-P&H 5223 (4 August 2006)

I.T.A.No.327 of 2004 [1]

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA NO. 327 OF 2004

DATE OF DECISION: 17.08.2006

COMMISSIONER OF INCOME TAX-I, LUDHIANA

....APPELLANT

VERSUS

M/S VARINDER AGRO CHEMICALS LTD.

....RESPONDENT

CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL

PRESENT: MR. S.K. GARG NARWANA, ADVOCATE FOR THE APPELLANT

MS. RADHIKA SURI, ADVOCATE

FOR THE RESPONDENT

Rajesh Bindal, J.

This is an appeal filed by the Revenue raising following substantial questions of law, arising out of order dated 26.5.2004 passed by the Income-Tax Appellate Tribunal, Chandigarh Bench 'A', (for short 'the Tribunal'), for the assessment year 1993-94: "i) Whether on the facts and circumstances of the case, the Hon'ble Income tax Appellate Tribunal was justified in law in deleting the disallowance of Rs. 7,74,940/- made on account of interest on interest free advances given to sister concern for non-business purposes ? ii) Whether on the facts and circumstances of the case, the Hon'ble Income tax Appellate Tribunal was justified in deleting the disallowance of Rs. 69,981/- made on account of disallowance out of festival expenses incurred by the assessee?"

During the year in question the assessee incurred interest liability of Rs. 1,29,82,129/- on total outstanding loan of Rs. 348581975/-.

The facts of the present case are identical to the facts in the assessee's own case for the assessment year 1994-95, wherein following the I.T.A.No.327 of 2004 [2]

judgment of this Court in I.T.A.No. 110 of 2005 ­ Commissioner of Income Tax-I, Ludhiana v. M/s Abhishek Industries Ltd. Ludhiana, decided on 4.8.2006, we have held that the interest on the interest free advances made for non business purposes to sister concern are to be disallowed.

Following the same, we accepted the appeal of the Revenue and set aside the order of the Tribunal and disallow the claim of interest to the extent of Rs. 7,74,940/- on account of interest on interest free advances to the sister concerns.

As far as question No. (ii) is concerned, in the case of the assessee for the assessment year 1992-93, the issue has been decided against the revenue and in favour of the assessee. The facts of the present case are identical to the facts of the case for the assessment year 1992-93. Rather, the Tribunal had decided the appeal by a common order for the assessment years 1992-93 and 1993-94. Accordingly, it is held that the Tribunal was justified in deleting the disallowance of festival expenses.

The appeal is disposed of in the manner indicated above.

(RAJESH BINDAL)

JUDGE

August 17, 2006 (ADARSH KUMAR GOEL)

gsv/mk JUDGE

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