Smt. Maya Mittal, Agra V. Dy. C.I.T.-4(1), Agra

CO 27/AGR/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6912 (ITAT-AGRA)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 12-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.99/AGR/2011 ASSESSMENT YEAR: 2003-04 DY. COMMISSIONER OF INCOME TAX 4(1), VS. SMT. MAYA MITTAL, AGRA. 62-B, NEHRU NAGAR, AGRA. (PAN: AAUPM 8414 C). C.O. NO.27/AGR/2011 (IN ITA NO.99/AGR/2011) ASSESSMENT YEAR: 2003-04 SMT. MAYA MITTAL, VS. DY. COMMISSION ER OF INCOME TAX 4(1), 62-B, NEHRU NAGAR, AGRA. AGRA. (PAN: AAUPM 8414 C). (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI A.K. SHARMA, JR. D.R. ASSESSEE BY : SHRI SAHIB P. SATSANGEE, C.A. DATE OF HEARING : 14.03.2012 DATE OF PRONOUNCEMENT : 23.03.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION B Y THE ASSESSEE HAVE BEEN FILED AGAINST THE ORDER DATED 17.01.2011 PASSE D BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMENT YEAR 2003-04. ITA NO.99/AGR/2011 & CO 27/AGR/2011 A.Y. 2003-04 2 2. THE GROUNDS TAKEN IN CROSS OBJECTION IS IN SUPPO RT OF CIT(A)S ORDER. LD. AUTHORISED REPRESENTATIVE REQUESTED THAT HE WISH TO WITHDRAW THE CROSS OBJECTION FILED BY THE ASSESSEE. THEREFORE, THE SAME IS DISM ISSED AS WITHDRAWN. 3. THE REVENUE HAS RAISED AS MANY AS 6 GROUNDS OF A PPEAL. BUT THE EFFECTIVE GROUND IS IN RESPECT OF DELETION OF ADDITION OF RS. 11,25,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS TRANSACTION O F SHARES. 4. THE SECOND EFFECTIVE GROUND RAISED IN REVENUES APPEAL IS IN RESPECT OF DELETION OF ADDITION OF RS.4,19,900/- OUT OF INTERE ST EXPENSES. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DERIVES INCOME FROM BUSINESS OF FINANCE & INVESTMENT AND MANUFACTURING AND TRADI NG OF PVC PIPES. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAIN AMOUNTING TO RS.10,2 0,070/- ON SALE OF 12500 SHARES OF SUMA FINANCE & INVESTMENT LIMITED THROUGH THE BROKER M/S. S.J. CAPITAL LIMITED, DELHI. THE ASSESSING OFFICER FURTHER NOTI CED THAT THE SHARES WERE PURCHASED ON 13 TH JULY, 2001 @ RS.8/- PER SHARE FOR RS.1,00,000/- TH ROUGH THE BROKER M/S. AGARWAL & COMPANY AND SOLD @ RS.90/- PE R SHARE ON 27 TH SEPTEMBER, 2002 FOR RS.11,25,000/-. THE ASSESSING OFFICER ALL EGED THAT THE SALE OF SHARES WAS ITA NO.99/AGR/2011 & CO 27/AGR/2011 A.Y. 2003-04 3 ASSESSEES OWN MONEY AND HELD THAT SALE AND PURCHAS E OF SHARES WAS BOGUS. THE CIT(A), ON IDENTICAL SET OF FACTS, FOLLOWED A DECIS ION OF I.T.A.T., AGRA BENCH IN THE CASE OF RAJESH KUMAR GARG VS. ITO-4(4), AGRA IN ITA NO.254/AGR/2005 ORDER DATED 31.03.2009 AND ALLOWED THE CLAIM OF THE ASSES SEE. THE CIT(A) ALSO RELIED UPON THE JUDGMENT OF ALLAHABAD HIGH COURT IN THE CA SE OF CIT VS. NITIN GUPTA IN ITA NO.84 OF 2010 ORDER DATED 03.12.2010 AND CIT VS . SHUBHAM GUPTA IN ITA NO.260 OF 2009 ORDER DATED 18.11.2010. 6. THE CONTENTION OF THE REVENUE WHICH HAS BEEN RAI SED IN THE STATEMENT OF FACTS ITSELF THAT THOUGH THE CIT(A) HAS FOLLOWED TH E ORDER OF I.T.A.T. BUT THE REVENUE DID NOT ACCEPT THE ORDER OF I.T.A.T. AND PR EFERRED APPEAL BEFORE THE ALLAHABAD HIGH COURT. THOUGH IT IS STATED THAT THE GROUNDS OF APPEAL AND THE FACTS ARE DIFFERENT THAN THE CASE ON WHICH THE CIT(A) HAS RELIED UPON, BUT AT THE TIME OF HEARING, THE REVENUE HAS FAILED TO POINT OUT ANY FA CT WHICH IS DIFFERENT THAN THE FACT ON WHICH THE I.T.A.T. HAS DECIDED THE ISSUE. SINCE ON IDENTICAL SET OF FACTS THE CIT(A) HAS FOLLOWED THE ORDER OF I.T.A.T. IN THE CA SE OF RAJESH KUMART GARG VS, ITO-4(4) (SUPRA), IN THE LIGHT OF THE FACT, WE DO N OT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE. THE ORDER OF CIT(A) IS C ONFIRMED ON THE ISSUE. ITA NO.99/AGR/2011 & CO 27/AGR/2011 A.Y. 2003-04 4 7. IN RESPECT OF SECOND GROUND WHICH IS PERTAINING TO DELETION OF ADDITION OF RS.4,19,900/- OUT OF INTEREST EXPENSES, THE BRIEF F ACTS NOTICED ARE THAT THE ASSESSEE CLAIMED INTEREST EXPENDITURE PAID TO DIFFERENT PART IES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH COPY OF ACCOUNT OF ALL SUCH PARTIES TO WHOM INTEREST HAS BEEN PAID AND TO PROVE THE NEXUS BETWEEN THE LOANS TAKEN FROM THEM AND UTILIZATION OF THE SAME FOR THE PURPOSE OF FINANCE BUSINESS. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE DID NOT UTILIZE BORROWED FUNDS FOR THE PURPOSE OF FINANCE BUSINESS. THEREFORE, THE CLAIM OF INTEREST PAID BY THE ASSESSEE AGAINST THE INTEREST ISSUED BY THE ASSESSEE IS NOT ACCEPTABLE. THE ASSE SSING OFFICER ACCORDINGLY DISALLOWED THE INTEREST OF RS.4,19,920/-. THE ASSE SSEE CHALLENGED THE ADDITION OF INTEREST AMOUNT OF RS.4,19,920/- AND SUBMITTED THAT THE ASSESSEE ENJOYED INCOME FROM BUSINESS CARRIED ON IN THE NAME AND STYLE OF M /S. MITTAL INDUSTRIES, M/S. MAYA TRADERS AND FINANCE BUSINESS BESIDES BEING A P ARTNER IN THE FIRM M/S. ATUL GENERATOR & COMPANY AND M/S. ATUL DEEPWELL & HAND P UMPS IT WAS ALSO SUBMITTED THAT THE INTEREST HAS BEEN PAID ON BORROW ING WHICH HAS BEEN INVESTED IN THE SOLE PROPERTY BUSINESS NAMELY M/S. MITTAL INDUS TRIES AND M/S MAYA TRADERS. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION AND H ELD THAT THE ASSESSING OFFICER HAS OVERRULED THE FACT THAT THE ASSESSEE WAS ALSO A SOLE PROPRIETOR OF M/S MITTAL INDUSTRIES AND M/S. MAYA TRADERS WHEREIN THE BORROW ED FUNDS HAVE BEEN UTILIZED. ITA NO.99/AGR/2011 & CO 27/AGR/2011 A.Y. 2003-04 5 THE CIT(A) WAS OF THE VIEW THAT THE NO DISALLOWANCE IS WARRANTED. THEREFORE, HE DELETED THE SAID ADDITION. 8. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE CIT(A) ACCEPTED THE FOLLOWING EXPLANATION OF TH E ASSESSEE WHICH HAS NOT BEEN CONTROVERTED BEFORE US :- THE LEARNED ASSESSING OFFICER IN MAKING THE DISALL OWANCE RS.4,19,920/- WORKED OUT AS UNDER :- INTEREST/BROKERAGE PAID AS PER FINANCE BUSINESS 4, 88,096 LESS: INTEREST EARNED 68,176 EXCESS INTEREST PAID DISALLOWED 4,19,920 HE HAS IGNORED THAT THE INTEREST HAS BEEN PAID ON T HE BORROWING WHICH HAVE BEEN INVESTED IN THE SOLE PROPRIETARY BU SINESS NAMELY M/S MITTAL INDUSTRIES AND M/S MAYA TRADERS. THE ASSESS EE HAS INVESTED THE BORROWED FUNDS IN HER PROPRIETORY CONCERN M/S. MITTAL INDUSTRIES WHEREIN SHE HAS EARNED A PROFIT RS.6,63,084/-. CON SIDERING THE ABOVE FACTS, THE CORRECT POSITION WILL EMERGE AS UNDER - NET PROFIT OF M/S MITTAL INDUSTRIES 6,63,084/- NET LOSS OF M/S MAYA TRADERS 66,381 NET SURPLUS FROM PROPRIETARY CONCERNS 5,96,703 THE LEARNED ASSESSING OFFICER WHILE MAKING THE DISA LLOWANCE HAS IGNORED THE SUBMISSIONS OF THE APPELLANT THAT THE A PPELLANT IS ENGAGED IN FINANCE BUSINESS SINCE LAST DECADE AND THE AMOUN T ON WHICH THE INTEREST PAID WAS OLD BALANCES. DURING THE YEAR UN DER CONSIDERATION, THE ASSESSEE FINANCED AMOUNTS AND EARNED INTEREST T HEREON AND HAD PAID INTEREST ON BORROWED FUNDS UTILISED WHOLLY AND EXCLUSIVELY FOR THE ASSESSEES BUSINESS. CONSIDERING THE NET SURPLUS F ROM PROPRIETARY ITA NO.99/AGR/2011 & CO 27/AGR/2011 A.Y. 2003-04 6 CONCERNS, WHEREIN THE ASSESSEE HAS INVESTED THE BOR ROWED FUND, THE POSITION WILL EMERGE AS UNDER - NET SURPLUS FROM PROPRIETARY CONCERNS 5,96,703 DISALLOWANCE MADE IN FINANCE BUSINESS 4,19,920 NET PROFIT FROM BUSINESS 1,76,783 9. FROM THE DETAILED DISCUSSIONS MADE BY THE CIT(A) , WE NOTICE THAT THE INTEREST CLAIMED BY THE ASSESSEE WAS AGAINST THE BO RROWED FUNDS USED FOR THE PURPOSE OF BUSINESS. THEREFORE, THE SAME IS ALLOWA BLE EXPENSES. THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY MATERIAL. IN THE LIGHT OF THE FACT, ORDER OF THE CIT(A) IS CONFIRMED. 10. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23.03.2012) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 23 RD MARCH, 2012 PBN/* ITA NO.99/AGR/2011 & CO 27/AGR/2011 A.Y. 2003-04 7 COPY OF THE ORDER FORWARDED TO: APPELLANT RESPONDENT CIT CONCERNED CIT (APPEALS) CONCERNED D.R., ITAT AGRA BENCH, AGRA GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY