DINESH B POKHRIYAL,KALYAN V. ITO WARD(2) PANVEL, PANVEL

ITA 2396/PUN/2024

AI Insights

The case involves Dinesh B. Pokhriyal, who appealed against the order of the CIT(A)/NFAC confirming the disallowance of interest expenditure of Rs.8,61,629 claimed on bank interest related to FDRs. The assessee had previously run a business under the name M/s Garhrwal Chemicals, which ceased operations in FY 2008-09. However, the financial transactions related to the business continued, including the interest payments on a cash credit account with Federal Bank. The Tribunal found that the interest expenditure claimed was justifiably related to the income from the FDRs and should be allowed.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 832254 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 14-11-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHASHANK OJHA VIRTUAL
• Assessee Lawyers: DINESH B. POKHRIYAL SELF
• Section: 143(3); 142(1); 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.2396/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2010-11 Dinesh B. Pokhriyal, Flat No.306, 3rd Floor, Cypress Building, Vasant Valley, Khadakpada, Kalyan(w)- 421301. PAN : AERPP9652C Vs. ITO, Ward- 2, Panvel. Appellant Respondent आदेश / ORDER PER MANISH BORAD, AM: This appeal filed at the instance of assessee is directed against the order of Ld. CIT(A)/NFAC dated 18.10.2024 which is arising out of the assessment order u/s 143(3) of the Act for Assessment Year 2010-11 framed on 28.03.2013 by the ITO, Ward-2, Panvel. 2. The assessee has raised multiple grounds of appeal raising legal issues challenging the validity of the assessment proceedings Assessee by : Shri Dinesh B. Pokhriyal (Self) Revenue by : Shri Shashank Ojha (Virtual) Date of hearing : 13.01.2026 Date of pronouncement : 19.01.2026 Printed from counselvise.com ITA No.2396/PUN/2024 2 and also raised the grounds on merit against the disallowance of interest expenditure claimed at Rs.8,61,629/-. 3. At the outset, during the course of hearing, Ld. assessee requested for not pressing the legal grounds challenging the validity of the assessment proceedings in question, therefore, the same are dismissed as not pressed. 4. Now, I take up the sole grievance of the assessee raised against the findings of Ld. CIT(A)/NFAC confirming the action of Ld. Assessing Officer disallowing the interest expenditure of Rs.8,61,629/-. 5. Brief fact of the case are that the assessee is an individual and declared income of Rs.8,26,819/- in the return of income for A.Y. 2010-11 filed on 30.07.2010. The case selected for scrutiny through CASS followed by serving of statutory notices u/s 143(2) and 142(1) of the Act. During the course of assessment proceedings, Ld. Assessing Officer called for various details and in response submissions were filed by the assessee, however Ld. Assessing Officer makes certain additions/disallowances amounting to Rs.14,46,409/- and assessed the total income at Rs.22,73,230/-. Printed from counselvise.com ITA No.2396/PUN/2024 3 6. Aggrieved with the above finding of the Assessing Officer, the assessee preferred an appeal before Ld. CIT(A)/NFAC but he partly succeeded. Now, the assessee is in appeal before this Tribunal against the findings of Ld. CIT(A)/NFAC confirming the disallowance of interest expenditure of Rs.8,61,629/- claimed by the assessee against the bank interest on FDR. 7. Ld. assessee submitted that he has been carrying on the business of chemicals under the sole proprietary concern, M/s Garhrwal Chemicals, Plot No.17/39, MIDC, Chemical Zone, Taloje, Panvel, Dist. Raigad upto financial year 2008-09 and for the purpose of carrying business, cash credit limits taken from bank against the bank FDR. He also submitted that the business closed during the financial year 2008-09, however the liability of interest payable on the bank cash credit limits crystallize during the year and the alleged sum is on account of said bank interest and the same has been claimed against the income from bank FDR and deserves to be allowed. 8. On the other hand, Ld. Departmental Representative submitted that the assessee has not carrying on any business during the year Printed from counselvise.com ITA No.2396/PUN/2024 4 and therefore, the said alleged claim has rightly been denied by Ld. CIT(A)/NFAC. 9. I have heard rival contentions and perused the records placed before me. The submission of the assessee is that the bank interest paid during the year at Rs.8,61,629/- deserves to be allowed against the FDR interest, I observe that in the return of income the assessee has shown bank FDR interest of Rs.16,13,394/- earned against Fixed Deposits held with SBI, Kalyan, Indian Bank, Kalyan and Federal bank, Dombivali. In the computation of income, the assessee has claimed bank interest expenditure of Rs.8,61,628/- paid on the cash credit account held with Federal Bank. Admittedly, there is no dispute to the fact that the assessee has been carrying on business of chemical under the sole proprietary concern, M/s Garhrwal Chemicals. It is also stated that in the past upto A.Y. 2009-10 assessee has filed income tax return along with audited financial statements of the sole proprietary concern, the business of which closed during the financial year 2008-09. The fact that the assessee was having the cash credit account with Federal bank stands acknowledged by Ld. Assessing Officer who called for information u/s 133(6) of the Act from the said bank. Further, the Printed from counselvise.com ITA No.2396/PUN/2024 5 assessee in its written submissions filed before lower authorities has demonstrated that even though the business of M/s Garhrwal Chemicals was closed for financial year 2008-09, however, there were outstanding creditors which were paid off during the year and the interest paid during the financial year 2009-10 on the cash credit limit held with Federal Bank. 10. I find that though the assessee has declared the income under the head ‘Income from other sources’, however facts indicate that the bank FDR interest as well as interest paid on cash credit account are part of the business transactions of the erstwhile chemicals business carried by the assessee and even though it has been shown in the income tax return under the head ‘Income from other sources’ but the fact remains that the assessee is eligible for bank cash credit account interest expenditure of Rs.8,61,629/- against the gross interest received on bank FDR. I therefore under the given facts and circumstances of the case set-aside the findings of Ld. CIT(A)/NFAC, delete the impugned disallowance and allow the claim of interest expenditure of Rs.8,61,629/- claimed against the gross bank FDRs interest income shown by the assessee in the Printed from counselvise.com ITA No.2396/PUN/2024 6 income tax return and allow the grounds of appeal raised on merits raised by the assessee. 11. In the result, the appeal of the assessee is partly allowed as per the above terms. Order pronounced on this 19th day of January, 2026. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 19th January, 2026. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “SMC” बᱶच, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. Printed from counselvise.com "