Ritu Agarwal, Bhilwara V. ACIT, Circle, Bhilwara

ITA 101/JODH/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6299 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-07-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 19-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI A K DAS
• Keywords: Proportionate interest
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (SMC), JODHPUR BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 101/JODH/2018 (ASSESSMENT YEAR-2014-15 RITU AGARWAL PROP. M/S KANU ENTERPRISES 45, HEENA PANNA MARKET PUR ROAD, BHILWARA VS ASSTT. COMMISSIONER OF INCOME TAX CICLE BHILWARA (APPELLANT) (RESPONDENT) PAN: AFXPA5676E ASSESSEE BY SHRI HEMANT CHHAJED (CA) REVENUE BY SHRI SHRI A. K. DAS (JCIT) DR DATE OF HEARING 17/07/2018 DATE OF PRONOUNCEMENT 19/07/2018 O R D E R PER: R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), AJMER DATED 25/01/2018 FOR THE A.Y. 201 4-15 IN THE IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INC OME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT, FOR SHO RT]. THE GROUNDS RAISED BY THE ASSESSEE IN APPEAL ARE REPROD UCED AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN RESPECT OF DISALLOWANCE 2 ITA 101/JODH/2018 RITU AGARWAL, BHILWARA VS. ACIT OF PROPORTIONATE INTEREST OF RS. 155370/- OUT OF T HE TOTAL INTEREST PAYMENT OF RS. 456974/- IN THE PERSONAL CAPACITY ON HYPOTHETI CAL ASSUMPTION. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN H OLDING THE DISALLOWANCE OUT OF VARIOUS EXPENSES OF RS. 37500/- ON ARBITRARY ASSUMP TION & PRESUMPTION. 3. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 4. THE ASSESSEE CRAVES RIGHT TO ADD, ALTER, OR AMEN D ANY OF THE GROUNDS OF APPEAL. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF FABRICS AND YARN IN TH E NAME OF PROPRIETORSHIP. DURING THE COURSE OF SCRUTINY, THE ASSESSING OFFICER DISALLOWED PROPORTIONATE INTEREST OF RS. 1, 55,370/- OUT OF TOTAL INTEREST PAYMENT OF RS. 4,56,974/-. FROM THE RECORD, I FOUND THAT ASSESSEE HAD TAKEN LOAN IN PERSONAL NAME AND THEN INVESTED IT IN THE BUSINESS AS CAPITAL. 3. IN RESPECT OF CLAIM OF DEDUCTION OF INTEREST THE ASSESSEE HAS PAID. THE ASSESSING OFFICER DECLINED THE PROPOR TIONATE CLAIM ON THE PLEA THAT ENTIRE FUND WAS NOT USED FOR THE P URPOSE OF THE BUSINESS. I FOUND THAT THE TOTAL OF ASSETS OTHER TH AN THE INVESTMENT IN THE BUSINESS AMOUNTS TO RS. 7173710/- WHICH IS 3 ITA 101/JODH/2018 RITU AGARWAL, BHILWARA VS. ACIT FULLY FINANCED BY THE ASSESSEE FROM THE PNB HOUSING LOAN AND INTEREST FREE UNSECURED LOANS. 4. I ALSO FOUND THAT THE AMOUNT INVESTED IN THE PRO PRIETORSHIP IS FROM THE CAPITAL OF THE ASSESSEE AND INTEREST BE ARING AS WELL AS INTEREST FREE UNSECURED LOANS. FURTHER, THE ASSE SSEE HAS NOT TAKEN ANY NEW LOAN ON WHICH SHE HAD PAID THE INTERE ST DURING THE YEAR UNDER CONSIDERATION. ALL THESE LOANS ARE T AKEN IN THE PRECEDING YEARS AND NO NEW LOAN IS TAKEN DURING THE YEAR UNDER CONSIDERATION. THE SAME WAS DISCUSSED AND VERIFIED DURING THE PROCEEDING CARRIED U/S 143(3) FOR THE ASSESSMENT YE AR RELEVANT TO THE PRECEDING PREVIOUS YEAR AND WAS DULY ALLOWED . THE ASSESSEE PAID THE INTEREST OF RS. 456974/- AFTER DE DUCTION OF TDS ON THE VARIOUS UNSECURED LOAN TAKEN FOR INVESTM ENT IN BUSINESS BY THE ASSESSEE. 5. I ALSO FOUND THAT THE ASSESSEE HAS SUBMITTED ALL THE CONFIRMATION OF THE UNSECURED LOAN ALONG WITH THE C OPY OF INCOME TAX RETURN AND BANK STATEMENT AT THE TIME OF PROCEEDINGS CARRIED U/S 143(3) OF INCOME TAX ACT, 1 961 AND SAID UNSECURED CREDITOR SHOWED INTEREST INCOME IN T HEIR ITR. THE ASSESSMENT OF THE ASSESSEE FOR THE A.Y. 2013-14 WAS 4 ITA 101/JODH/2018 RITU AGARWAL, BHILWARA VS. ACIT CARRIED U/S 143(3) AND THE INTEREST ON THE LOAN WAS DULY ACCEPTED AND ALLOWED BY THE LD. ASSESSING OFFICER A T THE TIME OF ASSESSMENT. 6. I FOUND THAT THE BORROWED MONEY WAS EXTENDED TO THE BUSINESS, EXPENDITURE SO INCURRED FOR SECURING THE USE OF MONEY FOR THE PURPOSE OF BUSINESS IS TO BE ALLOWED AS DED UCTION WHILE COMPUTING BUSINESS PROFITS. KEEPING IN VIEW THE TOT ALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DO NOT FIND ANY ME RIT FOR THE PROPORTIONATE DISALLOWANCE OF INTEREST SO MADE BY T HE ASSESSING OFFICER. ACCORDINGLY, THE ASSESSING OFFICER IS DIRE CTED DELETED THE DISALLOWANCE OF INTEREST. 7. THE ASSESSEE IS ALSO AGGRIEVED FOR THE DISALLOWA NCE VARIOUS EXPENDITURE OF 37,500/-. FROM THE RECORD, I FOUND T HAT THE DURING THE COURSE OF BUSINESS, ASSESSEE HAS INCURRE D EXPENDITURE ON TRAVELLING EXPENSES, DELIVERY CHARGE S AND OFFICE EXPENSES. 8. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSING OFFICER MADE AD HOCK THE DISALLOWANCE OF RS. 75,000 /- OUT OF THESE EXPENDITURE. BY THE IMPUGNED ORDER BY THE CIT (A) 5 ITA 101/JODH/2018 RITU AGARWAL, BHILWARA VS. ACIT CONFIRMED THE SAME TO THE EXTENT OF RS. 37,500/- AG AINST WHICH ASSESSEE IS FURTHER BEFORE ME. 9. I HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. KEEPIN G IN VIEW THE REASONS FOR THE DISALLOWANCE AS GIVEN BY THE ASSESS ING OFFICER VIS A VIS LD. CIT(A) AND ALSO THE NATURE OF ASSESSEES BUSINESS AND THE NATURE OF EXPENDITURE SO INCURRED, I DEEM IT APPROPRIATE TO R ESTRICT THE DISALLOWANCE TO THE EXTENT OF RS. 5,000/-. I DIRECT ACCORDINGLY. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 19/07/2018. SD/- [R.C. SHARMA] ACCOUNTANT MEMBER DATED : 19/07/2018 *GANESH KR. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6. GUARD FILE (ITA NO. 101/JODH/2018) ASSISTANT REGISTRAR JODHPUR BENCH