Sh. Gurvinder Singh Gill, Chandigarh V. ITO, Chandigarh

ITA 1085/CHANDI/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5499 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 18-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; TDS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH !, ' # , . %.. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R. KUMAR , A M ./ ITA NO. 1085/CHD/2017 '* + ,+ / ASSESSMENT YEAR : 2012-13 SH. GURVINDER SINGH GILL, H.NO. 1573, SECTOR 36-D CHANDIGARH THE ITO WARD 4(1), CHANDIGARH ./ PAN NO: ATFPG0619R / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI. TEJ MOHAN SINGH / REVENUE BY : SMT. CHANDRAKANTA ! ' # / DATE OF HEARING : 26/09/2018 $%&'() # / DATE OF PRONOUNCEMENT : 01/11/2018 '-/ ORDER PER DR. B.R.R. KUMAR, A.M.: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-2, CHANDIGARH DT. 01/09/2016. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: THAT THE LD. CIT(A)-2 HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS THEREBY ERRED IN CONFIRMING DISALLOWAN CE OF INTEREST PAID UNDER SECTION 57(III) OF INCOME TAX ACT 1961. THAT THE LD. CIT(A)-2 HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS THEREBY ERRED IN CONFIRMING AGRICULTUR AL INCOME AS INCOME FROM OTHER SORUCES. THE ADDITION HAVE BEEN CONFIRMED ON FLIMSICAL GROUN DS. IN VIEW OF THE ABOVE STATED FACTS AND CIRCUMSTANCES IT IS PRAYED THAT THE ADDITION MADE MAY KINDLY BE DELETED OR SUCH OTHER RELIEF MAY BE GRANTED AS DEEMED FIT. 3. THE FACTS TAKEN FROM THE RECORD ARE THAT THE ASSESSEE IS A DIRECTOR IN THE COMPANY M/S YAMADA AUTOMATION PVT. LTD. AND CLAIMED TO HAVE EARNED INTEREST OF RS. 18,86,836/- ON LOAN GIVEN TO THE SA ID COMPANY. THE ASSESSEE HAS CLAIMED DEDUCTION OF INTEREST OF THE SAME AMOUNT AG AINST THIS INCOME U/S 57 ON ACCOUNT OF INTEREST PAID TO ANOTHER COMPANY I.E. M/ S INDIA INFOLINE FINANCIAL 2 SERVICES PVT. LTD. THE ASSESSING OFFICER MADE ENQUI RIES FROM THE COMPANY AS WELL AS FROM THE BANKS AND FOUND THAT THE ASSESSEE HAS N OT AVAILED LOANS WHICH HAS BEEN CLAIMED TO HAVE BEEN ADVANCED TO M/S YAMADA AU TOMATION PVT. LTD. AS A MATTER OF FACT THE LOAN FROM M/S INDIA INFOLINE F INANCE LTD. HAVE BEEN AVAILED AS WELL AS REPAID BY THE COMPANY I,E. M/S YAMADA AU TOMATION PVT. LTD. THE ASSESSING OFFICER HELD THAT IHE ASSESSEE HAS NEITHE R RECEIVED LOAN FROM M/S INDIA INFOLINE FINANCE LTD. NOR INTEREST PAYMENT WAS MADE TO THE SAID COMPANY AMOUNTING TO RS. 18,86,835/- AND THEREFORE, DISALLO WED THE CLAIM OF THE ASSESSEE U/S. 57 OF THE ACT. 4. THE ARGUMENTS OF THE ASSESSEE THAT A LOAN OF RS . 5,50,00,000/- WAS TAKEN BY YAMADA AUTOMATION PVT. LTD. AND THE ASSESSEE ALO NG WITH HIS FAMILY MEMBERS AS CO APPLICANTS TO THE LOAN. THE LOAN WAS RECORDED IN THE BOOKS OF YAMADA AUTOMATION PVT. LTD. IN THE NAME OF THE ASSE SSEE HIS FATHER ARID BROTHER. SINCE, THE LOAN WAS TAKEN AGAINST THE PERSONAL PROP ERTY OF ASSESSEE'S FAMILY THE SAME WAS SHOWN AS LOAN IN THE BOOKS OF YAMADA AUTOM ATION PVT. LTD. IN THE MANNER AS SETTLED BY THE FAMILY MEMBERS. THE ASSESS EE DERIVED INTEREST ON THE LOAN RAISED FROM YAMADA AUTOMATION PVT. LTD. SO, MU CH SO, THAT EVEN TDS HAS BEEN DEDUCTED ON THE INTEREST RECEIVED. 5. THE ASSESSING OFFICER HAS DISALLOWED THE SAME ON THE GROUND THAT THE LOAN WAS RECEIVED BY YAMADA AUTOMATION PVT. LTD. AND SIN CE THE ABOVE COMPANY HAD NOT DEDUCTED TDS U/S 194 OF THE INCOME TAX ACT, 1961 ON PAYMENT MADE TO INDIA INFOLINE FINANCIAL LTD. THE APPELLANT HAD DEVISED THE ABOVE METHOD TO ESCAPE THE PROVISION OF LAW AND THE ARRANGEMENT WAS MADE IN THE BOOKS OF THE COMPANY TO MISLEAD THE REVENUE. IT WAS FURTHER HELD THE ASSESSEE DERIVED INTEREST FROM YAMADA AUTOMATION PVT. LTD. THE INTER EST WAS CREDITED ON 31.03.2012 AND TDS WAS DEDUCTED ON THE SAME. HAD, T HE INTENTION BEEN AS STATED BY THE ASSESSING OFFICER THAN THE COMPANY WO ULD HAVE DEDUCTED TDS TO THE ACCOUNT OF INDIA INFOLINE FINANCIAL LTD. FROM W HOM THE LOAN WAS RAISED IN ANY CASE, TDS HAS BEEN DEDUCTED ON TIME AND THERE I S NO DEFAULT OF THE SAME. THE COMPANY YAMADA AUTOMATION PVT. LTD. COULD HAVE DEDUCTED AND DEPOSITED THE TDS TO THE, ACCOUNT OF INDIA INFOLINE FINANCIAL LTD. INSTEAD OF THE INDIVIDUAL DIRECTORS IF THAT WAS THE CASE. 6. LD.CIT(A) CONFIRMED THE ADDITION HOLDING THAT O N THE ONE SIDE INTEREST INCOME HAVE BEEN RECEIVED FROM M/S YAMADA AUTOMATIO N PVT. LTD. AND ON THE HAND INTEREST WAS PAID ON THE SAME LOAN AMOUNT TO M /S INDIA INFOLINE FINANCIAL SERVICES. IT WAS SUBMITTED THAT THE LOAN AMOUNT OF RS. 2,24,99,164/- WAS RECEIVED 3 AND THE SAME AMOUNT WAS DEPOSITED WITH M/S YAMADA A UTOMATION PVT. LTD. THE CLAIM OF THE ASSESSEE WAS NOT FOUND CORRECT AS A RESULT OF INFORMATION COLLECTED BY A.O. AND IT WAS FOUND THAT THE SAID LO AN OF RS. 2,24,99,164/- WAS RECEIVED AND THE INTEREST ON THE SAME WAS PAID BY M /S YAMADA AUTOMATION PVT. LTD. DIRECTLY TO M/S INDIA INFOLINE FINANCE LT D. THE ASSESSEE HAS NEVER RECEIVED THIS LOAN NOR THE PAYMENT OF INTEREST HAS BEEN MADE BY HIM TO M/S LNDIA INFOLINE FINANCE LTD. 7. BEFORE US, THE LD. AR SUBMITTED COPY OF THE REPL Y DATED 19/12/2014 FILED BEFORE THE ASSESSING OFFICER ALONGWITH THE FOLLOWIN G ANNEXURES: A. COPY OF THE LEDGER ACCOUNT OF INTEREST RECEIVED FRO M YAMADA AUTOMATION PVT. LTD. IN THE BOOKS OF ASSESSEE. B. COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE IN THE B OOKS OF M/S YAMADA AUTOMATION PVT. LTD. AND RELIED ON THE ARGUMENTS TAKEN BEFORE THE AUTHOR ITIES BELOW. 8. LD. DR STRONGLY SUPPORTED THE ORDERS OF THE LD. CIT(A) AND THE ASSESSING OFFICER. 9. WE FIND THAT THE LEDGER ACCOUNTS FILED BY THE AS SESSEE GIVE A CONTRARY PICTURE TO THE FINDINGS OF THE ASSESSING OFFICER. W HILE THE LEDGER ACCOUNT SHOWS THE JOURNAL ENTRIES MADE IN THE ACCOUNT OF THE ASSE SSEE ON LOAN ACCOUNT OF INDIA INFOLINE INTEREST THE MATERIAL COLLECTED BY T HE ASSESSING OFFICER SHOWS THAT THE INDIA INFOLINE HAS DIRECTLY DISBURSED THE LOAN TO THE YAMADA AUTOMATION PVT. LTD. THE AR ARGUES THAT THE AMOUNT OF LOAN HAS BEEN ADJUSTED AMONG THE THREE CO-APPLICANTS OF THE LOAN MUTUALLY KEEPING INTO THE CONSIDERATION OF LIABILITY TO PAY INTEREST TO THE SAID FINANCIAL INSTITUTION AND ON THE OTHER SIDE TO RECEIVE THE INTEREST FROM YAMADA AUTOMATION PVT. LTD. FURTHER H E ARGUES THAT THE CO- APPLICANTS HAVE MADE ADJUSTMENT OF THE LOAN MUTUALL Y AND THERE IS NO DOUBT REGARDING THE DEPOSIT OF RS. 2.24 CRORES WHICH IS B OOKED IN THE NAME OF THE ASSESSEE IN THE BOOKS OF THE COMPANY. THE AR EXPLAI NS THAT THE REASON BEING THE TO DECREASE THE LIABILITY OF THE COMPANY ALREAD Y RUNNING IN HUGE LOSSES. WHILE SAYING SO IT IS ALSO OBSERVED THAT THE COMPAN Y IS PAYING INTEREST TO THE DIRECTOR WHO IN TURN PASSED ON THE INTEREST TO THE LENDING INSTITUTION. TO THAT EXTENT THE ARGUMENTS OF THE LD. AR CANNOT BE SAID T O HAVE ANY VALID GROUNDS. THE METHOD AND RATIONALE OF APPORTIONING THE LOAN R ECEIVED FROM INDIA INFOLINE 4 TO YAMADA AUTOMATION PVT. LTD WERE NOT EXAMINED AND NOT AVAILABLE ON RECORD. THE PRINCIPLE AMOUNT HAS BEEN PAID BY THE C OMPANY TO THE LENDOR INSTITUTION WHEREAS THE INTEREST HAS BEEN MADE BY A PASS THROUGH ENTRY. KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE I SSUE, WE HEREBY REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ENTRIES IN THE ACCOUNTING PERSPECTIVE AND AS WELL AS THE IMPACT ON THE REVENUE PERSPECTIVE IN THE HANDS OF THE ASSESSEE AFTER GOING THROUGH TH E ENTIRE FINANCIAL AFFAIRS OF THE ASSESSEE. 10. GROUND NO. 2 OF THE APPEAL IS AGAINST THE ADDI TION OF RS. 8,88,400/- ON ACCOUNT OF AGRICULTURAL INCOME. 11. THE ADDITION WAS CONFIRMED MAINLY ON THE BASIS THAT THE ASSESSEE IS NOT THE OWNER OF THE AGRICULTURAL LAND AND THE PERSONS PRODUCED BY THE ASSESSEE ARE NOT CULTIVATORS AS PER LAND RECORDS OF FARD ZAM ABANDI AND ALSO THE ASSESSEE FAILED TO PRODUCE J FORM ISSUED IN HIS NAME. THE FA RMERS NAMELY SHRI RAMESH MASITH, SHRI BHUPINDER PAL SINGH, STATED THAT THEY ARE DOING AGRICULTURAL ACTIVITIES ON CONTRACT BASIS ON 20 / 18 ACRES OF LA ND OF SHRI KANWALJEET SINGH, OTHER PERSONS NAMELY SHRI BALWINDER PAL AND SHRI JA GJEET SINGH STATED THAT THEY ARE DOING AGRICULTURAL ACTIVITIES ON CONTRACT BASIS ON 21 /18 ACRES OF LAND OF KANWALJEET SINGH AND THE ASSESSEE AND PAYING @ RS. 40,000/- PER ACRE. 12. WE HOLD THAT THE EARNING OF AGRICULTURAL INCOME CANNOT BE DISPUTED ON THE GROUNDS THAT THE J FORMS ARE NOT IN THE NAME OF THE ASSESSEE AS GENERALLY THEY ARE NOT ISSUED IN THE NAME OF THE ASSESSEE OR ON THE GROUNDS THAT FARD JAMA BANDI DOESNT SHOW THE ASSESSEE AS THE OWNER OF THE AGRICULTURAL LAND. THE ASSESSEE COULD AS WELL LEASE THE LANDS AND STILL CA N EARNED AGRICULTURAL INCOME. WHAT IS TO BE EXAMINED IS THE FACT WHETHER THE ASSE SSEE HAS EARNED INCOME BY THE WAY OF AGRICULTURAL ACTIVITIES OR NOT. WHILE TH E ASSESSING OFFICER CONTENTS THAT FARD JAMABANDI IS NOT IN THE NAME OF THE ASSESSEE, THE FARMERS STATED THAT THEY HAVE BEEN DOING AGRICULTURE ON 78 ACRES OF AGRICULT URE LAND BELONGING TO THE ASSESSEE. THE FACT THAT HOW THIS 78 ACRES OF LAND H AS BEEN AGGREGATED BY THE ASSESSEE, WHETHER ANY AGRICULTURE LAND WAS OWNED BY THE ASSESSEE OR LEASED BY THE ASSESSEE, IF SO ANY LEASE RENTALS HAVE BEEN PAI D BY THE ASSESSEE, THE TYPE OF THE CROPS CULTIVATED ON THESE LANDS EITHER BY THE A SSESSEE OR BY THE CONTRACT OR SUB CONTRACT FARMERS, THE HISTORY OF THE ASSESSEE E ARNING ANY AGRICULTURAL INCOME IN THE PREVIOUS YEARS HAS NOT BEEN BROUGHT ON RECOR D. HENCE WE RESTORE THE 5 MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD WITHOUT RE SORTING TO RE-EXAMINATION OF THE FARMERS ALREADY PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER EARLIER. 13. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ! . %.. . & , (DIVA SINGH) (DR. B.R.R. KUMAR) ' #/ JUDICIAL MEMBER '( #/ ACCOUNTANT MEMBER AG DATE: 01/11/2018 *% + ,- . -(/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. * * ! // CIT 4. * * ! / ()/ THE CIT(A) 5. - 23 4, * # *4), 67839/ DR, ITAT, CHANDIGARH 6. 38 :'/ GUARD FILE