Smt. Manjri Bhargava, Mohali V. JCIT, Mohali

ITA 1097/CHANDI/2011

• Counselvise Citation: 109721514 RSA 2011
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Depreciation; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1097/CHD/2011 ASSESSMENT YEAR: 2007-08 SMT. MANJRI BHARGAVA, VS THE JCIT, PROP. SILVER OAKS MEDICOS, RANGE 6, C/O SILVER OAK HOSPITAL, MOHALI MOHALI PAN NO. AAPPB55611 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI N.K. SAINI DATE OF HEARING : 16.2.2012 DATE OF PRONOUNCEMENT : 17.2.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), CHANDIGARH DATED 17.8.2011 RELATING TO ASS ESSMENT YEAR 2007-08. 2. GROUND NOS. 1, 4, 5 AND 6 ARE OF GENERAL NATURE AND HENCE NO COMMENTS ARE BEING GIVEN. 3. GROUND NO.2 OF THE APPEAL READS AS UNDER:- 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), CHANDIGARH GRAVELLY ERRED IN UPHOLDING THE 2 ADDITION MADE BY LD. ASSESSING OFFICER OF RS. 80,89 4/- ON THE GROUND THAT INTEREST FREE ADVANCES WERE GIVE N TO THE SISTER CONCERN. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A DOCTOR BY PROFESSION AND ALSO RUNNING A MEDICAL SHOP IN THE N AME OF SILVER OAKS MEDICOS OF WHICH SHE IS A PROPRIETOR. WHILE EXAMIN ING THE REPLY DATED 3.12.2009 OF THE ASSESSEE, THE ASSESSING OFFICER NO TICED THAT THE ASSESSEE HAS MADE INVESTMENTS WITH THE FOLLOWING CONCERNS. A) RS. 7,45,150/- TO M/S RELIANT INFRASTRUCTURE; B) RS. 2,82,244/- TO M/S IMPACT PROJECT PVT LTD AN D C) RS. 2,00,000/- TO SILVER OAK FOUNDATION. AS PER ASSESSING OFFICER, THE ASSESSEE HAS NOT CHAR GED INTEREST ON THESE ADVANCES, WHEREAS THE ASSESSEE ITSELF HAS PAID INTE REST AMOUNTING TO RS. 5,45,718/- TO COOPERATIVE BANK ON ITS BANK LOANS. THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS MADE THE ABOVE ADVANCES OUT OF THE FUNDS RAISED FROM THE COOPERATIVE BANK AND THIS INVESTMEN T WAS NOT FOR THE BUSINESS PURPOSES OF THE ASSESSEE. THE ASSESSING O FFICER REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY AN AMOUNT EQUAL TO THE INTEREST AMOUNTING TO RS. 80,894/- ACCRUED ON ITS ADVANCES / INVESTMEN T SHOULD NOT BE ADDED TO HER TOTAL INCOME. IN THIS REGARD, THE ASSESSEE SUB MITTED THAT PAYMENT TO M/S RELIANT INFRASTRUCTURE AND M/S IMPACT PROJECT PVT L TD WAS GIVEN FOR THE PURCHASE OF FLATS / PLOTS FOR THE EMPLOYEE OF THE A SSESSEE. NO SUPPORTING EVIDENCE WAS FURNISHED BY THE ASSESSEE AND, THEREFO RE, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 80,894/- TO THE TOTAL INCOM E OF THE ASSESSEE. 3 5. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION FOR THE REASONS STATED IN PARAS 3.3 AND 3.3.1 OF THE IMPUGNED ORDER AND, HENC E, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI VINEET KRISHAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DURING THE YEA R UNDER CONSIDERATION DID NOT ADVANCE MONEY TO M/S RELIANT INFRASTRUCTURE, M/ S IMPACT PROJECT PVT LTD AND M/S SILVER OAK FOUNDATION, OUT OF TERM LOAN TAK EN FROM THE COOPERATIVE BANK ON WHICH INTEREST AMOUNTING TO RS. 5,45,718/- WAS PAID. ACCORDING TO SHRI VINEET KRISHAN, LD. COUNSEL FOR THE ASSESSEE, THE TERM LOAN WAS UTILIZED BY THE ASSESSEE FOR THE PURPOSES FOR WHICH THE SAME WAS TAKEN BY THE ASSESSEE. NO DISALLOWANCE OF INTEREST CAN BE MADE W HEN THE ADVANCE WAS NOT OUT OF INTEREST BEARING LOAN BUT OUT OF SAVING AND INCOME OF THE ASSESSEE. SHRI VINEET KRISHAN, LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V MARK AUTO INDUSTRIES LTD REPORTED IN (2011) 57 DTR (P&H)113: (2011) 201 TAXMAN 137 IS SQUARELY APPLICABLE TO THE CASE OF TH E ASSESSEE. HE THEREFORE, SUBMITTED THAT NO DISALLOWANCE OF INTEREST OF RS. 8 0,894/- IS REQUIRED TO THE MADE. 7. AFTER PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE NOT CORRECTLY APPRECIATED THE FACTS OF THE PRESENT CASE. THE MAIN CONTENTION OF THE ASSESSEE IS THAT SHE DID NOT ADVANCED MONEY TO ABOVE THREE CONCERNS OUT OF TERM LOAN TAKEN FROM THE COOPERATIVE BANK. THE TERM LOAN WAS UTILIZED BY TH E ASSESSEE FOR THE 4 PURPOSES FOR WHICH THE SAME WAS TAKEN BY THE ASSESS EE. IN OUR OPINION, NO DISALLOWANCE OF INTEREST CAN BE MADE WHEN THE ADVAN CES WAS NOT OUT OF INTEREST BEARING LOAN BUT WAS OUT OF SAVINGS AND IN COME OF THE ASSESSEE. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND REMAND THE SAME TO ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW KEEPING IN VIEW THE ARGUMENTS A DVANCED BEFORE US ON BEHALF OF THE ASSESSEE AND THE OBSERVATIONS GIVEN H ERE-IN-ABOVE. THE ASSESSING OFFICER SHOULD GIVE AN OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. FOR STATISTICAL PURPOSES, THIS GROUND OF APPEAL IS ALLOWED. 8. GROUND NO.3 OF THE APPEAL READS AS UNDER:- 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), CHANDIGARH GRAVELLY ERRED IN UPHOLDING THE BLANKET DISALLOWANCE OF 15% ON ACCOUNT OF VEHICLE RUNNING & MAINTENANCE, CAR INSURANCE, DEPRECIATION ON VEHICLES AND TELEPHONE EXPENSES. 9. THE ASSESSEE CLAIMED CERTAIN EXPENSES SUCH AS V EHICLE RUNNING AND MAINTENANCE, CAR INSURANCE, DEPRECIATION ON VEHI CLES AND TELEPHONE EXPENSES AMOUNTING TO RS. 76,595/-, 63,746/-, RS. 4 ,89,485/- AND RS. 74,938/- RESPECTIVELY. THE ASSESSING OFFICER ALSO N OTICED THAT THE ASSESSEE HAD MADE WITHDRAWALS OF RS. 1,53,685/- ONLY FOR HOU SE HOLD EXPENSES. THE ASSESSING OFFICER DISALLOWED 15% OF THESE EXPENSES ON ACCOUNT OF ELEMENTS OF PERSONAL USE. ON APPEAL, THE CIT(A) UPHOLD THE D ISALLOWANCE OF RS. 1,05,715/- I.E. 15% OF THE EXPENSES. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE, THE A SSESSING OFFICER DISALLOWED 5 15% OF THE ABOVE EXPENSES ON ADHOC BASIS WITHOUT BR INGING ANY MATERIAL ON RECORD TO SUBSTANTIATE HIS ACTION. THE CIT(A) HAS ALSO UPHELD THE DISALLOWANCE WITHOUT ASSIGNING ANY COGENT REASON. HOWEVER, WE ARE OF THE VIEW THAT IN THIS CASE, PERSONAL USE OF CAR AND TEL EPHONE CANNOT BE RULED OUT AND, THEREFORE, CERTAIN DISALLOWANCES ARE REQUIRED TO BE MADE. IN OUR OPINION, THE DISALLOWANCES MADE BY THE ASSESSING OF FICER AND CONFIRMED BY THE CIT(A) IS EXCESSIVE. IN NUMBER OF CASES, THIS BENCH OF THE TRIBUNAL HAS TAKEN A CONSISTENT VIEW THAT 1/10 TH DISALLOWANCE WILL MEET THE ENDS OF JUSTICE. KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE DIRECT THE ASSESSING OFFICER TO DISALLOW 1/10 TH OF ABOVE EXPENSES. THE GROUND OF APPEAL IS ALLOWED PARTLY. 11. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY AND PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF FEBRUARY, 2012. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 17 TH FEBRUARY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR