MUKESH T DAND, MUMBAI V. ITO-5(3)(2), MUMBAI

ITA 111/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8496 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: HITESH M DHARAMSHI
• Section: 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO.111/MUM/2019 ( ASSESSMENT YEAR: 2010-11) MUKESH T DAND, 111, 3B, KALAPTARU AURA, LBS ROAD, GHATKOPAR WEST, MUMBAI-400086. VS. I.T.O.-5(3)(2), 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. PAN/GIR NO.AACPD 6265 A (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI HITESH M. DHARAMSHI (AR) REVENUE BY SHRI AKHTAR H ANSARI (DR) DATE OF HEARING 14/01/2020 DATE OF PRONOUNCEMENT 20/01/2020 / O R D E R PER: R.C. SHARMA, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 29/08/2018 OF LD. CIT(A)-10, MUMBAI FOR THE A.Y. 20 10-11 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. GRIEVANCE OF THE ASSESSEE RELATES TO NOT ALLOWIN G DEDUCTION ON ACCOUNT OF INTEREST PAID TO THE BANK AND ALSO SALAR Y PAID TO THE DRIVER. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FI LED HIS RETURN OF INCOME ON 31/07/2010 DECLARING TOTAL INCOME OF RS. 25,52,260/-. THE ITA NO. 111/MUM/2019 MUKESH T DAND VS ITO 2 RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND SUBS EQUENTLY SELECTED FOR SCRUTINY. AN ASSESSMENT U/S 143(3) OF THE ACT D ETERMINING THE TOTAL INCOME OF RS. 31,14,870/- WAS CONCLUDED ON 28/12/20 12 BY DISALLOWING EXPENDITURE OF RS. 91,847/- BESIDES THE ADDITION OF RS. 5,81,061/- ON ACCOUNT OF UNDISCLOSED INTEREST RECEIVED FROM M/S S ACHINAM TRAVELS PVT. LTD. 4. THE A.O. OBSERVED THAT THE ASSESSEE HAS NOT DISC LOSED INTEREST INCOME AND THAT EXPENDITURE OF RS. 91,847/- CLAIMED FOR EARNING CONSULTANCY INCOME OF RS. 2,34,000/- COULD NOT BE P ROVED. BEFORE THE LD. CIT(A), IT WAS CONTENDED BY THE LD AR THAT THE ASSESSEE HAS EARNED INTEREST INCOME OF RS. 5,81,061/- OUT OF THE FUND B ORROWED FROM ORIENTAL BANK OF COMMERCE. AS PER THE ASSESSEE, HE HAD TAKEN LOAN AGAINST THE FIXED DEPOSIT FROM ORIENTAL BANK OF COM MERCE AND WHICH WAS FURTHER GIVEN ON INTEREST TO M/S SACHINAM TRAVE LS PVT. LTD.. ACCORDINGLY, IT WAS PRAYED THAT ONLY THE NET INTERE ST INCOME SHOULD BE BROUGHT TO TAX AFTER GIVING DEDUCTION OF INTEREST P AID. IN RESPECT OF EXPENDITURE OF RS. 91,847/-, IT WAS THE CONTENTION OF THE ASSESSEE THAT THE SAME WAS INCURRED AS SALARY PAID TO THE DRIVER WHICH WAS IN THE COURSE OF EARNING THE CONSULTANCY INCOME. HOWEVER, BOTH THE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A) AND AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. ITA NO. 111/MUM/2019 MUKESH T DAND VS ITO 3 5. FROM THE RECORD I FOUND THAT NECESSARY EVIDENCE WITH REGARD TO TAKING OF LOAN FROM ORIENTAL BANK OF COMMERCE WAS N OT SUBMITTED BEFORE THE A.O.. THE QUESTION OF ALLOWABILITY OF IN TEREST ON BORROWED FUND WHICH IS ACTUALLY UTILIZED FOR ADVANCING TO OT HER PERSON ON WHICH THE ASSESSEE HAS EARNED INTEREST INCOME IS TO BE CO NSIDERED ONLY WHEN THE ASSESSEE CAN ESTABLISH DIRECT NEXUS BETWEEN THE FUNDS BORROWED AND THE VERY SAME FUNDS HAVE BEEN ADVANCED FOR EARN ING INTEREST INCOME. IN ALL FAIRNESS, I RESTORE THE MATTER BACK TO THE FILE OF THE A.O. WITH DIRECTION TO ASSESSEE TO FILE COMPLETE DETAILS OF BORROWINGS MADE FROM THE BANK, INTEREST PAID THEREON AND UTILIZATIO N OF SUCH BORROWED FUNDS FOR ADVANCING TO M/S SACHINAM TRAVELS PVT. LT D. ON WHICH INTEREST INCOME WAS EARNED. THE A.O. IS TO REEXAMINE ALL THE DOCUMENTS AND DECIDE THE MATTER AFRESH AS PER LAW AFTER GIVING DU E AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. THE ISSUE WITH REGARD TO DRIVERS SALARY OF RS. 91,847/- FOR EARNING CONSULTANCY INCOME OF RS. 2,34,000/- IS ALS O RESTORED BACK TO THE FILE OF THE A.O. WITH DIRECTION TO ASSESSEE TO FILE NECESSARY DOCUMENTS WITH REGARD TO PAYMENT OF SALARY TO DRIVE R AND UTILIZATION OF CAR FOR THE PURPOSE OF EARNING CONSULTANCY INCOME. THE A.O. IS TO DECIDE THE ISSUE AS PER LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO. 111/MUM/2019 MUKESH T DAND VS ITO 4 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 20/01/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//