SHRI NARESH KUMAR LUHADIA, JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, JAIPUR

ITA 1110/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8708 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 25-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA JCIT DHK
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA -@ ITA NO. 1110/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 NARESH KUMAR LUHADIA, D-143, A SAVITRI PATH, BAPU NAGAR, JAIPUR. CUKE VS. D.C.I.T., CIRCLE-7, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: ABJPL 9768 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI VIKAS JAIN (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A.S. NEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04/04/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 05/04/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)-3, JAIPUR DATED 20/07/2018 FOR THE A.Y. 2014-15 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF RS. 1,88,032/- OUT OF INTEREST PAID TO RELATIVES BY INVOKING PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. ITA 1110/JP/2018_ NARESH KR. LUHADIA VS DCIT 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S KISSAN PASHU AAHAR UDYOG AND DERIVES INCOME FROM MANUFACTURING AND SELLING OF CATTLE FEED AND FROM TRADING OF SHARES AND FROM INCOME FROM HOUSE PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAS TAKEN LOAN ON INTEREST FROM VARIOUS PARTIES, RATE OF INTEREST WAS VARYING FROM 15 TO 18%. THE A.O. ALLEGED THAT THE ASSESSEE HAS PAID HIGHER RATE OF INTEREST @ 18% TO THE PARTIES RELATED TO HIM, THEREFORE, BY INVOKING PROVISIONS OF SECTION 40A(2)(B) OF THE ACT HE MADE DISALLOWANCE OF RS. 1,88,032/-. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 4. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE DECISION OF THE ITAT JAIPUR BENCH IN (ITA NO. 984/JP/2018) IN ASSESSEE'S OWN CASE ON THE SAME GROUND OF APPEAL FOR THE A Y 2013-14, WHEREIN THE TRIBUNAL HELD THAT: 'WE FIND THAT WHEN THE MAJORITY OF THE UNRELATED PARTIES ARE PAID BY THE ASSESSEE AT 18%, THEN THE PAYMENT OF INTEREST TO THE RELATED PARTIES @18% IS NOT UNREASONABLE OR EXCESSIVE HAVING REGARD TO THE FACT THAT THERE ARE VARIOUS ADVANTAGES OF HAVING THE LOANS FROM THE RELATED PARTIES FOR REPAYMENT OF LOANS AS WELL AS NO COLLATERAL OR ITA 1110/JP/2018_ NARESH KR. LUHADIA VS DCIT 3 OTHER SECURITY IS REQUIRED. UNDISPUTEDLY, IN CASE OF UNRELATED PARTIES, THE REPAYMENT HAS TO BE MADE STRICTLY AS PER SCHEDULE OR AGREEMENT BETWEEN THE PARTIES WHEREAS IN CASE OF RELATED PARTIES THE REPAYMENT OF LOAN IS AS PER CONVENIENCE OF THE ASSESSEE AND THERE IS ADVANTAGE OF FLEXIBILITY OF REPAYMENT SCHEDULE. ACCORDINGLY, IN VIEW OF THE FACT THAT IN MAJORITY OF UNRELATED PARTIES THE INTEREST RATE WAS 18% WOULD NOT FALL IN THE CATEGORY OF EXCESSIVE OR UNREASONABLE INTEREST PAID TO THE RELATED PARTIES, HENCE WE DELETE THE ADDITION MADE BY THE A.O. IN THIS REGARD. 5. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT EXACTLY SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATE PRECEDING YEAR I.E. A.Y. 2013-14. THE TRIBUNAL HAVE DEALT WITH THE ISSUE THREADBARE AND AFTER RECORDING THE DETAILED FINDINGS REACHED TO THE CONCLUSION THAT THE MAJORITY OF THE UNRELATED PARTIES WERE PAID, INTEREST RATE AT THE RATE OF 18%, THEREFORE, PAYMENT OF INTEREST @ 10% TO THE RELATED PARTIES WOULD NOT FALL IN THE CATEGORY OF EXCESSIVE OR UNREASONABLE INTEREST. HENCE, NO DISALLOWANCE IS WARRANTED. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE PARI MATERIA, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, ITA 1110/JP/2018_ NARESH KR. LUHADIA VS DCIT 4 WE DO NOT FIND ANY MERIT IN THE DISALLOWANCE SO MADE BY THE A.O. BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH APRIL, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05 TH APRIL, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI NARESH KUMAR LUHADIA, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T., CIRCLE-7, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1110/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR