Manisha Srivastava, Kolkata V. ITO, WD-7(3), KOLKATA, Kolkata

ITA 1152/KOL/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3129 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 07-09-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R T YADAVA
• Keywords: Commercial expediency

Judgement Text

I.T.A. NO. 1152/KOL./2015 ASSESSMENT YEAR: 2005-2006 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1152/KOL/ 2015 ASSESSMENT YEAR: 2005-2006 SMT. MANISHA SRIVASTAVA,........................... ..................................APPELLANT 6/2, GURUSADAY ROAD, KOLKATA-700 019 [PAN : AKKPS 3525 J] -VS.- INCOME TAX OFFICER,................................ ...............................RESPONDENT WARD-7(3), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700 069 APPEARANCES BY: SHRI R.T. YADAVA, FCA, FOR THE ASSESSEE SMT. SARBARI MUKJHERJEE, JCIT, SR. D.R., FOR THE DE PARTMENT DATE OF CONCLUDING THE HEARING : JANUARY 04, 2016 DATE OF PRONOUNCING THE ORDER : FEBRUARY 10, 2016 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, KOLKATA DAT ED 27.05.2015 FOR THE ASSESSMENT YEAR 2005-06 AND THE SOLITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE OF RS.3,43,667/- M ADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON AC COUNT OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 29.03.2006 DECLARING TOTAL INCOME OF RS.2,11,304/-. DURING THE YEAR, SHE WAS A DIRECTOR OF A PRIVATE LIMITED COMPANY, NAMELY M/S. SAISHA ELECTRONICS (PVT.) LIMITED AND EARNED DIRECTORS REMUNERATION A S WELL AS DIVIDEND INTEREST FROM THE SAID COMPANY. DURING THE COURSE O F ASSESSMENT I.T.A. NO. 1152/KOL./2015 ASSESSMENT YEAR: 2005-2006 PAGE 2 OF 4 PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICE R THAT INTEREST OF RS.3,43,667/- PAID BY THE ASSESSEE ON UNSECURED LOA NS TAKEN FROM TWO FIRMS WAS CLAIMED AS DEDUCTION. IN THIS REGARD, HE NOTED THAT THERE WERE INTEREST-BEARING ADVANCES/LOANS GIVEN BY THE ASSESS EE. KEEPING IN VIEW THIS FACT AS WELL AS THE FACT THAT THERE WAS NO INC OME DECLARED BY THE ASSESSEE UNDER THE HEAD PROFITS AND GAINS OF BUSIN ESS OR PROFESSION, THE ASSESSING OFFICER HELD THAT INTEREST EXPENDITURE CL AIMED BY THE ASSESSEE WAS NOT ALLOWABLE AS DEDUCTION. ACCORDINGLY, THE IN TEREST EXPENDITURE CLAIMED BY THE ASSESSEE WAS DISALLOWED BY THE ASSES SING OFFICER. 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O N ACCOUNT OF INTEREST WAS CHALLENGED BY THE ASSESSEE IN THE APPE AL FILED BEFORE THE LD. CIT(APPEALS). DURING THE COURSE OF APPELLATE PROCEE DINGS BEFORE THE LD. CIT(APPEALS), IT WAS CONTENDED BY THE ASSESSEE THAT ALTHOUGH SHE DID NOT EARN ANY INTEREST ON THE INVESTMENT MADE OUT OF INT EREST-BEARING LOAN FOR GIVING ADVANCES TO HER TWO COMPANIES, THE SAID INVE STMENT HAVING BEEN MADE TO SUPPORT THE BUSINESS OF THE CONCERNED COMPA NIES AND SHE HAVING EARNED DIRECTORS REMUNERATION FROM THE SAID COMPAN IES, INTEREST WAS ALLOWABLE AS DEDUCTION. THIS CONTENTION OF THE ASSE SSEE WAS NOT FOUND ACCEPTABLE BY THE LD. CIT(APPEALS) AND HE PROCEEDED TO CONFIRM THE INTEREST DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 3.2 OF HIS IMPUGNED ORDER:- 3.2. I HAVE CONSIDERED THE SUBMISSION MADE. IT HAS NOT BEEN DENIED BY THE APPELLANT THAT THE FUNDS BORROWE D HAVE BEEN UTILIZED FOR INVESTMENT IN THE TWO COMPAN IES IN WHICH SHE WAS A DIRECTOR. HOWEVER, IT HAS BEEN CLAI MED THAT THE INVESTMENT WAS MADE ON THE GROUND OF BUSIN ESS EXPEDIENCY. IT IS TRUE THAT IT HAS BEEN UPHELD BY T HE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. (SU PRA), THAT LOAN GIVEN TO SISTER CONCERN ON ACCOUNT OF COMMERCIAL EXPEDIENCY SHOULD NOT BE CONSIDERED AS DIVERSION OF FUNDS. (THE OTHER DECISION CITED BY TH E APPELLANT IS INCIDENTALLY IN FAVOUR OF REVENUE AND NOT MUCH RELEVANT). HOWEVER, IN THE APPELLANTS CASE, S HE HAS NOT EXPLAINED AS TO WHAT WAS THE COMMERCIAL EXPEDIE NCY FOR WHICH LOANS WERE GIVEN. ALSO, EARNING OF DIRECT ORS REMUNERATION IS NOT MATERIAL IN THIS REGARD, BECAUS E SHE WOULD HAVE EARNED REMUNERATION IN THE CAPACITY OF I.T.A. NO. 1152/KOL./2015 ASSESSMENT YEAR: 2005-2006 PAGE 3 OF 4 DIRECTOR EVEN IF SHE HAD NOT GIVEN LOANS TO THE COM PANIES. CONSIDERING THESE FACTS, I AM NOT INCLINED TO INTER FERE WITH THE DISALLOWANCE MADE BY THE ASSESSING OFFICER . THE DISALLOWANCE OF RS.3,43,667/- IS ACCORDINGLY CONFIR MED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. COUNSEL FOR THE ASSESESE HAS REITERATED BEFORE ME THE CONTENTION RA ISED BEFORE THE LD. CIT(APPEALS) IN SUPPORT OF THE ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF INTEREST, I AM UNABLE TO ACCEPT THE SAME FOR THE SAME REASONS AS GIVEN BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER WITH WHICH I FULLY AGREE. AS RIGHTLY HELD BY THE LD. CIT(APPEALS), THE ONLY INCO ME RECEIVED BY THE ASSESSEE FROM THE CONCERNED TWO COMPANIES WAS IN TH E FORM OF DIRECTORS REMUNERATION AND INTEREST EXPENDITURE WAS NOT ALLOW ABLE AS DEDUCTION AGAINST THE SAID INCOME. MOREOVER, THERE WAS NO INC OME DECLARED BY THE ASSESSEE UNDER THE HEAD PROFITS AND GAINS OF BUSIN ESS OR PROFESSION AND, THEREFORE, THERE WAS NO QUESTION OF ALLOWING DEDUCT ION ON ACCOUNT OF INTEREST ON THE GROUND OF BUSINESS EXPEDIENCY. I, T HEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPE ALS) CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF INTEREST AND UPHOLDING THE SAME, I DISMISS THIS APPEAL FILED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 10, 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 10 TH DAY OF FEBRUARY, 2016 COPIES TO : (1) SMT. MANISHA SRIVASTAVA, 6/2, GURUSADAY ROAD, KOLKATA-700 019 I.T.A. NO. 1152/KOL./2015 ASSESSMENT YEAR: 2005-2006 PAGE 4 OF 4 (2) INCOME TAX OFFICER, WARD-7(3), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700 069 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-3, KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.