Income-tax Officer, V. M/s. Jalgaon Investment Pvt. Ltd., Jalgaon

ITA 1185/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7257 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-02-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 01-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHABANA PARVEEN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, J UDICIAL MEMBER . / ITA NO . 1 185 /P U N/201 6 / ASSESSMENT YEAR : 20 1 1 - 12 THE INCOME TAX OFFICER, WARD 2(1), JALGAON ....... / APPELLANT / V/S. M/S. JALGAON INVESTMENT PVT. LTD., JAIN PIPE NAGAR, OLD DHULE ROAD, JALGAON 425001 PAN : AABCJ4765D / RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE REVENUE BY : MS. SHABANA PARVEEN / DATE OF HEARING : 27 - 02 - 2019 / DATE OF PRONOUNCEMENT : 25 - 0 4 - 201 9 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2, NASHIK DATED 1 7 - 03 - 2016 FOR THE ASSESSMENT YEAR 201 1 - 12. THE SOLITARY ISSUE RAISED BY THE REVENUE IN APPEAL IS AGAINST DELETING THE ADDITION OF RS.1,43,82,332/ - ON ACCOUNT OF 2 ITA NO . 1185/PUN/2016, A.Y. 2011 - 12 DISALLOWANCE OF INTEREST U/S. 40A(2) (B) O F THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED TO AS THE ACT ). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE : THE ASSESSEE IS ENGAGED IN PURCHASE AND SALE OF ONIONS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30 - 09 - 2011 DECLARING TOTAL INCOME OF RS.1,15,790/ - . THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY, CONSEQUENTLY, STATUTORY NOTICE U/S. 143(2) OF TH E ACT WAS ISSUED TO THE ASSESSEE ON 24 - 09 - 2012. IN SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS TAKEN LOAN FROM ITS DIRECTORS /SHAREHOLDERS AND HAS PAID INTEREST @ 14.46%. THE ASSESSING OFFICER HELD THAT NO BUSINES S EXPEDIENCY IS ESTABLISHED FOR OBTAINING LOAN FROM THE DIRECTORS / SHAREHOLDERS AND THE INTEREST PAID BY THE ASSESSEE COMPANY TO THE DIRECTORS IS EXCESSIVE . THE ASSESSING OFFICER RESTRICTED THE PAYMENT OF INTEREST @ 12% AND DISALLOWED THE REMAINING INTER EST PAYMENT AGGREGATING TO RS.1,43,82,332/ - U/S. 40A(2)( B ) OF THE ACT. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 26 - 03 - 2014, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE APPEAL OF ASSESSEE ON THE GROUND THAT NEITHER THE ASSESSEE HAD DEBITED INTEREST PAID TO DIRECTORS/SHAREHOLDERS TO P ROFIT AND L OSS A CCOUNT NOR ANY DEDUCTION HAS BEEN CLAIMED BY THE ASSESSEE ON PAYMENT OF INTEREST ON UNSECURED LOANS FROM THE DIRECTORS / SHAREHOLDERS. AGAINST THE AFORESAID FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) , THE REVENUE IS I N APPEAL BEFORE THE TRIBUNAL. 3 ITA NO . 1185/PUN/2016, A.Y. 2011 - 12 3. SMT. DEEPA KHARE APPEARING ON BEHALF OF THE ASSESSEE - RESPONDENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE ASSESSEE HAS NOT CLAIMED THE PAYMENT OF INTEREST AS EXPENDITURE THERE IS NO QUESTION OF DISALLOWING THE SAME. 4. MS. SHABANA PARVEEN REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER. TH E LD. DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO SHOW THE BUSINESS EXPEDIENCY FOR TAKING LOAN FROM THE DIRECTORS/SHAREHOLDERS. THE LD. DR FURTHER CONTENDED THAT THE ASSESSEE HAS PAID EXCESSIVE INTEREST ON LOAN TAKEN FROM THE DIRECTORS / SHAREHOLDERS OF THE ASSESSEE COMPANY. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE SOLITARY ISSUE IN APPEAL BY THE REVENUE IS DELETING OF DISALLOWANCE OF INTEREST ALLEGEDLY PAID BY THE ASSESSEE COMPANY TO THE DIRECTORS/SHAREHOLDERS ON UNSECURED LOANS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION BY OBSERVING AS UNDER : 6. IT IS SEEN THAT THE APPELLANT HAD NEITHER DEBITED THE INTEREST PAID TO PROFIT & LOSS ACCOU NT NOR CLAIMED ANY DEDUCTION ON ACCOUNT OF INTEREST PAID ON UNSECURED LOAN IN THE RETURN OF INCOME FILED AND THE SAME FACT IS ALSO ADMITTED BY THE A.O. IN HIS ASSESSMENT ORDER. RATHER APPELLANT HAS CAPITALIZED THE INTEREST PAID TO THE COST OF INVESTMENT I N SHARES OF JAIN IRRIGATION SYSTEMS LTD. AS PER CONSISTENT PRACTICE FOLLOWED. SINCE NO DEDUCTION ON ACCOUNT OF INTEREST PAYMENT IS AT ALL CLAIMED BY THE APPELLANT QUESTION OF ANY DISALLOWANCE OF INTEREST U/S. 40A(2)(A) COULD NOT ARISE. 6. THE LD. DR HAS FAILED TO CONTROVERT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). NO MATERIAL HAS BEEN PLACED ON RECORD BY THE REVENUE TO SHOW THAT THE INTEREST EXPENDITURE HAS BEEN CLAIMED BY THE 4 ITA NO . 1185/PUN/2016, A.Y. 2011 - 12 ASSESSEE IN THE PROFIT AND LOSS ACCOUNT. ONCE, THE EXPENDITURE HAS NOT BEEN CLAIMED BY THE ASSESSEE THERE IS NO QUESTION OF DISALLOWING THE SAME. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER. ACCORDINGLY, THE SAME IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 25 TH DAY OF APRIL, 201 9 . SD/ - SD/ - ( R.S. SYAL ) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 25 TH APRIL, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, NASHIK 4. THE PR. COMMISSIONER OF INCOME TAX - 2, NASHIK 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / / / TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE