A.C.I.T.. Cir.-3, Nagpur V. SHRI AMARSINGH H. WAGHMARE, Nagpur

ITA 12/NAG/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2163 (ITAT-NAGPUR)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2016
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Assessee Lawyers: HARISH BHONEJA
• Keywords: Gift
• Section: 131; 68

Judgement Text

1 ITA NO. 12/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 12 /NAG/201 6 . ASSESSMENT YEAR : 2009 - 10. ASSTT. COMMISSIONER OF INCOME - TAX, SHRI AMARSINGH H. WAGHMARE, CIRCLE - 3, NAGPUR. VS. NAGPUR. PAN AAMPW7249P. APPELLANT. RESPOND ENT. APPELLANT BY : SMT. AGNES P. THOMAS. RESPONDENT BY : SHRI HARISH BHONEJA. DATE OF HEARING : 0 7 - 07 - 2016 DATE OF PRONOUNCEMENT : 8 TH JULY, 2016 O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 10 - 11 - 2015 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.35,00,000/ - IN RESPECT OF THE SO CALLED LOAN TAKEN BY THE ASSESSEE FROM M/S SAN FINANCE CORPORATION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THAT THE FACTS AND CIRCUMSTANCES OF THE CASE AT HAND ARE DIFFERENT FROM THOSE OF THE CASE LAW RELIED UPON I.E. CHANDRAKANT H. SHAH VS. ITO 121 TTJ 145 (MUM)(2009). 2. BRIEF FACTS OF THE CASE ARE AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD BEEN ALLOTTED ONE FLAT IN ADARSH CO OPERATION HOUSING SOCIETY, 2 ITA NO. 12/NAG/2016. COLABA, MUMBAI AND THAT THE ASSESSEE HAD INVESTED AN AMOUNT OF RS.35,00,000/ - IN THE SAID FLAT. THE ASSESSEE EXPLAINED THAT THE SOURCE OF SUCH INVESTMENT OF RS.35,00,000 WAS A LOAN FROM M/S SAN FINANCE CORPORATION AND HE FURNISHED VARIOUS DETAILS INCLUDING CONFIRMATION FROM THE SAID PARTY BEFORE THE AO. THE AO CARRIED OUT FURTHER ENQUIRIES BY WAY OF ISSUE OF SUMMONS U/S 131 TO THE SAID M/S SAN FINANCE CORPORATION WHEREIN THE SAID PARTY APPEARED BEFORE THE AO AND CONFIRMED THE SAID TRANSACTI ON. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT THE SAID LOAN WAS TAKEN BY CHEQUE FROM M/S SAN FINANCE CORPORATION AND HAD BEEN SUBSEQUENTLY REPAID BY CHEQUE AND THAT THEREFORE THE SAID T R ANSACTION STOOD PROPERLY EXPLAINED. THE AO, HOWEVER, CAME TO THE CONC LUSION THAT THERE WAS NO AGREEMENT BETWEEN THE ASSESSEE AND M/S SAN FINANCE CORPORATION AND THAT NO INTEREST WAS BEING CHARGED ON THE SAID ADVANCE TO THE ASSESSEE AND CONSEQUENTLY HE ADDED THE SAID AMOUNT OF RS.35,00,000/ - TO THE INCOME OF THE ASSESSEE U/S 56(2)(VI) OF THE INCOME TAX ACT. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) DELETED THE ADDITION HOLDING AS UNDER : CONSIDERING THE ABOVE TOTALITY OF FACT IT IS EVIDENT THAT THE AMOUNTS WHICH HAVE BEEN SHOWN IN THE BALANCE SHEET AS LOAN AND ALSO CONFIRMED BY THE LENDERS TO BE LOAN ARE NOT GIFT AND CANNOT BE BROUGHT TO TAX U/S 56(2)(V) OF THE ACT EVEN IF THE SAME REMAINED UNPAID. IT IS NOT A REQUIREMENT OF LAW OR CONTRACT THAT THE WRITTEN AGREEMENT SHOULD BE ENTERED INTO WHILE TAKING A LOAN. ABSENC E OF REPAYMENT SCHEDULED DOES NOT ALTER THE FACTS THAT THE AMOUNT TAKEN BY THE APPELLANT IS IN THE NATURE OF LOAN. THE INTENTION OF THE APPELLANT HAS TO BE GATHERED FROM THE CIRCUMSTANTIAL EVIDENCE AND THE INTENTION TO REPAY THE LOAN IS ESTABLISHED BY THE FACT THAT THE SAID AMOUNT IS SHOWN AS LOAN IN THE BALANCE SHEET OF THE APPELLANT AS WELL AS OF SFC. THE FACT THAT THE SAID AMOUNT IS A LOAN IN CONCLUSIVELY ESTABLISHED BY THE FACT THAT THE APPELLANT HAS SUBSEQUENTLY REPAID THE SAID AMOUNT TO SFC. IT IS ALS O A FACT THAT ALL THE REQUIREMENTS OF 3 ITA NO. 12/NAG/2016. SECTION 68 I.E., IDENTITY; CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS STAND ESTABLISHED AS THE SAID SFC IS ASSESSED IN NAGPUR ONLY AS MENTIONED ABOVE. CONSIDERING THE ABOVE TOTALITY OF FACTS THE ADDITION MADE BY THE LD. AO OF RS.35,00,000/ - IS HEREBY DELETED. 3. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. 4. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT IN THIS CASE THE ASSESSEE HAS TAKEN A LOAN BY CHEQUE. THE SAID LOAN HA S BEEN RETURNED BY CHEQUE AS WELL. PARTIES HAVE CONFIRMED THE TRANSACTION. NO CASE HAS BEEN MADE THAT THE PARTIES HAVE NOT BEEN IDENTIFIED OR THE TRANSACTION IS NOT GENUINE. IN THESE CIRCUMSTANCES, IN MY CONSIDERED OPINION, LEARNED CIT(APPEALS) IS QUITE CO RRECT IN HOLDING THAT THE SUM INVOLVED CANNOT BE BROUGHT TO TAX U/S 56(2)(V). IN THIS REGARD LEARNED CIT(APPEALS) RELIANCE UPON THE CASE OF MUMBAI ITAT IN THE CASE OF CHANDRAKANT H. SHAH VS. ITO 121 TTJ 145 IS ALSO WELL PLACED. THERE IS NO LAW THAT TO CON STITUTE A LOAN THERE HAS TO BE A WRITTEN AGREEMENT OR THERE HAS TO BE PROVISION OF INTEREST. IN THIS REGARD I ALSO PLACE RELIANCE UPON THE DECISION OF ITAT, MUMBAI IN THE CASE OF CHANDRAKANT H. SHAH (SUPRA) WHEREIN IT HAS HELD THAT ONCE AMOUNTS HAVE BEEN SHOWN IN THE BALANCE SHEET AS LOAN AND ALSO SHOWN CONFIRMATION BY THE LENDERS THAT THEY WERE LOAN AND NOT GIFTS, THE SAME CANNOT BE BROUGHT TO TAX U/S 56(2)(V) EVEN IF THE SAID AMOUN S T ARE NOT REPAID AND THAT THE LOAN TRANSACTION OUGHT TO BE CONSIDERED U/ S 68 ONLY AND NOT U/S 56(2)(V). IT HAS BE E N HELD THEREIN THAT INTEREST FREE LOAN WITHOUT REPAYMENT STIPULATION OBTAINED FROM SISTER CONCERNS FOR PURCHASE OF FLAT FROM ONE OF THEM LOANS TO BE EX AMINED IN CONTEXT OF S. 68. IT HAS BEEN FURTHER HELD THAT IF THE REQUIREMENT OF SECTION 68 STANDS APPROVED THE LD. AO CANNOT THEN ADD THE SAID AMOUNT U/S 56(2)(V) AS THERE CANNOT BE TWO PROVISIONS ENABLING ADDITION IN RESPECT OF THE SAID TRANSACTION. IN THESE CIRCUMSTANCES, IN MY CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY I UPHOLD THE SAME. 4 ITA NO. 12/NAG/2016. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF JULY,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 8 TH JULY, 2016. COPY FORWARDED TO : 1. SHRI AMARSINGH H. WAGHMARE, 12, HAWARE LAYOUT, KHAMLA, NAGPUR. 2. A.C.I.T. , CIRCLE - 3, NAGPUR. 3. C.I.T. - , NAGPUR. 4. CIT(APPEALS), - I I , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.