Shri Dharmeshkumar V. Patel, Ahmedabad V. The Deputy Commissioner of Income Tax, Circle-2(2), Ahmedabad

ITA 1219/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3372 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PPL
• Keywords: Depreciation
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1219/AHD/2017 (ASSESSMENT YEAR: 2013-14) SHRI DHARMESHKUMAR V. PATEL 25, SUDARSHAN SOCIETY NARANPURA AHMEDABAD-380013 V/S D.C.I.T. CIRCLE 2(2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ABYPP8092L APPELLANT BY : SHRI HEM CHHAJAD, AR RESPONDENT BY : SHRI VEDANSHU TRIPATHI, SR. D.R. ( )/ ORDER DATE OF HEARING : 21 -01-201 9 DATE OF PRONOUNCEMENT : 24 -04-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-10, AHMEDABAD DATED 15.03.2017 PERTAINING TO A.Y. 2013-14 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 1219 /AHD/2017 . A.Y. 2013-1 4 2 1) THE ORDER PASSED BY THE LD CIT(A) IS AGAINST LA W, EQUITY AND BAD IN THE EYES OF LAW. 2) THE LD CIT (A) HAS ERRED IN LAW AND/OR FACTS IN UPHOLDING THE ORDER OF THE LD. A.O. OF DISALLOWANCE OF GENUINE BUSINESS EXPENDITUR E OF RS 13,63,446/- 3) THE APPELLANT CRAVES LIBERTY TO ADD, AMEND ALTER OR MODIFY ALL OR ANY GROUNDS OF APPEAL BEFORE FINAL DISPOSAL. 2. IN THIS CASE, THE ASSESSEE IS A PROPRIETOR OF AVAL CONSTRUCTION CO. ON GOING THROUGH THE PROFIT & LOSS ACCOUNT OF AVAL CONSTRUCT ION CO. IT HAS COME TO NOTICE THAT DURING THE YEAR THE ASSESSEE HAD NOT CA RRIED OUT ANY BUSINESS ACTIVITIES SINCE NO INCOME OR RECEIPTS IS DECLARED IN THE PROFIT & LOSS ACCOUNT OF AVAL CONSTRUCTION CO. HOWEVER, INDIRECT INCOMES SUCH AS DIVIDEND (7440) AND INTEREST INCOME OF RS.L1,35,702/-HAS BEEN FOUND TO BE CREDITED TO THE PROFIT & LOSS ACCOUNT. IN OTHER WORDS, AS PER THE P ROFIT & LOSS ACCOUNT ONLY INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' H AS BEEN DECLARED. ON THE OTHER HAND, THE ASSESSEE HAD DEBITED VARIOUS EXPEND ITURES IN THE PROFIT & LOSS ACCOUNT TO THE TUNE OF RS. 18,46,978/- WHICH ARE NO T ALLOWABLE UNDER THE PROVISIONS OF SECTION 57 OF THE I.T. ACT. IT IS TO MENTION HERE THAT THE INCOME DECLARED BY THE ASSESSEE IS COVERED BY PROVISIONS O F SECTION 56 OF THE I.T. ACT I.E. 'INCOME FROM OTHER SOURCES'. 3. IN VIEW OF THE ABOVE OBSERVATION A SHOW-CAUSE NOTIC E WAS ISSUED TO THE ASSESSEE VIDE THIS OFFICE LETTER NO. DCIT/CIRCLE.2( 2)/SC/F.NO.53/2015-1 6 DTD.30.11.2015. THE RELEVANT PORTION OF THE SHOW CA SE NOTICE IS REPRODUCED HEREUNDER:- 'ON NOTIFICATION OF PROFIT & LOSS ACCOUNT, IT IS NOT ICED THAT YOU HAVE DECLARED INTEREST INCOME OF RS.L1,42,762/- WHICH IS TO BE ASSESSED UN DER THE HEAD 'INCOME FROM OTHER ITA NO. 1219 /AHD/2017 . A.Y. 2013-1 4 3 SOURCES'. NO. BUSINESS ACTIVITIES APPEARS TO HAVE B EEN CARRIED OUT AS PER THE P&L A/C. AND NO INCOME UNDER THE HEAD. BUSINESS AND PROFESS IONS HAS BEEN DECLARED BY YOU. IT IS FURTHER NOTICED THAT YOU HAVE DEBITED FOLLOWING EXP ENDITURE TO ARRIVE AT THE NET LOSS OF RS. 7,04,214/- :- INDIRECT EXPENSES BANK COMMISSION 81,922/- DEPRECIATION EXPENSES 7,48,094/- DIESEL PETROL EXPENSES 12,975/- ELECTRIC CHARGES 1,41,920/- INSURANCE EXPENSES 1,92,439/- MISCELLANEOUS EXPENSES 7,970/- MOTOR REPAIRING EXPENSES 1,21,365/- OFFICE EXPENSES 34,326/- PROFESSIONAL TAX EXPENSES 2,400/- R.T.O. TAX 5,0 12/ - STATIONERY & PRINTING EXPENSES 3 0,63 5/- TELEPHONE EXPENSES 65,490/- TOTAL :- 13,63,447 /- 4. THE ABOVE EXPENDITURES ARE NOT ALLOWABLE AS DEDUCTI ON AGAINST THE INTEREST INCOME AS PER THE PROVISION OF U/S 57 OF THE I.T. A CT AND ALL EXPENSES EXCEPT INTEREST EXPENSES OF RS. 4,83,531/- IS DISALLOWED A ND ADDITION OF RS. 13,63,446/- IS MADE IN THE HANDS OF THE ASSESSEE. ITA NO. 1219 /AHD/2017 . A.Y. 2013-1 4 4 5. THEREAFTER ASSESSEE PREFERRED FIRST STATUTORY APPEA L BEFORE THE LD. CIT(A) AND IN APPEAL ACTION OF THE A.O. WAS CONFIRMED BY THE LD. CIT(A). 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN THIS CASE, APPELLANT IS CARRYING ON BUSINESS OF FINANCE IN HIS PROPRIETARY CONCERN NAMELY M/S AVAL CONSTRUCTION CO. APPELLANT IS ALSO PARTNER IN VARIOUS FIRMS AND EARNING PROFIT, REMUNERATION AND INTEREST INCOME. T HE APPELLANT HAS SUBMITTED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF HIS PR OPRIETARY CONCERN NAMELY M/S AVAL CONSTRUCTION CO. AND OTHER DETAILS CALLED FOR BY THE LOWER AUTHORITIES. DURING THE YEAR UNDER REFERENCE, APPELLANT HAS ALSO EARNED INTEREST AND OTHER INCOME OF RS. 11,42,762/- IN HIS PROPRIETARY CONCER N. APPELLANT HAS ALSO PAID INTEREST OF RS. 4,83,531/-. THE OUT OF TOTAL EXPENS ES, ASSESSEE HAS HIMSELF DISALLOWED DEPRECIATION OF RS. 7,48,094/- IN HIS RE TURN OF INCOME. AND FOR REMAINING AMOUNT OF RS. 6,15,353/- WAS MADE FOR BUS INESS PURPOSE BY THE ASSESSEE BUT APPELLANT HAS NOT SHOWN ANY BUSINESS A CTIVITIES APPEARS TO HAVE CARRIED OUT AS PER PROFIT AND LOSS ACCOUNT AND NO I NCOME UNDER THE BUSINESS AND PROFESSIONAL HAS BEEN DECLARED BY HIM. BUT IN T HE INTEREST OF JUSTICE, WE ALLOW RS. 3 LACS EXPENSES OUT OF RS. 6,15,353 AND DIRECT THE A.O. TO MAKE ADDITION OF RS. 3,15,353/-. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 24 - 04- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 24/04/2019