Rajendra kumar Jalan, CHENNAI V. ACIT Company Circle II(2), CHENNAI

ITA 1247/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6143 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: A SRINIVASAN
• Keywords: Depreciation
• Section: 37(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH : CHENNAI [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.1247/CHNY/2018 / ASSESSMENT YEAR : 2009-2010. RAJENDRA KUMAR JALAN, FLAT E1, HARRINGTON COURT, NO.99, HARRINGTON COURT, CHETPET, CHENNAI 600 031. [PAN AAWPJ 2892H] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(2) CHENNAI. ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI. A. SRINIVASAN, C.A. /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 17 - 01 - 201 9 /DATE OF PRONOUNCEMENT : 24 - 01 - 201 9 / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, WHICH IS DI RECTED AGAINST AN ORDER DATED 13.03.2018 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-13, CHENNAI, IT IS AGGRIEVED ON DISALLOW ANCE OF INTEREST OF 13,80,647/- AND 1/3 RD OF AN EXPENDITURE OF 1,86,105/- CLAIMED AGAINST PETROL, TELEPHONE AND DEPRECIATION OF VEHI CLES. 2. FACTS APROPOS ARE THAT ASSESSEE A PARTNER IN ONE M /S. BALAJI INVESTMENTS AND ALSO EARNING COMMISSION INCOME, HA D FILED HIS RETURN FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME OF ITA NO.1247 /CHNY/2018 :- 2 -: 7,16,126/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, IT WAS NOTED BY THE LD. ASSESSING OFFICER THAT ASSESSEE HA D CLAIMED A SUM OF 13,80,647/- AS INTEREST ON AN OVER DRAFT TAKEN FRO M M/S. INDIAN BANK. ASSESSEES EXPLANATION WAS SOUGHT, WHY THE EXPENDIT URE SHOULD BE ALLOWED. EXPLANATION OF THE ASSESSEE WAS THAT HE H AD UTILIZED AN AGGREGATE SUM OF 89,65,250/- IN HIS REAL ESTATE BU SINESS AND THE INTEREST OUTGO WAS RELATING TO FUNDS UTILIZED FOR G IVING ADVANCE MONEY FOR PROPERTIES USING THE OVERDRAFT ACCOUNT. ASSESS EE ALSO SUBMITTED A SUMMARY, WHICH ACCORDING TO HIM, GAVE THE UTILIZA TION OF INDIAN BANK OVERDRAFT ACCOUNT. SAID SUMMARY READ AS UNDER:- RS. A TRUE VALUE HOMES 70,13,0 50 B ST.THOMAS MOUNT PROPERTY ADVANCE 9,30,500 C BALAJI INVESTMENTS 18,30,000 D MARUTHI ALTO 2,90,000 E INDIAN BANK OD INT 13,80,647 F INTEREST ON HOUSING LOAN 1,87,317 G JEWELLERY 1,12,334 H AYANAMBAKKAM LAN D 5,00,000 I FD 25,000 J LIC F UTURE PLUS 50,000 1,23,18,848 ITA NO.1247 /CHNY/2018 :- 3 -: LD. ASSESSING OFFICER, HOWEVER WAS OF THE OPINION THAT EXPENDITURE CLAIMED BY THE ASSESSEE AGAINST THE OVERDRAFT ACCO UNT WERE NOT RELATED TO ITS BUSINESS. ACCORDING TO HIM, SECTIO N 37(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DID NOT ALLOW FOR ANY EXPENDITURE OTHER THAN THOSE INCURRED WHOLLY AND EXCLUSIVELY F OR THE PURPOSE OF BUSINESS. INTEREST OF 13,80,647/- CLAIMED BY THE A SSESSEE WAS DISALLOWED. 3. LD. ASSESSING OFFICER ALSO MADE A DISALLOWANCE OF 1 /3 RD OF THE EXPENDITURE CLAIMED BY THE ASSESSEE FOR PETROL, TEL EPHONE AND DEPRECIATION. ACCORDING TO HIM, THERE COULD HAVE B EEN SOME PERSONAL ELEMENT IN SUCH CLAIM. ASSESSEES APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THE ABOVE ISSUES DID NOT ME ET WITH ANY SUCCESS 4. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STRO NGLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT ASSESSEE HAD A REAL ESTATE BUSINESS, AND THE OVERDRAFT WAS USED FOR SUCH REAL ESTATE BUSINESS. ACCORDING TO HIM, ASSESSEE HAD DI SPOSED OFF A PROPERTY WORTH 35,29,000/- AND BROUGHT IN THE MONE Y FOR PURCHASING THE PROPERTY FROM M/S. TRUE VALUE HOMES. FURTHER, ACCORDING TO HIM, THERE WERE DRAWINGS OF 52,00,000/- FROM THE FIRM M/S. BALAJI INVESTMENTS WHICH WAS ALSO USED ACQUIRING THE RESI DENTIAL PROPERTY IN ITA NO.1247 /CHNY/2018 :- 4 -: M/S. TRUE VALUE HOMES. FURTHER, ACCORDING TO HIM, CASH FLOW STATEMENT FILED BY THE ASSESSEE CLEARLY INDICATED T HE SOURCE FOR THE INVESTMENT IN A RESIDENTIAL FLAT AND OPENING AND CL OSING BALANCE OF THE OVERDRAFT BANK ACCOUNT TALLIED WITH THE BUSINESS A SSETS OF THE ASSESSEE. EVEN OTHERWISE, AS PER THE LD. AR, INTERE ST EARNED BY THE ASSESSEE WAS TAXED AND THEREFORE AMOUNTS EXPENDED T O KEEP THE FIXED DEPOSITS ALIVE SHOULD HAVE BEEN ALLOWED AS DEDUCTIO N. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, DISALLOWANCE AT THE BEST COULD BE MADE ONLY FOR A SUM OF 89,609/- RELATABLE TO THE PERSONAL ELEMENTS IN THE OUTFLOW FROM THE INDIAN BANK OVERDRAFT ACCO UNT. VIZ-A-VIZ, DISALLOWANCE OF EXPENDITURE ON PETROL, TELEPHONE AN D DEPRECIATION, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THERE COUL D BE NO SUCH ADHOC DISALLOWANCES. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. ANALYSIS OF THE IN DIAN BANK OVERDRAFT ACCOUNT FOR THE RELEVANT PREVIOUS YEAR GIVEN BY THE ASSESSEE IS REPRODUCED HEREUNDER:- ITA NO.1247 /CHNY/2018 :- 5 -: INDIAN BANK OVERDRAFT ACCOUNT ANALYSIS FOR THE YEAR 2008-09. INFLOWS OUTFLOWS BALAJI INVESTMENTS 5200000 TRUE VALUE HOMES 7013050 SHILPA JALAN 3729000 ST. THOMAS PROPERTY ADV 930500 SALARY GLOWWIDE 360000 BALAJJI INVESTMENTS 1830000 HOUSING LOAN 206000 MARTHI ALTO 290000 COMMISSION SMJ 1000000 INDIAN BANK OD INT 1380647 AYANABAKKAM 350000 INTEREST ON HOUSING LOAN 187317 FD PROCECEDS 25118 JEWELLERY 112334 57426 AYANAMBAKKAM LAND 500000 FD 25000 LIC FUTURE PLUS 50000 10927544 12318848 INTEREST RECEIVED 213449 DONATION U/S.80G 38250 ANILA JALAN 50000 MEDICLAIM POLICY 29361 OTHERS 91979 OTHERS 67433 11232972 12503892 OPENING BALANCE 01.04.2008 13173848 DEFICIT DURING THE YEAR 1270920 CLOSING BALANCE 31.03.2009 14444769 ITA NO.1247 /CHNY/2018 :- 6 -: BALANCE SHEET OF THE ASSESSEE REFLECTS HIS FIXED AS SETS AS UNDER:- FIXED ASSETS 15,91,359.89 COLOUR TELEVISI ON 13,940 FAN 3,485 FRIDGE 42,500 FURNITURE AND FIXTURE 46,164.63 JEWELLERY 6,65,344 MARUTI ALTO 2,68,250 MERCEDY VAN A/C. 5,30,718.75 MOBILE 10,860.36 WASHING MACHINE 10,097.15 IT IS CLEAR FROM THE ABOVE BALANCE SHEET THAT FIXED ASSETS OF THE ASSESSEE INCLUDED A NUMBER OF PERSONAL ITEMS LIKE JEWELLERY, MOBILE, COLOUR TELEVISION, WASHING MACHINE ETC. THERE IS NO THING ON RECORD TO SHOW THAT LOANS TAKEN BY THE ASSESSEE FROM INDIAN B ANK WERE UTILIZED ONLY FOR THE PURPOSE OF HIS REAL ESTATE BUSINESS. WHAT IS CLAIMED BY THE ASSESSEE AS INDIAN BANK OVERDRAFT ACCOUNT ANALY SIS, REPRODUCED BY US AT PARA 6 ABOVE IS ONLY AN ATTEMPT TO RECONC ILE THE OPENING OVERDRAFT ACCOUNT AND CLOSING OVERDRAFT ACCOUNT, B Y ADJUSTMENT OF WHAT WAS CLAIMED AS DEFICIT ARISING OUT FROM VARIOU S TRANSACTIONS DURING THE YEAR. MANY OF THE TRANSACTIONS CLAIMED A S OUTFLOWS HAD NOTHING TO DO WITH THE BUSINESS OF THE ASSESSEE. EF FECTIVELY, ASSESSEE WAS NOT ABLE TO SHOW THAT THE OVERDRAFT ACCOUNT WAS SOLELY AND WHOLLY USED FOR THE PURPOSE OF ITS BUSINESS. ITA NO.1247 /CHNY/2018 :- 7 -: 7. COMING TO THE DISALLOWANCE OF EXPENDITURE, NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THES E WERE INCURRED FOR THE PURPOSE OF ITS BUSINESS. ESPECIALLY SO SINC E THE BALANCE SHEET OF THE ASSESSEE INCLUDED ASSETS AND LIABILITIES RELATA BLE TO HIS BUSINESS, AS WELL AS HIS PERSONAL ASSETS, WITHOUT ANY CLEAR DEMA RCATION. IT WAS A MIXED BAG OF BUSINESS ASSETS AND PERSONAL ASSETS. ASSESSEE COULD NOT ESTABLISH THAT THE EXPENDITURE CLAIMED WAS SOLE LY ATTRIBUTABLE TO HIS BUSINESS AND NOT TO HIS PERSONAL DEALINGS. IN T HE FACTS AND CIRCUMSTANCES OF THE CASE, I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWERS AUTHORITIES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DISMIS SED. ORDER PRONOUNCED ON THURSDAY, THE 24 TH DAY OF JANUARY, 2019, AT CHENNAI. SD/ - (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER / CHENNAI / DATED:24TH JANUARY, 2019. KV / COPY TO: 1 . / APPELLANT 3. ( ) / CIT(A) 5. / DR 2. / RESPONDENT 4. / CIT 6. / GF