Lalitha Peddi, Hyderabad V. Income Tax Officer, Ward-4(2), Hyderabad

ITA 130/Hyd/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4863 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 05-10-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 12-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP MEHTA
• Assessee Lawyers: S RAMA RAO
• Keywords: Salary income; Revenue expenditure; Set aside
• Section: 143(3); 143(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B - SMC , HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 130/HYD/2018 ASSESSMENT YEAR: 2012 - 13 SMT. LALITHA PEDDY, HYDERABAD. PAN: VS. INCOME TAX OFFICER, WARD - 4(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S. RAMA RAO REVENUE BY: SHRI SANDEEP MEHTA, DR DATE OF HEARING: 05/10/2020 DATE OF PRONOUNCEMENT: 08 /10/2020 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 1, HYDERABAD IN APPEAL NO. 0098/CIT(A) - 1, HYD/2015 - 16/2017 - 18, DATED 03/08/2017 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE AY: 2012 - 13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN HER APPEAL WHICH ARE EXTRACTED HEREIN BELOW FOR REFERENCE: - 1. THE ORDER OF THE LD. CIT (A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD. CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 2,18,597/ - MADE BY THE AO WITHOUT CONSIDERING THE D ETAILED EXPLANATION SUBMITTED. 3. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY, BUSINESS, HOUSE PROPERTY AD INCOME FROM OTHER SOURCES FIL ED HER RETURN OF INCOME FOR THE AY 2012 - 13 ON 1/5/2013 DECLARING TOTAL INCOME OF RS. 5,87,220/ - . INITIALLY THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND THEREAFTER THE CASE WAS TAKEN UP FOR SCRUTINY. FINALLY, THE ASSESSMENT WAS COMPLETED U/S. 143(3 ) OF THE ACT ON 27/3/2015 WHEREIN THE LD.AO DISALLOWED THE CLAIM OF INTEREST OF RS. 2,18,597/ - AS ALLOWABLE DEDUCTION. THE LD. AO WAS OF THE VIEW THAT THE INTEREST EXPENSES INCURRED BY THE ASSESSEE TOWARDS HER BORROWINGS WAS NOT ALLOWABLE AS REVENUE EXPEN DITURE BECAUSE THE BORROWED FUNDS WERE UTILISED BY THE ASSESSEE FOR PURCHASE OF IMMOVABLE / MOVABLE PROPERTIES AND THEREFORE THEY HAVE TO BE ADDED TO THE COST OF ASSET. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY AGREEING WITH HIS VIEW . 4. BEFORE US, THE LD. AR VEHEMENTLY ARGUED STATING THAT THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE TREATED AS REVENUE EXPENDITURE BECAUSE THE BORROWED FUNDS WERE UTILISED FOR THE BUSINESS OF THE ASSESSEE AND FOR EARNING INCOME. THE L D. DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD. REVENUE AUTHORITIES AND PRAYED FOR CONFIRMING THE SAME. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. ON EXAMINING THE INCOME AND EXPENDITURE 3 STATEMENT OF THE ASSESSEE IT IS OBVIOUS THAT ASSESSEE IS ENGAGED IN CAR LEASING ACTIVITIES AND ALSO EARNING OTHER MISCELLANEOUS INCOME. THE ASSESSEE IS ALSO PARTICIPATING IN CHIT FUNDS AND THE DIVIDEND EARNED FROM THE CHITS IS TAX ABLE UNDER THE HEAD INCOME FROM OTHER SOURCE AS AND WHEN IT IS R EALIZED . FURTHER, THE LD. REVENUE AUTHORITIES HAVE ALSO NOT BROUGHT OUT AS TO WHICH MOVABLE / IMMOVABLE PROPERTIES THE ASSESSEE HAS DIVERTED H ER BORROWED FUND FOR ACQUIRING THE SAME. CONSIDERING THESE FACTS AND CIRCUMSTAN CES OF THIS CASE, I AM OF THE VIEW THAT THE ADDITION MADE BY THE LD. AO IN THE HANDS OF THE ASSESSEE BY DISALLOWING THE CLAIM OF INTEREST OF RS. 2,18,597/ - WHICH IS FURTHER CONFIRMED BY THE LD. CIT (A) IS NOT JUSTIFIED. THEREFORE, I HEREBY SET ASIDE THE ORDER OF THE LD.CIT (A) AND FURTHER DIRECT THE LD. AO TO DELETE THE ADDITION MADE IN THE HANDS OF THE ASSESSEE FOR RS. 2,18,597/ - TOWARDS DISALLOWANCE OF I NTEREST. IT IS ORDERED ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE 0 8 TH OCTOBER, 2020. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 08 TH OCTOBER, 2020. OKK 4 COPY TO: - 1) SMT. LALITHA PEDDY, H.NO. 3 - 4 - 1 - 13/24, BARKATPURA, HYDERABAD 500 027. 2) INCOME TAX OFFICER, WARD - 4(2), IT TOWERS, AC GUARDS, HYDERABAD. 3) THE CIT (A) - 1, HYDERABAD. 4) THE PRINCIPAL COMMISSIONER OF INCOME TAX - 1, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE