Surinder Kumar Singal, Chandigarh V. ACIT, C-5(1), Chandigarh

ITA 1303/CHANDI/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6536 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 15-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT ITA NO.1303/CHD/2018 ASSESSMENT YEAR: 2015-16 SURINDER KUMAR SINGAL VS. THE ACIT SCO15, MADHYA MARG, C-5(1) SECTOR-26, CHANDIGARH CHANDIGARH PAN NO. ADYPS5462P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RACHIT GOYAL REVENUE BY : SHRI MANJIT SINGH, SR. DR DATE OF HEARING : 20/02/2019 DATE OF PRONOUNCEMENT : 20/02/2019 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 21/08/2018 OF LD. CIT(A)-2, CHANDIGARH. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE SUSTENANCE OF THE ADDITION OF RS. 4,38,420/- MADE BY THE ASSESSING OF FICER BY MAKING THE DISALLOWANCE OF INTEREST EXPENSES. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 31/10/2015 DECLARING AN INCOME OF RS. 33,64,680/- W HICH WAS REVISED ON 28/03/2017 AT AN INCOME OF RS. 34,09,490/-, LATER ON, THE CASE WA S SELECTED FOR SCRUTINY. 4. DURING THE COURSE OF ASSESSMENT PROCEEDING THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAD TAKEN LOAN FROM DIFFERENT PARTIES AND WAS PAYING INTEREST @13% ON SUCH LOANS WHEREAS THE INTEREST WAS CHARGED AT THE LOWER RATE I.E; 12% FROM THE RELATED PARTIES. THE ASSESSING OFFICER DISALLOWED THE DIFFE RENCE OF INTEREST AMOUNTING TO RS. 4,38,420/-. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 6. NOW THE ASSESSEE IS IN APPEAL. 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT A SI MILAR ISSUE WAS A SUBJECT MATTER OF THE ASSESSEES APPEAL IN ITA NO. 963/CHD/2018 FOR T HE A.Y 2014-15 BEFORE THE ITAT CHANDIGARH BENCH, CHANDIGARH WHEREIN VIDE ORDER DT. 17/01/2019 THIS ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER, COP Y OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD. 2 8. IN HIS RIVAL SUBMISSIONS LD. SR. DR STRONGLY SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT ON IDENTICA L ISSUE FOR THE PRECEDING YEAR 2014-15 HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFF ICER BY FOLLOWING THE EARLIER ORDER DT. 03/07/2018 IN ITA NO. 1224/CHD/2016, THE RELEVANT F INDINGS HAS BEEN GIVEN IN PARA 5 TO 7 OF THE ORDER DATED 17/01/2019 IN ITA NO. 963/CHD/20 18 WHICH READ AS UNDER: 5. THE NEXT ISSUE RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 72,24,534/- U/S 57(III) OF THE A CT. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THERE WAS A DIRECT NEXUS BETWEEN THE INTEREST INCOME EARNED AND EXPENDITURE CLAIMED. THAT THE ASS ESSEE HAD RECEIVED LOAN AMOUNT FROM THE BANK WHICH WAS FURTHER DISBURSED AS LOAN TO OTHER PARTIES FROM WHOM THE INTEREST INCOME WAS EARNED. THAT THE ASSES SEE WAS ENTITLED TO SET OFF THE INTEREST EXPENDITURE AGAINST INTEREST INCOME AS THERE WAS A DIRECT NEXUS BETWEEN THE TWO. 6. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THA T THE ASSESSEE COULD NOT PROVE WITH SATISFACTORY EVIDENCE THE DIRECT NEXUS BETWEEN INTEREST INCOME EARNED AND THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. IF THE AVERMENTS OF THE ASSESSEE ARE TAKEN AS CORRECT, THE ASSESSEE, IN OUR VIEW, WILL B E ENTITLED TO CLAIM DEDUCTION OF THE EXPENDITURE OUT OF THE INTEREST INCOME OFFERED BY THE ASSESSEE. WE THEREFORE SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND REST ORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE IT AFRESH AND DECIDE T HE SAME IN THE LIGHT OF THE ABOVE OBSERVATIONS MADE AFTER GIVING PROPER OPPORTU NITY TO THE ASSESSEE TO PRESENT HIS CASE. SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION AR E IDENTICAL TO THE FACTS INVOLVED IN THE PRECEDING ASSESSMENT YEAR, SO RESPE CTFULLY FOLLOWING THE ORDER DT. 17/01/2019 IN ITA NO. 963/CHD/2018 FOR THE A.Y. 201 4-15 THIS ISSUE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED AS DIRECTED IN THE AFORESAID REFERRED TO ORDER OF THE ITAT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 20/02/2019.) SD/- (N.K. SAINI) VICE PRESIDENT PLACE: CHANDIGARH DATED : 20/02/2019 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR