KINTU KISHOR BAJAJ, MUMBAI V. ACIT CIR 9(1), MUMBAI

ITA 1307/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8614 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 26-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRAVAN KUMAR
• Assessee Lawyers: V C SHAH
• Keywords: Proportionate interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVA N, JM ITA NO.1307/MUM/2009 : ASST.YEAR 2005-2006 SMT.KINTU KISHOR BAJAJ 501, KRYSTAL, 206, N.S.PATKAR MARG (WATERFIELD ROAD), BANDRA (WEST) MUMBAI 400 050. PAN :AACPB6639A. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 9(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.C.SHAH RESPONDENT BY : SHRI SRAVAN KUMAR O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 18.12.2008 IN RELATION TO THE ASSESSMENT YEAR 2005-2006. 2. THE ONLY GROUND IS AGAINST THE CONFIRMATION OF D ISALLOWANCE OF RS.12,93,871, BEING THE AMOUNT OF INTEREST PAID ON BORROWING. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE CLAIMED DEDUCTION OF INTEREST OF RS.12,93,871. ON BEING CALLED UPON TO JUSTIFY THE CLAIM FOR DEDUCTIO N, THE ASSESSEE STATED THAT LOANS WERE TAKEN FOR BUSINESS PURPOSES. THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE HAD SHOWN INVESTMENT IN SHARES AT RS.22.39 LAKHS AN D RS.11.62 LAKHS IN HER CAPITAL ACCOUNT IN THE PARTNERSHIP FIRM M/S.TREND SETTER. S INCE THE INVESTMENT IN SHARES AND PARTNERSHIP CAPITAL WERE INTENDED FOR EARNING I NCOME, THE A.O. OPINED THAT PROPORTIONATE INTEREST ON THIS INVESTMENT WAS DISAL LOWABLE U/S.14A. HE, THEREFORE, MADE DISALLOWANCE U/S.14A OF RS.2,72,114. WITHOUT P REJUDICE TO THIS DISALLOWANCE, HE FURTHER NOTED THAT THE ENTIRE INTEREST EXPENDITU RE WAS ATTRIBUTABLE TO THE ASSESSEES NEW CONSTRUCTION OF THE LEASED PROPERTY. IN THIS VIEW IT WAS OPINED THAT THE ENTIRE EXPENDITURE WAS TO BE CONSIDERED AS RELA TABLE TO THE CONSTRUCTION AND NOT CONCERNED WITH HER BUSINESS. HE, THEREFORE, MADE DI SALLOWANCE OF INTEREST AT RS.12.93 LAKHS. THE LEARNED CIT(A) UPHELD THE DISAL LOWANCE. ITA NO.1307/MUM/2009 SMT.KINTU KISHOR BAJAJ. 2 3. WE HAVE HEARD BOTH SIDES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. THE LEARNED A.R. CLAIMED THAT APART FROM EARNING RENTAL INCOME, THE ASSESSEE WAS ALSO ENGAGED IN THE BUSINESS OF TRADING IN CLOTH AND FIN ANCING. HE SUBMITTED THAT THE FUNDS WERE BORROWED FOR THE PURPOSE OF ASSESSEES B USINESS AND HENCE NO DISALLOWANCE OF INTEREST WAS WARRANTED. HE INVITED OUR ATTENTION TOWARDS COPY OF PROFIT AND LOSS ACCOUNT FOR THIS YEAR TO SHOW THAT APART FROM INTEREST EXPENDITURE OF RS.12.93 LAKHS, THE ASSESSEE ALSO OFFERED INTEREST INCOME OF RS.7.22 LAKHS. IT WAS, THEREFORE, PRAYED THAT ONE MORE OPPORTUNITY BE GIVE N TO THE ASSESSEE SO THAT PROPER FACTS MAY BE PLACED BEFORE THE ASSESSING OFFICER. N O SERIOUS OBJECTION WAS TAKEN BY THE LD. DR. FROM THE ABOVE NARRATION OF FACTS IT CAN BE NOTICED THAT THE DISALLOWANCE OF INTEREST HAS BEEN MADE BY CONSIDERI NG THE BORROWING HAVING BEEN USED FOR CONSTRUCTION, WITHOUT ANY POSITIVE EVIDENC E. ON THE OTHER HAND THE CLAIM OF THE ASSESSEE IS THAT SUCH BORROWING WAS UTILIZED ONLY IN THE BUSINESS OF THE ASSESSEE, AGAIN WITHOUT ANY POSITIVE EVIDENCE. IN THE GIVEN CIRCUMSTANCES, IT NEEDS TO BE ASCERTAINED THAT HOW THE AMOUNT TAKEN AS LOA N, ON WHICH INTEREST WAS CLAIMED AS DEDUCTION, WAS ACTUALLY UTILISED. AS SUFFICIENT MATERIAL IS NOT BEFORE US TO DECIDE ABOUT THE UTILIZATION OF SUCH LOAN, IN OUR CONSIDE RED OPINION IT WOULD BE JUST AND FAIR IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASI DE AND THE MATTER IS RESTORED TO THE FILE OF A.O. WE ORDER ACCORDINGLY AND DIRECT HIM TO DECIDE THE ISSUE AFRESH AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 4. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 4 TH DAY OF FEBRUARY, 2011. SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 4 TH FEBRUARY, 2011. DEVDAS* ITA NO.1307/MUM/2009 SMT.KINTU KISHOR BAJAJ. 3 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - IX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.