Shri Rajeev Kumar , Bangalore V. The Deputy Commissioner of Income Tax Circle-4(1)(1), Bangalore

ITA 1310/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0191 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-09-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 23-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SIDDAPP A JI R N
• Assessee Lawyers: H GANPATLAL KAWAD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 1310/BANG/2018 (ASSESSMENT YEAR: 2013 - 14) SHRI RAJEEV KUMAR, NO. 32, PRESTIGE NORTH WEST COUNTRY, ADDEVESWANATGHPURA DODDABALLAPUR MAIN ROAD, BENGALURU 560064. PAN ACBPR0577N APPELLANT. VS. DCIT, CIRCLE 4 (1) (1), BANGALORE. RESPONDENT. ASSESSEE BY : SHRI H. GANPAT LAL KAWAD, C. A. REVENUE BY : SHRI SIDDAPPAJI R. N. ADDL. CI T (DR ) DATE OF HEARING : 03.0 9.2018 DATE OF PRONOUNCEMENT : 07.09.2018 O R D E R PER SHRI A. K. GARODIA, A.M. : THIS APPEAL IS FILED BY THE ASSESSEE AND THIS IS DI RECTED AGAINST THE ORDER OF CIT (A) 4, BANGALORE DATED 29.12.2017 FOR A. Y. 2013 14. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS BUT THE ONLY GRIEVANCE OF THE ASSESSEE IS ABOUT DISALLOWANCE OUT OF INTEREST EXPE NDITURE OF RS. 545,265/- MADE BY THE AO AND CONFIRMED BY THE CIT (A). 3. LEARNED AR OF THE ASSESSEE SUBMITTED THAT AS PER PARA 3 OF THE ASSESSMENT ORDER, THIS IS THE CONCLUSION DRAWN BY THE AO THAT OUT OF LOAN OF RS. 145 LACS BORROWED BY THE ASSESSEE FROM DUETSHE BANK AT AN IN TEREST RATE OF 13.75 %, AN AMOUNT OF ONLY RS. 65 LACS WAS GIVEN BY THE ASSE SSEE TO M/S KNN UNIVERSAL PVT. LTD ON 18.03.2011 AS ADDITIONAL LOAN . HE SUBMITTED THAT THE AO HAS ACCEPTED THAT TO THIS EXTENT I.E. RS. 65 LACS O F LOAN BORROWED FROM DUETSHE BANK AT AN INTEREST RATE OF 13.75 %, IT IS ACCEPTAB LE THAT THIS MUCH INTEREST 2 ITA NO. 1310/BANG/2018 BEARING BORROWED FUND WAS USED FOR EARNING INTEREST INCOME AND THEREFORE, DEDUCTION OF INTEREST EXPENDITURE IS ALLOWABLE ON T HIS MUCH LOAN ONLY AND HE ALLOWED DEDUCTION OF INTEREST EXPENDITURE TO THE EX TENT OF RS. 957,535/- OUT OF RS. 15 LACS OF INTEREST PAID AND IN THIS MANNER, HE MADE DISALLOWANCE OF RS. 545,265/-. HE SUBMITTED THAT IN A. Y. 2012 13 ALS O, THE ASSESSMENT ORDER WAS FRAMED U/S 143 (3) ON 31.07.2014, COPY OF WHICH IS AVAILABLE ON PAGES 55 TO 57 OF THE PAPER BOOK. HE DRAWN OUR ATTENTION TO PARA 4 .0 TO 4.2 OF THIS ASSESSMENT ORDER AND POINTED OUT THAT IN THAT YEAR, IT WAS HEL D BY THE A. O. THAT OUT OF RS. 145 LACS OF THE SAME LOAN BORROWED FROM DUETSHE BAN K, RS. 100 LACS WAS USED FOR GIVING INTEREST BEARING LOAN TO M/S KNN UN IVERSAL PVT. LTD. AND IN THAT YEAR, INTEREST WAS DISALLOWED ON THE LOAN OF RS. 45 LACS ONLY TO THE EXTENT OF RS. 597,524/-. HE SUBMITTED THAT WHEN IN A. Y. 2012 1 3, THE AO HAS ACCEPTED THAT TO THE EXTENT OF RS. 100 LACS, INTEREST BEARIN G BORROWED FUNDS OUT OF LOAN OF RS. 145 LACS FROM DUETSHE BANK WAS USED FOR EARN ING INTEREST INCOME AND DEDUCTION OF INTEREST EXPENDITURE ON SUCH LOAN WAS ALLOWED AND SINCE, THERE IS NO CHANGE IN FACTS IN THE PRESENT YEAR, IT CANNOT B E ALLEGED THAT ONLY 65 LACS OF SUCH LOAN FROM DUETSHE BANK WAS UTILIZED FOR EARNIN G INTEREST INCOME. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE LOAN OF RS. 145 LACS FROM DUETSHE BANK WAS BORROWED ON 18.03.2011. IN A. Y. 2012 13, THE ASSESSEE CLAIMED INTEREST EXPENDITURE OF RS. 19,25, 337/- BEING INTEREST PAID ON LOAN OF RS. 145 LACS FROM DUETSHE BANK. IN THAT YEA R, THE AO HELD THAT OUT OF THIS AMOUNT OF RS. 145 LACS BORROWED FROM DUETSHE B ANK, RS. 100 LACS WAS USED FOR EARNING INTEREST INCOME BY ADVANCING LOAN TO M/S KNN UNIVERSAL PVT. LTD. IT WAS HELD IN THAT YEAR THAT THE AMOUNT OF LO AN OF RS. 45 LACS BORROWED FROM DUETSHE BANK WAS NOT USED FOR EARNING INTEREST INCOME AND INTEREST ON THIS MUCH LOAN OF RS. 45 LACS COMPUTED AT RS. 597,5 24/- WAS DISALLOWED. THE ASSESSEE HAS ALSO ACCEPTED SUCH DISALLOWANCE. THERE IS NO DIFFERENCE IN FACTS OF THE PRESENT YEAR AS COMPARED TO A. Y. 2012 13. HENCE, IN OUR CONSIDERED OPINION, SAME AMOUNT OF INTEREST ALLOWED IN A. Y. 2 012 13 SHOULD BE ALLOWED IN THE PRESENT YEAR ALSO. IN THAT YEAR, THE AO HAS ALLOWED DEDUCTION OF RS. 13,27,831/- IN THE PROPORTION OF 100:145 OUT OF RS. 19,25,355/- BEING INTEREST ON LOAN OF RS. 145 LACS BORROWED FROM DUETSHE BANK AS AGAINST THE CLAIM OF THE 3 ITA NO. 1310/BANG/2018 ASSESSEE OF RS. 19,25,355/- AND DISALLOWANCE WAS MA DE OF RS. 597,524/-. SINCE, THERE IS NO DIFFERENCE IN FACTS IN THE PRESE NT YEAR, WE HOLD THAT IN THE PRESENT YEAR ALSO, DEDUCTION OUT OF INTEREST EXPEND ITURE SHOULD BE ALLOWED IN THE SAME PROPORTION. IN THE PRESENT YEAR, INTEREST EXPENDITURE INCURRED ON LOAN OF RS. 145 LACS FROM DUETSHE BANK IS RS. 19,57,735. 17 AS NOTED ON PAGE 54 OF THE PAPER BOOK. HENCE, THE AMOUNT ALLOWABLE IN THE PROPORTION OF 100:145 COMES TO RS. 13,50,162.19. WE DIRECT THE A. O. TO A LLOW DEDUCTION OF INTEREST EXPENDITURE TO THE EXTENT OF THIS AMOUNT OF RS. 13, 50,162.19 OUT OF THE ASSESSEES CLAIM OF RS. 15,36,200/- AND IN THIS MAN NER, THE AMOUNT TO BE DISALLOWED COMES TO RS. 186,037.81. THE AO IS DIREC TED ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DA TE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (N. V. VASUDEVAN) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 07.09.2018. MS* COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.