ISHWARDAS S GUPTA, MUMBAI V. INCOME TAX OFFICER-30(1)(5), MUMBAI

ITA 1322/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8506 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 06-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM ITA NO. 1322 /MUM/ 2018 (ASSESSMENT YEAR: 2012 - 13 ) ISHWARDAS S. GUPTA C - 1/4, SUNDER NAGAR, S. V. ROAD, MALAD (W), MUMBAI - 400 064 VS. INCOME TAX OFFICER - 30(1)(5), PRATYAKSHA KAR BHAVAN, BKC, BANDRA (E), MUMBAI - 400 051 PAN/GIR NO. AEJPG 5040 F ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : NONE RESPONDENT BY : SHRI S. K. BEPARI DATE OF HEARING : 16.10.2018 DATE OF PRONOUNCEMENT : 01.01 .201 9 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI (LD.CIT(A) FOR SHORT) DATED 10.01.2018 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2012 - 13. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS 13,89,689/ - BEING INTEREST PAID. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 13,89,689/ - THOUGH THE APPELLANT HAD TAKEN THE UNSECURED LOANS FOR INTRODUCTION TO THE CAPITAL OF THE PARTNERSHIP FIRM AND OUGHT TO HAVE ALLOWED BY WAY OF DEDUCTION FROM INCOME FROM PARTNERSHIP FIRM. 3. BRIEF FACTS OF THE CASE ARE AS UNDER: DURING THE YEAR UNDER CONSIDERATION, IT WA S SEEN THAT THE ASSESSEE HAS RECEIVED RS.13,51,730/ - AS INTEREST ON CAPITAL FROM THE PARTNERSHIP FIRM M/S. JAGANNATH STEEL COMPANY. THE ASSESSEE HAS ALSO SHOWN INCOME FROM OTHER SOURCES AS UNDER: . 2 ITA NO. 1322/MUM/2018 INTEREST ON SB A/C RS. 4.020/ - INTEREST ON FD RS. 3,439/ - INTEREST FROM SHREE SHYAM CONSTRUCTION RS. 1.45.500/ - 4. I T WA S FURTHER NOTICED THAT THE ASSESSEE HAS SHOWN INTEREST PAID OF RS. 24,30,922/ - ON UNSECURED LOANS. O N VERIFICATION OF THE ABOVE IT WA S SEEN THAT THE ASSESSEE HAS SET OFF INTEREST RECEIV ED FROM PARTNERSHIP FIRM OF RS. 13,51,730/ - AND I NCOME FROM OTHER SOURCES OF RS. 1,52,959/ - AGAINST THE INTEREST PAID ON UNSECUR ED LOA N OF RS. 4,30,922/ - . THE ASSESSING OFFICER (A.O. FOR SHORT) HAS ALSO NOTICED THAT THE ASSESSEE HAS WRITTEN O FF LOSS OF OTHER SOURCES OF RS. 9,27,733/ - . T HE ASSESSEE WAS ASKED BY THE AO TO EXPLAIN THE SAME IN THE FOLLOWING MANNER: 1. DURING THE YEAR, THE ASS ESSEE HAS SHOWN GROSS RECEIPTS OF RS.2,61,42,699/ - IN HIS PROFIT AND LOSS ACCOUNT, HOWEVER, AS PER 26AS THE GROSS RECEIPT ARE RS.3,12,84,718/ - . THIS WAS BROUGHT TO THE NOTICE OF ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. AS PER YOUR COMPUTATION OF INCOME YOU HAVE CLAIMED INTEREST PAID RS.24,30,922/ - IS NOT ALLOWABLE. ACCORDING TO SECTION 57 OF THE ACT, THE FOLLOWING CONDITIONS ARE TO BE FULFILLED FOR CLAIM: THE EXPENDITURE MUST HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING OR MAKI NG THE PROFIT. THE EXPENDITURE SHOULD NOT BE IN THE NATURE OF CAPITAL EXPENDITURE. THE AMOUNT IN QUESTION SHOULD NOT BE IN THE NATURE OF PERSONAL EXPENSES OF THE ASSESSEE. THERE MUST BE A CLEAR NEXUS BETWEEN THE EXPENDITURE INCURRED AND THE INCO ME SOUGHT TO BE EARNED. THE EXPENDITURE SHOULD BE INCURRED DURING THE ACCOUNTING YEAR. 2. YOU HAVE CLAIMED WRITE OFF RS. 9,27,733/ - . PLEASE FURNISH DETAILS AND UNDER WHICH IT. SECTION YOU ARE ELIGIBLE FOR THIS CLAIM. 3 ITA NO. 1322/MUM/2018 3. YOUR WITHDRAWAL APPEAR VERY LOW. PLEASE FURNISH FAMILY EXPENDITURE HEADWISE AND CONTRIBUTION OF FAMILY MEMBERS WITH REGARDS TO WITHDRAWALS. 4. ACCORDING TO BALANCE SHEET YOU OWNED THREE PROPERTIES. HOWEVER, YOU HAVE NOT SHOWN ANY RENT INCOME. YOU ARE HEREBY SHOWCAUSED WHY THE DEEMED RENT INCOME SHOULD NOT BE ADDED FOR GORGAON PROPERTY AND OTHER PROPERTIES. IT THE ABOVE DETAILS ARE NOT FURNISHED BY 07.10.2014 THE ASSESSMENT WILL BE COMPLETED ON THE BASIS OF DETAILS AVAILABLE ON RECORDS. 5. AS THE ASSESSEE DID NOT SUBMIT THE REQUISITE DETAILS WITH RESPECT TO INTEREST PAYMENT ON UNSECURED LOAN, THE AO DISALLOWED THE INTEREST EXPENSES OF RS.24,30,922 / - WHICH WAS SET OFF AGAINST THE INTEREST RECEIVED. THE AO HAS ALSO DISA LLOWED WRITE OFF OF LOSS OF RS. 9,27,733 / - AND SET OFF OF INTEREST RECEIVED F ROM THE PARTNERSHIP FIRM OF RS. 13,51,730 / - , LATTER BEING TREATED AS INCOME FROM BUSINESS. THE I NCOME FROM OTHER SOURCES OF RS. 1,52,959 / - SET OF AGAINST THE EXPENSES HAS ALSO BEEN DISALLOWED BY THE AO AND ADDED BACK TO TH E TOTAL INCOME OF THE ASSESSEE. 6. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) NOTED THAT THE ASSESSEE HAS NOT MADE SPECIFIC REPLY. HE HELD AS UNDER: 8. IN THIS REGARD, I AGREE WITH THE AO THAT THE BASIC REQUIREMENT THAT THERE MUST BE A CLEAR NEXUS BETWEEN THE EXPENDITURE INCURRED AND THE INCOME SOUGHT TO BE EARNED IS NOT ESTABLISHED BY THE APPELLANT. NO DETAILS OF LOAN TAKEN AND SUBSEQUENTLY PAID TO THE PARTNERSHIP FIRM WAS PRODUCED FOR VERIFICATION OF THE AO OR EVEN BEFORE THE UNDERSIGNED. I'M ALSO IN AGREEMENT WITH THE AO THAT WHEN AN ASSESSEE CLAIMS EXPENSES AGAINST THE INCOME, THE ONUS LIES ON HIM TO ESTABLISH THE GENUINENESS OF WHICH HAS NOT BEEN PROVED IN THE INSTANT CASE. UNDER THESE CIRCUMSTANCES AND IN THE ABSENCE OF ANY EVIDENCE PRODUCED DU RING THE APPELLATE PROCEEDING, I DO NOT HAVE ANY OPTION BUT TO CONFIRM THE DISALLOWA NCE OF INTEREST EXPENSES OF RS. 24,30,922/ - WHICH WAS SET OFF AGAINST THE INTEREST RECEIVED. FURTHER, THE ACTION OF THE AO IN DISAL LOWING WRITE OFF OF LOSS OF RS. 9,27,733 / - AND SET OFF OF INTEREST RECEIVED F ROM THE PARTNERSHIP FIRM OF RS. 13,51,730 / - IS ALSO CONFIRMED. MOREOVER, TREATING THE INTEREST RECEIVED FROM THE PARTNERSHIP FIRM AS BUSINESS 4 ITA NO. 1322/MUM/2018 INCOME IS UPHELD TOO. THE DISALLOWANCE OF INCOME FROM OTHER SOURCES OF RS.1,52,95 9 / - BEING SET OFF AGAINST THE EXPENSES IS CONFIRMED TOO. HENCE, THE GROUNDS OF APPEAL RAISE D BY THE APPELLANT ARE REJECTED. 7. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 8. I HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT). NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE. THE NOTICE SENT HAS RETURNED ANSWERED. HENCE, I PROCEEDED TO ADJUDICATE THE ISSUE BY HEARING THE LD. DR AND PERUSING THE RECORDS. 9. UPON CAREFUL CONSIDERATION I NOTE THAT NO DETAIL OF THE LO AN TAKEN WAS PRODUCED BEFORE THE AUTHORITIES BELOW DESPITE SEVERAL QUE RIES . IN THESE CIRCUMSTANCES, WITHOUT SUBMITTING THE NECESSARY DETAILS, IT CANNOT BE ACCEPTED THAT LOAN TAKEN WAS FOR THE PURPOSE OF INVESTMENT IN THE PARTNERSHIP FIRM. HENCE, I AFFIRM T HE ORDERS OF THE AUTHORITIES BELOW. 10. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 1 . 0 1 . 2 0 1 9 S D / - (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI ; DATED : 0 1 . 0 1 . 2 0 1 9 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI