ITO, New Delhi V. Shri Muni Ram Verma, New Delhi

ITA 1335/DEL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6207 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 04-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Proportionate interest; Additional evidence; Revenue expenditure
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SH. SUDHANSHU SRIVASTAVA, J.M. ITA NO. 1335 /DEL/201 2 A.Y. 200 8 - 09 ITO, WARD 6(1) VS. SH. MUNI RAM VERMA NEW DELHI BALAJI CHAIN CO. 1245, KUCHA MAHAJ ANI CHANDNI CHOWK NEW DELHI 110 006 PAN: ACBPV 8621 R (APPELLANT) (RESPONDENT) APPELLANT BY : SH.P. DAMKANUNJNA, SR.D.R RESPONDENT BY : SH. VED JAIN, C.A. ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF LD.CIT(A) - IX, NEW DELHI DATED 18.01. 2012 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 200 8 - 09 . 2. FACTS IN BRIEF : - THE ASSESSEE IS AN INDIVIDUAL AND HAS FILED HIS RETURN OF INCOME ON 30.9.2008 DECLARING INCOME OF RS.19,67,840/ - . THE A.O. COMPLETED ASSESSMENT U/S 143( 3 ) OF THE INCOME TAX ACT, 1961 (THE ACT) , COMPUTING THE TOTAL INCOME AT RS.2,77,79,266/ - , INTER ALIA MAKING ADDITIONS U/S 68 OF THE ACT OF RS.1,95 ,02,979/ - AND DISALLOWED THE INTEREST CLAIMED THEREON OF RS.7,53,550/ - . PROPORTIONATE INTEREST EXPENDITURE WAS ALSO DISALLOWED ON THE GROUND THAT IT HAS TO BE CAPITALIZED. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORIT Y ADMITTED ADDITIONAL EVIDENCE UNDER RULE 46 A OF THE INCOME TAX RULES. HE ITA 1335/DEL/2012 A.Y. 2008 - 09 SH. MUNI RAM VERMA, NEW DELHI 2 CALLED FOR A REMAND REPORT AND AFTER CONSIDERING THE REPLY, GRANTED RELIEF TO THE ASSESSEE. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS AND CONTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,95,02,979/ - MADE BY THE A.O. ON ACCOUNT OF UNSECURED LOANS TAKEN FROM VARIO US PERSONS INCLUDING PRIVATE LIMITED COMPANIES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,53,500/ - ON ACCOUNT OF INTEREST ON SUCH UNSECURED LOANS. 4. ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.55,54,897/ - TO RS.3,69,802/ - ON ACCOUNT OF INTEREST ON LOAN DEPLOYED FOR THE PURPOSE OTHER THAN BUSINESS. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND ANY GR OUNDS OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3 . WE HAVE HEARD SHRI VED JAIN, THE LD.COUNSEL FOR THE ASSESSEE AND SH.P.DAMKANUNJNA, THE LD.SR.D.R. ON BEHALF OF THE REVENUE. 5. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDERS OF LOWER AUTHORITIES, MATERIAL FILED ON RECORD AND CASE LAWS CITED, WE HOLD AS FOLLOWS. 6. GROUND NO.1 IS GENERAL IN NATURE . IN GROUND NO.2 WE FIND THAT SHRI BRIJ BIHARI BANSAL AND SMT. SANTOSH VERMA WHO HAVE A CREDIT OF RS.40 LAKHS, HA VE APPEARED BEFORE THE A.O. STATEMENT S W ERE RECORDED ON OATH U/S 131 OF THE ACT. BOTH HAVE CONFIRMED THAT THEY HAVE GIVEN ADVANCE S TO THE ASSESSEE. COPIES OF BANK STATEMENTS WERE FILED IN SUPPORT OF THEIR STATEMENTS. THE BANK STATEMENTS OF M/S GOLD LINE ENTERPRISES PVT. LTD. FROM WHERE THESE PERSONS HAVE RECEIVED MONEY (I.E. SOURCE OF SOURCE) WERE DIRECTLY OBTAINED BY THE A.O. UNDER THE CIRCUMSTANCES WE DO NOT FIND ANY ITA 1335/DEL/2012 A.Y. 2008 - 09 SH. MUNI RAM VERMA, NEW DELHI 3 INFIRMITY IN THE ORDER OF THE LD.CIT(A), WHEREIN THESE C REDITS WERE ACCEPTED AS GENUINE AND ADDITION U/S 68 OF THE ACT DELETED. 6.1. THE REVENUE HAS NOT CHALLENGED THE ACTION OF THE LD.CIT(A) ADMITTING ADDITIONAL EVIDENCE. IN VIEW OF THE ABOVE FACTUAL FINDINGS, WE DISMISS GROUND NO. 2 OF THE REVENUE. 7. GROUND NO. 3 IS CONSEQUENTIAL TO OUR DECISION IN GROUND NO. 2 . HENCE THE SAME IS DISMISSED. 8. GROUND NO. 4 IS ON DISALLOWANCE OF INTEREST. THE LD.CIT(A) AT PARA 10.3 OF HIS ORDER DEALT WITH THE ISSUE AS FOLLOWS. 10.3 I HAVE CONSIDERED THE FINDINGS OF THE AO AS PER THE ASSESSMENT ORDER, THE WRITTEN SUBMISSIONS AND THE ARGUMENTS MADE IN THIS RESPECT AND THE FACTS ON RECORD. I FIND THAT PARTLY THE STAND TAKEN BY THE ID. AO IS CORRECT AND AT THE SAME TIME THE CONTENTION OF THE APPELLANT IS PARTLY ACCEPTABLE. IT CANN OT BE SAID THAT ALL THE ASSETS SHOW BY THE APPELLANT ARE PART OF THE BUSINESS AND THE AO WAS NOT JUSTIFIED IN SEGREGATING THE SAME FOR MAKING PROPORTIONATE DISALLOWANCE OF INTEREST. IT IS SEEN THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE APPEL LANT HAD AGREED FOR A DISALLOWANCE OF RS.2,72,564/ - ON ACCOUNT OF INTEREST ATTRIBUTABLE TO THE FOLLOWING ITEMS: INTRODUCTION OF CAPITAL IN A PARTNERSHIP CONCERN RS.1,82,670/ - INVESTMENT IN A PLOT OF LAND RS. 89,894/ - TOTAL RS.2,72,564/ - 10.4 FURTHER, ON BEING CONFRONTED WITH THE APPLICABILITY OF THE PROVISIONS OF SECTION 36(1 )(III) OF THE ACT ON THE ADVANCES GIVEN FOR THE PURPOSE OF PURCHASE OF THE MACHINERY WHICH WAS NOT RECEIVED DURING THE YEAR, THE APPELLANT SUBMITTED THAT THE ADVA NCE WAS GIVEN TOWARDS THE END OF THE YEAR AND THEREFORE, THE AO WAS NOT JUSTIFIED IN COMPUTING THE INTEREST FOR THE WHOLE OF THE YEAR. VIDE SUBMISSION DATED 12.01.2012 FILED ON 17.01.2012 THE ID. AR SUBMITTED CALCULATION OF THE INTEREST DISALLOWABLE ON THE ADVANCE OF RS.1,45,25,348/ - GIVEN FOR THE PURCHASE OF MACHINERY AT RS.97,239/ - . SINCE, ITA 1335/DEL/2012 A.Y. 2008 - 09 SH. MUNI RAM VERMA, NEW DELHI 4 THE MACHINERY WAS NOT RECEIVED DURING THE YEAR AND HENCE NOT PUT TO USE, THE INTEREST ON SUCH ADVANCE CANNOT BE ALLOWED AS REVENUE EXPENDITURE. THE AMOUNT OF RS.97,2 39/ - IS, THEREFORE, ALSO DISALLOWED AS INTEREST ATTRIBUTABLE TO SUCH ADVANCE. THUS, THE TOTAL DISALLOWABLE INTEREST WORKS OUT TO RS.3,69,802/ - (2,72,564 + 97,238). 8.1. THE LD.D.R. COULD NOT CONTROVERT THESE FINDINGS. 8.2. THUS WE UPHOLD THIS FINDING OF THE LD.CIT(A) AND DISMISS GROUND NO.5. 9. GROUND NO.5 IS GENERAL IN NATURE. 10. IN THE RESULT RE VENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2016. SD/ - SD/ - (SUDHANSHU SRIVASTAVA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 31 ST MARCH, 2016 MANGA ITA 1335/DEL/2012 A.Y. 2008 - 09 SH. MUNI RAM VERMA, NEW DELHI 5 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR