Anil Kumar Goyal, Ludhiana V. ACIT, CC-2, Ludhiana

ITA 1356/CHANDI/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7842 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-03-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 15-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHWETA YADAV
• Section: 20

Judgement Text

, , A IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 1356/CHD/2019 / ASSESSMENT YEAR : 2016-17 SHRI ANIL KUMAR GOYAL, C/O VS KRISHNA GOYAL HOSIERY WORKS, 171 INDUSTRIAL AREA-A, LUDHIANA. THE ACIT, CIRCLE-2, LUDHIANA. ./PAN NO: ABMPG0832H / APPELLANT /RESPONDENT ./ ITA NO. 1354/CHD/2019 / ASSESSMENT YEAR : 2016-17 SHRI KAMAL PARKASH GOYAL, C/O VS KRISHNA GOYAL HOSIERY WORKS, 171 INDUSTRIAL AREA-A, LUDHIANA. THE ACIT, CIRCLE-2, LUDHIANA. ./PAN NO: ABFPG4996F / APPELLANT /RESPONDENT ./ ITA NO. 1355/CHD/2019 / ASSESSMENT YEAR : 2016-17 SHRI AJAY KUMAR, C/O VS KRISHNA GOYAL HOSIERY WORKS, 171 INDUSTRIAL AREA-A, LUDHIANA. THE ACIT, CIRCLE-2, LUDHIANA. ./PAN NO: ABFPG0751L / APPELLANT /RESPONDENT HEARING THROUGH VIDEO CONFERENCING ! /ASSESSEE BY : SHRI S.K. MUKHI, ADVOCATE ' ! / REVENUE BY : SMT. SHWETA YADAV, ACIT ITA NO. 1354 TO 1356-CHD-2019 KAMAL PARKASH GOYAL & ORS, LUDHIANA 2 # $ % /DATE OF HEARING : 11.03.2021 &'() % / DATE OF PRONOUNCEMENT : 11.03.2021 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEALS HAVE BEEN PREFERRED BY DIFFEREN T BUT RELATED ASSESSEES AGAINST THE ORDERS DATED 19.09.2019 OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-5, LUDHIANA [HEREINAFTER REFER RED TO AS CIT(A)]. SINCE THE ISSUE INVOLVED IN ALL THESE APPEALS ARE I DENTICAL, THEREFORE, THESE APPEALS HAVE BEEN HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY THIS COMMON ORDER. THE COMMON ISSUE INVOLVED IN THESE AP PEALS IS RELATED TO THE DISALLOWANCES OF DEDUCTION CLAIMED BY THE ASSES SEES ON ACCOUNT OF INTEREST EXPENDITURE CLAIMED AGAINST INTEREST INCOM E. 2. FOR THE SAKE OF CONVINCES HAVE BEEN TAKEN FROM I TA NO. 1356/CHND/2019 IN CASE OF SHRI ANIL KUMAR GOYAL. TH E ASSESSEE RECEIVED TOTAL INTEREST INCOME AGGREGATING TO RS. 5 1,23,856/- FOR THE YEAR UNDER CONSIDERATION ON UNSECURED LOANS ADVANCE D BY HIM AND INTEREST ON SAVING/FIXED DEPOSIT ACCOUNT. SIMULTANE OUSLY, THE ASSESSEE PAID INTEREST OF RS. 34,52,984/- DURING THE F.Y. 20 15-16 ON THE UNSECURED LOANS TAKEN BY HIM FROM DIFFERENT PARTIES . IN ADDITION, THE ASSESSEE HAS ALSO PAID INTEREST FOR RS. 13,40,951/- ON LOAN AGAINST PROPERTY FROM AXIS BANK LTD. THUS, TOTAL INTEREST P AID BY THE ASSESSEE ITA NO. 1354 TO 1356-CHD-2019 KAMAL PARKASH GOYAL & ORS, LUDHIANA 3 DURING THE F.Y. 2015-16WAS RS. 47,93,935/- (RS.34,5 2,984/- PLUS RS. 13,40,951/-). HOWEVER, THE LD. AO MADE COMPLETE DIS ALLOWANCE OF THE INTEREST PAID OF RS. 47,93,935/- WHICH WAS CLAIMED BY THE ASSESSEE AS DEDUCTION U/S 57(III) OF THE ACT AGAINST INTEREST I NCOME OF RS. 51,23,856/-. THE ASSESSING OFFICER DISALLOWED THE I NTEREST EXPENSES OF RS. 47,93,935/- FOR THE REASON THAT THE ASSESSEE FA ILED TO PROVE DIRECT NEXUS BETWEEN THE INTEREST EXPENDITURE AND INTEREST INCOME. 3. IN FIRST APPEAL, THE LD. CIT(A) CONFIRMED THE DI SALLOWANCES SO MADE BY THE ASSESSING OFFICER. THE ASSESSEE HAS THU S COME IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED MATE RIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE IS IN THE ACTIVITY OF TAKING AND GIVING LOAN ON INT EREST. THE ASSESSEE DURING THE YEAR HAD LOAN FROM CERTAIN PARTIES AND A DVANCED UNSECURED LOANS TO OTHER PARTIES AND YIELDED NET POSITIVE INT EREST INCOME. THAT THIS ACTIVITY OF THE ASSESSEE HAS BEEN CONTINUED SINCE M ANY YEARS. THE LOWER AUTHORITIES, ACCEPTING THE SAID ACTIVITY OF THE ASS ESSEE HAVE NEVER MADE ANY ADDITION ON THIS ISSUE IN THE EARLIER ASSESSMEN T YEARS AS WELL AS IN THE SUBSEQUENT YEAR EXCEPT THE ASSESSMENT YEAR UNDE R CONSIDERATION. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT THOUGH, SOME PART OF THE LOANS AMOUNTING TO RS. 13,40,951/- WAS TAKEN FROM B ANK AGAINST SECURITY OF PROPERTY GIVEN TO THE BANK, WHICH WAS R ECEIVED AT A LOWER RATE OF INTEREST, WHEREAS, THE ASSESSEE HAD ADVANCE D LOAN ON HIGHER RATE ITA NO. 1354 TO 1356-CHD-2019 KAMAL PARKASH GOYAL & ORS, LUDHIANA 4 OF INTEREST AND EARNED INTEREST INCOME. THE LD. COU NSEL HAS FURTHER SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT DISPU TED THE GENUINENESS OF THE ACTIVITY OF ADVANCEMENT OF LOAN AND TAKING O F LOAN BY THE ASSESSEE FROM DIFFERENT PARTIES. THE ONLY ISSUES ON WHICH TH E DEDUCTION HAS BEEN DISALLOWED IS THAT THE ASSESSEE HAS NOT ESTABLISHED ONE TO ONE NEXUS BETWEEN THE LOAN TAKEN AND LOAN ADVANCED. THE LD. C OUNSEL HAS FURTHER SUBMITTED THAT THOUGH THE ASSESSEE HAS SUFFICIENT O WN FUNDS ALSO BUT THAT DOES NOT MEAN THAT THE PRESUMPTION WILL BE THAT THE INTEREST YIELDED LOANS WERE ADVANCED BY THE ASSESSEE FROM OWN FUNDS. THAT THERE IS NO ALLEGATION OF THE DEPARTMENT THAT THE INTEREST BEAR ING FUNDS HAVE BEEN USED BY THE ASSESSEE FOR SOME OTHER PURPOSES. 5. THE LD. D/R HAS RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL CONTENTS. THE ASSES SEE HAS DEMONSTRATED FROM THE RECORD THAT THE ACTIVITY OF T HE ASSESSEE OF TAKING INTEREST BEARING LOAN AND MAKING ADVANCES TO OTHER PARTIES IS CONTINUED FOR THE LAST SO MANY YEARS. THE ASSESSEE IN THIS AC TIVITY HAS EARNED NET POSITIVE INTEREST INCOME. IN OUR VIEW IN SUCH A CAS E, THERE IS NO NEED TO ESTABLISH ONE TO ONE NEXUS BETWEEN EACH OF THE TRAN SACTION OF LOAN TAKEN AND LOAN ADVANCED BY THE ASSESSEE. THERE TRANSACTIO NS OF TAKING UNSECURED LOANS OTHERWISE HAS NOT BEEN DISPUTED BY THE DEPARTMENT. EVEN THE ASSESSING OFFICER HAS NOT MADE ANY EFFORT TO VERIFY THE GENUINENESS OF THE TRANSACTION BY SUMMONING THE CON CERNED PARTIES EITHER WHO HAVE ADVANCED LOAN TO ASSESSEE OR THE PA RTIES HAVE TAKEN LOAN ITA NO. 1354 TO 1356-CHD-2019 KAMAL PARKASH GOYAL & ORS, LUDHIANA 5 FROM THE ASSESSEE. THERE IS NO ALLEGATION THAT THE ASSESSEE HAS USED THE INTEREST BEARING FUNDS FOR SOME OTHER PURPOSES. UND ER THE CIRCUMSTANCES, IN OUR VIEW, THE ASSESSEE IS ENTITLE D TO SET OFF THE INTEREST EXPENDITURE AGAINST THE INTEREST INCOME EARNED BY T HE ASSESSEE AND THE NET OF THE SAME HAS RIGHTLY BEEN OFFERED BY THE ASS ESSEE FOR TAXATION. IN VIEW OF ABOVE DISCUSSION, THE ADDITION MADE BY THE ASSESSING OFFICER IS ORDERED TO BE DELETED. THE LD. REPRESENTATIVE PARTI ES HAVE SUBMITTED THAT THE FACTS AND ISSUES INVOLVED IN ALL THE CAPTIONED APPEALS THE IDENTICAL. IN VIEW OF OUR FINDINGS GIVEN ABOVE, THE ADDITION M ADE BY THE LOWER AUTHORITIES IN ALL THESE THREE APPEALS IS ORDERED T O BE DELETED. IN THE RESULT, ALL THESE THREE APPEALS ARE HEREBY A LLOWED. ORDER PRONOUNCED ON 11/03/2021 SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 11/03/2021 SANTOSH '* +,-, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # . / CIT 4. # . ( )/ THE CIT(A) 5. ,/0 1 , %1 , 23405 / DR, ITAT, CHANDIGARH 6. 046$ / GUARD FILE '* # / BY ORDER, 7' / ASSISTANT REGISTRAR