Dy. C.I.T.-1, Agra V. Sh. Ram Saran Mittal, Agra

ITA 136/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0753 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 136/AGRA/ 2013 ASSESSMENT YEAR 2008-09 DY. COMMISSIONER OF INCOME TAX-1, VS. SH. RAM SARA N MITTAL, AGRA 62-B, NEHRU NAGAR, AGRA (PAN ABLPM 2281 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI SAHIB P. SATSANGEE, C.A. DATE OF HEARING : 11.07.2013 DATE OF PRONOUNCEMENT : 26.07.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 10.12.2012 PASSED BY THE LEARNED CIT(A)-I, AGRA FOR A.Y. 2008-09. 2. THE GROUNDS RAISED IN THIS APPEAL ARE REPRODUCED AS BELOW:- 1. THAT THE CIT(A)-I, AGRA HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.14,13,062/- OUT OF TOTAL ADDITION OF RS.17,86,469/- MADE ON ACCOUNT OF INTEREST DISALLOWED U/S 36(1) (III) ON THE LOAN AND ADVANCES WITHOUT APPRECIATING THE FACTS OF THE CASE . 2. THAT THE APPELLANT CRAVES LEAVE TO ADD OR DELETE OR ALTER OR MODIFY ANY ONE OR MORE GROUND(S) OF APPEAL DURIN G THE APPELLATE PROCEEDINGS. ITA NO.136 /AGRA./2013, A.Y. 2008-09 2 3. THAT THE ORDER OF THE CIT(A)-1, AGRA BEING ERRONEOU S IN LAW AND ON FACTS BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. THE A.O. MADE ADDITION OF RS.17,86,469/- DISALLO WING INTEREST UNDER SECTION 36(1)(III) OF THE ACT. THE CIT(A) PARTLY AL LOWED APPEAL OF THE ASSESSEE AS UNDER :- (CIT(A) PAGE NOS. 10 & 11) AFTER EXAMINATION OF THE DETAILS OF LOANS TAKEN AN D ADVANCES GIVEN BY THE ASSESSEE(APPELLANT), I HAVE FOUND THAT THE I NVESTMENT IN CAPITAL ACCOUNT OF M/S ATUL POLY PLAST DURING THE YEAR, HAS NOT BEEN MADE OUT OF BORROWED FUND AND THEREFORE, NO INTEREST TO BE C HARGED ON THIS INVESTMENT. AS REGARD TO INVESTMENT IN SHARE AND OT HER INSTRUMENTS OF INVESTMENTS, THESE INVESTMENT SHOULD BE COVERED BY DISALLOWANCE TO BE MADE U/S. 14A FOR WHICH, THE ASSESSEE (APPELLANT) H AS GIVEN WORKING IN HIS WRITTEN SUBMISSION FILED DURING THE COURSE O F ASSESSMENT PROCEEDING AFTER A SHOW CAUSE NOTICE WAS GIVEN BY T HE AO WHICH HAS ULTIMATELY NOT BEEN CONSIDERED BY THE AO IN THE ASS ESSMENT ORDER WITHOUT GIVING ANY REASON. HOWEVER, FOR THE INVESTM ENT MADE IN SUCH SHARES AND SECURITIES OUT OF WHICH, THE INCOME EARN ED BY AN ASSESSEE IS NOT FORMING PART OF THE INCOME, NECESSARY DISALL OWANCE IS REQUIRED TO BE MADE AS PER THE PROVISION OF SECTION 14A AND, THEREFORE, THE AO IS DIRECTED TO MAKE ADDITION OF RS.58,107/- U/S 14A . AS REGARDS TO LOAN AND ADVANCES GIVEN TO BELA MITTAL, MUKESH MITTAL, H UF, SANJEEV MITTAL, MUKESH MITTAL, SUCHI MITTAL, MAYA MITTAL AS LISTED OUT IN THE TABLE MADE BY THE AO ON PAGE NO.2, I HAVE VERIFIED THAT THE ASSESSEE (APPELLANT) IS CHARGING INTEREST @ 12% AND HENCE, N O DISALLOWANCE OUT OF INTEREST PAID IS REQUIRED TO BE MADE FOR THE SE ADVANCES. AS REGARD TO RS.30,20,000/- APPEARING IN THE NAME OF N ITIN JAIN FAMILY TRUST, IN THE LIST OF DETAILS OF LOAN AND ADVANCES IN THE TABLE PREPARED BY THE AO, I HAVE FOUND THAT OUT OF TOTAL AMOUNT OF RS.30,20,000/-, RS.20 LAC HAS BEEN GIVEN IN JAN. 2008 AND BALANCE R S.10,20,000/- HAS BEEN GIVEN IN FEB, 2008 AND THEREFORE, INTEREST @ 1 2% CHARGEABLE ON THIS AMOUNT COMES TO RS.75,300/-(RS.60,000+RS.15,30 0) AND THE SAME SHOULD BE DISALLOWED OUT OF INTEREST PAID BY THE AS SESSEE(APPELLANT). AS REGARDS TO RS.20,00,000/- APPEARING IN THE NAME OF SHRI SANJEEV JAIN ALSO, IT HAS BEEN FOUND THAT IT WAS ALSO GIVEN OUT OF BORROWED FUND AND HENCE, INTEREST PAID ON SUCH BORROWED FUND SHOULD BE ITA NO.136 /AGRA./2013, A.Y. 2008-09 3 DISALLOWED @ 12%, WHICH WORKS OUT TO RS.2,40,000/- AND THIS INTEREST AMOUNT SHOULD BE DISALLOWED FROM THE INTEREST PAID BY THE ASSESSEE. KEEPING IN VIEW OF MY ABOVE FINDING, THE AO IS DIRE CTED TO MAKE DISALLOWANCE OUT OF INTEREST PAID AMOUNTING TO RS.3 ,15,300/- (RS.2,40,000/- +RS.75,300/-) AND FURTHER ADDITION O F RS.58,107/- SHOULD BE MADE U/S 14A. THEREFORE, THE TOTAL AMOUNT OF DISALLOWANCE WOULD COME TO RS.3,73,407/- (RS.3,15,300 + RS.58,10 7) INSTEAD OF RS.17,86,469/- MADE BY THE AO IN THE ASSESSMENT ORD ER AND HENCE, THE ASSESSEE WILL GET A RELIEF OF RS.14,13,062/- AND AC CORDINGLY, GROUND NO.2 IS PARTLY ALLOWED. 4. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE LD. REPRESENTATIVES OF THE PARTIES SUBMITTED TH AT THE FACTS OF THE CASE UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS OF T HE CASE IN ITA NO.135/AGRA/2013 IN THE CASE OF SHRI SANJEEV MITTAL . THE LD. REPRESENTATIVES OF THE PARTIES SUBMITTED THAT THEIR SUBMISSIONS ARE IDENTICAL, WHICH WERE MADE IN CASE OF SRI SANJEEV MITTAL. WE F IND THAT ON IDENTICAL SETS OF FACTS THE ITAT IN ITA NO. 135/AGRA/2013 IN THE C ASE OF SHRI SANJEEV MITTAL, VIDE EVEN DATED ORDER HAS SET ASIDE THE ISS UE. THE RELEVANT FINDINGS OF THE ITAT IS REPRODUCED AS BELOW :- WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES A ND RECORDS PERUSED. THE CIT(A) HELD THAT THE A.O. WAS NOT CORR ECT IN DISALLOWING INTEREST CLAIM OF THE ASSESSEE UNDER SE CTION 36(1)(III) BECAUSE THE ASSESSEE BEING IN THE FINANCE BUSINESS AND ALSO MAKING INVESTMENT IN SHARES, COMMODITY, TRADING AND HAS MA DE INVESTMENT IN SHARE AND OTHER INSTRUMENT OF INVESTMENT, WHICH IS PERTAINING TO BUSINESS OF THE ASSESSEE. THE CIT(A) FOUND THAT AT THE MOST DISALLOWANCE CAN BE MADE BY INVOKING SECTION 14A OF THE ACT. THE BUSINESS OF THE ASSESSEE IS FINANCE AND SHARES/COMM ODITY TRADING AND SPECULATION AND ALSO EARNED INCOME FROM CAPITAL GAIN AND OTHER SOURCES. SINCE SO CALLED INVESTMENT POINTED O UT BY THE A.O. IS ITA NO.136 /AGRA./2013, A.Y. 2008-09 4 INVESTMENT IN SHARES, LIP AND OTHERS RELATED TO BUS INESS OF THE ASSESSEE. AS THE ASSESSEE IS DOING BUSINESS OF FINA NCE, SHARES COMMODITY TRADING AND SPECULATION ETC., WE, THEREFO RE, FIND THAT THE A.O. HAS WRONGLY CALCULATED AMOUNT OF DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT. WE NOTICE THAT CIT(A) HAS AP PRECIATED THE FACTS AND FOUND THAT AT THE MOST INTEREST IS DISALL OWABLE INVOKING SECTION 14A OF THE ACT. THE CIT(A) HAS RIGHTLY DIRE CTED THE A.O. TO RESTRICT THE DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT UPTO RS.4,48,832/- AND RS.67,718/- FOR DISALLOWANCE MADE BY UNDER SECTION 14A. THUS, THE TOTAL DISALLOWANCE RESTRICTE D BY THE CIT(A) OF RS.5,16,550/-, WE FIND THAT THE CIT(A) HAS RIGHT LY ALLOWED THE RELIEF OF RS.10,54,804/-. THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY MATERIAL TO THE FINDING OF THE CIT(A). WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ORDER OF THE CIT(A) IS CONFIRMED. 5. THE FACTS ARE IDENTICAL, ONLY DIFFERENCE IS IN F IGURES. TO MAINTAIN CONSISTENCY, WE FOLLOW THE ABOVE DISCUSSIONS MADE B Y THE ITAT IN ITA NO.135/AGRA/2013, ORDER EVEN DATED AND IN THE LIGHT OF THE FACTS, THE ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. (ORDER PRONOUNCED IN THE OPEN COURT.) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- APPELLANT/RESPONDENT/CIT (APPEALS) CONCERNED CIT CONCERNED/D.R., ITAT, AGRA BENCH, AGRA GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY