SHREEJI KRUPA HOTEL P.LTD, MUMBAI V. ITO 7(2)(3), MUMBAI

ITA 1401/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75475 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 29-01-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 17-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Onus to prove
• Section: 143(3)

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI .. , . ... BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM ./ I.T.A. NO. 1401/MUM/2011 ( / ASSESSMENT YEAR : 2001-02 MS SHREEJI KRUPA HOTEL & PROPERTIES PVT. LTD., 24, A.B. OLD ANJIRWADI, DR. MASCARENHAS ROAD, MAZGAON, MUMBAI 400 010. / VS. INCOME TAX OFFICER 7(2)(3), MUMBAI. . / PAN : AAFCS 5207 N ( % / APPELLANT ) .. ( &'% / RESPONDENT ) APPELLANT BY NONE RESPONDENT B Y : SHRI ASHOK KUMAR SURJI * / DATE OF HEARING : 29-1-2014 * / DATE OF PRONOUNCEMENT : 07-02-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) 14, MUMBAI DATED 25-10-2010 WHEREBY HE UPH ELD THE ACTION OF THE A.O. IN DISALLOWING THE ASSESSEES CLAIM FOR DEDUCT ION U/S 57(III) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS INCORPORATED WITH AN OBJECT TO CARRY ON HOTEL BUSINESS. IN THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 VI DE AN ORDER DTD. 30-12- 2003, THE INTEREST INCOME OF RS. 5,03,503/- EARNED BY THE ASSESSEE FROM THE ADVANCES GIVEN OUT OF UNUTILIZED LOAN AMOUNT TAKEN FOR THE CONSTRUCTION WORK ITA 1401/M/11 2 WAS TREATED BY THE A.O. AS INCOME FROM OTHER SOURC ES AND THE CLAIM OF THE ASSESSEE FOR NETTING OFF THE INTEREST PAID ON LOANS TAKEN AGAINST THE SAID INCOME WAS DISALLOWED. ON CONFIRMATION OF THIS ACTI ON OF THE A.O. BY THE LD. CIT(A), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE TRIBUNAL AND VIDE ITS ORDER DATED 10-5-2007 PASSED IN ITA NO. 8846/MU M/2004, THE TRIBUNAL HELD THAT INTEREST INCOME WAS RIGHTLY ASSESSED IN T HE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES SINCE TH E ASSESSEE HAD NOT COMMENCED ITS BUSINESS DURING THE YEAR UNDER CONSID ERATION. THE TRIBUNAL, HOWEVER, ACCEPTED THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT THE DEDUCTION ON ACCOUNT OF INTEREST EXPENDITURE ETC. I NCURRED WHOLLY FOR THE PURPOSE OF EARNING SUCH INTEREST INCOME WAS ALLOWAB LE U/S 56(III) OF THE ACT. THE TRIBUNAL HELD THAT THE ONUS TO PROVE THAT ANY E XPENDITURE WAS INCURRED WHOLLY FOR THE PURPOSE OF EARNING THE INCOME WAS ON THE ASSESSEE IN ORDER TO CLAIM DEDUCTION U/S 57(III) OF THE ACT AND ACCORDIN GLY RESTORED THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO GIVE ONE M ORE OPPORTUNITY TO THE ASSESSEE TO ESTABLISH AS TO WHETHER ANY MONEY BORRO WED ON INTEREST WAS UTILIZED FOR EARNING INTEREST INCOME WHICH IS ASSES SED TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES IN ORDER TO CLAIM DEDUC TION U/S 57(III) OF THE ACT ON ACCOUNT OF INTEREST PAID ON BORROWED FUNDS. AS PER THE DIRECTION OF THE TRIBUNAL, OPPORTUNITY WAS PROVIDED BY THE A.O. TO T HE ASSESSEE TO ESTABLISH ITS CASE FOR DEDUCTION U/S 57(III) OF THE ACT. HOWEVER , THE ASSESSEE FAILED TO SUPPORT AND SUBSTANTIATE ITS CLAIM FOR DEDUCTION U/ S 57(III) OF THE ACT AND ACCORDINGLY A FRESH ASSESSMENT WAS MADE U/S 143(3) R.W.S. 254 OF THE ACT BY THE A.O. ASSESSING THE ENTIRE INCOME OF RS. 5,03,50 0/- RECEIVED BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES . 3. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) R.W.S. 254 OF THE ACT, THE ASSESSEE AGAIN PREFERRED AN APPEAL BEFORE THE L D. CIT(A) CLAIMING DEDUCTION U/S 57(III) OF THE ACT. DURING THE COURS E OF APPELLATE PROCEEDINGS, ONE MORE OPPORTUNITY WAS GIVEN BY THE LD. CIT(A) TO THE ASSESSEE TO PRODUCE ITA 1401/M/11 3 THE RELEVANT BANK STATEMENT IN ORDER TO SHOW THE NE XUS, IF ANY, BETWEEN INTEREST BEARING FUNDS AND INTEREST EARNING INVESTM ENTS. THE ASSESSEE, HOWEVER, FAILED TO PRODUCE SUCH BANK STATEMENT AND KEEPING IN VIEW THIS FAILURE OF THE ASSESSEE TO SUPPORT AND SUBSTANTIATE ITS CLAIM FOR DEDUCTION U/S 57(III) OF THE ACT, THE LD. CIT(A) UPHELD THE ORDER OF THE A.O. ON THIS ISSUE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSES SEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING FIXED ON 29-1-2014, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE NOR HAS ANY APPLICATION SEEKING ADJ OURNMENT BEEN FILED DESPITE THE FACT THAT NOTICE OF THE SAID HEARING WA S GIVEN THROUGH NOTICE BOARD. THIS APPEAL FILED BY THE ASSESSEE IS, THEREF ORE, BEING DISPOSED OF EX PARTE QUA THE APPELLANT ASSESSEE ON MERIT AFTER HEA RING THE ARGUMENTS OF THE LD. D.R. AND PERUSING THE RELEVANT MATERIAL AVAILAB LE ON RECORD. 5. AS RIGHTLY SUBMITTED BY THE LD. D.R., A SPECIFIC OPPORTUNITY WAS GIVEN BY THE A.O. TO THE ASSESSEE AS PER THE DIRECTION OF TH E TRIBUNAL TO ESTABLISH ITS CLAIM FOR DEDUCTION U/S 57(III) OF THE ACT BUT THE ASSESSEE FAILED TO DO SO. THEREAFTER, THE LD. CIT(A) ALSO AFFORDED ONE MORE O PPORTUNITY TO THE ASSESSEE TO PRODUCE THE RELEVANT BANK STATEMENT SHOWING ANY NEXUS BETWEEN THE INTEREST BEARING FUNDS AND INTEREST EARNING INVESTM ENTS IN ORDER TO ESTABLISH ITS CLAIM FOR DEDUCTION U/S 57(III) OF THE ACT WHIC H THE ASSESSEE AGAIN FAILED TO AVAIL. AS OBSERVED BY THE TRIBUNAL IN ITS ORDER DAT ED 10-5-2007 (SUPRA), THE ONUS IN THIS REGARD WAS ON THE ASSESSEE TO SUPPORT AND SUBSTANTIATE ITS CLAIM FOR DEDUCTION U/S 57(III) OF THE ACT AND SINCE THE ASSESSEE HAS FAILED TO DISCHARGE THE SAME EVEN AFTER SUFFICIENT OPPORTUNIT Y HAVING BEEN GRANTED BY THE AUTHORITIES BELOW, WE ARE OF THE VIEW THAT THER E IS NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING THE ASSESSEES CLAIM FOR DEDUCT ION U/S 57(III) OF THE ACT. IN THAT VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORD ER OF THE LD. CIT(A) AND DISMISS THIS APPEAL FILED BY THE ASSESSEE. ITA 1401/M/11 4 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH FEBRUARY, 2014. . * 0 1 07-02-2014 * SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 07-02-2014 .../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. 4 () / THE CIT(A)13, MUMBAI. 4. 4 / CIT 7,, MUMBAI 5. 7 &9 , 9 , / DR, ITAT, MUMBAI H BENCH 6. ; / GUARD FILE. / BY ORDER, '7 & //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI