Shri Sachidanand Madhukarrao Chitale, Indore V. THE ACIT 4(1), Indore

ITA 15/IND/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4020 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V J BORICHA
• Assessee Lawyers: MANOJ FADNAVIS
• Section: 143(3); 28

Judgement Text

[ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.15/IND/2017 ASSESSMENT YEAR: 2009-10 SHRI SACHIDANAN D MADHUKARRAO CHITALE, 29, JAWAHAR MARG, INDORE / VS. ACIT - 4(1) INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. ABAPC4968Q APPELLANT BY SHRI MANOJ FADNAVIS, AR RESPONDENT BY SHRI V.J. BORICHA, DR DATE OF HEARING: 24.10.2018 DATE OF PRONOUNCEMENT: 02.11.2018 [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 2 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-II, INDORE DATED 15.11.2016 PERTAINING TO THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: GROUND NO.1 ADDITION OF RS.9,96,360/- ON ACCOUNT O F DEEMED INTEREST ON ADVANCE OF RS.83.03 LACS TO M/S. KARAN ASSOCIATES. 1.1 THAT THE ADDITION OF RS.9,96,360/- IS MADE ON A NOT IONAL BASIS AND IS NOT ACTUAL INCOME OF THE ASSESSEE. 1.2 THAT THE LD.A.O. HAS NOT DISALLOWED THE EXPENDITURE ON INTEREST BUT HAS ADDED NOTIONAL INCOME. 1.3 THAT THE NOTIONAL INCOME IS NOT INCOME WHICH CAN BE BROUGHT TO TAX UNDER SECTION 28 OF THE ACT. 1.4 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION MADE BY THE LD. A.O. IN HOLDING THAT THE LOAN GIVEN TO M/S. KAR AN ASSOCIATES IS NOT FOR THE BUSINESS PURPOSE. [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 3 2. BRIEFLY STATED FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS FRAMED. THEREBY, THE A.O. MADE ADDITION OF RS.9,96,36 0/- IN RESPECT OF INTEREST OF ADVANCE. THE A.O. NOTICED THAT THERE WAS NO BUSINESS IN ADVANCING LOAN TO M/S. KARAN ASSOCIATES. IT IS OBSERVED BY THE A.O. THAT THE LOAN WAS NOT GIVEN FOR BUSINESS PURPOSE. AGAINST THIS, THE ASSESS EE PREFERRED AN APPEAL BEFORE LD. CIT(A) ON THE BASIS THAT NO INTEREST HAS BEEN CHARGED FROM THE LOANS SO GIVEN. AS PER APPELLANT, THE SAME HAS BECOME STICKY, HOWEVER, AT THE SAME TIME, THE INTEREST HAS BEEN CHARGED AS EXPENSES AND THE PROFIT & LOSS ACCOUNT HAS BEEN DEBITED BY THE IN TEREST EXPENSES. LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS. THE SYNOPSIS OF THE ASSESSEE IS REPRODUCED AS UNDER: [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 4 [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 5 [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 6 [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 7 3. LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER S OF THE AUTHORITIES BELOW. IT IS STATED BY THE ASSESSEE T HAT THE MONEY SO ADVANCED COULD NOT BE RECOVERED. HE SUBMI TTED THAT THE AUTHORITIES BELOW HAVE NOT CONSIDERED SUBMISS IONS MADE BY THE ASSESSEE IN RIGHT PERSPECTIVE. HE SUBMI TTED THAT THE LOANS AND ADVANCES TO M/S. KARAN ASSOCIATES WERE GIVEN WITH THE INTENTION TO EARN INTEREST. THE INT EREST EARNED DURING THE FINANCIAL YEAR 2005-06 WAS DULY OFFE RED TO TAX. HE SUBMITTED THAT THE AUTHORITIES BELOW FAILE D TO APPRECIATE THAT THERE IS A DIFFERENCE BETWEEN NOT PROVI DING INTEREST ON STICKY LOANS AND INTEREST FREE LOANS. HE [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 8 SUBMITTED IN THE PRESENT CASE THAT IT IS NOT THE CASE WHERE THE ASSESSEE HAS GIVEN INTEREST FREE LOANS. RELIANCE I S PLACED ON THE JUDGEMENT OF THE HON'BLE SUPREME COURT RENDERED IN THE CASE OF UCO BANK VS. CIT 237 ITR 889. FURTHER RELIANCE IS PLACED ON THE JUDGEMENT OF HON'BL E M.P. HIGH COURT IN THE CASE OF STATE BANK OF INDORE VS. CIT 257 ITR 463. WE FIND THAT THESE JUDGEMENTS ARE GIVEN IN RESPECT OF THE BANKING COMPANY. ADMITTEDLY, THE ASSE SSEE IS NOT A BANKING COMPANY. RELIANCE IS PLACED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF S.N. CHITALE V S. ITO IN ITA NO.310/IND/2008, WHEREIN THE ASSESSEE HAD GIVE N LOAN TO HIS FATHER THE A.O. HAD MADE ADDITION OF PRESUMPTIVE INTEREST. IT IS DEMONSTRATED BY THE ASSE SSEE THAT THE ADVANCE SO MADE BECOME NON RECOVERABLE. THE ASSESSEE HAS ALSO MADE EFFORTS TO RECOVER THE AMOUNT BUT OF NO AVAIL. ADMITTEDLY, THE INCOME TAX IS CHARGED ON IN COME. IN THE PRESENT CASE, IT IS NOT THE CASE THAT THE INCOM E HAS [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 9 IN FACT ACCRUED TO THE ASSESSEE. IN FACT, THE RECOVERY OF THE PRINCIPAL AMOUNT IS IN DOUBT. MOREOVER, THE ASSESSEE HAS NO WHERE CLAIMED AS BUSINESS ADVANCE, IT WAS A SIMPLE LOAN ON WHICH THE ASSESSEE WAS EARNING INTEREST AND OFFERING THE SAME FOR TAX TILL A.Y. 2005-06, SUBSEQUE NT TO IT LOAN BECAME BAD AND NO INTEREST WAS EARNED. THEREFORE, UNDER THE PECULIARITY OF FACTS AND IN VIEW OF THE JUDG EMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF UCO BANK VS. CIT (SUPRA) AND THE JUDGEMENT OF THE JURISDICTIONAL HI GH COURT IN THE CASE OF STATE BANK OF INDORE VS. ITO (SUP RA) AND THE DECISION OF THE COORDINATE BENCH IN THE CASE O F S.N. CHITALE (SUPRA), WE DIRECT THE A.O. TO DELETE THE ADDI TION. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER WAS PRONOUNCED IN THE OPEN COURT ON 02 . 11.2018. SD/ - (MANISH BORAD) SD/ - (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 02/11/2018 VG/SPS [ITA 15/IND/2017] [SHRI SACHIDANAND MADHUKARRAO CHITALE, INDORE] 10 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE