PANKAJ SURNA, DURG V. INCOME TAX OFFICER, WARD 2(2), BHILAI

ITA 153/RPR/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1492 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 02-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital expenditure
• Section: 143(3)

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR (Through Virtual Court) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 153/RPR/2018 Ǔनधा[रण वष[ / Assessment Year : 2013-14 Shri Pankaj Surana, (Prop. M/s. Sparsh Transport, 501A, Lale View Apartment, Bandha Talab, Ganj Para, Durg (C.G.). PAN : AJGPS9020B .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-2(2), Durg (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : None Revenue by : Shri G. N. Singh, DR स ु नवाई कȧ तारȣख / Date of Hearing :23.05.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 23.05.2022 2 Pankaj Surana Vs. ITO, Ward-2(2) ITA No. 153/RPR/2018 आदेश/ ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-1, Raipur (C.G.) dated 30.05.2018, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short ‘the Act’), dated 23.02.2016 for assessment year 2013-14. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. On the facts & in the circumstances of the case, the learned Assessing Officer grossly erred in addition of Rs.6,45,531/- being an expenditure of interest. 2. On the facts & in the circumstances o the case, the Learned CIT(A) has not justified in disallowing of Exps on account of interest.” 2. Controversy involved in the present appeal lies in a narrow compass i.e., declining of the assessee’s claim for setting-off the interest paid on the unsecured loan of Rs.6,45,531/- against the interest income of Rs.6,40,874/- earned on advancing of such amounts at interest to third parties. 3. Shorn of unnecessary details, the assessee had raised interest bearing unsecured loans, on which, interest of Rs. 6,45,531/- was paid by him. The aforesaid interest bearing borrowed funds were channelized by the assessee for advancing of interest-bearing loans to various parties, on which, interest income of 3 Pankaj Surana Vs. ITO, Ward-2(2) ITA No. 153/RPR/2018 Rs.6,40,874/- was received by him. Qua the aforesaid facts, the assessee had sought for setting-off the interest paid on the borrowed funds against the aforesaid interest income so received by him. However, the AO was not persuaded to subscribe to the aforesaid claim of the assessee. Observing that the assessee had not utilized the unsecured loans for his business purposes, the A.O disallowed his aforesaid claim for setting-off of the interest paid against his interest income. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. As the assessee appellant despite having been intimated about the hearing of appeal has failed to put up an appearance before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1962, i.e, after hearing the respondent revenue and perusing the orders of the lower authorities. 6. We have heard the ld. Departmental Representative (“DR”, for short), perused the orders of the lower authorities and the material available on record. After deliberating at length on the issue in hand we are unable to persuade ourselves to subscribe to the view taken by the lower authorities. As per Section 57(iii) of the Act, any expenditure not being in the nature of a capital expenditure, laid out or expended wholly and exclusively for the purpose of making or earning 4 Pankaj Surana Vs. ITO, Ward-2(2) ITA No. 153/RPR/2018 income under the head 'income from other sources' is to be allowed as a deduction. As the interest-bearing unsecured loans were raised by the assessee with a purpose, intent and motive of earning interest income by advancing the same to third parties and, have actually been so utilized, therefore, the interest expenditure so borne by him could safely, or in fact, inescapably, be held to have been incurred wholly and exclusively for the purpose of earning of interest income. In the backdrop of our aforesaid deliberations, we are of a strong conviction that the deduction of interest expenditure of Rs.6,45,531/-, as claimed by the assessee, and rightly so, was duly allowable as a deduction u/s.57(iii) of the Act. We, thus, in terms of our aforesaid observations not finding favor with the view taken by the lower authorities set-aside the order of the CIT(Appeals) and vacate the disallowance of Rs. 6,45,531/- made by the A.O. Thus, the Grounds of appeal No.(s) 1 & 2 raised in appeal by the assessee are allowed in terms of our aforesaid observations. 7. In the result, appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in open court on 23 rd day of May, 2022. Sd/- Sd/- RATHOD KAMLESH JAYANTBHAI RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 23 rd May, 2022 SB 5 Pankaj Surana Vs. ITO, Ward-2(2) ITA No. 153/RPR/2018 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-II, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 6 Pankaj Surana Vs. ITO, Ward-2(2) ITA No. 153/RPR/2018 Date 1 Draft dictated on 23.05.2022 Sr.PS/PS 2 Draft placed before author 23.05.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order