Ganga Rathi , Hyderabad V. Income Tax Officer, Ward-4(4), Hyderabad

ITA 1538/Hyd/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8181 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 13-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Keywords: Set aside
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH, HYDERABAD BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER ITA NO. 1538 / HYD /201 8 (ASST. YEAR : 20 13 - 14 ) GANGA RATHI, D.NO. 3 - 2 - 840/A, KACHIGUDA, HYDERABAD . V S . IT O , WARD - 4 ( 4 ), HYDERABAD . PAN NO. ADGPR 5128 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHUPESH KUMAR DAND, AR DEPARTMENT BY : SHRI NILANJAN DEY , SR. DR DATE OF HEARING : 04 / 12 /201 9 . DATE OF PRONOUNCEMENT : 22 / 0 1 /20 20 . O R D E R TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , HYDERABAD , DATED 16 /0 5 /201 8 FOR THE ASSESSMENT YEAR 20 13 - 14 . 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO DISALLOWANCE OF INTEREST OF RS. 9,24,393/ - U/SEC. 57 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT'). 3 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS ADMITTED INTEREST INCOME OF RS. 9,24,393/ - AND CLAIMED THE EXPENDITURE TOWARDS INTEREST U/SEC. 57 AT RS. 9,24,393/ - . THE ASSESSING OFFICER ASKED THE 2 ITA NO. 1538 / HYD /2018 ( GANGA RATHI ) ASSESSEE TO FURNISH THE DETAILED ANALYSIS SHOWING THE NEXUS BETWEEN THE INTEREST RECEIVED AND INTEREST PAID . I N RESPONSE, THE ASSESSEE HAS FILED A REPLY DATED 19/01/2016 BY STATING THAT HE HAS RECEIVED INTEREST ON L O ANS AND ADVANCES ETC . OF RS. 9,24,393/ - AND PAID A SUM OF RS. 10,53,203/ - AS INTEREST TO STANDARD CHARTERED BANK . SINCE HE RECEIVED LOWER INTEREST THAN INTEREST PAID, THE SAME HAS BEEN RESTRICTED TO INTEREST RECEIVED OF RS.9,24,393/ - ONLY AS IN LAST YEAR . THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION ASKED THE ASSES SEE TO SUBSTANTIATE AND TO PROVE THAT THE INTEREST AMOUNT OF RS. 9,24,393/ - IS WHOLLY AND EXCLUSIVELY SPENT TO EARN THE INTEREST INCOME I.E. THE UTILIZATION OF THE AMOUNT BORROWED FROM STANDARD CHARTERED BANK TO WHICH INTEREST IS PAID WITH SUPPORTING EVIDE NCE. IN RESPONSE , THE ASSESSEE HAS SUBMITTED THE FO L L O WING DETAILED REPLY: - (1) IT IS FACT ON RECORD THAT YEAR UPON YEAR, PART OF THE LOAN TAKEN FROM BANK AGAINST THE PROPERTY HAS BEEN UTILIZED FOR MAKING ADVANCES ON WHICH I AM EARNING CERTAIN INTEREST. THE CLAIM OF INTERES T PAID T O TH E B ANK IS RESTRICTED TO THE INTEREST RECEIVED FROM THE AFORESAID ADVANCES IN THE BALANCE SHEET DEBITED TO CAPITAL ACCOUNT. THE SAME HAS BEEN ACCEPTED FOR THE A. Y.2009 - 10 WHICH HAS BEEN COMPLETED U/S. 143(3) OF THE ACT. EVEN TODAY, THERE IS NO CHANGE IN THE FACT. WITHOUT PREJUDICE TO THE ABOVE, AS FAR AS LOANS AND ADVANCES APPEARING IN THE BALANCE SHEET ARE CONCERNED FROM WHOM I AM RECEIVED INTEREST ARE SUBROGATION FROM EARLIER DEBTORS/OR ARE SAME. SINCE, PART OF BORROWED MON EY IS UTILIZED FOR MAKING ADVANCES, THE CLAIM OF INTEREST AGAINST SUCH ADVANCE PAID TO BANK IS AN ALLOWABLE U/S57 OF THE ACT. IT WOULD NOT BE OUT OF PLACE TO MENTION HEREIN THAT ADVANCES MADE ARE BEFORE MARCH 2009 WHEREIN THE NEXUS HAS BEEN ESTABLISHED AND THE SAME WAS 3 ITA NO. 1538 / HYD /2018 ( GANGA RATHI ) ALLOWED. FROM 2009 - 10 ONWARDS SUBROGATION OF CERTAIN DEBTORS HAS BEEN HAPPENED AND AS SUCH THE CLAIM OF MY INTEREST AGAINST SUCH DEBTS/DEBTORS IS AN ALLOWABLE EXPENDITURE. AS FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED, DETAILS OF LOANS AND ADVANCES EXPLAINING THE NATURE THEREOF IS APPENDED HEREUNDER......... ' HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT ASSESSEE HAS FAILED TO PROVE THE NEXUS BETWEEN THE BORROWED FUNDS AND FUNDS ADVANCED AND ALSO FOUND THAT ASSESSEE HAS FAILED TO BRING ANY EVIDENCE TO ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE. THEREFORE, DISALLOWED THE DEDUCTION OF RS. 9,24,393/ - U/SEC. 57 OF THE ACT AND ADDED BACK TO THE T OTAL INCOME OF THE ASSESSEE. 4 . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE HAS NOT FILED BALANCE SHEET , BANK STATEMENT OR DETAILS OF THE CONCERNED LOAN S/ INTEREST GIVEN AND RECEIVED. 5. BEFORE ME , LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ASSESSEE HAS FILED ALL THE DETAILS SUCH AS BALANCE SHEET, BANK ACCOUNT STATEMENT, DETAILS OF CONCERNED LOANS, INTEREST GIVEN AND RECEIVED BEFORE TH E ASSESSING OFFICER AS WELL AS THE LD. CIT(A). THE LD. CIT (A) WITHOUT CONSIDERING THE SAME, SIMPLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4 ITA NO. 1538 / HYD /2018 ( GANGA RATHI ) 6 . ON THE OTHER HAND, LD.DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7 . I HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO DISALLOWANCE OF RS. 9,24,393/ - U/SEC. 57 OF THE ACT. THE CASE OF THE ASSESSING OFFICER IS THAT ASSESSEE HAS FAILED TO PROVE THE NEXUS BETWEEN THE INTEREST RECEIVED AND INTERES T PAID NOT ONLY THAT BUT ALSO FAILED TO PRODUCE EVIDENCE IN RESPECT OF INTEREST RECEIVED AND PAID. ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE HAS NOT FILED THE BALANCE SHEET, BANK ACCOUNT STATEMENT OR DETAILS OF CONCERNED LOAN S AND INTEREST PAID AND RECEIVED. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ALL THE DETAILS ARE FURNISHED BEFORE THE AUTHORITIES BELOW . IN VIEW OF THE SUBMISSIONS MADE , I FIND THAT IN THE INTEREST OF JUSTICE IT IS NECESSARY FOR THE LD. CIT(A) TO EXAMINE THE DETAILS AS SUBMITTED BY THE ASSESSEE WHICH ARE NECESSARY TO DECIDE THE APPEAL. I, THEREFORE, SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMIT THE MATTER BACK TO HIM WITH A DIRECTION TO ADJUDICATE TH E APPEAL AFRESH IN ACCORDANCE WITH LAW AFTER EXAMIN IN G THE DETAILS. IT IS ALSO DIRECTED THE ASSESSEE TO FILE ALL THE NECESSARY DETAILS BEFORE 5 ITA NO. 1538 / HYD /2018 ( GANGA RATHI ) THE LD. CIT(A) EVEN IF HE FILED EARLIER. THUS, THIS APPEA L FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURP OSE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON TH IS 2 2 N D DAY OF JAN. , 20 20 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 2 2 N D JANUARY , 20 20 . VR/ - COPY TO: 1. THE ASSESSEE GANGA RATHI, D.NO. 3 - 2 - 840/A, KACHIGUDA, HYDERABAD. 2. THE REVENUE - ITO, WARD - 4(4), HYDERABAD. 3. THE PR. CIT - 1, HYDERABAD. 4. THE CIT(A) ,HYDERABAD. 5. THE D.R . , HYDERABAD. 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.