Dharamshala Health Resorts Ltd., Dharamshala Cantt. V. ACIT, Circle, Palampur

ITA 1543/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0426 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Notional interest

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 1543/CHD/2018 / ASSESSMENT YEAR : 2005-06 DHARAMSHALA HEALTH RESORTS LTD., VILLAGE SATOBARI, NEAR DAL LAKE, DHARAMSHALA CANTT, DISTT. KANGRA-176216 VS. THE ACIT, PALAMPUR, DISTT. KANGRA (H.P.) ./PAN NO: AABCD8254H / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI SURINDER BABBAR, CA ' ! / REVENUE BY : SH. ROHIT MEHRA, SR.DR # $ % /DATE OF HEARING : 11.09.2019 &'() % / DATE OF PRONOUNCEMENT : 11.09.2019 / ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 10.10.2018 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)- PALAMPUR [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE SOLE ISSUE RAISED IN THIS APPEAL IS REGARDIN G THE CONFIRMATION OF ADDITION OF RS. 4,00,842/- BY THE LD. CIT(A) INT O THE INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF NOTIONAL INT EREST ON THE ADVANCES MADE BY THE ASSESSEE FOR THE PURCHASE OF THE PROPER TY. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT HE ASSESSEE DURING THE YEAR ADVANCED AN AMOUNT OF RS. 62,56,265/- ITA NO.1543-CHD-2018 M/ S DHARAMSHALA HEALTH RESORTS LTD, DISTT. KANGRA 2 FOR THE PURCHASE OF THE PROPERTY. THE ASSESSING OFF ICER CALCULATED THE NOTIONAL INTEREST @ 12% OF THE SAID AMOUNT HOLDING THAT THE SAID AMOUNT WAS NOT ADVANCED FOR BUSINESS PURPOSES AND ACCORDIN GLY ADDED THE SAME INTO THE INCOME OF THE ASSESSEE. 4. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE SU BMITTED THAT THE ASSESSEE HAD NOT DEBITED / BOOKED ANY INTEREST EXP ENDITURE IN ITS PROFIT & LOSS ACCOUNT, HENCE, THERE WAS NO QUESTION OF DI SALLOWANCE OF ANY INTEREST EXPENDITURE. THE LD. CIT(A), HOWEVER, OBS ERVED THAT THE ASSESSEE DURING THE YEAR HAD PAID INTEREST OF RS. 4 ,00,842/- ON A LOAN OF RS. 82,24,273/- RECEIVED BY THE ASSESSEE FROM J & K BANK. THE LD. CIT(A) ACCORDINGLY RESTRICTED THE DISALLOWANCE OF THE AFORESAID AMOUNT TO RS. 4,00,842/-. 5. AGGRIEVED BY THE ABOVE ORDER, THE ASSESSEE HAD C OME IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, HAS SUBMITTED THAT THE ASSESSEE HAD NOT BOOKED THE SAID INTEREST PAYME NT OF RS. 4,00,842/- IN ITS PROFIT & LOSS ACCOUNT AS AN EXPENDITURE. THA T WHEN NO INTEREST EXPENDITURE HAS BEEN BOOKED / DEBITED IN THE PROFI T & LOSS ACCOUNT, THERE IS NO QUESTION OF ANY DISALLOWANCE OF SUCH AN EXPENDITURE. I AGREE WITH THE ABOVE SUBMISSIONS OF THE LD. AR OF T HE ASSESSEE. HOWEVER, THE FACT THAT THE ASSESSEE DURING THE YEAR HAD NOT BOOKED / DEBITED ANY INTEREST EXPENDITURE IN ITS PROFIT AND LOSS ACCOUNT NEEDS ITA NO.1543-CHD-2018 M/ S DHARAMSHALA HEALTH RESORTS LTD, DISTT. KANGRA 3 VERIFICATION AT THE HANDS OF THE ASSESSING OFFICER. THEREFORE, THE ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AS TO WHETHER ANY INTEREST EXPENDITURE HAS BEEN BOOKED BY THE ASS ESSEE DURING THE YEAR AND IF IT IS NOT FOUND SO, THEN THERE IS NO QUESTIO N OF ANY DISALLOWANCE OF INTEREST EXPENDITURE. THE ASSESSING OFFICER IS DIRE CTED TO VERIFY THIS ISSUE ON THIS LIMITED ASPECT AND DECIDE THE SAME AS PER DIRECTIONS GIVEN ABOVE. THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FO R STATISTICAL PURPOSES. ORDER DICTATED AND PRONOUNCED IN THE OPEN C OURT IMMEDIATELY ON COMPLETION OF HEARING. SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 11. 09.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR