The ACIT,B.K. Circle, Palanpur V. Shri Piyush Vasudev Agrawal, Deesa

ITA 1671/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94346 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILASH SHINDE
• Assessee Lawyers: GAURAV NAHATA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I S. S. GODARA , JUDICIAL MEMBER ACIT, B.K. CIRCLE, PALANPUR, (APPELLANT) VS SHRI PIYUSH VASUDEV AGRAWAL, DEESA, PAN - ADYPA3176E (RESPONDENT) REVENUE BY : S H RI VILASH SHINDE , SR. D . R. ASSESSEE BY: S H RI GAURAV NAHATA , A.R. DATE OF HEARING : 20 - 08 - 2 015 DATE OF PRONOUNCEMENT : 04 - 09 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2008 - 09 , ARISES FROM ORDER OF T HE CIT(A) - XX, AHMEDABAD DATED 27 - 04 - 2011 IN APPEAL NO. CIT(A) - I T A NO . 1671 / A HD/20 11 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 1671 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI PIYUSH VASUDEV AGRAWAL 2 XX/642/ 10 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE S SOLE SUBSTANTIVE GROUND CHALLENGES THE CIT(A) S ORDER DELETING INTEREST EXPENDITURE DISALLOWANCE OF RS. 10,05,306/ - MADE BY THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 29 - 12 - 2010. THE ASSESSEE HAD CLAIMED INTEREST EXPENSES TO THE TUNE OF RS. 16,81,175/ - AGAINST THE CORRESPONDING INTEREST INCOME OF RS. 6, 75,769/ - U/S. 57(1)(III) OF THE ACT. THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS. 10,05,306/ - IN QUESTION ARISING FROM THE DIFFERENCE BETWEEN THE ABOVE STATED TWO FIGURES AND MADE CONSEQUENTIAL ADDITION. 3. THE ASSESSEE PREFERRED APPEAL. THE C IT(A) HAS ACCEPTED ITS CONTENTIONS AS UNDER: - 3.3 I HAVE GONE THROUGH THE SUBMISSIONS OF THE AR AND THE ASSESSMENT ORDER CAREFULLY. IT IS SEEN THAT THE AO HAS HELD IN THE ASSESSMENT ORDER THAT THE ENTIRE INTEREST EXPENSES HAVE BEEN CLAIMED AGAINST THE INTEREST INCOME EARNED BY THE APPELLANT. THE AO HAS HENCE PROCEEDED ON THE PREMISE THAT THE CLAIM OF INTEREST EXPENSES IS UNDER SECTION 57(III) OF THE IT ACT 1961. THIS PRESUMPTION OF THE AO IS NOT JUSTIFIED. IT IS SEEN THAT THE APPELLANT HAS TRANSPORTATIO N INCOME AS ALSO INCOME FROM HOUSE PROPERTY, CAPITAL GAINS APART FROM THE INCOME OF INTEREST ON LOANS GIVEN. IT IS NOT THE CASE OF THE AO THAT THE APPELLANT HAS GIVEN INTEREST FREE ADVANCES OUT OF INTEREST BEARING FUNDS. FROM THE DETAILS FILED IT IS SEEN T HAT THE OPENING CAPITAL OF THE APPELLANT WAS RS. 90,82,355/ - THE LOANS TAKEN ON INTEREST WERE RS. 1,38,78,974/ - AS AGAINST THE ABOVE THE ENTIRE AMOUNT OF LOANS GIVEN INTEREST FREE IS ONLY RS. I.T.A NO. 1671 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI PIYUSH VASUDEV AGRAWAL 3 16,57,847/ - . IN VIEW OF THE OPENING CAPITAL BALANCE OF RS. 90,82 ,355/ - IT CANNOT BE SAID THAT THE APPELLANT DID NOT HAVE SUFFICIENT INTEREST FREE FUNDS TO ADVANCE RS. 16,57,847/ - INTEREST FREE. THE HON. GUJARAT HIGH COURT IN TAX APPEAL NUMBER 111 OF 2009 HAS HELD THAT THE DISALLOWANCE OF INTEREST UNDER SECTION 36(L)(II I) WAS NOT JUSTIFIED IF THE APPELLANT HAD SUFFICIENT INTEREST FREE FUNDS TO MAKE ADVANCES INTEREST FREE. FOR MAKING A DISALLOWANCE U/S 36(L)(III) THE ONUS IS ON THE ASSESSING AUTHORITY TO PROVE THAT INTEREST BEARING FUNDS WERE UTILIZED IN MAKING INTEREST F REE ADVANCES. IN THE INSTANT CASE THE AO HAS NOT MADE ANY ANALYSIS OF THE FUNDS AVAILABLE WITH THE APPELLANT AND THE SOURCES OF FUNDS ADVANCED AS LOANS INTEREST FREE. IN VIEW OF THE ABOVE THE AO IS NOTJUSTIFIED IN MAKING THE DISALLOWANCE OF INTEREST OF RS. 10,05,306/ - . THE DISALLOWANCE MADE BY THE AO IS HENCE NOT ON SOUND FOOTING. THE SAME IS DELETED. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE FILE. THE REVENUE S ARGUMENTS SEEK TO RESTORE THE IMPUGNED INTEREST DISALLOWANCE. IT HAS COME ON RECORD THAT THE ASSESSEE HAD OPENING CAPITAL BALANCE OF RS. 90,82,355/ - ALONG WITH INTEREST BEARING LOANS OF RS. 1,38,78,974/ - . ITS INTEREST FREE LOANS GIVEN IS ONLY A PALTRY SUM OF RS. 16,57,847/ - . IN OTHER WORDS, THE ABOVE STATED INTEREST FREE LOANS CAN BE SAFELY PRESUMED TO HAVE BEEN ADVANCED FROM CORRESPONDING INTEREST FREE BALANCES HEREINABOVE. THE CIT(A) QUOTES DECISION OF HON BLE JURISDICTIONAL HIGH COURT ON THE VERY PRINCIPLE. THE HON BLE BOMBAY HIGH COURT IN CASE OF CIT VS. RELIAN CE POWER UTILITIES 313 ITR 340 ALSO PROPOUNDS THE VERY PROPOSITION. THE CASE FILE COMPRISE OF ASSESSEE S PROFIT AND LOSS ACCOUNT AS WELL AS BALANCE SHEET. THE REVENUE FAILS TO PIN POINT ANY INFIRMITY THEREIN VIS - - VIS THE LOWER APPELLATE FINDINGS UNDER C HALLENGE. ITS SOLE SUBSTANTIVE GROUND FAILS ACCORDINGLY. I.T.A NO. 1671 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI PIYUSH VASUDEV AGRAWAL 4 5. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 04 - 0 9 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( S. S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD : DATED 04 /0 9 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,