Sri Tara Chand Daptry, Kolkata V. ACIT,Circle-40, Kolkata, Kolkata

ITA 1677/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2531 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CHOUDHURY
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1677 / KOL / 20 16 ASSESSMENT YEAR :2010-11 SRI TARA CHAND DAPTRY, 107, MANIKTALA ROAD, KOLKAT-700 054 [ PAN NO.ADQPD 6025 R ] V/S . ACIT, CIRCLE-40, 3, GOVT. PLACE WEST, KOLKATDA-700 001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SOUMITRA CHOUDHURY, ADVOCATE /BY RESPONDENT SHRI R. CHOUDHURY, ADDL. CIT-DR /DATE OF HEARING 13-08-2018 /DATE OF PRONOUNCEMENT 12-11-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-11 CHALLENGES CORRECTNESS OF COMMISSIONER OF INCOME TAX (APPEALS) -13, KOLKATAS ORDER DATED 31.05.2016, PASSED IN CASE NO.305/CIT(A)-13/C IR-45/KOL/2014-15, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GROUND SEEKS TO CHALLENGE CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION DISALLOWING I TS INTEREST CLAIM OF 12,16,614/- U/S 36(1)(III) OF THE ACT. THE CIT(A)S DETAILED DISCUSSION QUA THE INSTANT ISSUE READS AS UNDER:- 6. I HAVE GONE THROUGH THE CONTENTION OF THE ASSES SEE, THE ORDER PASSED BY THE AO AND THE SUBMISSIONS MADE BY THE AP PELLANT. THE DECISION OF THIS APPEAL IS GIVEN AS UNDER :- ITA NO.1677/KOL/2016 A.Y. 201 0-11 SH.TARA CHAND DAPTRY VS. ACIT, CIR -40, KOL. PAGE 2 IN THIS CASE THE AO DISALLOWED INTEREST OF RS.12,16 ,6144/- ON THE GROUND THAT UNSECURED LOAN AMOUNTING TO RS.1,33,67, 163/- WAS NOT USED FOR BUSINESS PURPOSE. THE APPELLANT DEPLOY ED THE SAME IN VARIOUS INVESTMENT WHICH ARE AS UNDER:- INTEREST OF RS.12,16,614/- ON UNSECURED LOANS AMOU NTING TO RS.1,33,67,163/- NOT ALLOWABLE BEING NOT FOR THE PURPOSE OF BUSINESS OR PROFESSION. ASSESSEE HAS PAID INTEREST AS ABOVE AND HAS MADE IN VESTMENTS AS UNDER AS PER AUDITED BALANCE SHEET OF THE CONCER N M/S TTD INDUSTRIES OF WHICH ASSESSEE IS THE PROPRIETOR. INVESTMENT AMOUNT REAL ESTATE 13652627 RUCHI REALITY HOLDINGS PVT LTD 2156009 HDFC AMC LTD 1750000 SHARES IN COMPANIES 200172 PPF ACCOUNT 631846 ASLN & AKALIMATA 500000 TOTAL 18890654 THE APPELLANT HAS REPLIED THAT THERE WAS NO ALLEGED INVESTMENT OF RS.1,88,90,654/- AND DUE TO CAPITAL ADJUSTMENT THOS E ASSE5T HAS BEEN SHOWN IN ASSET AND TWO ASSET PURCHASED AND ADVANCE OF RS.1,33,52,627/- WITH A MOTIVE TO MAKE PROFIT BY HE NCE ULTIMATELY IT WAS SOLD IN THE NEXT FINANCIAL YEAR AND EARED PROFIT. THE AO FOUND THAT THE EXPLANATION WAS NOT SATISFACT ORY HENCE DISALLOWANCE WAS MADE. DURING THE COURSE OF APPELLATE PROCEEDING THE APPEL LANT SUBMITTED BALANCE SHEET AND HIS SUBMISSION. AS PER HIS SUBMIS SION DURING THE COURSE OF ASSESSMENT PROCEEDING ON 29-03-2003 IT WA S STATED THAT ALL THE INVESTMENT WERE NOT MADE FROM BORROWED CAPITAL. THE INVESTMENTS WERE MADE IN THE PAST YEARS. HE FURTHER SUBMITTED T HAT THE APPELLANT WANTED TO EARN PROFIT THEREFORE INVESTMENT WAS MADE IN TWO REAL ESTATE PROPERTY TO THE TUNE OF RS.1,58,08,636/- WITH MOTIV E TO EARN PROFIT. THEREFORE, THE SAID INTEREST SHOULD BE ALLOWED AS A BUSINESS EXPENDITURE. IN THIS REGARD THE BALANCE SHEET OF THE APPELLANT W AS PERUSED. THE PERUSAL OF THE BALANCE SHEET OF THE APPELLANT SHOWS THAT THE APPELLANT HAS SHOWN CASH IN BANK TO THE TUNE OF RS.2,02,10,03 8/- IN THE ROYAL BANK OF SCOTLAND AND INVESTMENT AS PER SCHEDULE-I H AS BEEN SHOWN TO THE EXTENT OF RS.1,88,90,0654/-. THE APPELLANT DID NOT SUBMIT ANY CASH FLOW STATEMENT WHICH CAN THROUGH ANY LIGHT THAT THE INVESTMENT WERE MADE OUT OF HIS SURPLUS FUND. IT CANNOT BE INVESTME NT FROM HIS SURPLUS FUND TOO BECAUSE CAPITAL IN THE BALANCE SHEET IS SH OWN TO THE TUNE OF RS.1,35,17,700/- ONLY, WHEREAS IN THE CASE OF ASSE T SIDE CLOSING STOCK WAS TO THE TUNE OF RS.2.6CRORE AND SUNDRY CREDITOR WAS SHOWN TO THE TUNE OF RS.2.4 CRORE AND CASH AT BANK IS MORE THAN 2.5 CRORE HAS BEEN ITA NO.1677/KOL/2016 A.Y. 201 0-11 SH.TARA CHAND DAPTRY VS. ACIT, CIR -40, KOL. PAGE 3 SHOWN. THIS CLEARLY SHOWS THAT THE APPELLANT HAS NO T USED HIS SURPLUS FUND FOR INVESTMENT. IT WAS BORROWED FUND WHICH HAS BEEN USED FOR INVESTMENT PURPOSE. THE APPELLANT HAS SUBMITTED THA T THE ASSET HAS BEEN SOLD IN SUBSEQUENT YEAR ON ACCOUNT OF WHICH HE HAS EARNED PROFIT. IT WAS GATHERED FROM HIM DURING THE APPELLATE PROCE EDING THAT SUBSEQUENT SALE HAS BEEN SHOWN AS LONG TERM CAPITAL GAIN. THE APPELLANT WAS ASKED AS HOW HE CAN CLAIM BUSINESS EX PENSES ONCE HE SHOWN CAPITAL GAIN ON SALE OF THOSE INVESTMENT AGAI NST WHICH INTEREST HAS BEEN CLAIMED. NO ARGUMENT OR SUITABLE EXPLANATI ON WAS GIVEN. CONSIDERING THE FACT THAT THE APPELLANT HAS NOT SUB MITTED ANY CASH FLOW STATEMENT WHICH CAN THROUGH ANY LIGHT THAT THE INVE STMENT WAS MADE OUT OF SURPLUS FUND. PERUSAL OF BALANCE SHEET SHOWS THAT ASSESSEE HAS PARKED HIS FOUND IN CASH AT BANK AND ALSO IN CLOSIN G STOCK & FIXED ASSET AT MULTIFOLD IN COMPARISON TO HIS SURPLUS FUND WHIC H IS SHOWN AS A CAPITAL. ONCE IT IS CONCLUDED THAT THE APPELLANT FA ILED TO CLARIFY AND SUBSTANTIATED ITS CLAIM THAT INVESTMENT WERE NOT MA DE OUT OF BORROWED FUND, THE INTEREST ON INVESTMENT CANNOT BE ALLOWED. SIMILARLY THE APPELLANT OWN ACTION OF SHOWING LONG TERM CAPITAL G AIN ON SALE OF THESE INVESTMENT, SUBSEQUENTLY MAKES IT CLEAR THAT IT CAN NOT BE ALLOWED AS A BUSINESS EXPENDITURE. CONSIDERING THE ABOVE FACT TH E DISALLOWANCE IS HEREBY UPHELD AND THE GROUND OF THE APPEAL IS DISMI SSED. 3. WE HAVE HEARD RIVAL CONTENTIONS AGAINST AND IN S UPPORT OF THE IMPUGNED DISALLOWANCE. PAPER BOOK COMPRISING OF ASSESSEES B ALANCE-SHEET AS ON 31.03.2009 STATEMENT OF UNSECURED LOAN, TREADING AN D PROFIT AND LOSS ACCOUNT AS WELL AS BALANCE-SHEET AS ON 31.03.2008 OF PROPRI ETORSHIP BUSINESS CONCERN M/S TTD INDUSTRIES, THE VERY DOCUMENTS AS ON 31.03. 2009 FOR THE SAID CONCERN, GENERAL LEDGER ACCOUNT FROM 01.04.2009 TO 31.03.2010 AND AUDITED ACCOUNTS AS ON 31.03.2010 STAND PERUSED. IT HAS COM E ON RECORD THAT ASSESSEE HAD SHOWN CASH AMOUNT IN HIS BANK TO THE T UNE OF 2,02,10,038/- AS AGAINST INVESTMENT OF 18,90,654/- ONLY MEANING THEREBY THAT THE ASSESSEE S NON-INTEREST BEARING FUND EXCEED NON-BUSINESS INVES TMENTS. IT HAS FURTHER COME ON RECORD THAT SAID INVESTMENTS HAVE BEEN MADE / ACCEPTED IN ASSESSMENT YEAR 2008-09 AS AGAINST IN THE IMPUGNED ASSESSMENT YEAR. ALL THESE CLINCHING ASPECTS HAVE GONE UNREBUTTED DURING THE COURSE OF HEARING. WE QUOTE HON'BLE BOMBAY HIGH COURTS LANDMARK DECIS ION IN CIT VS. RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340 (BOM) TO CONCLUDE THAT NECESSAR Y ITA NO.1677/KOL/2016 A.Y. 201 0-11 SH.TARA CHAND DAPTRY VS. ACIT, CIR -40, KOL. PAGE 4 PRESUMPTION IN SUCH CASE IS THAT OF INVESTMENT FRO M NON-INTEREST BEARING FUNDS ONLY. THIS TAXPAYERS SOLE SUBSTANTIVE GROUND IS ALLOWED THEREFORE. 4. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 12/11/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 12 / 11 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SRI TARA CHAND DAPTRY, 107, MANIKTALA RD . KOLKATA-54 2. /RESPONDENT-ACIT, CIR-40, 3, GOVT. PLACE WEST, KOLK ATA-700001 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 3,