Dilkhush Chaplot, BHILWARA V. ITO, BHILWARA

ITA 173/JODH/2013

• Counselvise Citation: 17323314 RSA 2013
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-10-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 18-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: SOHAN LAL KOGTA
• Keywords: Opportunity of being heard
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NOS. 173/JU/2013 A.Y: 1999-2000 SHRI DILKUSH CHAPLOT VS. THE INCOME-TAX OFFICER C/O SOHAN LAL KOGTA, ADV. WARD 1 11/161, AZAD MOHALLA BHILWARA BHILWARA PAN NO. AETPC 4219 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SOHAN LAL KOGTA DEPARTMENT BY : SHRI N.A. JOSHI - DR DATE OF HEARING : 23.10.2013 DATE OF PRONOUNCEMENT : 24.10.2013 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A), AJMER, DATED 18.01.2013 FO R A.Y 1999-2000. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED HIS RETURN OF INCOME [ROI] FOR A.Y. 1999- 2000 ON 26.11.1999, WHICH WAS PROCESSED U/S 143(1)( A) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO A S 'THE ACT', FOR SHORT]. THE A.O. ISSUED NOTICE U/S 148 OF THE ACT ON 30.8.2000. IN COMPLIANCE THEREOF, THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN FILED ON 26.11.1 999 MAY BE TREATED TO HAVE BEEN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. IN THE ASSESSMENT COMPLETED U/S 143(3) R.W.S 148 OF THE ACT, THE A.O. MADE VARIOUS DISALLOWANCES , INCLUDING DISALLOWANCE OF INTEREST EXPENSES OF RS. 1,79,005/-. AS PER ASSESSEE, THE INTEREST PERTAINE D TO AN AMOUNT UTILIZED FOR THE PURCHASE OF SHARES OF M/S S AMURAI SYNTHETICS PVT. LTD AND THE ASSESSEE EXPECTED DIVID END INCOME THEREFROM. BUT THE A.O. WAS NOT AGREEABLE A ND HELD THAT THE DIVIDEND INCOME BEING EXEMPT WAS EXEM PT U/S 10(33) OF THE ACT AND THE ABOVE INTEREST EXPENS ES WERE NOT RELATED TO THE BUSINESS OF THE ASSESSEE. THE A.O. DISALLOWED A SUM OF RS. 1,79,005/-. THE LD. CIT(A) , VIDE HIS ORDER DATED 28.2.2003, UPHELD THE ADDITION. IN FURTHER 3 APPEAL, THE APPELLATE TRIBUNAL, VIDE THEIR ORDER DA TED 31.3.2007 RESTORED THE MATTER TO THE FILE OF THE A. O. SINCE THE TRIBUNAL VIDE THEIR ORDER DATED 28.7.2006 PASSED FOR A.Y. 1996-97 IN ITA NO. 142/JU/205 IN ASSESSEE S OWN CASE HAD SET ASIDE THE ORDERS OF THE AUTHORITIES BE LOW AND RESTORED THE ISSUE TO THE FILE OF THE A.O. WITH THE DIRECTION TO DECIDE THE SAME AFRESH AFTER ACCORDING CLEAR OPPORTUNITY OF BEING HEARD AS PER LAW TO THE ASSESS EE, THE TRIBUNAL FOLLOWED SUIT AND RESTORED THE ISSUE TO TH E A.O. IN THE SAME LINES. IN THE SECOND ROUND, THE A.O. HAS HELD THAT THE ASSESSEE HAS FAILED TO FURNISH EVIDENCE TO ESTABLISH THE NEXUS BETWEEN THE FUNDS BORROWED AND INTEREST PAID THEREON AND UTILIZATION OF THESE FUND S FOR INVESTMENT IN SHARES. AGGRIEVED, THE ASSESSEE IS I N FURTHER APPEAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. IT WAS ARGUED BY THE LD. A.R. THAT THE FUNDS WERE BORROWED IN F.YS. 1994-95, 1995-96 AND 1996-97 AMOUNTING TO RS. 18 4 LAKHS FOR PURCHASE OF SHARES OF M/S SAMURAI SYNTHET ICS PVT. LTD. AND THERE WERE NO FRESH BORROWINGS IN F.YS. 19 97-98 AND 1998-99. THE ASSESSEE HAS SUPPORTED THE ABOVE CLAIM WITH EVIDENCE BY FILING DETAILS OF AMOUNT BORROWED AS INVESTMENT IN SHARE CAPITAL STATEMENT OF INTEREST P AID AND COPY OF BANK STATEMENTS. A CHART SHOWING INTEREST PAID DURING A.Y. 1999-2000 OF RS. 1,79,005/- WHICH IS MA DE A PART OF LD. CIT(A)S ORDER HAS BEEN PAID FOR PURCHA SE OF SHARES. ACCORDING TO THE LD. A.R., THE ASSESSEE HA S BEEN ABLE TO ESTABLISH THE NEXUS OF BORROWED FUNDS WITH PURCHASE OF SHARES OF SAMURAI SYNTHETICS. ON THE O THER HAND, THE LD. D.R. HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES PERTAINING TO A.Y. 1998-99, THE LD. CIT(A) HAS ALLO WED SIMILAR CLAIM OF THE ASSESSEE BUT IN THIS YEAR HE H AS TAKEN A DIFFERENT VIEW. WE MAY MENTION THAT FOR JUDICIAL PURPOSES, IT DOES NOT MAKE ANY DIFFERENCE IN CASE T HE LD. 5 CIT(A) PASSING FOR ONE A.Y. IS A DIFFERENT INCUMBEN T FOR ANOTHER A.Y. IT IS THE AUTHORITY THAT MATTERS AND NOT THE PERSON. AS PER THE FINANCE ACT, 2001 THE DIVIDEND INCOME WAS DECLARED EXEMPT FOR I.T. PURPOSES. THEREFORE, I NTEREST PAID RELATED TO INTEREST AMOUNT IN PURCHASE OF DIVI DEND DECLARED BECAME DISALLOWABLE W.E.F. 1.4.2001. THIS CASE OF THE ASSESSEE IS PRIOR TO 1.4.2001. THEREFORE, P ROVISIONS OF SECTION 40A R.W. RULE 8 OF INCOME TAX RULES, 196 2 ARE NOT APPLICABLE IN THIS A.Y. IT IS FOUND FOR A FACT THAT NO FRESH INVESTMENT WAS MADE FOR PURCHASE OF SHARES IN A.Y. 1998-99 AND 1999-2000 AND THE PAYMENTS MADE DURING THOSE YEARS PERTAINED TO THE OUTSTANDING AMOUNT OF OLD LOANS. IN FACT, THE DIRECTIONS GIVEN BY THE TRIBUN AL IN THE FIRST ROUND ARE CLEAR AND IN THE SECOND ROUND THE A .O. WAS TO SEE WHETHER THERE WAS ANY NEXUS, AS DISCUSSED AB OVE, BETWEEN THE INTEREST MADE AND THE INTEREST PAID. FOLLOWING DECISIONS SUPPORT OUR FINDING THAT IN THE ABSENCE OF ESTABLISHING THE NEXUS AS DISCUSSED ABOVE, THE I NTEREST PAID PERTAINING TO THE PAST BORROWINGS CANNOT BE DISALLOWED: 6 1) SHRI DILKHUSH CHAPLOT VS. ITO, WARD-I, BHILWARA IN ITA NO. 173/JODH/2013 2) CIT VS. INDIAN SUGAR EXIM CORPORATION LTD. REPO RTED IN [2012] 19 TAXMANN 158 (DELHI). 3) DCIT VS. JAMMU & KASHMIR BANK LTD. REPORTED IN ( 2013) 152 TTJ (ASR) 522. 4) ZAVERI VIRJIBHAI MANDALIA VS. ACIT REPORTED IN ( 2013) 152 TTJ (AHD) (UO) 20 5) ACIT VS. MOHAN EXPORTS (P) LTD. REPORTED IN (201 3) 151 TTJ (DEL) 667. 6) DCIT VS. GULSHAN INVESTMENT CO. LTD. REPORTED IN (2013) 154 TTJ (KOL) 273 7) OASIS SECURITIES LTD. VS. DCIT (2013) 154 TTJ (M UMBAI) (UO) 17 8) MAJ. GENUINE. (RETD.) KANWARJIT SINGH GILL L/H O F SMT. NARINDER KAUR GILL (DEAD) VS. ACIT REPORTED IN (200 6) 101 TTJ (ASR) 538. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE ORDE R DELETION OF THE IMPUGNED AMOUNT. RULE OF CONSISTENC Y ALSO DEMANDS THAT THE DEPARTMENT SHOULD TAKE SAME VIEW I N RESPECT OF IDENTICAL FACTS IN THE CASE OF THE SAME ASSESSEE. THE REVENUE DID NOT FILE APPEAL FOR OTHER A.Y. WHEN LD. CIT(A) HAD DELETED SIMILAR INTEREST DISALLOWANCE. ACCORDINGLY, WE ALLOW THE APPEAL OF THE ASSESSEE. 7 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 24 TH OCTOBER, 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 TH OCTOBER, 2013 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR