Amit Dhirajlal Doshi, Ahmedabad V. DCIT, Circle-1(1)(2), Ahmedabad

ITA 1760/AHD/2018

AI Insights

The case involves Amit Dhirajlal Doshi, who appealed against the order of the CIT(A)-1, Ahmedabad, concerning the Assessment Year 2013-14. The primary issues in the appeal were the additions made to the assessee's income under the heads of 'salaries' and 'interest under Section 57'. The Assessing Officer had added Rs.6,11,400 as a short declaration of salary income and Rs.31,99,303 as disallowed interest under Section 57, which was later partially reduced by the CIT(A). The Tribunal's decision addressed the taxability of various reimbursements under salary and the deductibility of interest on loans used for purchasing immovable property.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129292 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 17-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 06-08-2018
• Other Referred Cases: CIT vs. Sridev Enterprises, 192 ITR 165
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K. PATEL
• Section: 10(14); 143(1); 192

Judgement Text

ITA No.1760/Ahd/2018 Assessment Year: 2013-14 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1760/Ahd/2018 Assessment Year: 2013-14 Amit Dhirajlal Doshi, C/o. Doshi Ion Exchange & Chem. Ind. Limited, Plot No.24-25-26, Phase-II, Vatva, Ahmedabad – 382 445. [PAN – AACPD 7751 P] Vs. DCIT, Circle – 1(1)(2), Ahmedabad. (Appellant) (Respondent) Assessee by Shri Mehul K. Patel, AR Revenue by Shri Rohit Asudani, Sr. DR Da te o f He a r in g 18.07.2023 Da te o f P ro n o u n ce m e n t 13.09.2023 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the Assessee against order dated 18.05.2018 passed by the CIT(A)-1, Ahmedabad for the Assessment Year 2013-14. 2. The Assessee has raised the following grounds of appeal :- “1. The Learned Assessing Officer has erred in law and on facts in making addition of Rs.6,11,400/- under the head salaries and Hon. CIT (Appeals) has erred in law and on facts in confirming the addition of Rs.6,11,400/-. 2. The learned Assessing Officer has erred in law and on facts in making addition of Rs.31,47,497/- under Section 57 and Hon CIT (Appeals) has erred in law and on facts in confirming the addition of Rs.31,47,497/-. 3. The appellant craves leave to adduce, alter and submit detailed grounds of appeal. 4. it is prayed that the addition of Rs.6,11,400/- and Rs.31,47,497/- be deleted.” ITA No.1760/Ahd/2018 Assessment Year: 2013-14 Page 2 of 4 3. The assessee filed return of income on 31.07.2013 declaring total income of Rs.77,78,190/-. The return was duly processed under Section 143(1) of the Income Tax Act, 1961 and statutory notices were issued to the assessee and served. The assessee’s AR filed response alongwith the details during the course of assessment proceedings. The Assessing Officer observed that the assessee has credited an amount of Rs.58,63,992/- being salary income, however, in the statement of income the assessee has shown salary income of Rs.52,52,592/- only. The Assessing Officer added Rs.6,11,400/- as short declaration of salary income. The Assessing Officer also disallowed interest under Section 57 amounting to Rs.31,99,303/- which was utilised for the purpose of immovable property. The Assessing Officer also made addition of Rs.44,573/- in respect of interest on LIC loans. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted that as regards ground no.1 related to addition of Rs.6,11,400/- the assessee received gross salary of Rs.58,63,992/- which included car reimbursement, children education, driver salary reimbursement, helper, telephone reimbursement and uniform Attire reimbursement. The Ld. AR submitted that the Assessing Officer has not considered tax free allowance and included the said allowance in taxable salary. The Ld. AR submitted that the Assessing Officer has overlooked a certificate of employer acknowledging the payment of tax free allowances. As regards to ground no.2 relating to addition of Rs.31,47,497/- under Section 57 of the Act, the Ld. AR submitted that the assessee has given details of 11 parties from whom the assessee has taken advance/borrowed fund and paid interest thereof. Ld. AR submitted that in respect of these loans, the same were taken in earlier years and was immediately paid thereafter and, therefore, there was no question of interest paid. The Ld. AR further submitted that the funds were utilised for purchase of immovable property and the same is on record. The Ld. AR submitted that the addition does not sustain as the CIT(A) as well as the Assessing Officer has totally ignored the details of the parties from whom advances were taken. ITA No.1760/Ahd/2018 Assessment Year: 2013-14 Page 3 of 4 6. The Ld. DR submitted that the CIT(A) as well as the Assessing Officer has given all the detailed finding in respect of gross salary and the reimbursement is taxable income and the same was rightly disallowed by the CIT(A). As regards the addition of Rs.31,47,497/- under Section 57 of the Act, the CIT(A) has given a partial relief in the original addition which was Rs.31,99,303/-.. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the incentive such as car reimbursement, driver salary reimbursement and telephone reimbursement comes under the purview of taxable income and thus the Assessing Officer has rightly disallowed the same as they are perquisites. But, as regards to children education, helper & uniform attire reimbursement, the same are coming under the purview of Section 10(14) of the Act and hence are allowable. The certificate issued by the employer cannot override the applicability of the Income Tax Statute wherein such kind of reimbursements are taxable. Thus, ground no.1 is partly allowed. As regards ground no.2, the CIT(A) in respect of party-wise has given the finding as to the 11 parties and the evidences filed by the assessee was considered. In fact, in paragraph no.3.1(vi), it is clearly mentioned that at the time of scrutiny assessment proceedings the assessee submitted that unsecured loan on which interest has been paid but were utilised to purchase immovable property. The contention of the assessee that the funds were utilised and the loans were taken in earlier year and, therefore, the interest portion should have been allowed appears to be correct. Further, in paragraph no.3.7 the CIT(A) has categorically observed that the funds were given to Ashit Doshi on the very same date on which advances were taken from these 11 parties and such funds were repaid by Ashit Doshi immediately. The assessee has also paid interest of Rs.7,60,770/- to Ramilaben Doshi and only submitted ledger account of current year which shows opening balance of Rs.63,39,754/-. In case of Nishit Doshi, assessee paid interest of Rs.9,38,647/-. The Ld. AR relied upon the decision of CIT vs. Sridev Enterprises, 192 ITR 165. Thus, the assessee has established that the borrowed funds were utilised for such interest bearing advance and hence claim of the assessee for deduction of interest expenditure under Section 57 of the Act was proper. The ITA No.1760/Ahd/2018 Assessment Year: 2013-14 Page 4 of 4 Assessing Officer as well as the CIT(A) was not right in making this addition. Hence, ground no.2 is allowed. 8. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open Court on this 13 th September, 2023. Sd/- Sd/- (ANNAPURNA GUPTA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 13 th September, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad