Shri Alpesh Dahyabhai Patel, Ahmedabad V. The Dy.CIT, Circle-6, Ahmedabad

ITA 1776/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8135 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Earning of tax free income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LNL; DS LE{KA LNL; DS LE{KA LNL; DS LE{KA LNL; DS LE{KA (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ) ./ I.T.A. NO.1776/AHD/2015 ( / ASSESSMENT YEAR : 2011-12) SHRI ALPESH DAHYABHAI PATEL B-404, SURYADEEP TOWER, GURUKUL ROAD, AHMEDABAD 380052 / VS. DCIT, CIRCLE 6, AHMEDABAD. ./ ./ PAN/GIR NO. : ACWPP 0823 G ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL TALATI, A.R. / RESPONDENT BY : SHRI V. K. SINGH, SR. D.R / DATE OF HEARING 01/11/2017 !'# / DATE OF PRONOUNCEMENT 16/11/2017 $% / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-13, AHMEDABAD, DATED 31/03/2015 FOR THE ASSESSMENT YEAR (AY) 2011-12, ON THE FOLLOWING GROUNDS: THE LD. CIT(A)-13, AHMEDABAD HAS ERRED IN LAW AND O N FACTS OF THE CASE BY CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDIT URE OF RS.10,28,717/- MADE BY THE AO AFTER HOLDING THAT THE INTEREST EXPE NDITURE IS NOT IN RELATION TO THE INTEREST INCOME. ITA NO.1776/AHD /2015 SHRI ALPESH D. PATEL VS. DCIT ASST.YEAR 2011-12 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER HAS NOTICED THAT ASSESSEE HAS CLAIMED INTER EST EXPENDITURE OF RS.8,10,864/- TO STATE BANK OF INDIA AND OTHER PART OF INTEREST OF RS.2,17,853/- TO THE OTHER PERSONS. ON VERIFICATION OF BALANCE SHEET OF THE ASSESSEE, THE AO HAS OBSERVED THAT THE ASSESSEE HAS NOT SHOWN ANY LOAN LIABILITY IN THE BALANCE SHEET. ON THE BASIS O F WHICH, INTEREST WERE PAID DURING THE YEAR UNDER CONSIDERATION. IN THIS C ONNECTION, THE AO HAS FURTHER OBSERVED THAT THE ASSESSEE WAS HAVING SAVIN G BANK INTEREST OF RS.4,00,051/- AND CREDIT BALANCE OF RS.79,56,144/- WITH STATE BANK OF INDIA, WHICH DEMONSTRATE THAT THERE WAS NO REQUIREM ENT OF BORROWING LOAN FOR THE ASSESSEE. HE FURTHER NOTED THAT ASSESS EE HAS ADVANCED INTEREST FREE LOAN OF RS.5,57,50,000/- TO HIS FAMILY MEMBERS & FRIENDS, ON WHICH NO INCOME WAS GENERATED. SUBSEQUENTLY, THE ASSESSIN G OFFICER HAS DISALLOWED THE INTEREST EXPENDITURE CLAIM OF ASSESS EE TOTALING TO RS.10,28,717/-. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.10,28,717/-. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, THE LD. COUNSEL HAS SUBMITTED THE PAPER BOOK PERTAINING INF ORMATION RELATING TO FILING OF RETURN OF INCOME, LEDGER ACCOUNT OF SBI L OAN, SBI LOAN ITA NO.1776/AHD /2015 SHRI ALPESH D. PATEL VS. DCIT ASST.YEAR 2011-12 - 3 - INTEREST AND LEDGER ACCOUNT OF LOAN AND INTEREST PA YMENT TO OTHER PERSONS. THE LD. COUNSEL HAS CONTENDED THAT ASSESSE E HAS OBTAINED SECURED LOAN FROM STATE BANK OF INDIA AND UNSECURED LOAN FROM OTHER PERSON, WHICH WERE PAID DURING THE YEAR UNDER CONSI DERATION BECAUSE OF WHICH THESE ITEMS WERE NOT APPEARING IN THE BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION. HE FURTHER CONTENDED THAT ASSE SSEE WAS HAVING SUFFICIENT INTEREST FREE FUND AND AS PER THE DECISI ON OF CIT VS. GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. (2014) 221 TAXM AN 479 (GUJ H.C.) WHERE NO DISALLOWANCE CAN BE MADE WHEN INTEREST FR EE FUNDS AVAILABLE WITH THE ASSESSEE ARE MUCH HIGHER THAN INVESTMENTS MADE TO EARN EXEMPT INCOME. 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDE R OF CIT(A) AND WE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE HAVE NOTICED THAT AS PER PAGE NO.9 OF THE PAPER BOOK, TH E ASSESSEE HAS LEDGER ACCOUNT OF SBI LOAN FOR THE PERIOD OF 01.04.2010 TO 31.03.2011. SIMILARLY, ON PAGE NO. 15 OF PAPER BOOK, DETAIL OF INTEREST PAYMENT TO THE OTHER PERSONS ON THE UNSECURED LOAN WAS REFLECT ED. THE ASSESSEE HAS CLAIMED THAT BOTH THESE LOANS WERE REPAID DURING TH E YEAR SO THE SAME ARE NOT REFLECTED IN THE BALANCE SHEET FOR THE YEAR UND ER CONSIDERATION. WE HAVE FURTHER NOTICED FROM PAGE NO.16 OF THE PAPER B OOK CONTAINING BALANCE SHEET OF THE ASSESSEE AS ON 31 ST MARCH, 2010, IN WHICH ON THE LIABILITY SIDE, THE TOTAL AVAILABLE FUND OF THE ASS ESSEE WAS RS.10,10,31,728/-, WHEREAS, WE HAVE SEEN THAT ON TH E OTHER SIDE, THE ASSESSEE HAS MADE LOAN AND ADVANCES OF RS.10,59,12, 908/-. FURTHER ON ITA NO.1776/AHD /2015 SHRI ALPESH D. PATEL VS. DCIT ASST.YEAR 2011-12 - 4 - THE LIABILITY SIDE, ASSESSEE HAS SHOWN SECURED LOAN FROM BANK OF RS.91,29,946/- AND UNSECURED LOAN OF RS.82,10,807/- . AFTER PERUSAL OF THE ABOVE INFORMATION, WE FIND THAT ASSESSEE HAS MADE M ORE LOAN AND ADVANCES THEN THE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE. WE HAVE FURTHER OBSERVED THAT THE ASSESSEE HAS CLAIMED PAYM ENT OF INTEREST ON UNSECURED LOAN TO THE AMOUNT OF RS.21,17,853/-. ON THE OTHER HAND, NO INTEREST WAS CHARGED ON THE LOAN AND ADVANCES, WHIC H WAS NOT MADE OUT OF INTEREST FREE FUND. 6. AFTER CONSIDERED THE ABOVE FACTS, WE ALLOW THE P AYMENT OF INTEREST TO THE ASSESSEE IN RESPECT OF SECURED LOAN TAKEN FR OM STATE BANK OF INDIA, ON WHICH INTEREST OF RS.8,10,864/- WAS PAID. HOWEVE R, WE DISALLOWED THE CLAIM OF INTEREST OF RS.2,17,853/- ON OTHER UNSECUR ED LOAN TAKEN BY THE ASSESSEE ON THE GROUND THAT ASSESSEE HAS NOT CHARGE D ANY INTEREST ON THE LOAN AND ADVANCES, WHICH WAS NOT ADVANCED OUT OF IN TEREST BORROWING FUND AS ELABORATED ABOVE IN THIS ORDER. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16 / 11 /201 7 SD/- SD/- VEJTHR FLAG VEJTHR FLAG VEJTHR FLAG VEJTHR FLAG &' $ ( $ ) ()* $ ) ( AMARJIT SINGH ) ( MAHAVIR PR ASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 16/11/2017 PRITI YADAV, SR. PS ITA NO.1776/AHD /2015 SHRI ALPESH D. PATEL VS. DCIT ASST.YEAR 2011-12 - 5 - !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , -. / / CONCERNED CIT 4. / () / THE CIT(A)-13, AHMEDABAD. 5. 012 **-. , -.# , '&$,$ / DR, ITAT, AHMEDABAD 6. 245 6 / GUARD FILE. & ' / BY ORDER, 0 * //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION .01/11/2017 (DICTATION-PAD 3 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03/11/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER