Pawan kumar Goel, Ludhiana V. DCIT, Ludhiana

ITA 180/CHANDI/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6946 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 16-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C CHANDRAKANTA
• Keywords: Gift; Salary income; Deemed to accrue or arise in india
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.180/CHD/2015 (ASSESSMENT YEAR : 2010-11) PAWAN KUMAR GOEL VS. THE D.C.I.T., LUDHIANA. CIRCLE-VI, LUDHIANA. PAN: ABGPG2298F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR, CA RESPONDENT BY : SMT.C.CHANDRA KANTA, DR DATE OF HEARING : 04.07.2017 DATE OF PRONOUNCEMENT : 18.08.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(APPEALS)-3, LUDHIANA DATED 18.12.2 014 RELATING TO ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 3 ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS.1416937/- OUT OF TOTAL DISALLOWANCES OF RS. 1 707116/- MADE BY THE ASSESSING OFFICER. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-3 HAS FAILED TO APPRECIATE THE FACT THAT THE INTEREST BEARI NG BORROWED FUND IS LESS THAN THE INTEREST EARNING FUN D. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-3 HAS FAILED TO APPRECIATE THAT AMOUNT GIVEN TO MALHOTRA BROTHERS, GIFT TO HEENA GOEL AND CASH WITHDRAWAL HAS DIRECT LINKED WITH ASSESSEE'S OWN FUND/INTEREST FREE FUND. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-3 HAS FAILED TO APPRECIATE THE FACT THAT THE PROPERTY IN QU ESTION IS 2 SELF OCCUPIED/VACANT THEREFORE NO INCOME IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5. THAT THE APPELLANT PRAYS FOR LEAVE TO ADD, ALTER, A MEND AND/OR VARY THE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING OF THE APPEAL. 3. GROUND NOS.1, 2 AND 3 RAISED BY THE ASSESSEE AR E INTER-LINKED AND RELATE TO THE DISALLOWANCE OF INTE REST EXPENDITURE INCURRED BY THE ASSESSEE. THE SAME ARE , THEREFORE, BEING TAKEN UP TOGETHER FOR ADJUDICATION . 4. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT RETU RN DECLARING INCOME OF RS.1,15,09,670/- WAS FILED BY T HE ASSESSEE SHOWING INCOME UNDER THE FOLLOWING HEADS: S.NO. PARTICULARS INCOME I INCOME FROM SALARY RS.6,00,000/- II INCOME FROM HOUSE PROPERTY RS. 33,600/- III LOSS FROM BUSINESS/PROFESSION RS.45,51,069/- IV INCOME FROM CAPITAL GAINS RS.1,02,98,311/- V INCOME FROM OTHER SOURCES RS.53,03,828/- 5. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN LOSS U NDER THE HEAD BUSINESS AND PROFESSION TO THE EXTENT OF RS.45,51,069/- WHICH WAS ON ACCOUNT OF INTEREST PAI D TO K. LALL OVERSEAS IN WHICH THE ASSESSEE WAS A PARTNER. THE ASSESSING OFFICER OBSERVED THAT FROM THE FINAL ACCO UNTS IT EMERGED THAT THE ASSESSEE HAD UTILIZED THE INTEREST BEARING FUNDS FOR NON-INTEREST BEARING ACTIVITY I.E. FOR AC QUISITION OF ASSET OR GIVING LOANS/ADVANCES ON WHICH NO INTEREST WAS CHARGED. HE THEREFORE, DISALLOWED INTEREST TO THE EXTENT OF RS.17,07,116/- WHICH WAS CALCULATED BY WORKING OUT THE INTEREST PAYABLE ON VARIOUS INTEREST FREE ADVANCES 3 REPRODUCED IN THE CIT(APPEALS)S ORDER AT PARA 4.10 AS UNDER: 4.10. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMIS SIONS. DISALLOWANCE OF RS. 17,07,116/- MADE BY THE AO HAS BEEN COMPUTED AS UNDER: S.NO. PARTICULARS AMOUNT NO, OF DAYS INTEREST @ 12% 1. J.M. LAND PROMOTERS PVT. LTD. 01.04.2009 TO 1 7.11.2009 | 40,00,000 231 303780 17. 11. 2009 TO 19. 11. 2009 30,00,000 3 2960 19.1 1.2009 TO 14.12.2009 20,00,000 26 17095 2. M/S SWADESI MANUFACTURING SYNDICATE 01.04.2009 TO 31.03.2010 41,447 365 4974 3. SH. MAHESH KUMAR GOEL (SHARES ACCOUNT ) 10.11.2009 TO 31.03.2010 52,50,000 142 45095 4. GIFT TO HEENA GOEL 02.06.2009 TO 31.03.2010 3,00,000 303 29885 24.06.2009 TO 3 1.03.2010 44,00,000 281 406488 07.07.2009 TO 31.03.2010 16,00,000 268 140975 17.07.2009 TO 31.03.2010 6,00,000 257 50696 30.07.2009 TO 3 1.03.2010 1,85,354 244 14869 01.08.2009 TO 31.03.2010 5,51,500 242 43878 26.08.2009 TO 3 1.03.2010 (-) 16,79,000 217 (-)119784 5. SH. AMARJIT SINGH 30.11.2009 TO 31.03.2010 10,00,000 122 40110 6. CASH WITHDRAWAL FOR PERSONAL USE 29.06.2009 TO 3 1.03.2010 24,00,000 277 218564 07.07.2009 TO 3 1.03.2010 9,00,000 268 79299 29.07.2009 TO 31.03.2010 2,00,000 245 16110 7. MALHOTRA BROTHERS 01.04.2009 TO 15.05.2009 85,00,000 45 125753 15.05.2009 TO 12.06.2009 70,00,000 29 66740 12.06.2009 TO 13.06.2009 59,00,000 2 3880 13.06.2009 TO 15.06.2009 48,00,000 3 4734 15.06.2009 TO 19.06.2009 33,00,000 5 5424 19.06.2009 TO 20.06.2009 20,00,000 2 1315 20.06.2009 TO 02.07.2009 10,00,000 13 4275 TOTAL 17,07,116 AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BE FORE THE LD.CIT(APPEALS) WHO DELETED THE DISALLOWANCE OF INT EREST PERTAINING TO M/S SWADESI MANUFACTURING SYNDICATE, SHRI MAHESH KUMAR GOEL AND SHRI AMARJIT SINGH, WHILE INT EREST 4 PERTAINING TO REST OF THE ADVANCES MADE WAS UPHELD . IN EFFECT LD CIT(A) UPHELD DISALLOWANCE OF INTEREST PE RTAINING TO THE FOLLOWING: J.M LAND PROMOTERS PVT.LTD. GIFT TO HEENA CASH WITHDRAWAL FOR PERSONAL USE MALHOTRA BROTHERS IT IS AGAINST THIS ORDER OF THE LD.CIT(APPEALS) THAT THE ASSESSEE HAS RAISED THE PRESENT GROUNDS BEFORE US. 6. DURING THE COURSE OF HEARING BEFORE US, THE ASSESSEE TOOK UP DISALLOWANCE OF INTEREST ON EACH A DVANCE UPHELD BY THE LD.CIT(APPEALS) INDIVIDUALLY AND MADE ARGUMENTS ON THE SAME. WE SHALL BE DEALING WITH TH E ARGUMENTS WITH RESPECT TO EACH SUCH ADVANCE. 7. VIS--VIS THE DISALLOWANCE OF INTEREST PERTAINI NG TO ADVANCE MADE TO J.M.LAND PROMOTERS PVT. LTD., TH E LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE INTEREST HAD BEEN COMPUTED ON ADVANCES MADE TO THE SAID PARTY AMOUNTI NG TO RS.40 LACS. THE LD. COUNSEL FOR ASSESSEE POINTED O UT THAT THE SAID ADVANCES HAD BEEN MADE IN THE PRECEDING YE AR AS MENTIONED IN THE ORDER OF THE LD.CIT(APPEALS) ALSO. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE LD.CIT(AP PEALS) HAS MENTIONED THE DATE OF THE SAID ADVANCES AS 2.5. 2007. THEREFORE, CLEARLY, THE SAID ADVANCE WAS MADE IN TH E ASSESSMENT YEAR 2008-09. THEREAFTER LD. COUNSEL F OR ASSESSEE POINTED OUT THAT THE DISALLOWANCE OF INTER EST ON ACCOUNT OF THESE ADVANCES WAS ALSO MADE IN THE PREC EDING 5 YEAR I.E. 2009-10 WHICH WAS DELETED BY THE I.T.A.T. VIDE ITS ORDER IN ITA NO.525/CHD/2013 DATED 11.7.2014. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO PARA 5 O F THE ORDER NARRATING THE FACTS OF THE CASE AND POINTED O UT THAT IT CLEARLY MENTIONS THE ISSUE OF DISALLOWANCE OF INTER EST OF RS.4,80,000/- ON ACCOUNT OF ADVANCES GIVEN TO M/S J .M LAND PROMOTERS PVT. LTD. OF RS.40,00,000/-.LD.COUNS EL FURTHER DREW OUR ATTENTION TO THE RELEVANT PORTION OF THE I.T.A.T. ORDER AT PARA 10, DELETING THE DISALLOWANC E, WHICH IS AS UNDER: 10. IN RESPECT OF THE ISSUE RAISED BY THE ASSESSEE VIDE GROUND OF APPEAL NO.1 I.E. IN RESPECT OF THE INTEREST FREE ADVANCE MADE TO M/S J.M. LAND PROMOTERS PVT. LTD., WE FIND THAT THE SAID ADVANCE WAS MADE IN THE PRECEDING YEARS AND THE ISSUE OF DISALLOWANCE OF INTEREST RELATABLE TO SUCH ADVANCES AROSE BEFORE THE TRIBUNAL IN ASSESSEE'S OWN CASE. THE TRIBUNAL IN ITA NO. 1438/CHD/2010 RELATING TO ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 31.10.2011 ANALYZED THE BORROWED FUNDS AVAILABLE WITH THE ASSESSEE AS AGAINST THE INTEREST BEARING FUNDS AND HELD THAT THERE WAS NO MERIT IN DISALLOWANCE OF ANY INTEREST AS DEPLOYED FUNDS OR INTEREST WAS ALWAYS HIGHER THAN THE BORROWED FUNDS AS PER THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). THE ISSUE RAISED IN THE PRESENT APPEAL IS RELATABLE TO AN ADVANCE MADE BY THE ASSESSEE IN THE EARLIER YEARS AND IN VIEW OF THE FINDINGS OF THE TRIBUNAL, WE FIND NO MERIT IN DISALLOWANCE OF ANY INTEREST RELATABLE TO SUCH ADVANCE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE ADDITION OF RS. 4,80,000/-. THE 6 GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 8. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, STATED THAT DISALLOWANCE OF INTEREST PERTAINING TO THE SAI D ADVANCE HAVING BEEN DELETED BY THE I.T.A.T. IN THE PRECEDIN G YEAR, THERE WAS NO CASE FOR MAKING ANY SUCH DISALLOWANCE IN THE IMPUGNED YEAR. 9. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(APPEALS) AND STATED THAT THE IM PUGNED ADVANCE HAD BEEN GIVEN OUT OF PAYMENTS RECEIVED FRO M K.LALL OVERSEAS AND, THEREFORE, CLEARLY INTEREST BE ARING FUNDS HAVE BEEN USED FOR MAKING THIS ADVANCE WHICH WAS LIKELY TO BE DISALLOWED. 10. HAVING HEARD BOTH THE PARTIES, WE FIND MERIT IN THE CONTENTIONS OF THE LD. COUNSEL FOR ASSESSEE. C LEARLY DISALLOWANCE OF INTEREST ON ACCOUNT OF THE IMPUGNED ADVANCE GIVEN TO J.M. LAND PROMOTERS PVT. LTD. OF R S.40 LACS WAS MADE IN ASSESSMENT YEAR 2009-10 ALSO, AMOU NTING 4,80,000/- WHICH FINDS MENTION IN PARA 5 OF THE I.T .A.T. ORDER, AND WHICH WAS DELETED BY THE I.T.A.T. FOLLO WING ITS ORDER IN THE ASSESSEES CASE FOR ASSESSMENT YEAR 200 7-08 HOLDING THAT THE DEPLOYED FUNDS BEING MORE THAN THE INTEREST BEARING FUNDS TAKEN, NO DISALLOWANCE OF IN TEREST WAS WARRANTED. IN VIEW OF THE CATEGORICAL FINDIN G OF THE ITAT IN THE PRECEDING YEAR WE FIND NO REASON FOR M AKING DISALLOWANCE ON ACCOUNT OF THE SAME ADVANCE IN THE IMPUGNED ASSESSMENT YEAR. ACCORDINGLY, THE ORDER OF THE 7 LD.CIT(A) UPHOLDING THE DISALLOWANCE OF INTEREST MA DE ON ACCOUNT OF ADVANCES MADE TO J.M. LAND PROMOTERS PVT . LTD. IS SET ASIDE. 11. THE LD. COUNSEL FOR ASSESSEE THEREAFTER TOOK U P THE ISSUE OF DISALLOWANCE OF INTEREST ON ACCOUNT OF ADVANCE MADE TO MALHOTRA BROTHERS AND STATED THAT ORIGINALL Y AN ADVANCE OF RS.1.50 CRORES WAS GIVEN ON 14.5.2008, O UT OF WHICH RS.85 LACS REMAINED OUTSTANDING FOR RECOVERY AS AT THE BEGINNING OF THE YEAR. LD.COUNSEL FOR THE ASSES SEE THEREAFTER STATED THAT THE ADVANCE OF 1.50 CRORES HAD BEEN MADE OUT OF AMOUNT RECEIVED FROM SALE OF LAND BY TH E ASSESSEE AT JODHEWAL OF RS.3.68 CRORES. THE LD. CO UNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE COPY OF ACCOUNT OF MALHOTRA BROTHERS IN THE BOOKS OF THE ASSESSEE PLAC ED AT PAPER BOOK PAGE NO.30 REFLECTING THE AFORESAID ADVA NCE MADE IN FINANCIAL YEAR 2008-09. THE LD. COUNSEL FO R ASSESSEE THEREAFTER DREW OUR ATTENTION TO THE LAND BUILDING 2566 S.Y. JODHEWAL ACCOUNT IN THE BOOKS OF THE ASS ESSEE PERTAINING TO FINANCIAL YEAR 2008-09 REFLECTING REC EIPT OF AMOUNT OF RS.3.68 CRORES ON ACCOUNT OF SALE OF THE SAID LAND, PLACED AT PAPER BOOK PAGE NO.31. THEREAFTER LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE COPY OF BANK STATEMENT OF THE ASSESSEE IN HDFC BANK REFLECTING T HE DEPOSITS OF THE SALE CONSIDERATION RECEIVED ON ACCO UNT OF SALE OF JODHEWAL LAND AMOUNTING TO RS.3.68 CRORES O N 14.5.2008 AND THE ADVANCE MADE TO MALHOTRA BROTHERS ON 16.5.2008 AMOUNTING TO RS.1.05 CRORES. THE COPY OF THE 8 BANK ACCOUNT WAS PLACED AT PAPER BOOK PAGE NO.32. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT IS EVIDENT FROM THE ABOVE THAT THE ADVANCE MADE TO MALHOTRA BROTHERS WA S OUT OF THE CONSIDERATION RECEIVED FROM SALE OF LAND AND COULD NOT BE ATTRIBUTED TO ANY INTEREST BEARING FUNDS. TH E LD. COUNSEL FOR ASSESSEE STATED THAT THE FINDINGS OF TH E LD.CIT(APPEALS) THAT NO EVIDENCE OF MAKING THE SAID ADVANCE OUT OF SALE CONSIDERATION RECEIVED ON ACCOU NT OF SALE OF LAND WAS FURNISHED BY THE ASSESSEE, WAS INC ORRECT SINCE THE SAID COPY OF ACCOUNTS AND BANK STATEMENT WERE PLACED BEFORE THE LD.CIT(APPEALS). 12. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 13. WE HAVE HEARD BOTH THE PARTIES AND FIND MERIT IN THE CONTENTIONS OF THE LD. COUNSEL FOR ASSESSEE. I T IS EVIDENT FROM THE CONTENTIONS RAISED BY THE LD. COUN SEL FOR ASSESSEE AND THE DOCUMENTS IN SUPPORT OF HIS CONTEN TIONS THAT IT WAS CATEGORICALLY ESTABLISHED BEFORE THE LO WER AUTHORITIES BY THE ASSESSEE THAT THE IMPUGNED ADVAN CE TO MALHOTRA BROTHERS WAS MADE OUT OF INTEREST FREE FUN DS AND HAD NOTHING TO DO WITH THE INTEREST BEARING FUNDS R ECEIVED BY THE ASSESSEE FROM K.LALL OVERSEAS. LD.DR HAS NOT CONTROVERTED THE STAND OF THE ASSESSEE THAT THE DOC UMENTS PROVING THE SOURCE OF ADVANCE FROM THE SALE OF LAND WERE NOT FILED BEFORE THE LD.CIT(A). THEREFORE, THERE WAS N O CASE FOR MAKING ANY DISALLOWANCE OF INTEREST ON ACCOUNT OF T HE SAID ADVANCE. THE ORDER OF THE LD.CIT(A) UPHOLDING THE 9 DISALLOWANCE OF INTEREST ON ACCOUNT OF ADVANCE MADE TO MALHOTRA BROTHERS IS SET ASIDE AND THE DISALLOWANC E SO MADE DIRECTED TO BE DELETED. 14. THE LD. COUNSEL FOR ASSESSEE THEREAFTER TOOK U P THE ISSUE OF DISALLOWANCE OF INTEREST ON ACCOUNT OF GIFTS GIVEN TO DAUGHTER OF THE ASSESSEE MISS HEENA GOEL. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE ASSESSEE HA D GIFTED SUM OF RS.44 LACS AND 16 LACS OUT OF PAYMENTS RECEI VED FROM MALHOTRA BROTHERS, WHICH FACT IS NOT DISPUTED, AND SINCE THE PAYMENTS MADE TO MALHOTRA BROTHERS WERE P ROVED TO BE OUT OF INTEREST FREE FUNDS, THE GIFTS GIVEN I N TURN FROM THE PAYMENTS RECEIVED FROM MALHOTRA BROTHERS COULD NOT BE ATTRIBUTED TO ANY INTEREST BEARING FUNDS. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE LD. CIT(A) UPHELD THE DISALLOWANCE OF INTEREST SINCE HE DID NOT AGREE WIT H THE CONTENTION OF THE ASSESSEE THAT THE ADVANCE GIVEN T O MALHOTRA BROTHERS WAS MADE OUT OF INTEREST FREE FUN DS. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT SINCE THE S AME HAD BEEN DEMONSTRATED BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US, THERE WAS NO REASON TO ATTRIBUTE THE GIF TS MADE TO HEENA GOEL OF RS.44 LACS AND RS.16 LACS TO ANY INTE REST BEARING FUNDS. THE LD. COUNSEL FOR ASSESSEE, THERE FORE, PLEADED THAT THE DISALLOWANCE MADE TO INTEREST ON A CCOUNT OF THE SAID GIFTS, THEREFORE, BE DELETED. 15. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). LD.DR FURTHER POINTE D OUT THAT BESIDES THE ABOVE TWO SUMS THE ASSESSEE HAD AL SO 10 ADVANCED OTHER SUMS REGARDING WHICH NO SUBMISSIONS HAVE BEEN MADE EITHER BEFORE THE LOWER AUTHORITIES OR EV EN NOW AND THEREFORE DISALLOWANCE PERTAINING TO THE SAME O UGHT TO BE UPHELD. 16. HAVING HEARD BOTH THE PARTIES, WE FIND MERIT I N THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE VIS A VIS GIFTS OF RS.44LACS AND RS.16 LACS GIVEN. WE FIND THAT TH E MAIN REASON FOR UPHOLDING THE DISALLOWANCE OF INTEREST P ERTAINING TO THE SAID GIFTS BY THE LD.CIT(APPEALS) WAS THAT H E DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE ADVANCE MADE TO MALHOTRA BROTHERS WAS OUT OF INTEREST FREE FUNDS. SINCE THIS FACT HAS BEEN HELD BY US IN FAVOUR OF TH E ASSESSEE I.E. SINCE WE HAVE HELD THAT THE ADVANCE M ADE TO MALHOTRA BROTHERS WAS OUT OF INTEREST FREE FUNDS, T HERE REMAINS NO BASIS WITH THE CIT(APPEALS) FOR UPHOLDIN G THE DISALLOWANCE. EVEN OTHERWISE SINCE THE AMOUNT ADVA NCED TO MALHOTRA BROTHERS WAS OUT OF INTEREST FREE FUNDS, T HE AMOUNT RECEIVED BACK FROM THEM WAS TO BE ATTRIBUTED TO THE SAME AND GIFTS GIVEN TO THE DAUGHTER OF THE ASSESSE E OUT OF THE SAME COULD, THEREFORE, BE SAFELY SAID TO BE OUT OF INTEREST FREE FUNDS. WE, THEREFORE, HOLD THAT THER E WAS NO REASON TO MAKE ANY DISALLOWANCE OF INTEREST ON ACCO UNT OF GIFTS OF RS.44 LACS AND RS.16 LACS MADE TO THE DAUG HTER OF THE ASSESSEE MISS HEENA GOEL AND DISALLOWANCE SO MA DE IS, THEREFORE, DELETED. 17. AS FOR DISALLOWANCE PERTAINING TO THE OTHER ADVANCES AS REFLECTED IN THE TABLE ABOVE AT PARA 5 ,IN THE 11 ABSENCE OF ANY ARGUMENTS ADVANCED BY THE ASSESSEE W E CONFIRM THE ORDER OF THE CIT(A) UPHOLDING THE DISAL LOWANCE OF INTEREST PERTAINING TO THE SAME. 18. THE LD. COUNSEL FOR ASSESSEE THEREAFTER TOOK U P THE ISSUE OF DISALLOWANCE OF INTEREST MADE ON ACCOU NT OF CASH WITHDRAWN BY THE ASSESSEE HOLDING THE SAME TO HAVE BEEN USED FOR PERSONAL PURPOSE. THE LD. COUNSEL FO R ASSESSEE CONTENDED THAT ALL CASH WITHDRAWALS WERE F OR BUSINESS PURPOSES AND HAD BEEN SHOWN AS CASH IN HAN D. THE LD. COUNSEL FOR ASSESSEE RELIED UPON HIS SUBMIS SION MADE AS UNDER: IN ACCOUNT OF CASH WITHDRAWAL FOR PERSONAL USE THE CASH WITHDRAWN FROM THE BANK ON DIFFERENT DATES HAS BEEN PUT IN CASH HAND AND LATER ON USED FOR DEPOSI TING IN THE BANK OR FOR BUSINESS PURPOSES. NO SUCH WITHDRAWAL H AS BEEN USED FOR PERSONAL PURPOSE. FOR EXAMPLE THE ASSE SSEE HAS WITHDRAWN CASH OF RS.23.75 LACS ON 29.06.2009 AND THE SAME HAS BEEN PUT IN CASH IN HAND AND THEN ON 07.07.200 9 THE ASSESSEE HAS DEPOSITED RS.24.85 LACS WITH K. LALL OVERSEAS THROUGH HIS CAPITAL ACCOUNT. IN THIS WAY NO WITHDRAWAL FOR PERSONAL PURPOSE IS USED. 19. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). THE LD. DR CONTENDED THAT SINCE NO BUSINESS HAD BEEN CARRIED OUT BY THE ASSES SEE THERE WAS NO MERIT IN THE CLAIM OF THE ASSESSEE THA T THE WITHDRAWALS WERE MADE FOR BUSINESS PURPOSES AND, THEREFORE, WITHDRAWALS WERE TO BE ATTRIBUTED TO THE PERSONAL PURPOSE OF THE ASSESSEE WARRANTING DISALLOWANCE OF INTEREST ON ACCOUNT OF THE SAME. 12 20. ALTERNATIVELY, THE LD. COUNSEL FOR ASSESSEE PLEADED THAT IT HAD ENOUGH NON-INTEREST BEARING FUN DS FOR MAKING THE IMPUGNED INTEREST FREE ADVANCES AND, THE REFORE, ALSO NO DISALLOWANCE WAS WARRANTED. THE LD. COUNSE L FOR ASSESSEE DREW OUR ATTENTION TO THE COMPARATIVE BALA NCE SHEET FOR THE IMPUGNED YEAR AND PRECEDING YEAR REPR ODUCED IN HIS WRITTEN SUBMISSIONS FILED BEFORE THE LD.CIT( APPEALS) AT PAPER BOOK PAGE NOS.10 AND 11 AS UNDER: COMPARISON OF BALANCE SHEET LIABILITY 31.03.2009 31.03.2010 ASSETS 31.03.2009 31.03.2010 CAPITAL 106122621 99787026 FIXED ASSETS 540568 720568 LOAN INTEREST BEARING 71944638 97670660 INVESTMENTS 8114502 10286561 LOAN NON INTEREST BEARING 8900158 16523600 CURRENT ASSETS 2258854 12425541 JEWELLERY 274596 274596 LAND & BUILDING 29799432 30330447 LOANS & ADVANCES (INTEREST EARNING) 91413513 129786320 LOANS & ADVANCES (NON INTEREST EARNING) 18808522 3068653 13 SHARES 35757430 27088600 TOTAL 186967417 213981286 186967417 213981286 21. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT IT IS EVIDENT FROM THE ABOVE THAT THERE WAS ENOUGH INTER EST FREE FUNDS FOR MAKING THE IMPUGNED ADVANCES AND, THEREFO RE, THERE WAS NO NEED FOR MAKING ANY DISALLOWANCE OF IN TEREST. 22. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES. WE FIND MERIT IN THE CONTENTIONS OF THE L D. COUNSEL FOR ASSESSEE. INTEREST HAS BEEN DISALLOWED ON CASH WITHDRAWALS OF RS.35 LACS AS IS EVIDENT FROM THE TA BLE REPRODUCED ABOVE AT PARA 5. THE ASSESSEE HAS CLEAR LY DEMONSTRATED BEFORE US THAT THERE WERE SUFFICIENT I NTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE IN THE FORM OF CAPITAL AMOUNTING TO RS.9.97 CRORES AND INTEREST FREE FUNDS OF RS.1.65 CRORES TO MAKE THE IMPUGNED INTEREST FREE A DVANCES OF RS.35 LACS. FOR THE ABOVE REASON WE DELETE THE DISALLOWANCE MADE ON ACCOUNT OF CASH WITHDRAWALS. THE GROUNDS OF APPEAL NOS.1, 2 AND 3 THEREFORE STAN D ALLOWED IN ABOVE TERMS. 23. IN GROUND NO.4, THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE LD.CIT(APPEALS) IN MAKING ADDITION OF RS.1,11,927/- AS DEEMED INCOME AGAINST UNOCCUPIED H OUSE. 24. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE OWNED TWO MORE HOUSES APART FROM 14 HIS OCCUPIED RESIDENTIAL HOUSE. THE ASSESSING OFFI CER ASKED THE ASSESSEE TO EXPLAIN WHY NOTIONAL VALUE OF THE UNOCCUPIED HOUSE PROPERTY MAY NOT BE ADDED TO THE T OTAL INCOME U/S 23 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE CONTENDED THAT THE TWO BUILDIN GS WERE USED FOR BUSINESS ACTIVITIES. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ASSESSEES SUBMISSIONS. THE ASSE SSING OFFICER ACCORDINGLY COMPUTED NET ANNUAL VALUE OF TH E TWO PROPERTIES AT RS.1,59,895/- AND AFTER PROVIDING FOR THE STANDARD DEDUCTION U/S 24 ADDED AN AMOUNT OF RS.1,11,927/- U/S 23 OF THE ACT. 25. BEFORE THE LD.CIT(APPEALS), THE ASSESSEE CONTENDED THAT THE SAID TWO PROPERTIES WERE USED FO R BUSINESS PURPOSE. THE LD.CIT(APPEALS) REJECTED THE ASSESSEES CONTENTION STATING THAT AS PER THE RETUR N OF INCOME FILED NO BUSINESS ACTIVITY WAS CARRIED OUT B Y THE ASSESSEE DURING THE ENTIRE YEAR AND, THEREFORE, THE RE WAS NO MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE SA ID PROPERTIES WERE USED FOR BUSINESS PURPOSE. 26. BEFORE US, THE LD. COUNSEL FOR ASSESSEE REITER ATED THE CONTENTIONS MADE BEFORE THE LD.CIT(APPEALS). 27. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 28. WE HAVE HEARD BOTH THE PARTIES AND FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(APPEALS). UND ENIABLY, NO BUSINESS HAS BEEN CARRIED OUT BY THE ASSESSEE DU RING 15 THE YEAR AND THE BUSINESS LOSS CLAIMED IS ONLY ON A CCOUNT OF INTEREST. THE LD. COUNSEL FOR ASSESSEE HAS NOT BEE N ABLE TO DEMONSTRATE AS TO WHAT BUSINESS ACTIVITY WAS BEING CARRIED OUT BY THE ASSESSEE. IN VIEW OF THE SAME, WE UPHOL D THE ORDER OF THE LD.CIT(APPEALS) COMPUTING THE INCOME U NDER THE HEAD INCOME FROM HOUSE PROPERTY OF THE SAID T WO PROPERTIES AT RS.1,11,927/-. THE GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE IS, THEREFORE, DISMISSED. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 TH AUGUST, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH