Shri Alpeshbhai Maganbhai Vaviya, Surat V. The Income Tax Officer, Ward-7(1), Surat

ITA 1925/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94239 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D V SINGH

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.1925/AHD/2013 /BLOCK ASSTT. YEAR: 2009-2010 ALPESHBHAI MAGANBHAI VAVIYA 130, AMAR BHAVAN, RAMBAUG SOCIETY A.K. ROAD, SURAT. VS ITO, WARD - 7(1) SURAT. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SURANA REVENUE BY : SHRI D.V. SINGH, SR.DR / DATE OF HEARING : 13/08/2015 / DATE OF PRONOUNCEMENT: 13/08/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A)-V, SURAT DATED 23.5.2013 PASSED FOR ASSTT .YEAR 2009-10. 2. THOUGH THE ASSESSEE HAS TAKEN THREE GROUNDS OF A PPEAL ALONG WITH SUB-GROUNDS, WHICH ARE ARGUMENTATIVE AND REPET ITIVE IN NATURE, THE GRIEVANCE OF THE ASSESSEE REVOLVES AROUND A SINGLE CLAIM. THE LD. COUNSEL FOR THE ASSESSEE PLEADED THAT THE CIT(A) HA S ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSES OF RS.3,01,536/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. HE HAS FILED RETURN OF INCOME ON 13.10.2009 DECLARING TOTAL INCOME OF RS.1,34,021/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSU ED AND SERVED ON THE ASSESSEE. ITA NO.1925/AHD/2013 2 4. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS BORROWED UNSECURED LOAN FROM PARINAY O RGANISERS PVT. LTD., AND ARBUDA CONSTRUCTION AT THE RATE OF 6%. H E HAS ADVANCED LOAN TO HIS SISTER CONCERN, VIZ. AMAR JEWELLERS PVT. LTD . IT ALSO EMERGES OUT THAT IN THE MONTH OF MARCH, 2009 THE ASSESSEE HAD B ORROWED FUND AT THE RATE OF 12%, BUT ADVANCED THEM AT THE RATE OF 6 %. THE LD.AO HAS HARBORED A BELIEF THAT THE HIGHER RATE INTEREST BEA RING FUNDS HAVE BEEN USED BY THE ASSESSEE GIVING AS ADVANCES AT A LOWER RATE OF INTEREST. ACCORDING TO THE LD.AO ASSESSEE OUGHT TO HAVE CHARG ED INTEREST ON THE ADVANCE GIVEN BY HIM AT 12%. THEREFORE, HE DISALLOW ED INTEREST EXPENDITURE OVER AND ABOVE 6%, BUT, WHILE WORKING O UT THE DISALLOWANCE, HE COMPUTED THE DISALLOWANCE FOR A PE RIOD OF COMPLETE YEAR. 5. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE H AVE GONE THROUGH THE RECORD CAREFULLY. ON DUE CONSIDERATION OF THE FACTS, WE ARE OF THE VIEW THAT THE LD.AO OUGHT TO HAVE DISALLOWED THE AM OUNT WHICH THE ASSESSEE HAS EXTENDED THE BENEFIT TO THE BORROWER. IN OTHER WORDS, THE INTEREST BEARING FUNDS AT THE RATE OF 12% WERE ADVA NCED AT THE RATE OF 6%. THE INTERMEDIATE PERCENTAGE OF 6% FOR THE PERI OD, WHICH ACTUALLY GIVEN BY THE ASSESSEE OUGHT TO BE DISALLOWED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS INTERMEDIATE AMOUNT COMES TO RS.18,247/-. IN REST OF THE YEAR, ASSESSEE TOOK LO AN AT INTEREST RATE OF 12% , AND FURTHER ADVANCE IT BY CHARGING INTEREST RATE OF 12%. IN SUCH SITUATION, HOW LD.AO CAN RESTRICT THE EXPENDITURE A T THE RATE OF 6% FOR THE WHOLE YEAR. THIS ASPECT IS DISCERNIBLE FROM TH E DETAILS EXTRACTED BY THE LD.AO HIMSELF IN THE ASSESSMENT ORDER. WE, THER EFORE, DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF RS.18,247 /- AND DELETE THE ITA NO.1925/AHD/2013 3 BALANCE AMOUNT OF RS.2,83,289/-. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE RESULT OF THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13 TH AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 13/08/2015