Ajanta Times, Ahmedabad V. The Income tax Officer,Ward-12(4), Ahmedabad

ITA 1956/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9940 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-09-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 07-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JHA SRDR
• Assessee Lawyers: P M PATEL
• Keywords: Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1956/AHD/2010 ASSESSMENT YEAR:2007-08 DATE OF HEARING:7.9.10 DRAFTED:7.9.10 AJANTA TIMES, 3, KRISHNA PALACE, OPP. BANKOF INDIA, MANINAGAR, AHMEDABAD PAN NO.AAHFA0622M V/S . INCOME TAX OFFICER, WARD-12(4), NARAYAN CHAMBERS, AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI P.M.PATEL, AR RESPONDENT BY:- SHRI S.K.JHA, SR-DR O R D E R THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDE R OF COMMISSION OF INCOME- TAX (APPEALS)-XX, AHMEDABAD IN APPEAL NO. CIT(A)-XX /229/2009-10 DATED 19-03- 2010. THE ASSESSMENT WAS FRAMED BY ITO, WARD-12(4), AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 29-12-2009 FOR ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN CONFIRMING THE NOTIONAL INTEREST CHARGE ON DEBIT BA LANCE OF PARTNERS AT RS.51,376/-. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-XX IS NOT JUSTIFIED IN CONFIRMING NOTIONAL INTEREST OF RS.473.76 ON DEBIT BALANCE OF PARTNERS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) II AHMEDABAD IS NOT JUSTIFIED IN CONFIRMING ADDITION OF RS.4000,00 NOTI ONAL INTEREST ON ADVANCES MADE TO MR. NAVINCHANDRA. 3. HAVING HEARD THE RIVAL CONTENTIONS AND GOING THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE ASSESSIN G OFFICER HAS MADE DISALLOWANCE WITHOUT ANY BASIS AND AO ONLY NOTED THAT NO INTERES T IS CHARGED ON DEBIT BALANCE OF ITA NO.1956/AHD/2010 A.Y. 2007-08 AJANTA TIMES V. ITO WD-12(4) ABD PAGE-2 PARTNERS AND ACCORDING TO HIM, OPENING DEBIT BALANC E OF THE PARTNERS AS ON 01-04- 2006 AS UNDER:- 1. SHRI CHANDRAKANT B PATEL RS.2,90,741/- 2. SHRI RAMESHBHAI B PATEL RS.1,04,152/- SIMILAR IS THE POSITION IN REGARD TO ADVANCES GIVEN TO SHRI NAVINCHANDRA ON16-01- 2007 AMOUNTING TO RS.1.60 LAKH. THE CIT(A) SIMPLY C ONFIRMED THE ADDITION AND GIVEN HIS FINDING THAT THE BORROWED FUNDS HAVE BEEN DIVER TED FOR PERSONAL BENEFITS. I FIND THAT NONE OF THE AUTHORITIES BELOW HAS GIVEN ANY BA SIS FOR MAKING THIS DISALLOWANCE AND ONCE THERE IS NO BASIS FOR THE FINDING THAT THE INTEREST BEARING FUNDS HAVE BEEN DIVERTED FOR NON-INTEREST BEARING ADVANCES, IN THE ABSENCE OF THE SAME, IT IS NOT POSSIBLE TO DISALLOW OR CHARGE INTEREST. EVEN OTHER WISE, THE ORDER OF ASSESSING OFFICER AS WELL AS THAT OF CIT(A) SUFFER FROM THE I NFIRMITY THAT NO NOTIONAL INTEREST CAN BE CHARGED ON THE DEBIT BALANCE RATHER THE INTEREST PAID CAN BE DISALLOWED. ACCORDINGLY, I ALLOW THIS ISSUE OF ASSESSEES APPEA L. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 07/09/2010 SD/- (MAHAVIR SING H) (JUDICIAL MEMBER) AHMEDABAD, DATED : 07/09/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-XX, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD