Rajendra Kumar Jain, CHENNAI V. ITO, CHENNAI

ITA 2110/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7839 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 13-07-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SUNIL KUMAR JAIN

Judgement Text

, ( ) , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH, CHENNAI , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER . /ITA NO.2110/MDS/2016 / ASSESSMENT YEAR : 2011-12 RAJENDRA KUMAR JAIN, 92, PONDY BAZAAR, T. NAGAR, CHENNAI 600 017. PAN AACPR1494D ( /APPELLANT) V. THE INCOME-TAX OFFICER, NON-CORPORATE WARD-2(3), CHENNAI- 34. RESPONDENT) / APPELLANT BY : SHRI S.SUNIL KUMAR JAIN, FCA / RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT ! / DATE OF HEARING : 05.12.2016 '# ! / DATE OF PRONOUNCEMENT : 22.12.2016 ! / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-2, CHENN AI DATED 31.03.2016. - - ITA 2110/16 2 2. THE ONLY ISSUE IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE OF INTEREST PAID ON LOANS. THE ASSESS EE CLAIMED INTEREST AMOUNT OF 7,36,579/- ON ACCRUAL BASIS. THE SAID INTEREST WAS ACCRUED ON THE LOANS BORROWED IN EARLI ER YEARS AND THERE IS NO ACTUAL PAYMENT OF THIS INTEREST TO THE PARTIES. THE AO OBSERVED THAT THE ASSESSEE HAS NOT SHOWN THE PARTIE S FOR WHICH THE LOANS WERE BORROWED AND THE INTEREST WAS DISALL OWED. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE TH E CIT(APPEALS), WHO CONFIRMED THE FINDING OF THE AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL ON RECORD. THE LOANS WERE SAID TO BE BORROWED IN EARL IER YEARS. ACCORDING TO THE ASSESSEE, THE LOANS WERE CARRIED F ORWARD FROM YEAR TO YEAR FOR SEVERAL YEARS AND INTEREST WAS ALL OWED IN EARLIER ASSESSMENT YEARS. BUT THE FACT REMAINS THAT THE AS SESSEE HAS BORROWED THE AMOUNT FOR THE PURPOSE OF INVESTMENT I N OTHER FIRMS AS CAPITAL OF THE ASSESSEE. IN MY OPINION, WHEN TH E ASSESSEE BORROWED FUNDS FOR THE PURPOSE OF INVESTMENT IN OTH ER PARTNER FIRMS, IT CANNOT BE ALLOWED AS DEDUCTION AS INCOME EARNED FROM FIRM IS NOT FEASIBLE WHILE COMPUTING THE INCOME OF THE ASSESSEE. - - ITA 2110/16 3 THIS VIEW IS FORTIFIED BY THE JUDGMENT OF THE KERAL A HIGH COURT IN THE CASE OF CIT VS. POPULAR VEHICLES AND SERVICES L TD., IN [2010] 325 ITR 523(KER.) IT IS TO BE NOTED THAT IN EARLIER ASSESSMENT YEARS, THERE WAS NO ASSESSMENT U/S.143(3) AND THE R ETURN WAS ACCEPTED ONLY U/S.143(1) OF THE ACT WITHOUT ANY SCR UTINY. IT CANNOT BE SAID THAT THE RIGHT IS VESTED WITH THE AS SESSEE TO CLAIM SUCH DEDUCTION ON THE BASIS OF EARLIER ASSESSMENT. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 22 ND DECEMBER, 2016AT CHENNAI. SD/- ( $ % & ' ) ()*+,-*.//0*-12 ! 34566/7+8*+89:;<:- $= /CHENNAI, >3 /DATED, THE 22 ND DECEMBER, 2016. K S SUNDARAM 3? @ABA /COPY TO: 1 . / APPELLANT 4. C / CIT 2. / RESPONDENT 5. ADE F / DR 3. C2 / CIT(A) 6. EGH / GF