Mrs. Jagjit Kaur, New Delhi V. ITO, New Delhi

ITA 2265/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3284 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 25-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: KAPOOR
• Keywords: Business income; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SHRI N.K. SAINI , ACCOUNTANT MEMBER I.T.A. NO. 2265 /DEL /201 3 A .Y. : 20 0 8 - 09 JAGJIT KAUR H. NO. 9, OPP. GURU NANAK PUBLIC SCHOOL WEST AVENUE ROAD, WEST PUNJABI BAGH NEW DELHI PAN : AGEPK1858B VS. ITO WARD - 32(3) NEW DELHI [APPELLANT] [RESPONDENT] APPELLANT BY: SH. M.S. KAPOOR, C.A. RESPONDENT BY: SH. AMRIT LAL, SR. DR DATE OF HEARING: 09 1 1 2017 DATE OF PRONOUNCEMENT: 2 8 1 1 2017 O R D E R N.K. SAINI , A.M: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 30.01.201 5 OF THE LEARNED CIT(A) - 18 NEW DELHI . THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE DISALLOWANCE OF BUSINESS EXPENDITURE OF RS. 32,20,478 / - MADE BY THE AO AND SUSTAINED B Y THE LEARNED CIT(A). FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: - 1. THAT THE ORDER OF LD. ASSESSING OFFICER IS BAD IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT LD. AO AND HON BLE CIT APPEAL XXVI HAS ERRED ON FACTS OF LAW IN DISALLOWING BUSINESS EXPENDITURE OF RS. 32,20,478/ - WITHOUT APPRECIATING THE SUBMISSION MADE BY APPELLANT TILL ASSESSMENT AND APPELLANT PROCEEDINGS. 3. THAT LD. AO AND HON BLE CIT APPE AL XXVI FAILED TO DETERMINE THE INTENSION OF APPELLANT WITH RESPECT TO CONDUCT BUSINESS AND TREAT SUCH INVESTMENT AS CAPITAL INVESTMENT INSTEAD OF BUSINESS INVESTMENT. ITA NO. 2265 /DEL/201 3 2 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSE T STATED THAT A SIMILAR ISSUE WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEAL IN ASSESSEE S OWN CASE, FOR THE A.Y. 2009 - 10 IN ITA NO. 5994/DEL/2015 WHEREIN VIDE ORDER DATED 16.10.2017 , TH E ISSUE HAS BEEN DECIDED AGAINST THE DEPARTMENT AND IN FAVOUR OF THE ASSESSEE, COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD. IN HIS RIVAL SUBMISSIONS, THE LEARNED DR ALTHOUGH SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LEARNED COUN SEL FOR THE ASSESSEE. 3. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE , IT IS AN ADMITTED FACT THAT AN IDENTICAL ISSUE WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEAL IN ITA NO. 5994/DEL/2015 FOR THE A.Y. 2009 - 10 WHEREIN VIDE ORDER DATED 16.10.2017 . THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT DELHI SMC BENCH , NEW DELHI AND THE RELEVANT FINDINGS HAS BEEN GIVEN IN PARA 9 TO 11 WHICH READ AS UNDER: 9. THE MERITS OF THE FIRST ADDITION MADE BY THE ASSESSING OFFICER, AS DELETED BY THE FIRST APPELLATE AUTHORITY, RELATES TO AMOUNT OF 33,95,802/ - COMPRISING OF RUPEES 33,47,778/ - AND RUPEES FOR 48,024/, ON ACCOUNT OF THERE BEING NO BUSINESS ACTIVITY AND BUSINE SS INCOME BEING TAKEN AS NIL. LD. ASSESSING OFFICER HAS DISCUSSED THE MERITS OF THE CASE IN PARAGRAPH 3.1 TO PARAGRAPH 3.5 OF THE ORDER PASSED BY HIM (FROM PAGES 4 TO 7). I HAVE CAREFULLY GONE THROUGH THE FINDINGS OF ASSESSING OFFICER IN THE ASSESSMENT ORD ER RECORDED PARTICULARLY IN PARAGRAPH 3.4 & 3.5 , ON WHICH I AM UNABLE TO AGREE WITH THE CASE OF THE DEPARTMENT/REVENUE INASMUCH AS MERE NOT CARRYING OF BUSINESS ACTIVITY INFERRED OUT OF NIL BUSINESS INCOME IS OUTRIGHTLY AND PATENTLY WRONG AND INCORRECT. F ROM LONG BACK IT IS SETTLED LEGAL POSITION THAT QUANTUM OF RECEIPTS APPEARING IN CREDIT SIDE OF P&L ACCOUNT CANNOT DECIDE THE ALLOWABILITY OF THE EXPENDITURE CLAIMED. IN 20 ITR POSE 1 IT WAS HELD THAT IT IS NOT MUST UNDER INCOME TAX LAW THAT THERE IS RECIPROCITY BETWEEN EXPENDITURE AND INCOME AND IT IS ALWAYS NOT MUST THAT EXPENDITURE MADE RESULTS IN POSITIVE INCOME. SO THE REASONING AND FOUNDATION LAID BY ASSESSING OFFICER IN IMPUGNED ORDER IS EX - FACIE ERRONEOUS AND RIGHTLY INTER FERED BY COMMISSIONER OF INCOME TAX APPEALS. ITA NO. 2265 /DEL/201 3 3 10. REGARDING THIS ISSUE, ELABORATE AND DETAILED FINDING CONTAINED IN ORDER PASSED BY CIT - APPEALS IS REPRODUCED BELOW FOR READY REFERENCE: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FINDI NGS OF THE LD. AO. KEEPING INTO CONSIDERATION THE VARIOUS CASE LAWS OF THE HIGHER APPELLATE AUTHORITIES AND THE HON BLE COURTS HELD RELIED ON BY THE LD.AR AND THE FOLLOWING FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE. I INCLINE TO AGREE WITH THE CONTEN TION OF THE APPELLANT THAT THE LD. AO IS NOT JUSTIFIED IN MAKING ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES INCURRED TO GENERATE THE INCOME OF FDRS AMOUNTING TO RS.33,47,7781 - AND OTHER EXPENSES OF RS.48,024/ - . (I) ON PERUSAL OF THE DOCUMENTARY EVIDENCES FILED BY THE LD.AR DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS, IT IS EVIDENT THAT THE LOAN OF RS.2.50 CRORES TAKEN FROM ICICI BANK IS NOT HOME LOAN AND IS LOAN AGAINST THE PROPERTY. THE WORDS HOME LOAN MENTIONE D OVER THE LOAN AGREEMENT IS AS PER THE CATEGORIZATION SYSTEM OF THE BANK. THIS CAN BE MADE MORE CLEAR BY THE FACT THAT THE PROPERTY MENTIONED IN LOAN AGREEMENT I.E. HOUSE NO.9, WEST PUNJABI BAGH, WEST AVENUE, DELHI - 220026, HAS ALREADY BEEN PURCHASED BY S. SUKHBIR SINGH (HUSBAND OF THE ASSESSEE) ON 25TH DAY OF FEBRUARY, 1970 AND THUS THE OBSERVATION OF THE LD.AO BEING THE SAME PROPERTY PURCHASED AGAINST THE LOAN IS FACTUALLY NOT CORRECT. 1 . THE APPELLANT PRODUCED THE COPY OF BANK STATEMENT ALONG WITH DETAIL ED CHART FOR OF FDR WHICH CLEARLY REFLECT THAT RS.2.50 CRORES HAVE BEEN RECEIVED BY HER AGAINST LOAN FROM ICICI BANK UNDER LOAN AGAINST PROPERTY (LAP) ON 05 - 01 - 2007 AND 5 FDRS WERE CREATED ON 12 - 01 - 2007 OF RS.50 LAKH EACH. 2. THEREAFTER SUCH FDRS ARE UTILIZED FOR PURCHASE OF PROPERTY AND JEWELLERY WITH THE CLEAR INTENTION TO CONDUCT THE BUSINESS FROM A.Y. 2008 - 09. (II) THE MOST RELEVANT ASPECT, WHICH IS TO BE SEEN IN THIS CASE, IS THE INTENSION OF THE ASSESSEE FOR PURCHASE OF JEWELLERY, GOLD, DIAMOND & PROPERTY THAT CAN BE REFLECTED FROM THE FACTS OF THE CASE AND THE CONDUCT OF THE ASSESSEE. THE ASSESSEE HAS TAKEN A LOAN OF RS.2.5 CRORES FOR STARTING HIS BUSINESS AND AS A PRUDENT BUSINESSMAN, SHE HAS INVESTED SUCH AMOUNT FOR PURCHASE OF JEWELLERY AND PROPERTY. THE INTENSION OF ASSESSEE CLEARLY REFLECT FROM THE TRADING ACCOUNT AND PROFIT & LOSS ACCOUNT DECLARED FROM THE START OF HIS BUSINESS, I.E .A.Y.2008 - 09 AND SHOWN UNDER THE HEAD PURCHASE / CLOSING STOCK / OPENING STOCK OF PROPERTIES AND JEWELLERY. THE DOCUMENTS PRODUCED DURING THE ASSESSMENT PROCEEDING CLEARLY REVEALS THAT LOAN AVAILED FROM ICICI BANK IS UTILIZED FOR PURCHASE OF JEWELLERY AND PROPERTY W.E.F.01 - 04 - 2007. NO PERSON SHALL TAKE LOAN FOR INVESTMENT IN ANY JEWELLERY AND PROPERTY. III) THE INTENTION FOR PURCHASE OF PARTICULAR ASSETS NOT DEPEND ON THE NATURE OF THE ASSET, BUT IT DEPENDS ON THE INTENSION OF THE ASSESSEE FOR THE PURPOSE FOR WHICH SUCH ASSET HAS PURCHASED. IN THE PRESENT CASE, THE ASSESSEE HAS KEPT ITA NO. 2265 /DEL/201 3 4 OFFICE, RAISE THE LOAN, MADE SALE AND PURCHASE FOR JEWELLERY AND PROPERTY, SPEND ON STATIONERY AND OTHER EXPENSES, WHICH LEAD TO CONCLUDE THAT THERE IS A BUSINESS CONDUCTED BY ASSESSEE AND THE INTENSION TO PURCHASE SUCH ASSETS ARE TO CONDUCT THE BUSINESS RATHER THAN MAKE THE INVESTMEN T. ( IV ) THE ASSESSEE SHOWING THE SALE AND PURCHASE OF SUCH JEWELLERY AND PROPERTY UNDER THE HEAD BUSINESS AND PROFESSION, THE ASSESSEE ALSO LOSE THE BENEFIT OF INDEXATION, WHICH IS AVAILABLE WHEN SUCH ASSETS ARE SHOWN UNDER THE HEAD INVESTMENT. SO THE ASSESSE E HAS LOOSE SUCH BENEFIT OF INDEXATION FOR CONDUCTING THE BUSINESS AND THIS CONDUCT CLEARLY REVEALS THE INTENSION OF ASSESSEE TO PURCHASE SUCH ASSETS FOR BUSINESS AND PROFESSION. ( V ) IT WAS HELD BY DELHI HIGH COURT IN THE CASE OF CIT VS SMT. RADHA BHAI (2005) 272 ITR 264 THAT THE PERIOD FOR RETAINING P OF IMMOVABLE PROPERTY DOES NOT DETERMINE THE NATURE BUT THE INTENSION OF PURCHASE OF SUCH PROPERTY DETERMINED THE STATUS AND NATURE OF SUCH PROPERTY. IT WAS FURTHER HELD BY PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SUSHILA DEVI JAIN (2001) 259 ITR 671 THAT IT WAS NECESSARY TO DETERMINE THE INTENTION OF ASSESSEE AT THE TIME OF PURCHASE OF LAND AND PROPERTY SHOULD BE CONSIDERED. T HEREFORE, KEE PING IN VIEW, THE RATIO OF JUDG MENTS OF VARIOUS COURTS LAW OF HIGHER AUTHORITIES AND HON BLE COURTS . I INCLINE TO AGREE WITH THE CONTENTION OF LD.AR AND DELETE THE ADDITION OF RS.33,47,778/ - MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST AND OTHE R EXPENSES. HENCE, THE GROUND OF APPEAL IS ALLOWED . 11 . IN VIEW OF ABOVE REVENUE S FIRST GROUND OF APPEAL IS DISMISSED. 4. SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS INVOLVED IN THE ASSESSMENT YEAR 2009 - 10 IN ITA NO. 5994/DEL/2015 IN ASSESSEE S OWN CASE , S O RESPECTFULLY FOLLOWING THE ORDER DATED 16.10.2017 , THE IMPUGNED ADDITION IS DELETED. 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( P RONOUNCE D IN THE OP EN COURT ON 28 .1 1 .2017. ) SD/ - [ N.K. SAINI ] ACCOUNTANT MEMBER DATED: 28 . 1 1 .2017 SH ITA NO. 2265 /DEL/201 3 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR