Jai Kishan HUF, Delhi V. ITO, New Delhi

ITA 2269/DEL/2013

• Counselvise Citation: 226920114 RSA 2013
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 30-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA

Judgement Text

ITA NO.2269/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.2269/DEL/2013 ASSESSMENT YEAR : 2009-10 JAI KISHAN HUF, C/O M/S JK IRON & STEEL MFG. CO., 2431, TELIWARA, SADAR BAZAR, DELHI. PAN : AABHJ5266N VS. ITO, WARD 39(4), NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI SAMIR SHARMA, ADVOCATE DEPARTMENT BY : S HRI S .N. BHATIA, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 AGAINST THE ORDER DATED 14.01.2013, PASSED BY THE LD. CIT(A)-XXVI II, NEW DELHI. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN:- 1. THAT THE LD. CIT (A) HAS ERRED BOTH IN LAW AND FAC T OF THE CASE IN NOT DELETING THE INTEREST ON ACCOUNT OF DEBIT BALANCE OF A S ISTER CONCERN WITHOUT APPRECIATING THAT THE APPELLANT HAD SUFFICIENT INT EREST FREE LOAN AND DEPOSITS FAR EXCEEDING THAT THE DEBIT BALANCE AND A LL THE MORE THERE WAS NO PRECEDENT IN THE CASE TO CHARGE INTEREST O N DEBIT BALANCE OF ANY DEBTOR. ITA NO.2269/DEL/2013 2 2. THAT THE LD. CIT (A) HAS ERRED BOTH IN LAW AND FACT OF THE CASE AND NOT DELETING THE EXPENSES ON ACCOUNT OF CAR AND TEL EPHONE IN SPITE OF THE FACT THAT THERE WAS NO SUCH INCIDENT OR ANY PART O F THE EXPENDITURE NOT RELATED TO BUSINESS. 2. APROPOS GROUND NO.1, THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE HAD MADE SALES OF ` 13,75,622/- TO M/S KAUSHIK IRO N STORE, IN WHICH, THE KARTA OF THE ASSESSEE HUF WAS PROPRIETOR; THAT THE SA ME HAD BEEN QUALIFIED BY THE AUDITORS OF THE ASSESSEE; THAT AN AMOUN T OF ` 1,42,756/- HAD BEEN SHOWN AS OUTSTANDING FROM M/S KAUSHIK IRON STORE; T HAT AS PER THE DETAILS OF UNSECURED LOANS, THE ASSESSEE WAS PAYING INTERE ST @ 12% ON UNSECURED LOANS TAKEN FROM THE FAMILY MEMBERS, INCLUDI NG SHRI JAI KISHAN, IN HIS INDIVIDUAL CAPACITY; AND THAT HENCE, ON THE ONE HAND, THE ASSESSEE WAS SHOWING LOAN TO SHRI JAI KISHAN AND PAYING INTEREST @ 12%, WHEREAS, ON THE OTHER HAND, IT WAS GIVING INTEREST FREE AMOUNT IN THE FORM OF SALES AND NOT COLLECTING AS PER THE BUSINESS NORMS, WHICH ALSO STOOD PR OVED BY THE FACT THAT OUT OF TOTAL TURNOVER OF ` 13,75,622/-, NOTHIN G HAD BEEN RECEIVED AND EVEN OLD BALANCE WAS ALSO STANDING. THE LD. CIT (A) CO NFIRMED THE DISALLOWANCE. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT IN ITS TRADE, THERE IS NO PRECEDENT, EITHER TO CHARGE INTEREST ON DEBTORS, OR TO PAY INTEREST TO CREDITORS AND THE ASSESSEE HAS BEEN FOLLOWING THE SAME PR ACTICE, RIGHT FROM ITS VERY INCEPTION, WITHOUT CHANGE; THAT AS ON 31.03. 2008, IT HAD SUNDRY CREDITORS OF ` 2,16,34,483/- AND SUNDRY DEBTORS OF ` 2 ,46,54,632/-, WHEREAS AS ON 31.03.2009, THE SUNDRY CREDITORS WERE OF ` 8,90 ,787/- AND THE SUNDRY DEBTORS WERE OF ` 98,40,800/-; THAT THE ASSESSEE HAD NOT PAID ANY INTEREST TO PARTIES DIRECTLY RELATED TO SHRI JAI KISHAN, FROM WHO M, HUGE LOANS HAD BEEN RAISED; THAT EVEN DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD REFUNDED HUGE UNSECURED LOANS; THAT THE ASSESSEE ALSO HAD HUGE INTEREST FREE LOANS; THAT THERE IS NO NEXUS PROVED BETWEEN THE INTEREST FREE LOANS AND INTEREST BEARING LOANS AND IT HAS NOT BEEN PROVED THAT ADVANCES WERE GIVEN OUT OF INTEREST BEARING LOANS. ITA NO.2269/DEL/2013 3 4. THE LD. DR HAS PLACED RELIANCE ON THE IMPUGNED OR DER. 5. WE HAVE HEARD THE PARTIES ON THIS ISSUE AND WE FIND THAT THE TRANSACTION OF THE ASSESSEE WITH M/S KAUSHIK IRON STORE, THE PROPRIETARY CONCERN OF SHRI JAI KISHAN WAS A BUSINESS TRANSACTION, AS GOODS WERE SOLD TO THE CONCERN. BESIDES, THERE WERE ENOUGH INTEREST FREE LOANS WITH THE ASSESSEE FROM RELATIVES. THE DEPARTMENT HAS NOT PROVED TH E LOANS TO HAVE BEEN UTILIZED BY THE ASSESSEE FOR NON-BUSINESS PURPOSES. AS SUCH, NO DISALLOWANCE OF INTEREST IS CALLED FOR. IT HAS ALSO NOT BEEN PROVED THAT AT ANY TIME FROM THE VERY INCEPTION, THE ASSESSEE HAD CHARGED INTEREST FROM DEBTORS. 6. IN VIEW OF THE ABOVE, GROUND NO.1 IS ACCEPTED. 7. SO FAR AS REGARDS GROUND NO.2, THE ASSESSEE WAS FOUND TO HAVE DEBITED TO ITS PROFIT & LOSS ACCOUNT, AN AMOUNT OF ` 1 ,92,170/- AS CAR EXPENSES AND TELEPHONE EXPENSES OF ` 88,404/-. HOLDING THEM TO BE OF PERSONAL NATURE, THE ASSESSING OFFICER DISALLOWED 20%. HO LDING SUCH DISALLOWANCE TO BE REASONABLE, THE LD. CIT (A) CONFIR MED THE DISALLOWANCE. 8. THOUGH THE ASSESSEE HAS CONTENDED THAT THERE WAS NO IN STANCE OF THE EXPENDITURE NOT RELATED TO ITS BUSINESS, WE DO NOT FIN D ANY REASON TO DIFFER WITH THE DISALLOWANCE MADE, SINCE NO DETAILS HAVE BEEN FILED BEFORE EITHER OF THE AUTHORITIES BELOW AND ALSO BEFORE US. FURTHER, THE PERSONAL ELEMENT IN SUCH EXPENDITURE CANNOT BE RULED OUT. ACCORDINGLY, G ROUND NO.2 IS REJECTED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED, AS INDICATED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 07.02.201 4. SD/- SD/- [ G.D. AGRAWAL ] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 07 TH FEBRUARY, 2014. ITA NO.2269/DEL/2013 4 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.