Neelam Singhvi, CHENNAI V. ITO, CHENNAI

ITA 227/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4812 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 12-04-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 25-01-2017
• Court: TRIBUNAL
• Department Lawyers: B NISCHAL JT
• Assessee Lawyers: F C JAIN
• Keywords: Unexplained investment; Depreciation; Cost of acquisition
• Section: 143(3)

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C/SMC, CHENNAI , ! BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER ./ITA NO.227/MDS/2017 ' # $%# / ASSESSMENT YEAR : 2012-13 NEELAM SINGHVI, 31, GENERAL MUTHIAH STREET, SOWCARPET, CHENNAI 600 079. [PAN: AACPN 4651L] VS. INCOME TAX OFFICER, NON CORPORATE WARD-5(2), CHENNAI. ( /APPELLANT ) ( / RESPONDENT ) &' ( ) / APPELLANT BY : SHRI F.C.JAIN, CA *+&' ( ) / RESPONDENT BY : SHRI B.NISCHAL, JT. CIT , $ ( - / DATE OF HEARING : 12.04.2017 .% ( - / DATE OF PRONOUNCEMENT : 21.04.2017 /O R D E R PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI (C IT(A) FOR SHORT) DATED 28.12.2016, DISMISSING THE ASSESSEES APPEAL CONTES TING ITS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREI NAFTER) DATED 19.03.2015 FOR ASSESSMENT YEAR (AY) 2012-13. 2. THE DISPUTE IN THE INSTANT CASE RELATES TO THE D ISALLOWANCE OF, IN THE MAIN, INTEREST U/S. 57(III), AND ADDITION U/S. 69/69A TOW ARD UNEXPLAINED SOURCE OF ACQUISITION COST OF A PROPERTY, PURCHASED DURING TH E RELEVANT YEAR FOR AN AMOUNT 2 ITA NO. 227/MDS/2017 (AY 2012-13) NEELAM SINGHVI V. ITO OF . 109.18 LACS, MADE IN THE SUM OF .8,58,717/- AND .3,30,787/- RESPECTIVELY. THE ASSESSEE DERIVING INCOME BY WAY OF INTEREST ( . 4.81 LACS) AND TEACHING JAINOLOGY, EARNING TEACHING INCOME (AT . 1.08 LACS), I.E., IN THE MAIN, WAS ACCORDINGLY CONSTRUED AS NOT ENTITLED TO HER CLAIM FOR THE FOLLOWING EXPENDITURE, IN-AS-MUCH AS THE SAME COULD NOT BE SAID TO BE INCU RRED FOR THE PURPOSE OF EARNING THE INCOME FROM OTHER SOURCES, RETURNED AS UNDER: SR.NO. HEAD OF EXPENSE AMOUNT (RS.) 1 INTEREST PAYMENT 7,67,489 2 CAR INSURANCE 7,466 3 CAR DEPRECIATION 67,385 4 AUDITORS FEES 2,000 5 TELEPHONE EXPENSES 10,870 6 BANK CHARGES 3,507 TOTAL 8,58,717 SR.NO. HEAD OF INCOME AMOUNT (RS.) 1 INTEREST INCOME 4,78,641/- 2 TUITION FEES 1,08,000/- 3 MATURED INTEREST 88,200/- 4 MISC. INCOME 6,18,200/- 5 BANK INTEREST 9,338/- TOTAL 13,02,379/- 3. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. THE ASSESSEES INTEREST EXPENDITURE (AT . 7.68 LACS) IS MUCH HIGHER THAN THAT THE EARNED ( . 4.79 LACS). ADEQUACY OF CAPITAL IS A PRE-REQUISIT E FOR FINANCING BUSINESS. WHY, THE ASSESSEES BORROWING/S WOULD ONLY BE AT THE MARKET RATE, EVEN AS THE PREMISE OF THE BORROWING F OR MONEY LENDING IS ONLY TO LEVERAGE ON A BETTER CREDIT RATING AND, ACCORDINGLY , BARGAIN AN EFFECTIVE LOWER RATE OF INTEREST. IN FACT, THE BORROWINGS CONTRACTE D DURING THE YEAR ( . 45.75 LACS) HAVE BEEN APPLIED ONLY FOR THE PURCHASE OF THE PROP ERTY, AS CLARIFIED BY THE ASSESSEE VIDE HER REPLY DATED 9.11.2016 (REPRODUCED AT PG. 16 OF THE APPELLATE ORDER). THE INTEREST INCOME, ACCORDINGLY, STANDS RI GHTLY RETURNED AND ASSESSED AS 3 ITA NO. 227/MDS/2017 (AY 2012-13) NEELAM SINGHVI V. ITO INCOME FROM OTHER SOURCES U/S. 56. LIKE-WISE FOR TH E TUITION FEES, EARNED IN A NOMINAL SUM; WHILE THE NATURE OF THE MISCELLANEOUS INCOME ( . 6.18 LACS) HAS NOT BEEN DISCLOSED. PER CONTRA, ONLY THE EXPENDITUR E SPECIFICALLY INCURRED FOR THE SAME WOULD STAND TO BE ALLOWED AND, FURTHER, ONLY O N IT BEING SHOWN TO BE SO. THE BORROWINGS ASSUMED DURING THE CURRENT YEAR HAV E ADMITTEDLY FINANCED THE ACQUISITION OF THE PROPERTY. IT IS ACCORDINGLY ONLY THE BORROWING/S OUTSTANDING FROM THE PRECEDING YEAR THAT SHALL REQU IRE BEING EXAMINED WITH REFERENCE TO THE BALANCE-SHEET AS AT 31.3.2011 AND THE FUND FLOW STATEMENT FOR THAT YEAR, IF NOT EARLIER YEARS AS WELL. THE MATTER QUA DISALLOWANCE OF INTEREST, CONFIRMED IN PART, I.E., IN RESPECT OF THE BORROWIN G OF . 45.75 LACS INCURRED DURING THE YEAR, IS RESTORED TO THE FILE OF THE AO FOR ADJUDICATION AFRESH, ISSUING DEFINITE FINDINGS OF FACT, AND AFTER ALLOWING THE A SSESSEE AN OPPORTUNITY TO STATE HER CASE, I.E., FOR THE BALANCE BORROWINGS. NO DEDU CTION IN RESPECT OF CAR DEPRECIATION AND INSURANCE IS ALLOWABLE IN-AS-MUCH AS THE ASSESSEE HAS NOT IN ANY MANNER SHOWN AS TO HOW THE CAR WAS UTILIZED FOR EARNING THE INCOME, I.E., FOR THE RELEVANT ACTIVITY/S. RATHER, EVEN AS OBSERV ED DURING HEARING, THERE IS NO EXPENDITURE ON CAR MAINTENANCE, SO THAT THE SAME HA S IN FACT NOT BEEN PUT TO USE, OR AT LEAST INFERABLY. THE CLAIMS FOR TELEPHONE EXP ENSES AND AUDIT FEE WOULD STAND TO BE SIMILARLY DISALLOWED. BANK CHARGES, TO THE EXTENT INCURRED FOR PURCHASE OF DEMAND DRAFTS, I.E., FOR LENDING MONEY TO THE LENDEES, AS EXPLAINED DURING HEARING, IS DEFINITELY A PART OF THE EARNING OF THE INTEREST INCOME. NO CASE FOR ANY OTHER BANK CHARGES IS MADE OUT FOR BEING AL LOWED. I DECIDE ACCORDINGLY. 4. THE ONLY OTHER ISSUE IN THIS APPEAL IS IN RESPEC T OF UNEXPLAINED INVESTMENT FOR ACQUIRING THE PROPERTY. I FIND NO BASIS FOR THE SAME. THE ASSESSEE HAS FURNISHED THE CHANGES IN HER ASSETS AND LIABILITIES DURING THE RELEVANT PREVIOUS YEAR, AND ON THAT BASIS, I.E., THE FUNDS RELEASED A ND APPLIED THUS, SHOWN THE MANNER OF THE FUNDING THE PURCHASE THE PROPERTY, AN ASSET IN HER BALANCE-SHEET. 4 ITA NO. 227/MDS/2017 (AY 2012-13) NEELAM SINGHVI V. ITO THE SAME STANDS IN FACT REPRODUCED AT PARA 4.1 (PAG E 8-11 OF THE IMPUGNED ORDER). NO INFIRMITY THEREIN HAS BEEN POINTED OUT A T ANY STAGE, INCLUDING BEFORE ME. WHY, EVEN THE BREAKUP OR CONSTITUENTS OF THE IM PUGNED SUM, I.E., HOW THE SAME STANDS COMPUTED OR ARRIVED AT, IS NOT FOUND IN THE ORDERS OF THE REVENUE AUTHORITIES, NOR COULD BE EXPLAINED BY EITHER COUNS EL BEFORE ME. I, THEREFORE, FIND NO MERIT IN THE SAID ADDITION AND, ACCORDINGLY, DIR ECT ITS DELETION. I DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED AND PARTLY ALLOWED FOR STATISTICALLY PURPOSES. ORDER PRONOUNCED ON APRIL 21, 2017 AT CHENNAI SD/- ( ) (SANJAY ARORA) /ACCOUNTANT MEMBER /CHENNAI, / /DATED, APRIL 21, 2017. EDN 0 ( *'-12 32%- /COPY TO: 1. &' /APPELLANT 2. *+&' /RESPONDENT 3. , 4- ( )/CIT(A) 4. , 4- /CIT 5. 2$56 *'-' /DR 6. 67# 8 /GF