V WAMA INTERNATIONAL, Mumbai V. ITO WARD 25(1)(4), Mumbai

ITA 2477/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1054 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 22-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SHANTESHWAR SWAMI LD
• Assessee Lawyers: MRUGAKHSHI JOSHI LD
• Keywords: Business income
• Section: 143(3)

Judgement Text

ITA NO. 2477/MUM/2019 V. WAMA INTERNATIONAL ASSESSMENT YEAR: 2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , , BEFORE JUSTICE SHRI P. P. BHATT, PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.2477/MUM/2019 ( / ASSESSMENT YEAR: 2013-14) V. WAMA INTERNATIONAL , 3 RD FLOOR, CIVIC CENTRE BLDG, MMGS MARG, DADAR (E), MUMBAI-400 014. / VS. ITO WARD 25(1)(4 ) C-10, 4 TH FLOOR, BKC BANDRA EAST MUMBAI-400051 ./ ./PAN/GIR NO. AAAGFV-6789-F ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ASSESSEE BY : MS. MRUGAKHSHI JOSHI, LD. AR REVENUE BY : DR. SHANTESHWAR SWAMI, LD. DR / DATE OF HEARING : 30/06/2021 / DATE OF PRONOUNCEMENT : 12/07/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 2013-14 ARISES OUT OF THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-37, MUMBAI [CIT(A)], DATED 25/02/2019 IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OFFICER (AO) U/S 143(3) OF THE ACT ON 30/03/2016. THE ONLY GRIEVANCE OF THE ASSESSEE I S CONFIRMATION OF INTEREST DISALLOWANCE FOR RS.7 LACS. ITA NO. 2477/MUM/2019 V. WAMA INTERNATIONAL ASSESSMENT YEAR: 2013-14 2 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS AS PLACED IN THE PAPER BOOK. OUR ADJUDICATION TO THE SUBJECT MATTER OF APP EAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING R ESIDENT FIRM HAVING 4 PARTNERS WAS ASSESSED FOR THE YEAR U/S 143(3) ON 30/03/2016. DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSE SSEE OBTAINED LOAN OF RS.750.24 LACS WHICH WERE DULY CONFIRMED. THE AS SESSEE PAID INTEREST IN THE RANGE OF 13% AND 15% ON THESE LOANS . AS PER ASSESSEES SUBMISSION, LOAN TO THE EXTENT OF RS.105.59 LACS WA S WITHDRAWN BY THE PARTNERS DURING THE YEAR. ACCORDINGLY, FORMING AN O PINION THAT INTEREST BEARING LOAN WAS USED BY THE PARTNERS FOR DRAWINGS, LD. AO COMPUTED INTEREST DISALLOWANCE OF RS.15.83 LACS. 4. DURING APPELLATE PROCEEDINGS, THE ASSESSEE CONTR OVERTED THE FINDINGS OF LD. AO BY SUBMITTING THAT THE DEBIT BAL ANCE IN PARTNERS CAPITAL ACCOUNT WAS DUE TO CONTINUOUS LOSSES IN THE FIRM AGGREGATING TO MORE THAN RS.264.12 LACS DURING AYS 2008-09 TO 2013 -14. IT WAS ALSO SUBMITTED THAT NO INTEREST WAS PAID ON CREDIT CAPIT AL BALANCES AND THEREFORE, NO INTEREST WAS CHARGED ON DEBIT BALANCE S. 5. THE LD. CIT(A) NOTED THAT DEBIT BALANCE OF RS.10 5.59 LACS INCLUDE CURRENT YEARS LOSSES OF RS.58.92 LACS AND THEREFOR E, THE INTEREST DISALLOWANCE SHOULD HAVE BEEN COMPUTED ONLY ON THE OPENING DEBIT BALANCE OF RS.46.66 LACS. THE SAID ADJUDICATION RED UCED THE INTEREST DISALLOWANCE TO RS.7 LACS. STILL AGGRIEVED, THE ASS ESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO. 2477/MUM/2019 V. WAMA INTERNATIONAL ASSESSMENT YEAR: 2013-14 3 6. FROM ASSESSEES COMPUTATION OF INCOME AS PLACED ON RECORD, IT IS EVIDENT THAT THE ASSESSEE HAS ACCUMULATED LOSSES OF MORE THAN RS.205.20 LACS DURING AYS 2008-09 TO 2012-13 WHICH SUPPORT THE SUBMISSIONS THAT DEBIT BALANCE IN PARTNERS CAPITAL ACCOUNT WAS DUE TO CONTINUOUS LOSSES IN THE FIRM. IT IS ALSO EVIDENT T HAT THE ASSESSEE HAS NOT PAID INTEREST ON CREDIT BALANCES AND SIMILARLY NOT CHARGED INTEREST ON DEBIT BALANCES. ANOTHER PERTINENT FACT IS THAT THER E IS NO DIVERSION OF LOAN FUNDS FOR NON-BUSINESS PURPOSE IS THERE SINCE INTER EST HAS BEEN OFFERED AS WELL AS ACCEPTED AS BUSINESS INCOME ONLY. THER EFORE, CONCURRING WITH SUBMISSIONS OF LD. AR, WE DELETE IMPUGNED DISA LLOWANCE OF RS.7 LACS. 7. THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED ON 12 TH JULY, 2021 SD/- SD/- (JUSTICE P.P. BHATT) (MANOJ KU MAR AGGARWAL) PRESIDENT ACCOUNTANT MEMBER MUMBAI; DATED : 12/07/2021 SR.PS, JAISY VARGHESE !'#' / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. + -'+%++. , +. , / DR, ITAT, MUMBAI 6. -/0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.