ITO 12(3)(2), MUMBAI V. SUSHILADEVI O. PARASRAMPURIA, MUMBAI

ITA 2486/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2642 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2016
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 13-01-2015
• Assessment Year: 1997-1998
• Appeal Filed On: 30-03-2011
• Court: TRIBUNAL
• Assessee Lawyers: J SARAVANAN
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.2486/MUM/2011 (ASSESSMENT YEAR: 1997-98) ITO, 12(3)(2), MUMBAI VS MRS SUASHILADEVI O PARASRAMPURIA, 3 RD FLOOR, MITTAL TOWER, A WING, NARIMAN POINT, MUMBAI 21 PAN : AAGPP3365H (APPELLANT) (RESPONDENT) I.T.A. NO.3072/MUM/2011 (ASSESSMENT YEAR: 1997-98) MRS SUASHILADEVI O PARASRAMPURIA, 3 RD FLOOR, MITTAL TOWER, A WING, NARIMAN POINT, MUMBAI 21 VS ITO, 12(3)(2), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI J SARAVANAN REVENUE BY SHRI SATISH MODY DATE OF HEARING : 10-10-2016 DATE OF PRONOUNCEMENT : 10 -10-2016 O R D E R PER ASHWANI TANEJA, AM: THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE OR DER OF COMMISSIONER OF INCOME-TAX (APPEALS)-23, MUMBAI [HE REINAFTER CALLED CIT(A)] DATED 16-12-2010 PASSED AGAINST THE ASSESSM ENT ORDER U/S 143(3) R.W.S. 254 DATED 26-12-2006 FOR A.Y. 1997-98. 2 I.T.A. NO.2486/MUM/2011 2. THE ASSESSEE FILED APPEAL ON THE FOLLOWING GROUNDS: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 23, MUMBAI E RRED BY PARTIALLY UPHOLDING THE DISALLOWANCE OF INTEREST OF 32,77,573/- EVEN AS THE APPELLANT HAD HERSELF CAPITALIZED INTEREST T O THE EXTENT OF RS. 43,59,943/-. 2) WITHOUT PREJUDICE TO THE ABOVE, YOUR APPELLANT FURT HER SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 23 HAS IGNORED THE INACCURACIES POINTED OUT IN THE CALCULATION OF THE SAID AMOUNT OF RS. 32,77,573/-, AS WORKED OUT BY THE ASSESSING OFFICER. 3. THE REVENUE HAS FILED THE APPEAL ON THE FOLLOWING G ROUNDS: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, ` THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO COMPUTE THE INTEREST DISALLOWANCE ON THE NET INTEREST BEARING F UND AMOUNTING TO RS. 32,77,573/- USED FOR INVESTMENT IN PERSONAL ASSETS /INTEREST FREE ADVANCES.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CT(A) FAILED TO APPRECIATE THE FACT THAT THE DISALL OWANCE OF INTEREST OF RS. 32,77,573/- WAS MADE BY THE ASSESSING OFFICER S INCE THE INTEREST PAYMENT ON LOAN BORROWED FOR INVESTMENT IN PERSONAL ASSET TO THE TUNE OF RS. 2,56,93,269/- WERE NOT ALLOWABLE EXPENDITURE U/S 37(1) AS THE SAME HAD NOT BEEN EXPENDED WHOLLY AND EXCLUSIVELY F OR THE PURPOSE OF BUSINESS.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN OBSERVING THE INTEREST OF R S. 43,59,943/- CAPITALIZED BY THE ASSESSEE WAS NOT TAKEN INTO CONS IDERATION BY THE A.O. WHITE HE MADE THE DISALLOWANCE OF RS. 32,77,573/- . 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) O N THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OF FICER BE RESTORED ' 2. THE SOLITARY ISSUE IN BOTH THE APPEALS IS ABOUT DET ERMINING THE CORRECT AMOUNT OF DISALLOWANCE TO BE SUSTAINED ON P ROPORTIONATE BASIS OUT OF INTEREST ATTRIBUTABLE TO THE INVESTMENTS MAD E BY THE ASSESSEE FOR ACQUIRING HER PERSONAL ASSETS. 3 I.T.A. NO.2486/MUM/2011 3. DURING THE COURSE OF HEARING, IT WAS STATED AT THE OUTSET BY THE LD. COUNSEL OF THE ASSESSEE THAT IN THE IMPUGNED YEAR D IVIDEND INCOME WAS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE HAD PAID TOTAL INTEREST OF RS.1,22,77,230 ON VARIOUS LO ANS OUT OF WHICH A SUM OF RS.43,59,943/- WAS DISALLOWED AND CAPITALISED BY THE ASSESSEE HERSELF ON ACCOUNT OF INVESTMENT MADE IN PERSONAL ASSETS AN D BALANCE AMOUNT OF INTEREST OF RS.79,79,287/- WAS CLAIMED AS ALLOWA BLE EXPENSES. BUT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO MADE FURTHER DISALLOWANCE OF RS.32,77,573. 4. BEING AGGRIEVED, ASSESSEE HAD FILED AN APPEAL BEFOR E THE LD. CIT(A) AND CONTENDED THAT ASSESSEE HAD CORRECTLY MADE VOLU NTARY DISALLOWANCE OF RS.43,59,943/- AND, THEREFORE, AO HAS MADE INCOR RECT DISALLOWANCE ON LAW AND FACTS. THOUGH, LD. CIT(A) HAD AGREED WITH THE ASSESSEE IN PRINCIPLE, BUT WHILE PASSING THE ORDER, SHE MADE CE RTAIN DIRECTIONS WHICH HAVE CREATED CONFUSION AND MISUNDERSTANDING AND, TH EREFORE, NO PROPER APPEAL EFFECT HAS BEEN GIVEN BY THE AO SO FAR. UND ER THESE CIRCUMSTANCES, HE REQUESTED FOR MODIFYING THE DIREC TIONS OF THE LD. CIT(A) FOR BRINGING BETTER CLARITY IN THE ORDER SO AS TO HELP THE AO IN PASSING HE APPEAL EFFECT ORDER IN PROPER MANNER. 5. PER CONTRA, THE LD. DR AGREED IN PRINCIPLE WITH THE SUBMISSIONS OF THE ASSESSEE THAT ONLY PROPORTIONATE AMOUNT PERTAIN ING TO THE INVESTMENT MADE IN THE PERSONAL ASSETS CAN BE DISAL LOWED AND FOR THIS PURPOSE, PROPER FACTS CAN BE VERIFIED BY THE AO. 6. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHOR ITIES AND SUBMISSIONS MADE BY BOTH THE SIDES BEFORE US. IT I S NOTED THAT ON PRINCIPLE, NONE OF THE PARTIES IS AGGRIEVED. BOTH THE PARTIES AGREED THAT ONLY THAT PORTION OF THE INTEREST CAN BE DISALLOWED , WHICH PERTAINS TO 4 I.T.A. NO.2486/MUM/2011 THOSE INVESTMENTS WHICH HAVE BEEN MADE IN THE PERSO NAL ASSETS. PERUSAL OF THE ORDER OF THE LD. CIT(A) REVEALS THAT SHE HAS ALSO ATTEMPTED TO CONVEY THE SAME THING. BUT THERE SEEMS TO BE SOME CONFUSION IN ISSUING THE DIRECTIONS AS FACTS WERE JUMBLED UP IN NOTING D OWN THE FIGURES. UNDER THESE CIRCUMSTANCES, WE SEND THIS ISSUE BACK TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHOULD FIND OUT THE AMOUNT OF INVESTMENT, WHICH IS RELATABLE TO THE INVESTMENT MADE IN THE PE RSONAL ASSETS BY THE ASSESSEE. IF THE AMOUNT SO WORKED OUT BY THE AO IS LESS THAN THE AMOUNT VOLUNTARILY DISALLOWED BY THE ASSESSEE IN ITS RETUR N, THEN NO FURTHER DISALLOWANCE NEEDS TO BE MADE. IF THE AMOUNT SO WO RKED OUT BY THE AO IS MORE THAN THE AMOUNT VOLUNTARILY DISALLOWED BY T HE ASSESSEE, THEN, THE AMOUNT SO WORKED OUT BY THE AO SHALL BE DISALLO WED AFTER GIVING CREDIT FOR THE DISALLOWANCE MADE BY THE ASSESSEE. 7. THE ASSESSEE SHALL FURNISH ALL REQUISITE DETAILS AN D DOCUMENTARY EVIDENCES IN SUPPORT OF HER CLAIM, FOR WHICH ADEQUA TE OPPORTUNITY SHALL BE GIVEN BY THE AO. THE AO SHALL DECIDE THIS ISSUE AFRESH AFTER CONSIDERING THE ENTIRE MATERIAL BROUGHT ON RECORD. THUS, BOTH THE APPEALS MAY BE TREATED AS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE CONCL USION OF THE HEARING. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 10 TH OCTOBER, 2016 PK/- 5 I.T.A. NO.2486/MUM/2011 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , E-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES