SHASHIKANT DAMANI, MUMBAI V. ASST CIT 4(2), MUMBAI

ITA 2510/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8751 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2510 /MUM/2014 (ASSESSMENT YEAR: 2010-11) SHRI SHASHIKANT DAMANI VS. A C I T - 4 (2) C/O. MOHANLAL JAIN &CO, CA S 10, CHARTERED HOUSE, GR. FLOOR DR. C.H. STREET, MARINE LINES MUMBAI 400002 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 PAN AABPD4814A APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI V. JUSTIN DATE OF HEARING: 30.10.2017 DATE OF PRONOUNCEMENT: 31.10.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-8, MUMBAI DATED 28.02.2014 FOR A.Y. 2010-11. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THOUGH HEARING HAS BEEN FIXED FROM TIME TO TIME ON THE REQUEST OF THE ASSESSEE. WE, THEREFORE, DECIDED TO DISPOSE OFF THIS APPEAL AFTER HEARING TH E LEARNED D.R. 3. WE NOTED THAT THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE HON'BLE CIT(A) ERRED IN UPHOLDING THE DISALLOWA NCE MADE BY THE LD AO ON ACCOUNT OF LEGITIMATE INTEREST MADE ON FUNDS BORROWED AND USED FOR THE PURPOSES OF BUSINESS OF RS. 9,79,2 32/- WITHOUT APPRECIATING THAT THE ASSESSEE HAS DEBITED A SUM OF RS.516,368/- ONLY IN PROFIT FIT LOSS A/C ON ACCOUNT OF CLAIM OF INTEREST BY DOING SO THE LD AO HAS SOUGHT TO TAX DEEMED INTEREST INCOME WHICH IS WRONG AND THE REASON ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE PROVISION OF INCOME TAX ACT AND RULES MADE THERE UN DER. ITA NO. 2510/MUM/2014 SHRI SHASHIKANT DAMANI 2 4. AFTER HEARING THE LEARNED D.R. AND GOING THROUGH TH E ORDERS OF TAX AUTHORITIES BELOW WE NOTED THAT THE AO WHILE FRAMIN G THE ASSESSMENT FOUND THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OR ` 5,16,318/- AS INTEREST ON SECURED LOANS TAKEN BY HIM. THE AO FURTHER NOTED THAT THE ASSESSEE HAD GIVEN INTEREST FREE LOANS TO THE TUNE OF ` 92,03,307/-. THEREFORE THE AO COMPUTED INTEREST @10.64% ON ` 92,03,307/- WHICH COMES TO ` 9,79,232/- AND DISALLOWED THE SAME WHILE COMPUTING THE INCOME UNDER THE HEAD INCOME FROM BUSINESS. WHEN THE MATTER WENT TO THE CIT(A), THE CIT(A) CONFIRMED THE DISALLOWANCE. 5. WE NOTED THAT THE ASSESSEE HAD PAID INTEREST OF ` 5,16,368/- TO HDFC BANK ON LOAN AVAILED BY HIM OF AN ` 48,53,950/-. THUS THE ASSESSEE HAS PAID A TOTAL INTEREST ` 5,39,543/- WHICH THE ASSESSEE HAD DEBITED TO THE PROFIT & LOSS ACCOUNT ON A LOAN OF ` 48,53,950/-. THE ASSESSEE HAS ALSO CLAIMED DEDUCTION FOR A SUM OF ` 5,39,543/- UNDER SECTION 36(1)(III) OF THE INCOME TAX ACT BUT THE AO NOTED THAT THE ASSESSEE H AS ALSO DEBITED THE SAID INTEREST IN ITS PROFIT & LOSS ACCOUNT AND CLAI MED THE SAME AS DEDUCTION UNDER SECTION 36(1)(VII) BUT THE AO AFTER NOTING THAT THE ASSESSEE HAS GIVEN INTEREST FREE LOAN FOR A SUM OF ` 93,60,865/- AND COMPUTED INTEREST THEREON AND THUS CALCULATED THE D ISALLOWANCE AT ` 9,79,232/- INSTEAD OF RESTRICTING IT TO ` 5,16,368/-. IF THE ASSESSEE HAS CLAIMED DEDUCTION OF ` 5,16,368/- UNDER SECTION 36(I)(III) THE DISALLOWANC E MADE THEREON, EVEN IF IT IS ASSUMED THAT ASSESSEE H AS UTILISED BORROWED MONEY FOR ADVANCING INTEREST FREE LOAN, CANNOT BE M ORE THAN ` 5,18,368/-. WE ACCORDINGLY REDUCE THE DISALLOWANCE OF ` 9,79,232/- TO ` 5,16,368/-. THUS THE GROUND TAKEN BY THE ASSESSEE IS PARTLY ALL OWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017. SD/ - SD/ - (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 31 ST OCTOBER, 2017 ITA NO. 2510/MUM/2014 SHRI SHASHIKANT DAMANI 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -8, MUMBAI 4. THE CIT - 4, MUMBAI 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.