The ITO, Ward - 2(2), RAJKOT-GUJARAT V. Smt. Parulben Hitenkumar Desai, RAJKOT-GUJARAT

ITA 255/RJT/2011

• Counselvise Citation: 25524914 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: R D LALCHANDANI S
• Keywords: Gift; Business income; Business expenditure

Judgement Text

I , IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . . R I . . I I BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTAVA AM IT A NO. 254/RJT/2011 CA A / ASSESSMENT YEAR 2008 - 09 SMT. PARULBEN HITENKUMAR DESAI ILLA VILLA, ASHAPURA ROAD, RAJKOT. PAN : A B IPD - 9934 - D ( / APPELLANT) THE INCOME - TAX OFFICER, WARD 2 (2), RAJKOT. / RESPONDENT ITA NO.255/RJT/2011 CA A / ASSESSMENT YEAR 2008 - 09 THE INCOME - TAX OFFICER, WARD 2 (2), RAJKOT. ( / APPELLANT) SMT. PARULBEN HITENKUMAR DESAI ILLA VILLA, ASHAPURA ROAD, RAJKOT. PAN : ABIPD - 9934 - D / RESPON DENT CAES / ASSESSEE BY SHRI R.D. LALCHANDANI, ADVOCATE . S / REVENUE BY DR. M. L. MEENA , DR. S / DATE OF HEARING 09 - 0 7 - 2013 S / DATE OF PRONOUNCEMENT 12 - 0 7 - 2013 / ORDER . . , R I / T. K. SHARMA, J. M. : THE S E CROSS APPEAL S ARE AGAINST THE ORDER DATED 28 - 04 - 2011 OF CIT (A) - I II , RAJKOT FOR THE ASSESSMENT YEAR 2008 - 09. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS A N INDIVIDUAL ENGAGED IN TRADING MINERALS AND CHEM ICALS. FOR THE ASSESSMENT YEAR UNDER APPEAL, SHE FILED THE RETURN OF INCOME ON 25 - 08 - 2009 SHOWING TOTAL INCOME OF RS. NIL. AO FRAMED THE ASSESSMENT U/S.143(3) OF THE I. T. ACT, 1961 ON 22 - 12 - 2010. IN THIS ASSESSMENT ORDER, AO MADE ADDITION OF RS.3,40,74, 26 2 / - U/S. 41(1)(A) FOR THE DETAILED REASONS GIVEN IN PARA - 5 WHICH READ AS UNDER: - 5. THE ASSESSEE VIDE HER SUBMISSION DATED 13 - 12 - 2010 HAS STATED THAT SHE HAD TAKEN LOAN FROM HER FATHER SINCE ABOUT 7 TO 8 YEARS AGO, FOR WHICH SHE HAS ALSO ENCLOSE COPIE S OF ACCOUNT OF HER FATHER. SHE HAS ALSO STATED THESE ARE PURELY LOAN BETWEEN HER AND THEIR FATHER. SHE HAS TAKEN LOAN FROM HER FATHER FOR BUSINESS PURPOSE ONLY. THEREFORE, ITS HER TRADING LIABILITY. THE ABOVE MENTION DECISIONS GIVEN BY HONBLE TRIBUNAL AR E ALSO ITA 254 & 255 - 2011 2 NOT APPLICABLE IN THE CASE OF ASSESSEE. ITS NOTHING BUT CONVERT HER TRADING LIABILITY IN TO GIFT. THEREFORE I MAD ADDITION OF RS.3,40,74,262/ - . AS THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME RS.3,40,74,262/ - AS DISCUSS ABOVE. I AM PRIM A FACIE SATISFIED THAT ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME. PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE I.T. ACT IN I TIATE SEPARATELY. 3. APART FROM ABOVE, IN THE ASSESSMENT ORDER, AO DISALLOWED THE DIWALI EXPENSES AMOUNTING TO RS.17,730/ - ON THE GROUND THAT THESE ARE NOT BUSINESS EXPENDITURE. 4. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT (A) RESTRICTED THE ADDITION OF RS.3,40,74,262/ - MADE BY AO U/S.41(1) OF THE I.T. ACT TO RS.33,90,939/ - AND THUS, ALLOWED THE RELIEF OF RS.3,06,83,324/ - . THE REASONING GIVEN BY LD. CIT (A) FOR RESTRICTING THE ADDITION TO RS.33,90,939/ - IS CONTAINED IN PARAS - 4.1 TO 4.3 WHICH READS AS UNDER: - 4.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSION OF APPELLANT. THE COPIES OF LEDGE ACCOUNT OF MR. JAYANTK UMAR DOSHI IN THE BOOKS OF ACCOUNT SHOW THAT APPELLANT IS REGULARLY OBTAINING LOAN AND REPAYING THE SAME TO MR. JAYANTKUMAR DOSHI SINCE PAST 7 - 9 YEARS. APPELLANT IS CREDITING THE ACCOUNT OF MR. JAYANTKUMAR DOSHI NEAR THE END OF THE FINANCIAL YEAR WITH THE INTEREST DUE TO HIM FOR THAT FINANCIAL YEAR AND IS MAKING PAYMENT ON ACCOUNT OF SUCH INTEREST AMOUNT IMMEDIATELY TO MR. JAYANTKUMAR DOSHI. THE DETAILS OF INTEREST CREDITED IN THE LEDGE ACCOUNT OF MR. JAYANTKUMAR DOSHI AND PAYMENTS MADE TO HIM FOR SUCH INTE REST AS PER THE DETAILS FROM THE LEDGE ACCOUNT OF MR. JAYANTKUMAR DOSHI ARE AS UNDER: INTEREST PAID BY CHEQUE ON 26.03.2002 2726484 INTEREST DUE FOR FINANCIAL YEAR 2001 - 02 CREDITED ON 31.03.2002 2726484 NO INTEREST PAID / DUE FOR FINANCIAL YEAR 2002 - 03 INTEREST PAID BY CHEQUE ON 29.03.200 4 490491 INTEREST DUE FOR FINANCIAL YEAR 2003 - 04 CREDITED ON 31.03.2004 490491 INTEREST PAID BY CHEQUE ON 21.03.2005 2832255 INTEREST DUE FOR FINANCIAL YEAR 2004 - 05 (EXCEPT MARCH 2005) CREDITED ON 31.03.2007 2832255 IN TEREST PAID BY CHEQUE ON 28.03.2005 324478 INTEREST DUE FOR MARCH 2005 CREDITED ON 01 - 04 - 2005. 324478 INTEREST PAID BY CHEQUE ON 13.03.2006 3498073 INTEREST DUE FOR FINANCIAL YEAR 200 5 - 06 CREDITED ON 31.03.200 6 3498073 ------ ----- INTEREST DU E FOR FINANCIAL YEAR 2006 - 07 CREDITED ON 31.03.200 7 3390939 IT IS APPARENT FROM THE ABOVE TABLE THAT IN ALL THE FINANCIAL YEARS EXCEPT FINANCIAL YEAR 2006 - 07, APPELLANT HAS PAID SPECIFIC CHEQUES OF AMOUNT EQUIVALENT TO THE AMOUNT OF INTEREST DUE TO MR. JAYANTKUMAR DOSHI IN THOSE FINANCIAL YEARS. THEREFORE IT IS CONSIDERED THAT THE LIABILITY OF INTEREST HAS BEEN PAID BY THE APPELLANT TO MR. JAYANTKUMAR DOSHI TILL ITA 254 & 255 - 2011 3 FINANCIAL YEAR 2005 - 06. THE DETAILS OF ACCOUNT OF MR. JAYANTKUMAR DOSHI AS SUBMITTED BY APPEL LANT FOR FINANCIAL YEAR 2006 - 07 DO NOT SHOW ANY SPECIFIC PAYMENT FOR INTEREST OF RS.33,90,939/ - DUE IN THAT FINANCIAL YEAR. THERE ARE CHEQUES RECEIPTS AND PAYMENTS OF RS.72,94,848 AND RS.26,07,569/ RESPECTIVELY ON ACCOUNT OF LOAN. THE LEDGE ACCOUNT OF MR. JAYANTKUMAR DOSHI IN THE BOOKS OF APPELLANT FOR FINANCIAL YEAR 2006 - 07 IS NARRATED AS UNDER IN BRIEF. ACCOUNT OF JAYANTKUMAR DOSHI IN THE BOOKS OF APPELLANT FOR FINANCIAL YEAR 2006 - 07 OPENING CREDIT BALANCE OF MR JAYANTKUMAR DOSHI AS ON 01 - 04 - 2006 2599 6045 CHEQUES RECEIVED FROM JAYANTKUMAR DOSHI IN FINANCIAL YEAR 2006 - 07 7294848 CHEQUES PAID TO JAYANTKUMAR DOSHI IN FINANCIAL YEAR 2006 - 07 - 2607569 DETAILS OF CHEQUES PAID 26 - 06 - 2006 29 - 06 - 2006 14 - 07 - 2006 18 - 09 - 2006 16 - 10 - 2006 29 - 01 - 2007 23 - 02 - 2007 26 - 02 - 2007 03 - 03 - 2007 08 - 03 - 2007 10 - 03 - 2007 12 - 03 - 2007 16 - 03 - 2007 20 - 03 - 2007 27 - 03 - 2007 - 200000 - 200000 - 200000 - 200000 - 500000 - 100000 - 200000 - 25000 - 97300 - 68700 - 112000 - 323600 - 100000 - 25000 - 255969 INTEREST CREDITED ON 31 - 03 - 2007 3390939 OUTSTANDING CREDIT BALANCE OF JAYANTKUMAR DOSHI AS ON 31 - 03 - 2007 34074263 THE NET BALANCE IN THE LEDGER ACCOUNT OF MR. JAYANTKUMAR DOSHI IN THE BOOKS OF APPELLANT WAS RS.3,40,74,262 AFTER INCLUDING THE INTEREST OF RS.33,90,939/ - AT THE E ND OF FINANCIAL YEAR 2006 - 07. IT IS APPARENT FROM THE ABOVE ACCOUNT THAT THE INTEREST OF RS.33,90,939/ - WAS NOT PAID BY APPELLANT TO MR. JAYANTKUMAR DOSHI. THEREFORE AS ON - 1.04.2007, APPELLANT HAD AN INTEREST LIABILITY OF RS.33,90,939/ - AND LOAN LIABILITY OF RS.3,06,83,324 PAYABLE TO MR. JAYANTKUMAR DOSHI. APPELLANT HAS DEBITED THE ACCOUNT OF MR. JAYANTKUMAR DOSHI WITH AN AMOUNT OF RS.3,40,74,263 BY A JOURNAL ENTRY DATED 01 - 04 - 2007 BY CREDITING HER CAPITAL ACCOUNT ON ACCOUNT OF WAIVER OF OUTSTANDING BALANC E OF RS.3,40,74,263 AS ON 31 - 03 - 2007 WHICH INCLUDED INTEREST LIABILITY OF RS.33,90,939/ - AND LOAN LIABILITY OF RS.3,06,83,324 RECOVERABLE FROM APPELLANT BY MR. JAYANTKUMAR DOSHI. THE WAIVER OF OUTSTANDING BALANCE OF INTEREST LIABILITY OF RS.33,90,939 AND L OAN LIABILITY OF RS.3,06,83,324 HAS BEEN CONSIDERED AS GIFT BY THE APPELLANT FROM HER FATHER IN FINANCIAL YEAR 2007 - 08 WHICH IS THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE FACTS OF THE CASE SHOW THAT THE AMOUNT OF GIFT OF RS.3,40,7 4,263/ - BY MR. JAYANTKUMAR DOSHI TO APPELLANT INCLUDES WAIVER OF INTEREST LIABILITY OF RS.33,90,939 WHICH WAS CLAIMED AS DEDUCTION BY APPELLANT IN FINANCIAL YEAR 2006 - 07 AND THEREFORE THE WAIVER OF INTEREST LIABILITY OF APPELLANT TO THE EXTENT OF RS.33,90, 939 / - WOULD CONSTITUTE INCOME WITHIN THE MEANING OF SECTION 41(1) OF THE I.T. ACT. 4.2 AS FAR AS THE OTHER PART OF THE WAIVED AMOUNT OF RS.3,06,83,324/ - IS CONCERNED, IT IS PURE LOAN AMOUNT, WHICH HAS BEEN RECEIVED BY APPELLANT ON CAPITAL ACCOUNT FROM HER FATHER. THIS AMOUNT WAS NEVER EVER CLAIMED AS DEDUCTION OR ALLOWANCE IN THE PROFIT AND LOSS ACCOUNT BY APPELLANT AND THEREFORE THE QUESTION OF APPLICATION OF SECTION 41(1) OF I.T. ACT ON WAIVER OF SUCH AMOUNT DOES NOT ARISE. IN CASE OF TIRUNELVELI MOTOR B US SERVICE CO. (P) LTD. V. CIT [1970] 78 ITR 55 (SC), IT WAS HELD THAT PROVISION OF SECTION 41(1) ONLY APPLIES WHEN AN ALLOWANCE OF DEDUCTION HAS BEEN MADE IN THE ASSESSMENT OF ANY YEAR IN RESPECT OF ANY LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY T HE ASSESSEE AND, SUBSEQUENTLY, DURING ANY PREVIOUS YEAR THE ASSESSEE RECEIVES ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR HAS OBTAINED SOME BENEFIT IN RESPECT OF SUCH TRADING ITA 254 & 255 - 2011 4 LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF IN WHICH EVENT THE AM OUNT RECEIVED BY HIM HAS TO BE DEEMED TO BE PROFITS AND GAINS. IN PRESENT CASE, THE QUESTION OF TAXABILITY OF SUCH AMOUNT U/S.28 OF THE I.T. ACT MAY BE EXAMINED. IF ANY ASSESSEE IS ENGAGED IN THE BUSINESS OF MONEY LENDING THEN THE LOAN RECEIVED OR LENT BEC OMES THE TRADING ASSET OF THE APPELLANT. IF ANY MONEY LENT BY ASSESSEE BECOMES IRRECOVERABLE DURING THE COURSE OF MONEY LENDING BUSINESS THEN IT WOULD BE A TRADING LOSS AND APPELLANT CAN CLAIM IT FOR DEDUCTION FROM BUSINESS INCOME. CONVERSELY, IF ANY MONEY RECEIVED BY ASSESSEE IN THE MONEY LENDING BUSINESS IS WAIVED FOR REPAYMENT, THE SAME WOULD BE A TRADING OR REVENUE GAIN AND WOULD BE TAXABLE U/S.28 OF THE I.T. ACT. HOWEVER, WHERE THE BUSINESS OF ASSESSEE IS NOT MONEY LENDING BUSINESS AND IT IS NOT ESTABL ISHED THAT THE LOAN HAS NOT BEEN RECEIVED BY ASSESSEE AGAINST THE SUPPLY OF ANY STOCK IN TRADE IN THE BUSINESS OF TRADING IN MINERALS AND CHEMICALS, AS IN CASE OF APPELLANT, THEN THE LOAN IS CONSIDERED TO BE RECEIVED BY APPELLANT ON CAPITAL ACCOUNT AND IT CANNOT BE CALLED A TRADING LIABILITY. ANY LOSS OF LOAN RECEIVED ON CAPITAL ACCOUNT WOULD BE A LOSS OF CAPITAL AND CANNOT BE CLAIMED FOR DEDUCTION FROM BUSINESS INCOME. SIMILARLY ANY WAIVER OF LOAN RECEIVED ON CAPITAL ACCOUNT WOULD BE AN ACCRETION TO THE CA PITAL AND CANNOT BE TAXED AS REVENUE GAIN. THEREFORE THE WAIVER FROM THE LIABILITY TO REPAY THE LOAN OF RS.3,06,83,324 RECEIVED ON CAPITAL ACCOUNT BY THE APPELLANT CANNOT BE TAXED AS BUSINESS INCOME U/S.28 OF THE I.T. ACT. IN RESPECT OF SPECIFIC TAXABILIT Y OF WAIVER OF A LOAN U/S.28(IV) WHICH IS RECEIVED ON CAPITAL ACCOUNT, HBLE GUJARAT HIGH COURT HAVE HELD IN CASE OF CIT VS. CHETAN CHEMICALS (P) LTD. (2004) 267 ITR 770 (GUJ) THAT IF IT CANNOT BE SAID THAT THE ASSESSEE - COMPANY WAS CARRYING ON BUSINESS OF OBTAINING LOANS THEN THE REMISSION OF SUCH LOANS BY THE CREDITORS OF THE COMPANY CANNOT BE A BENEFIT ARISING FROM SUCH BUSINESS U/S.28(IV) OF THE I.T. ACT. IN SHORT, THE BENEFIT MUST BE ON TRADING/REVENUE ACCOUNT AND NOT ON CAPITAL ACCOUNT FOR IT TO QUALIF Y AS BENEFIT ARISING FROM BUSINESS U/S.28(IV) OF THE I.T. ACT. I THEREFORE HOLD THAT WAIVER OF LOAN OF RS.3,06,83,324/ - ON CAPITAL ACCOUNT WOULD NOT RESULT IN ACCRETION TO BUSINESS INCOME OF APPELLANT. 4.3 IN NUTSHELL, THE INCOME ADDED BY ASSESSING OFFICE R U/S.41(1) OF THE I. T. ACT IS RESTRICTED TO RS.33,90,939 / - AND APPELLANT GETS RELIEF OF RS.3,06,83,324/ - . 5. IN THE IMPUGNED ORDER, THE LD. CIT (A) CONFIRMED THE DISALLOWANCE OF DIWALI EXPENSES AMOUNTING TO RS.17,730/ - AS THE ASSESSEE FAILED TO SUBMIT ANY ARGUMENT OR EVIDENCE TO SUBSTANTIATE THE CLAIM OF DEDUCTION OF THESE EXPENSES AS BUSINESS EXPENDITURE. AGGRIEVED WITH THE ORDER OF LD. CIT (A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS: - 1] THE COMMISSIONER OF INCO ME TAX [APPEALS] ERRED IN HOLDING THAT THERE WAS A REMISSION OF LIABILITY OF RS.3390903/ - WHICH WOULD CONSTITUTE INCOME WITHIN THE MEANING OF SECTION 41[1] OF THE IT ACT. THE APPELLANT HAD RECEIVED A GIFT FROM THE APPELLANTS FATHER. THERE WAS NO CESSATION OR ANY TRADING LIABILITY AND HENCE THE ADDITION IS NOT JUSTIFIED. 2] THE COMMISSIONER OF INCOME TAX [APPEALS] ERRED IN UPHOLDING THE DISALLOWANCE OF RS.17730/ - BEING DIWALI EXPENSES. THE DISALLOWANCE IS NOT JUSTIFIED. ITA 254 & 255 - 2011 5 6. THE REVENUE HAS ALSO FILED APPEA L ON THE FOLLOWING GROUND: - 1 . THE LD. CIT(A) - III, RAJKOT HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION MADE U/S.41(1) OF THE I.T. ACT, TO THE TUNE OF RS.33,90,939/ - AND THEREBY DELETED THE ADDITION OF RS.3,06,83,324/ - . 7. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF REVENUE, DR. M. L. MEENA, DR, APPEARED AND POINTED OUT THAT ASSESSEE TOOK LOAN ABOUT 7 - 8 YEARS AGO ON INTEREST THEREFORE IT IS HER TRADING LIABILITY. AS THE ASSESSEE HAS CONVERTED TRADING LIABILITY INTO GIFT THEREFORE ADDITION OF R S.3,40,74,262/ - WAS RIGHTLY MADE BY AO U/S.41(1) OF I.T. ACT, 1961 AND LD. CIT (A) IS NOT JUSTIFIED IN DELETING THE SAME. AS AGAINST THIS, SHRI R.D. LALCHANDANI, ADVOCATE APPEARED ON BEHALF OF THE ASSESSEE POINT ED OUT THAT IN RESPECT OF RELIEF TO THE EXTE NT OF RS.3,06,83,324/ - ALLOWED BY AO SUPPORTED THE ORDER OF LD. CIT (A). HE FURTHER POINTED THAT LD. CIT (A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION BECAUSE ASSESSEES FATHER HAS GIFTED THE INTEREST ACCRUED AMOUNTING TO RS.33,90,939/ - . TO SUM - UP, LD. COU NSEL OF THE ASSESSEE PLEADED THAT THE ENTIRE ADDITION OF RS. 3,06,83,324/ - MADE BY AO BE DELETED. 8. HEAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT ASSESSEE TOOK LOAN FROM HER FAT HER NAMELY MR.JAYANTKUMAR DOSHI . THE BALANCE IN LEDGER ACCOUNT OF MR.JAYANTKUMAR DOSHI IN THE BOOKS OF THE ASSESSEE WAS RS.3,40,74,263/ - AFTER INCLUDING THE INTEREST OF RS.33,90,939/ - AT THE END OF FINANCIAL YEAR 2006 - 07. THE INTEREST AMOUNT OF RS.33,90,9 39/ - WAS NOT PAID BY THE ASSESSEE TO MR.JAYANTKUMAR DOSHI. THEREFORE AS ON 01 - 04 - 2007, THE APPELLANT HAD AN INTEREST LIABILITY OF RS.33,90,939/ - AND LOAN LIABILITY OF RS.3,06,83,324/ - PAYABLE TO MR.JAYANTKUMAR DOSHI. THE ASSESSEE HAS DEBITED THE AMOUNT PAY ABLE TO MR.JAYANTKUMAR DOSHI WITH AN AMOUNT OF RS.3,40,74,263/ - BY A JOURNAL ENTRY DATED 01 - 04 - 2007 BY CREDITING HER CAPITAL ACCOUNT ON ACCOUNT OF WAIVER OF OUTSTANDING BALANCE OF RS.3,40,74,263/ - AS ON 31 - 03 - 2007 WHIC H INCLUDED INTEREST LIABILITY OF RS.33 ,90,939/ - AND LOAN LIABILITY OF RS.3,06,83,324/ - . THUS, RS.3,06,83,324/ - IS A PURE LOAN AMOUNT WHICH HAS BEEN RECEIVED BY THE ASSESSEE ON CAPITAL ACCOUNT FROM HER FATHER AND WHICH IS GIFTED BY HIS FATHER TO THE ASSESSEE, THEREFORE SAME IS NOT TAXABLE U/S.4 1(1)(A) OF THE I.T. ACT, 1961 AS ITA 254 & 255 - 2011 6 HELD BY THE LD. CIT (A) IN THE IMPUGNED ORDER. THEREFORE, WAIVER OF LOAN OF RS.3,06,83,324/ - IS ON CAPITAL ACCOUNT WHICH WOULD NOT RESULT TO ACCRETION OF BUSINESS INCOME OF THE ASSESSEE. THE VIEW TAKEN BY LD. CIT (A) IN THI S REGARD IS THEREFORE UPHELD. THE BALANCE AMOUNT OF RS.33,90,939/ - IS RIGHTLY HELD BY AO AS WELL AS LD. CIT (A) U/S.41(1) OF THE I.T. ACT. THEREFORE, IN OUR CONSIDERED OPINION, THE LD. CIT (A) IS LEGALLY AND FACTUALLY CORRECT IN RESTRICTING THE ADDITION U /S.41(1) OF THE I.T. ACT TO RS.33,90,939/ - . CONSEQUENTLY, THE GROUND NO.1 OF ASSESSEE IS DISMISSED. THE APPEAL OF THE ASSESSEE IS DISMISSED AND APPEAL OF THE REVENUE IS REJECTED. 9. IN RESPECT OF GROUND NO.2, NO ARGUMENT WAS RAISED BY LD. COUNSEL OF THE ASSESSEE AT THE TIME OF HEARING. THEREFORE, VIEW TAKEN BY LD. CIT (A) UPHOLDING THE DISALLOWANCE OF RS.17,730/ - BEING DIWALI EXPENSES IS UPHELD. GROUND NO.2 OF ASSESSEES APPEAL IS REJECTED . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED AND A PPEAL OF THE REVENUE IS REJECTED. 11. THIS O RDER IS PRONOUNCED IN OP EN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( . . D. K. SRIVASTAVA ) ( . . A / T. K. SHARMA) / ACCOUNTANT MEMBER C / JUDICIAL MEMBER / ORDER DATE 12 - 0 7 - 2013. /RAJKOT NVA/ - 2 RJO O / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - SMT. PARULBEN HITENKUMAR DESAI, ILLA VILLA, ASHAPURA RO AD,RAJKOT. 2 . / RESPONDENT - THE INCOME - TAX OFFICER, WARD 2 (2), RAJKOT. 3 . I T / CONCERNED CIT - I I, RAJKOT. 4 . T - / CIT (A) - I II , RAJKOT. 5 . CCI , I , / DR, ITAT, RAJKOT 6 . A / GUARD FILE. / BY ORDER TRUE COPY. PRIVATE SECRETARY, ITAT, RAJKOT