Sh. Rajeev Singal, Ludhiana V. ACIT, Ludhiana

ITA 261/CHANDI/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8465 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 16-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Earning of tax free income; Fair market value; Valuation report; Competent authority; Reason to believe; Rule 8D; Set aside
• Section: 143(3); 50C; 14A; 37; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !' # $ % &' , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.261/CHD/2015 / ASSESSMENT YEAR : 2011-12 ./ ITA NO.22/CHD/2017 / ASSESSMENT YEAR : 2012-13 SH.RAJ EEV SING AL C/O JVR FORGINGS LTD., INDL. AREA-C, SUA ROAD, LUDHIANA. THE A .C.I.T., CIRCLE-V, LUDHIANA. ./PAN NO: ARSPS8301D ./ ITA NO.262/CHD/2015 / ASSESSMENT YEAR : 2011-12 & ./ ITA NO.23/CHD/2017 / ASSESSMENT YEAR : 2012-13 SH.VINAY SINGAL C/O EASTMENT IMPEX, INDL. AREA-C, SUA ROAD, DHANDARI KALAN, LUDHIANA. THE A.C.I.T., CIRCLE-V, LUDHIANA. ./PAN NO: ADVPS8356H /ASSESSEE BY : SHRI ASHWANI KUMAR, CA / REVENUE BY : SHRI RAM MOHAN, CIT DR ! ' /DATE OF HEARING : 28.01.2019 #$%& ' /DATE OF PRONOUNCEMENT: 29 .03.2019 /ORDER PER BENCH: THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY TWO DIFFERENT ASSESSEES AGAINST SEPARATE ORDERS DATED 20.1.2015, 11.11,2016, 20.1.2015, AND 11.11.2016 OF THE COMMIS SIONER ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 2 OF INCOME TAX (APPEALS)-2, LUDHIANA [HEREINAFTER RE FERRED TO AS CIT(A)], PASSED U/S 250(6) OF THE INCOME TAX ACT,1961(HEREINAFTER REFERRED TO AS ACT) THE ASSE SSMENT YEARS INVOLVED IN ALL THE APPEALS ARE A.Y 2011-12 A ND A.Y 2012-13. IT WAS COMMON GROUND BETWEEN BOTH THE PARTIES THAT THE ISSUE INVOLVED IN ALL THE APPEALS IS IDENTICAL. THEY WERE THEREFORE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED COMMON ORDER. FOR THE SAKE OF CONVENIENCE WE SHALL BE DEALING WIT H THE FACTS IN THE CASE OF ITA NO.262/CHD/2015 RELATI NG TO ASSESSMENT YEAR 2011-12 AND OUR DECISION RENDERED T HEREIN WILL APPLY MUTATIS MUTANDIS TO OTHER APPEALS ALSO. ITA NO.262/CHD/2015(A.Y.2011-12): 2. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UNDE R: (1) THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE OF RS. 95.73.276/- OUT OF TOTAL DISALL OWANCE OF RS. 1,49,62,428/- MADE BY THE LD. ASSESSING OFFI CER U/S 57 OUT OF INTEREST ACCOUNT. 3. BRIEF FACTS RELATING TO THE ISSUE ARE THAT RETUR N DECLARING TOTAL INCOME OF RS. 1,55,36,200/- WAS FIL ED ON 30.09.2011. THE ASSESSEE DERIVES INCOME FROM CAPITA L GAINS AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 3 ASSESSMENT PROCEEDINGS A.O. NOTED THAT THE ASSESSEE HAD CLAIMED INTEREST EXPENSES OF RS. 1,49,62,428/- AGAI NST INTEREST INCOME OF RS. 1,52,77,082/-. THE A.O. ASKE D THE ASSESSEE TO EXPLAIN HOW EACH OF THESE EXPENSES CLAI MED HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY TOWARDS EARNIN G INCOME. THE ASSESSEE SUBMITTED THAT HE HAD RAISED L OANS FROM VARIOUS PARTIES/BANKS AS OVERDRAFT FACILITIES IN THE PAST MORE THAN 4 TO 5 YEARS WHICH WAS INTRODUCED BY THE ASSESSEE WITH HIS FAMILY CONCERNS NAMELY M/S JANPATH ESTATES PVT. LTD. M/S EASTMAN IMPEX, M/S JVR FORGINGS LTD. ETC. THAT OVER A PERIOD OF TIME SOME OF THE LOANS WERE REPAID AND TAKEN FROM SOME OTHER PARTIES. THAT AFTER HAVING NU MBER OF ENTRIES IN THESE 4 TO 5 YEARS, AT PRESENT IT WAS NO T POSSIBLE FOR THE ASSESSEE TO ESTABLISH ANY NEXUS OF INTEREST PAID AGAINST EARNING OF INTEREST INCOME. KEEPING IN VIEW THE SUBMISSIONS MADE BY THE ASSESSEE THE A.O. ASKED THE ASSESSEE TO EXPLAIN WHY INTEREST EXPENSES CLAIMED M AY NOT BE DISALLOWED US 57 OF THE I.T. ACT. THE A.O. CONSI DERED THE REPLY OF THE ASSESSEE. THEREAFTER REFERRING TO THE PROVISIONS OF SECTION 57, WHICH PROVIDE THAT DEDUCTION WOULD BE ALLOWED ONLY IF EXPENDITURE IS LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING INCOME, THE A.O. POINTED OUT THAT THERE HAD TO BE A DIRECT AND COMPL ETE NEXUS BETWEEN INCOME AND THE EXPENDITURE SO AS TO CLAIM DEDUCTION U/S 57. IN THIS REGARD THE A.O. POINTED O UT THAT ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 4 THE ASSESSEE HAD HIMSELF ADMITTED IN THE LETTER DAT ED 16.12.2013 THAT IT WAS NOT POSSIBLE FOR THE ASSESSE E TO ESTABLISH ANY NEXUS OF INTEREST PAID AGAINST EARNIN G OF INTEREST INCOME. 4. THE A.O. FURTHER POINTED OUT THAT ON PERUSAL OF COMPUTATION OF INCOME IT WAS SEEN THAT OUT OF THE I NTEREST RECEIPTS OF RS. 1,52,77,083/-, RS. 1,51,99,859/- HA D BEEN RECEIVED FROM M/S JANPATH ESTATES PVT. LTD. THE A.O . FURTHER POINTED OUT THAT THE LEDGER OF THE ASSESSEE IN THE BOOKS OF M/S JANPATH ESTATES ALSO SHOWED THAT SIGNIFICANT AM OUNT OF PAYMENT MADE TO M/S JANPATH ESTATE LTD. WAS DURING THE YEAR UNDER CONSIDERATION. THE A.O. FURTHER POINTED OUT THAT DURING THE YEAR THE ASSESSEE HAD WITHDRAWN RS. 18,51,55,5307- FROM M/S EASTMAN IMPEX. THE A.O. OBS ERVED THAT THE PAYMENTS MADE TO M/S JANPATH ESTATE LTD., FROM WHOM MOST OF THE INTEREST INCOME HAD BEEN RECEIVED, WAS OUT OF FUNDS RECEIVED FROM M/S EASTMAN IMPEX AND NO T FROM BORROWED FUNDS. THE A.O. THEREFORE HELD THAT INTERE ST BEARING LOANS HAD NOT BEEN USED FOR EARNING OF INTE REST INCOME. THE A.O. ACCORDINGLY DISALLOWED DEDUCTION C LAIMED U/S 57 AMOUNTING TO RS.1,49,62,428/-. 5. BEFORE THE LD.CIT(A) THE ASSESSEE FILED DETAILED SUBMISSIONS, REPRODUCED AT PARA 4.3 OF THE ORDER TH E LD.CIT(A) ANALYZED THE PROVISIONS OF LAW IN THIS RE GARD CULLED ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 5 FROM VARIOUS JUDICIAL DECISIONS AND HELD THAT AS PE R THE PROVISIONS OF SECTION 57(III) OF THE ACT, ANY EXPEN DITURE IS ALLOWABLE AS DEDUCTION AGAINST THE INCOME FROM OTHE R SOURCES ONLY IT ITS IS LAID OUT OR EXPANDED WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SU CH INCOME. THEREAFTER APPLYING THIS PROVISION TO THE F ACTS OF THE CASE DRAWN FROM THE STATEMENT OF AFFAIRS OF THE AS SESSEE,AT PARA 4.7 OF THE ORDER, THE LD.CIT(A) HELD THAT AT B EST, ONLY FUNDS AMOUNTING TO RS.11,55,30,660/- WERE DEPLOYED FOR EARNING INTEREST AND REMAINING AMOUNTS OF FUNDS OUT OF THE TOTAL BORROWED FUNDS OF RS.22,35,30,371/- I.E. RS.10,80,26,711/- WERE USED FOR OTHER ACTIVITIES. ACCORDINGLY, HE HELD THAT THE INTEREST ON THESE FUN DS BE DISALLOWED U/S 57 OF THE ACT. 6. BEFORE US, THE LD. COUNSEL FOR ASSESSEE CONTENDE D THAT THE METHOD EMPLOYED BY THE LD.CIT(A) FOR WORKING OU T THE DISALLOWANCE OF INTEREST WAS INCORRECT. IT WAS POIN TED OUT THAT THE FACT OF THE MATTER WAS THAT THERE WERE MIX ED FUNDS AVAILABLE WITH THE ASSESSEE AND IT WAS DIFFICULT, T HEREFORE, TO WORK OUT THE DIRECT NEXUS BETWEEN THE BORROWED FUND S UTILIZED FOR MAKING LOANS AND ADVANCES. THE LD.CO UNSEL FOR THE ASSESSEE CONTENDED THAT IDENTICAL ISSUE HAD BEE N DEALT WITH BY THE ITAT CHANDIGARH BENCHES IN THE CASE OF ACIT, CIRCLE-VI, LUDHIANA VS. PAWAN KUMAR GOEL IN ITA ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 6 NO.1438/CHD/2010 DATED 31.10.2011 WHEREIN THE TOTAL AMOUNT OF FUNDS DEPLOYED FOR EARNING INTEREST WAS V IEWED AGAINST THE BORROWED FUNDS AND AFTER CONSIDERING TH E SAME THE DISALLOWANCE OF INTEREST U/S 57(III) OF THE ACT WAS WORKED OUT. OUR ATTENTION WAS DRAWN TO PARA 4.5 OF THE ORD ER AS UNDER: 4. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE , RIVAL SUBMISSIONS AND THE CASE LAWS RELIED ON BY BOTH THE PARTIES INCLUDING THE PAPER BOOK. IN THIS CASE THE ASSESSEE SUBMITTED BEFORE THE ID. CIT(A), AS RECORDED AT PAGE 2 OF THE APPELLATE ORDER THAT OWN FUND OF THE ASSESSEE EXCEEDED BORROWED FUNDS, ON WHICH THE INTEREST WAS PAID. IT WAS, FURTHER, DEMONSTRATED IN THE FORM OF SUBMISSION FIELD BEFORE THE ID. CIT(A) THAT THROUGH O UT THE YEAR BORROWED FUND IS ON THE LOWER SIDE AS COMPARED TO FUND GIVEN ON INTEREST. AS SUCH IT WAS CONTENDED TH AT NO DISALLOWANCE ON THIS COUNT IS CALLED FOR. THE RELEV ANT DATA IN THE MATTER IS EXTRACTED FROM THE ORDER OF ID. CIT( A) AND IS REPRODUCED HEREUNDER:- ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 7 4.1 THE ID. C1T(A) IN HIS FINDINGS CLEARLY HELD THAT TH E ASSESSEE HAD GIVEN RS. 4,25.86,325/~, ON INTEREST TO DIFFERENT PARTIES. THE ASSESSEE HAS TAKEN AN AMOUNT OF RS. 3,48,27,666/-, ON INTEREST. IN VIEW OF THIS, IT WAS HELD BY THE ID. G1T(A) THAT THE FUNDS FOR EARNING INTEREST IS HIGHER THAN THE AMOUNT OF BORROWED FUNDS. THER EFORE, IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF T HE CASE, IT IS EVIDENT THAT THE BORROWED FUNDS HAD NOT BEEN USED FOR OTHER PURPOSES THAN EARNING INTEREST. REFERENC E MADE BY THE ID. 'AR', TO THE CONTENTS OF TABLE 3 AND 4 HAS FORCE. DEPLOYED FUNDS FOR INTEREST IS ALWAYS HIGHER THAN THE BORROWED FUNDS EXCEPT FOR THE MONTH OF DECEMBER, 20 06. IN VIEWS OF THIS, THE DECISION OF HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES RELIED UPO N BY THE ID. 'AR 1 IS NOT APPLICABLE TO FACTS OF THE CASE. SIRNILARY, THE DECISION IN THE CASE OF PADMMAVATI JAYKRISHNA V. C1 T, 131 ITR 653 (GUJ) DOES NOT SUPPORT THE CASE OF THE REVENUE HAVING REGARD TO THE FACTS OF THE CASE. 4.2 THE FINDINGS OF THE ID. CIT(A) ARE GIVEN HEREUNDER: '1 HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVA NT RECORD. THE ASSESSEE HAS GIVEN RS. 4,25,86,3257- TO DIFFERENT PARTIES ON INTEREST. SIMILARLY THE ASSES SEE HAS TAKEN RS.3,48,27,666/- ON INTEREST. SINCE FUND_ DEPL OYED FOR EARNING INTEREST IS HIGHER THAN THE AMOUNT OF BORRO WED FUND HENCE IN TOTALITY IT SEEMS THAT BORROWED FUND HAS NOT USED FOR ASSESSEE HAS ALSO POINT OUT THAT DISALLOW ANCE OF INTEREST EXPENDITURE AT THE RATIO OF 36.81 IS AGA INST THE FACT OF THE CASE. THE ID. COUNSEL FOR THE ASSESSEE HAS ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 8 FURTHER SUBMITTED THAT AS PER TABLE 3 PREPARED BY T HE AO DEPLOYED FUND FOR INTEREST IS ALWAYS HIGHER THA N THE BORROWED FUND EXCEPT FOR THE MONTH OF DECEMBER, 200 6. THE LD. COUNSEL IN HIS SUBMISSION HAS SUBMITTED THAT TABLE 4 AS CALCULATED BY THE AO HAS BEEN TAKEN AS A BASIS FOR CALCULATING THE AMOUNT OF INTEREST NOT UTILIZED WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING OF INTER EST. CONCLUSION OF FUND DEPLOYMENT AS PER TABLE 4 DOES N OT IN ACCORDANCE WITH A CONCLUSION OF FUND DEPLOYED AS PE R BALANCE SHEET. THE ARGUMENT PUT FORTH BY THE ID. CO UNSEL HAS STRONG REASON TO BELIEVE THAT THE RATIO TAKEN B Y THE DY. COMMISSIONER FOR DISALLOWING INTEREST EXPENDITURE I S NOT CORRECT. IN VIEW OF THE ABOVE DISCUSSION THE EXPEND ITURE OF RS.17,32,8117- IS DIRECTED TO BE CONSIDERED AS EXPENDITURE. THIS GROUND OF APPEAL IS THEREFORE, ALLOWED.' 4.3 THE DECISION RELIED UPON BY THE LD. 'AR' IN THE CASE OF APPOLLO TRADE LINKS V. ITO, B-WARD, 204 ITR (AT) 78 SUPPORTS THE CASE OF THE ASSESSEE. 5. IN VIEW OF THE ABOVE DETAILED LEGAL AND F ACTUAL DISCUSSIONS, IT IS EVIDENT THAT BORROWED FUNDS WERE NOT USED FOR ADVANCING LOANS. HOWEVER, THE ASSESSEE U SED HIS SURPLUS FUNDS FOR EARNING THE INTEREST. CONSEQU ENTLY, DISALLOWANCE OF INTEREST BY THE AO UNDER SUCH FACT-S ITUATION IS NOT JUSTIFIED, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE ID. C1T(A) AND, HENCE, THE SAME ARE UPHELD. 7. IT WAS POINTED OUT THAT THIS DECISION OF THE I.T .A.T. WAS FOLLOWED IN THE SUBSEQUENT YEAR IN THE CASE OF PAWA N KUMAR GOEL VS. ACIT IN ITA NO.528/CHD/2013 DATED 11.7.201 4. FURTHER THE LD. COUNSEL FOR ASSESSEE POINTED OUT TH AT FOLLOWING THESE DECISIONS THE A.O. HAD WORKED OUT DISALLOWANCE OF INTEREST U/S 57(3) OF THE ACT IN TH E CASE OF THE ASSESSEE ITSELF IN SUBSEQUENT YEARS .E. ASSESSM ENT YEAR 2013-14 AND ASSESSMENT YEAR 2014-15. COPIES OF ALL THE ABOVE ORDERS WERE PLACED BEFORE US. OUR ATTENTION W AS DRAWN TO PAGES 3 TO 5 OF THE ASSESSMENT ORDER FOR A.Y 20 13-14, ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 9 POINTING OUT THEREFROM THAT FOLLOWING DECISION OF T HE I.T.A.T. IN THE CASE OF PAWAN KUMAR GOEL IN ITA NO.1438/CHD/ 2010 ON NOTING THAT THE FACTS WERE IDENTICAL IN THE SAID CASE WITH THAT OF THE ASSESSEE, THE A.O. HAD WORKED OUT DISAL LOWANCE OF INTEREST BY WORKING OUT MONTHWISE EXCESS INTERES T BEARING FUNDS AVAILABLE WITH THE ASSESSEE AS COMPARED TO TH E INTEREST EARNING ADVANCES DISALLOWING INTEREST RELA TING TO THE SAME AS UNDER: INTEREST BEARING FUNDS INTEREST EARNING ADVANCES INTEREST BEARING FUNDS INVESTED IN NON-INTEREST EARNING ADVANCES INTEREST DISALLOWANCE U/S 57(1) APRIL - 2012 238813515 226219957.14 12593557.86 125935.58 MAY - 2012 236404560 282969957.14 JUNE - 2012 238863723 290669957.14 JULY - 2012 238158189 289669957.14 AUGUST - 2012 243135079 290819957.14 SEP - 2012 252273184 300169957.14 OCT - 2012 268233343 303069957.14 NOV - 2012 272047764 310599957.14 DEC - 2012 241306970 307499957.14 JAN - 2013 235013297 311999957.14 FEB - 2013 242933362 315499957.14 MARCH - 2013 279709033 313364589.14 TOTAL 1,25,935.58 THUS, AN AMOUNT OF RS.1,25,936/- IS DISALLOWED U/S 57 AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 8. OUR ATTENTION WAS DRAWN TO THE IDENTICAL CALCULA TION OF INTEREST FOR ASSESSMENT YEAR 2014-15 PLACED AT PAPE R BOOK PAGE NO.30 POINTING THEREFROM THAT THERE WERE NO SU RPLUS INTEREST BEARING FUNDS IN THAT YEAR AND ACCORDINGLY , NO DISALLOWANCE OF INTEREST WAS MADE IN THE ASSESSMENT FRAMED ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 10 U/S 143(3) OF THE ACT VIDE ORDER DATED 17.8.2016 WH ICH WAS PLACED AT PAPER BOOK PAGE NO.34. OUR ATTENTION WAS ALSO DRAWN TO IDENTICAL MONTHWISE WISE DETAIL OF INTERES T BEARING BORROWINGS AND INTEREST BEARING ADVANCES FOR ASSESS MENT YEAR 2015-16 PLACED AT PAPER BOOK PAGE NO.36 POINTI NG OUT THEREFROM THAT THE CALCULATION OF INTEREST DISALLOW ANCE U/S 57(III) AMOUNTED TO RS.1,92,766/- WHICH WAS ACCORDI NGLY SHOWN TO HAVE BEEN DISALLOWED BY THE ASSESSEE IN IT S COMPUTATION OF INCOME, PLACED AT PAPER BOOK PAGE NO .38 AND WHICH WAS ACCEPTED IN ASSESSMENT FRAMED U/S 143(3) OF THE ACT, COPY OF ORDER OF WHICH WAS PLACED AT PAPER BOO K PAGE NO.40. THUS IT WAS CONTENDED BY THE LD. COUNSEL FOR ASSESSEE THAT FOLLOWING THE PRINCIPLE OF CONSISTENC Y, THE DISALLOWANCE OF INTEREST IN THE IMPUGNED YEAR OUGHT TO BE WORKED OUT IN AN IDENTICAL MANNER. MONTHWISE DETAIL S OF INTEREST BEARING BORROWINGS AND INTEREST BEARING AD VANCES FOR THE IMPUGNED YEAR WERE PLACED BEFORE US AND IT WAS PLEADED THAT THE MATTER BE RESTORED BACK TO BE ALLO WED IN THE LIGHT OF THE DECISION OF THE I.T.A.T. IN THE CASE O F PAWAN KUMAR GOEL (SUPRA) FOLLOWED BY THE A.O. IN THE CASE OF THE ASSESSEE FOR SUBSEQUENT YEARS AS DETAILED ABOVE. 9. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE CIT(A) POINTING THEREFROM THAT IT HAD MADE DETA ILED EXERCISE OF WORKING OUT THE AMOUNT OF BORROWED FUND S ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 11 UTILIZED FOR THE PURPOSE OF MAKING INTEREST EARNING LOANS AND ADVANCES AND, THEREFORE, THE DISALLOWANCE OF INTERE ST WORKED OUT BY HIM, IT WAS CONTENDED, WAS RIGHTLY MADE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE P RESENT GROUND BEFORE US RELATES TO DISALLOWANCE OF INTERES T EXPENSES AS PER THE PROVISIONS OF SECTION 57(III) OF THE ACT . IT IS AN UNDISPUTED FACT THAT THE FUNDS AVAILABLE WITH THE A SSESSEE WERE MIXED FUNDS AND SOME OF THE INTEREST BEARING A DVANCES HAD BEEN MADE IN THE PRECEDING YEARS AND IT WAS DIF FICULT TO WORK OUT THE EXACT NEXUS BETWEEN THE INTEREST BEARI NG FUNDS AND INTEREST BEARING ADVANCES. NONE OF THE AUTHORIT IES BELOW WE FIND, HAVE BEEN ABLE TO ESTABLISH DIRECTLY THE A BSENCE OF ANY SUCH NEXUS WHILE WORKING OUT THE AMOUNT DISALLO WABLE U/S 57(III) OF THE ACT. THE AO WE FIND REASONED THA T MAJORLY INTEREST WAS EARNED BY THE ASSESSEE FROM ONE M/S JA NPATH ESTATES AND SCRUTINIZING THE LEDGER ACCOUNT OF THE SAID PARTY, WORKED OUT THE ADVANCES MADE TO IT DURING TH E YEAR ON THE BASIS OF DIFFERENCE IN THE OPENING AND CLOSI NG BALANCE. THEREAFTER HE DERIVED FROM THE BANK STATEM ENT OF THE ASSESSEE THAT MAJOR AMOUNT WAS RECEIVED BY THE ASSESSEE FROM M/S EASTMAN IMPEX WHICH WAS NON INTEREST BEARI NG. HE THEREFORE DEDUCED THAT THIS NON INTEREST BEARING FU ND HAD BEEN ADVANCED FOR EARNING MAJOR PORTION OF INTEREST DURING ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 12 THE YEAR AND ACCORDINGLY DISALLOWED ENTIRE INTEREST CLAIMED BY THE ASSESSEE. THE LD.CIT(A), WE FIND, ADOPTED A TOTALLY DIFFERENT BASIS FOR CALCULATING THE DISALLOWANCE EX TRACTING FIGURES FROM THE STATEMENT OF AFFAIRS FILED BY THE ASSESSEE AND FINDING THAT TOTAL BORROWINGS BEARING INTEREST DURING THE YEAR WERE RS.22.35 CRORES WHILE AMOUNT ADVANCED FOR EARNING INTEREST WAS ONLY 11.55 CRORES, WHICH HE HE LD COULD AT BEST BE TREATED AS MADE FROM INTEREST BEARING FU NDS. THE REST OF THE INTEREST PAID WAS ACCORDINGLY DISALLOWE D BY THE LD.CIT(A).THUS THE DISALLOWANCE OF INTEREST U/S 57 (III) OF THE ACT, MADE BY THE REVENUE AUTHORITIES, WE FIND, WAS NOT ON THE BASIS OF DIRECT NEXUS BETWEEN NON INTEREST BEAR ING FUNDS DEPLOYED FOR MAKING INVESTMENTS EARNING INTEREST. 11. IDENTICAL FACT SITUATION, WE FIND, WAS DEALT W ITH BY THE I.T.A.T. IN THE CASE OF PAWAN KUMAR GOEL (SUPRA) WH EREIN QUANTUM OF DISALLOWANCE U/S 57(III) WAS WORKED OUT BY CALCULATING THE MONTHLY DIFFERENCE OF INTEREST BEA RING FUNDS AND INTEREST EARNING ADVANCES AND DISALLOWING INTER EST RELATING TO THE SURPLUS OF INTEREST BEARING FUNDS RAISED ,ON THE PRESUMPTION THAT THE INTEREST BEARING FUNDS HAD BEEN DEPLOYED FOR MAKING THESE ADVANCES AND THE SURPLUS IF ANY WAS THEREFORE DEPLOYED FOR PURPOSES OTHER THAN EARN ING INTEREST INCOME. MOREOVER, WE FIND, THAT IN THE CAS E OF THE ASSESSEE IN THE SUBSEQUENT YEARS DISALLOWANCE OF I NTEREST ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 13 U/S 57(III) WAS MADE ON THIS BASIS FOLLOWING THE DE CISION OF THE ITAT IN THE CASE OF PAWAN GOEL(SUPRA) . CONSIDE RING THE SAME, WE HOLD THAT THE DISALLOWANCE U/S 57(III) OF THE ACT IN THE PRESENT CASE ALSO SHOULD BE WORKED OUT ACCORDIN GLY AS PRESCRIBED BY THE ITAT IN THE CASE OF PAWAN GOEL(SU PRA) AND WHICH WAS FOLLOWED IN THE CASE OF THE ASSESSEE IN S UBSEQUENT YEARS. THE ISSUE IS ACCORDINGLY RESTORED BACK TO TH E A.O. TO WORK OUT DISALLOWANCE OF INTEREST AS ABOVE. THIS GR OUND OF APPEAL BY THE ASSESSEE IS, THEREFORE, ALLOWED FOR S TATISTICAL PURPOSES 12. GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE RE ADS AS UNDER: 2. THAT HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE OF RS.74,34,992/- MADE U/S 14A. 13. THIS GROUND RELATES TO DISALLOWANCE OF EXPENSES MADE U/S 14A OF THE ACT RELATING TO THOSE INCURRED FOR T HE PURPOSE OF EARNING EXEMPT INCOME. 14. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD SHOWN INVESTMENT OF RS. 25,36,52,818/- AND RS.16,15,53,614/- AS ON 31.03.2011 AND 31.03.2010 RESPECTIVELY IN THE BALANCE SHEET. THE INCOME FROM THESE INVESTMENTS DOES NOT FORM PART OF THE TOTAL INCOME. THE A.O. FURTHER NOTED THAT THE ASSESSEE HAD INCURRED INTERE ST EXPENDITURE OF RS.1,49,62,428/-. THE A.O. ASKED THE ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 14 ASSESSEE TO EXPLAIN WHY PROVISIONS OF SECTION 14A M AY NOT BE APPLIED IN THE ASSESSEES CASE. AFTER CONSIDERIN G THE ASSESSEES SUBMISSIONS ON THIS ISSUE, THE A.O. HELD THAT PROVISIONS OF SECTION 14 A WERE ATTRACTED IN THE CA SE. THE A.O. COMPUTED DISALLOWANCE UNDER RULE 8D(II) AT RS. 74,34,992/- AND UNDER RULE 8D(III) AT RS.10,38,016/ -. THE TOTAL DISALLOWANCE OF RS.84,37,008/- WAS MADE. HOWE VER, AS THE WHOLE OF INTEREST EXPENDITURE OF RS.1,49,62,428 /- WAS DISALLOWED BY THE A.O. U/S 57 OF THE ACT, NO FURTHE R DISALLOWANCE ON THIS ACCOUNT WAS MADE. 15. THE LD.CIT(A) ON FINDING THAT OUT OF THE TOTAL INTEREST EXPENDITURE OF RS.1,49,62,428/- CLAIMED BY THE ASSE SSEE AN AMOUNT OF RS.95,73,276/- HAD BEEN DISALLOWED U/S 57 OF THE ACT AND THE REMAINING HAD BEEN HELD AS INCURRED DIR ECTLY FOR THE PURPOSE OF EARNING INTEREST INCOME AND HELD THA T NO FURTHER DISALLOWANCE WAS TO BE MADE OUT OF THE EXPE NDITURE HELD TO HAVE BEEN INCURRED FOR THE PURPOSE OF EARNI NG INTEREST INCOME. ACCORDINGLY, HE TELESCOPED THE DIS ALLOWANCE MADE BY THE ASSESSEE OF RS.74,34,922/- U/S 14A IN T HE TOTAL DISALLOWANCE OF INTEREST OF RS.95,73,276/- MADE U/S 57 OF THE ACT. 16. BEFORE US, THE LD. COUNSEL FOR ASSESSEE RELIED ON THE FINDINGS OF THE LD.CIT(A) THAT ONCE THE TOTAL INTER EST EXPENDITURE IS BIFURCATED FOR THE PURPOSE OF SECTIO N 57 AS ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 15 INCURRED FOR THE PURPOSE OF EARNING INTEREST INCOME AND OTHERWISE AND THE LATER PORTION IS DISALLOWED, NO F URTHER DISALLOWANCE U/S 14A CAN BE MADE SINCE THE BALANCE CLEARLY RELATED FOR THE PURPOSE OF EARNING TAXABLE INTEREST INCOME. 17. WE FIND MERIT IN THE CONTENTION OF THE LD. COUN SEL FOR ASSESSEE. THE DISALLOWANCE, IF ANY, U/S 14A IS TO B E MADE OUT OF THE BALANCE AMOUNT REMAINING AFTER MAKING DISALLOWANCE OF INTEREST U/S 57 OF THE ACT. THIS BA LANCE AMOUNT WHICH IS ALLOWED U/S 57 OF THE ACT IS ON THE GROUND THAT IT HAS BEEN INCURRED FOR EARNING TAXABLE INTER EST INCOME. THEREFORE, THIS INTEREST EXPENSES CANNOT NO W BE HELD TO HAVE BEEN INCURRED FOR EARNING EXEMPT INCOME FOR THE PURPOSE OF SECTION 14A OF THE ACT AND HENCE, WE AGR EE WITH THE LD. COUNSEL FOR ASSESSEE THAT AFTER THE EXERCIS E OF DISALLOWANCE OF INTEREST U/S 57 OF THE ACT IS COMPL ETED VIS-- VIS ENTIRE INTEREST EXPENDITURE INCURRED BY THE ASS ESSEE, NO FURTHER DISALLOWANCE OF INTEREST IS WARRANTED U/S 1 4A OF THE ACT. THIS GROUND OF APPEAL, IS, THEREFORE, ALLOWED. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. ITA NO.23/CHD/2017(A.Y. 2012-13: 18. GROUND NOS.1 AND 2 RAISED BY THE ASSESSEE READ AS UNDER: ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 16 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX A CT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- 2, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD DISALLOWANCE OF A SUM OF RS. 84,28,993/- OUT OF INTERE ST ACCOUNT MADE BY THE LD. ASSESSING TREATING THE SAME AS NOT ALLOWABLE U/S 57 OF THE INCOME TAX ACT, 1961. 2. THAT SHE WAS FURTHER NOT JUSTIFIED TO UPHOLD DIS ALLOWANCE OF RS. 93,88,780/- U/S 14A AS WORKED OUT BY THE LD. ASSESSING OFFICER. 19. IT WAS COMMON GROUND THAT THE ISSUES IN GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IN THIS APPEAL WERE SIMI LAR TO GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IN ITA NO.262/CHD/2015 ADJUDICATED ABOVE .OUR DECISION RE NDERED THEREIN AT PARAS 10 -11 AND 16 RESPECTIVELY AND WIL L THEREFORE APPLY MUTATIS MUTANDIS TO THESE GROUNDS A LSO FOLLOWING WHICH GROUND NOS. 1 RAISED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES WHILE GROUND NO.2 IS ALLOWED. 20. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. THAT SHE FURTHER GRAVELY ERRED IN UPHOLDING AN ADDITI ON OF RS. 23,92,500/- TO THE LONG TERM CAPITAL GAIN MADE BY THE LD. ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 50C. 21. BRIEF FACTS RELATING TO THE ISSUE ARE THAT AN INFORMATION WAS RECEIVED FROM ITO, WARD 20(1)(5), MUMBAI VIDE L ETTER DATED 18.02.2015 THAT THE ASSESSEE HAD SOLD A FLAT AT MATUNGA, MUMBAI FOR RS. 85,00,000/-, THE FAIR MARKE T VALUE OF WHICH WAS RS.1,08,92,500/-, THE VALUATION REPORT ATTESTED BY THE JOINT SU-REGISTRAR, DEPARTMENT OF STAMP AND REGISTRATION, MUMBAI-1 WAS ALSO PROVIDED IN WHICH T HE ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 17 MARKET VALUE OR THE STAMP DUTY/ VALUE HAD BEEN MENT IONED AS RS. 1,08,92,500/-. THE ASSESSEE WAS ASKED TO EXP LAIN WHY THE BALANCE AMOUNT SHOULD NOT BE ADDED BACK. THE A. O. WAS NOT SATISFIED WITH THE ASSESSEES SUBMISSION SINCE THE COMPETENT AUTHORITY IN THE MATTER HAD CERTIFIED THA T THE PROPERTY WAS SOLD AT LESS THAN THE VALUE ADOPTED FO R STAMP DUTY PURPOSES. THEREFORE, THE A.O. MADE DISALLOWANC E OF RS.23,92,500/- AS DIFFERENCE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS LONG TERM CAPITAL GAIN OF THE AS SESSEE. THE A.O. PLACED RELIANCE ON THE DECISION OF THE I.T .A.T., MUMBAI BENCH IN THE CASE OF RALLIS INDIA LTD. VS. A DDL. CIT IN ITA NO.2464(MUM.) OF 2010. 22. BEFORE THE LD.CIT(A) THE ASSESSEE CONTENDED THA T BEFORE THE A.O. THE ASSESSEE HAD CLAIMED THAT THE FAIR MAR KET VALUE OF THE PROPERTY WAS LESS THAN THE STAMP DUTY VALUE AND THE A.O., THEREFORE, AS PER THE PROVISIONS SECTION 50C OF THE ACT SHOULD HAVE REFERRED THE MATTER FOR VALUATION TO A VALUATION OFFICER. RELIANCE WAS PLACED ON THE DECISION OF THE I.T.A.T. PUNE BENCH IN THE CASE OF SUBHASH VINAYAK SUPNEKAR VS. ACIT. THE LD.CIT(A) THEREAFTER UPHELD THE ORDER OF THE A.O. HOLDING THAT SINCE THE COMPETENT AUTHORITY I.E. JOI NT SUB REGISTRAR, DEPARTMENT OF STAMP & REGISTRATION, MUMB AI-I HAD CERTIFIED THAT THE PROPERTY WAS SOLD AT LESS TH AN THE ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 18 VALUE ADOPTED FOR THE STAMP DUTY PURPOSES, THEREFOR E, NO INTERFERENCE WAS REQUIRED IN THE ORDER OF THE A.O. 23. BEFORE US THE LD. COUNSEL FOR ASSESSEE REITERAT ED THE CONTENTIONS MADE BEFORE THE LD.CIT(A) THAT IN VIEW OF HIS ASSERTION BEFORE THE A.O. THAT THE FAIR MARKET VALU E OF THE PROPERTY WAS LESS THAN THE STAMP DUTY VALUE, THE VA LUATION OF THE PROPERTY SHOULD HAVE BEEN REFERRED TO THE VA LUATION OFFICER AS PER SECTION 50C(2) OF THE ACT. OUR ATTEN TION WAS DRAWN TO THE PROVISIONS OF SECTION 50C(2) OF THE AC T, WHICH READS AS UNDER: 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED 86[OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAM P VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED 86[OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FUL L VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB- SECTION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED 86[OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF TH E PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED 86[OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 19 CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB- SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODI-FICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. [EXPLANATION 1].FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). [EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.] (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB- SECTION (2), WHERE THE VALUE ASCERTAINED UNDER SUB- SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTE D OR ASSESSED [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] AND ALSO TO THE SUBMISSION MADE BEFORE THE A.O., RE PRODUCED AT PAGE 15 OF THE A.OS ORDER AS UNDER: SIR, REFERENCE DISCUSSION ON THE LAST HEARING. REGARDING YOUR HONOURS SHOW CAUSE DATED 26.02.2015 WITH RESPECT TO THE MARKET VALUE OF THE PROPERTY/FLAT SOLD DURING THE YEAR UNDER CONSIDERATION BE NOT TAKEN AT RS.1,08,92,500/- AS AGAINST SALE CONSIDERATION SHOWN IN THE RETURN OF INCOME AT RS.85,00,000/- BASED ON THE INFORMATION ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 20 RECEIVED FROM YOUR HONOUR FROM ITO, WARD/20(1)(5), MUMBAI. IN REPLY, IT IS RESPECTFULLY SUBMITTED THAT WHATEVER WAS THE MARKET PRICE, THE ASSESSEE HAS TRANSACTED ON THAT WHEREAXS THERE WEAS NO MENTION OF STAMP DUTY VALUE ON THE REGISTRATION DEED WHICH REQUIRES FOR APPLICATION OF PROVISION OF SECTION 50 C OF THE ACT. IN VIEW OF THE SUBMISSION, IT IS SUBMITTED THAT BASIS ON WHICH THE MARKET VALUE AS REVIEWED BY THE LD.ITO, WARD-20(1)(5), MUMBAI HAS NEVER BEEN SHOWN/MADE AVAILABLE TO THE ASSESSEE AND NO ADDITION IS CALLED FOR ON THE BALANCE AMOUNT AS DESIRED BY YOUR HONOUR VIDE ORDER SHEET ENTRY DATED 26.02.2015. HOPE YOUR HONOUR WILL FIND THE ABOVE INFORMATION IN ORDER AND SHALL PROCEED TO FINALIZE THE PROCEEDINGS ACCORDINGLY. THANKING YOU, YOURS FAITHFULLY, SD/- (VINAY SINGAL) ENCL: AS ABOVE. DATED----- 24. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, PLEADE D THAT IN THE LIGHT OF THE SAME, THE MATTER BE RESTORED BACK TO THE A.O. FOR REFERENCE OF THE VALUATION OF THE PROPERTY TO T HE DVO IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50C(2) OF THE ACT. 25. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 26. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES. THE ISSUE BEFORE US RELATES TO THE SUBSTITUTION OF THE ACTUAL VALUE OF CONSIDERATION RECEIVED FROM THE SALE OF A PROPERTY BY STAMP DUTY VALUE FOR THE PURPOSE OF CALCULATING CAP ITAL GAINS ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 21 EARNED THEREON AS PER THE PROVISIONS OF SECTION 50C OF THE ACT. THE FACTS WHICH ARE NOT DISPUTED ARE THAT THE ASSESSEE HAD SOLD A FLAT AT MATUNGA, MUMBAI FOR RS.85 LACS. THE VALUATION REPORT ATTESTED BY THE JOINT SUB REGISTRA R, DEPARTMENT OF STAMP & REGISTRATION, MUMBAI-I SHOWED THE STAMP DUTY VALUE OF THE PROPERTY AT RS.1,08,92,500/ -. THE PROVISIONS OF SECTION 50C(2) OF THE ACT WHICH HAVE BEEN REFERRED TO BY THE LD. COUNSEL FOR ASSESSEE AND WHI CH HAVE BEEN REPRODUCED ABOVE CLEARLY STATE THAT THE SUBSTI TUTION OF THE ACTUAL CONSIDERATION RECEIVED WITH THE STAMP DU TY VALUE IS NOT AUTOMATIC AND WHERE THE ASSESSEE CONTENDS TH AT THE FAIR VALUE OF THE PROPERTY DID NOT EXCEED THE STAMP DUTY VALUE, IT IS INCUMBENT UPON THE A.O. TO VERIFY THIS FACT BY REFERRING FOR VALUATION. IN THE PRESENT CASE, WE FI ND THAT THE ASSESSEE DID CONTEND THAT THE FAIR MARKET VALUE OF THE PROPERTY DID NOT EXCEED THE STAMP DUTY VALUE. IN SU CH FACTS AND CIRCUMSTANCES WE AGREE WITH THE LD. COUNSEL FOR ASSESSEE THAT THE A.O. SHOULD HAVE REFERRED THE MAT TER TO THE DVO FOR VALUATION PURPOSES. THE ACT OF THE A.O. AND CIT(A) IN IGNORING THIS CONTENTION OF THE ASSESSEE, WE HOL D, IS IN VIOLATION OF PROVISIONS OF SECTION 50C(2) OF THE AC T. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) IN THI S REGARD AND RESTORE THE ISSUE BACK TO THE A.O. DIRECTING HIM TO REFER THE VALUE OF THE PROPERTY TO THE VALUATION OFFICER IN A CCORDANCE WITH THE PROVISIONS OF SECTION 50(2) OF THE ACT AND THEREAFTER ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 22 DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THIS GROUN D OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.261/CHD/2015(A.Y. 2011-12: 27. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: (1) THAT ORDER PASSED U/S 250(6) OF THE INCOME TA X ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOL D THE DISALLOWANCE OF RS.24,24,858/- OUT OF TOTAL DISALLOWANCE OF RS.60,95,957/- MADE BY THE LD. ASSESSING OFFICER U/S 57 OUT OF INTEREST ACCOUNT. 2. THAT HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE OF RS.25,78,108/- MADE U/S 14A. 28. IT WAS COMMON GROUND THAT THE ISSUES IN GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IN THIS APPEAL WERE SIMI LAR TO GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IN ITA NO.262/CHD/2015 ADJUDICATED ABOVE .OUR DECISION RE NDERED THEREIN AT PARAS 10 -11 AND 16 RESPECTIVELY WILL T HEREFORE APPLY MUTATIS MUTANDIS TO THESE GROUNDS ALSO FOLLOW ING WHICH GROUND NOS. 1 RAISED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES WHILE GROUND NO.2 IS ALLOWED. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. ITA NO.22/CHD/2017(A.Y. 2012-13: 29. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 23 (1) THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE OF A SUM OF RS.43,32,058/- OUT OF INTE REST ACCONT MADE BY THE LD. ASSESSING TREATING THE SAME AS NOT ALLOWABLE U/S 57 OF THE INCOME TAX ACT, 1961. 2. THAT SHE WAS FURTHER NOT JUSTIFIED TO UPHOLD DISALLOWANCE OF RS.237,62,254/- U/S 14A AS WORKED O UT BY THE LD. ASSESSING OFFICER. 30. IT WAS COMMON GROUND THAT THE ISSUES IN GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IN THIS APPEAL WERE SIMI LAR TO GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IN ITA NO.262/CHD/2015 ADJUDICATED ABOVE .OUR DECISION RE NDERED THEREIN AT PARAS 10 -11 AND 16 RESPECTIVELY AND WIL L THEREFORE APPLY MUTATIS MUTANDIS TO THESE GROUNDS A LSO FOLLOWING WHICH GROUND NOS. 1 RAISED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES WHILE GROUND NO.2 IS ALLOWED. 31. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # $ % &' (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER '( /ACCOUNTANT MEMBER *# /DATED: 29 TH MARCH, 2019 * ' * ITA NO.261/CHD/2015 A.Y.2011-12 ITA NO.22/CHD/2017 A.Y.2012-13 ITA NO.262/CHD/2015 A.Y.2011-12 ITA NO.23/CHD/2017 A.Y.2012-13 24 $'( )*+* / COPY OF THE ORDER FORWARDED TO : 1. , / THE APPELLANT 2. (-, / THE RESPONDENT 3. . / CIT 4. . ( )/ THE CIT(A) 5. */0( 1 , '1 , 23405 / DR, ITAT, CHANDIGARH 6. 046! / GUARD FILE $' / BY ORDER, / ASSISTANT REGISTRAR