The ACIT, Central Circle-1(3), Ahmedabad V. Shri Mukesh Balabhai Patel, Bhavnagar

ITA 2615/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9283 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 07-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALBINUS TIRKEY
• Assessee Lawyers: P M MEHTA
• Keywords: Business income; Business expenditure; Revised return
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 2615/AHD/2013 (ASSESSMENT YEAR: 2009-10) ACIT CENTRAL CIRCLE-1(3), AHMEDABAD V/S SHRI MUKESH BALABHAI PATEL. C/O. SHREE RAM STEEL AND ROLLING INDUSTRIES, BHAVNAGAR, RAJKOT ROAD, SIHOR, DIST-BHAVNAGAR. (APPELLANT) (RESPONDENT) PAN: AAPPP8456N APPELLANT BY : SHRI ALBINUS TIRKEY, SR. D .R. RESPONDENT BY : SHRI P.M. MEHTA, A.R. ( )/ ORDER DATE OF HEARING : 07 -02-201 7 DATE OF PRONOUNCEMENT : 10 -02-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)- XX, AHMEDABAD DATED 30.08.2013 PERTAINING TO A.Y. 2 009-10. ITA NO. 2615 /AHD/2013 . A.Y. 2009-10 2 2. THE ONLY GRIEVANCE OF THE REVENUE RELATES TO THE DE LETION OF THE DISALLOWANCE OF RS. 40,15,678/- OUT OF TOTAL DISALL OWANCE OF INTEREST OF RS. 69,27,948/- MADE U/S. 14A READ WITH RULE 8D OF THE ACT. 3. THE A.O. VIDE ORDER DATED 27.12.2011 MADE U/S. 143( 3) OF THE ACT MADE THE FOLLOWING OBSERVATIONS WHILE MAKING THE IMPUGNED DI SALLOWANCES:- THE SUBMISSION OF THE ASSESSEE IS PERUSED & CONSID ERED. ON CAREFUL CONSIDERATION OF THE SAME, IT IS SEEN THAT THERE IS NO SUBSTANCE IN IT. THE CLAIM OF THE ASSESSEE THAT INTEREST EXPENSES OF RS.69,27,948 /- IS ACTUALLY PERTAINING TO BUSINESS EXPENDITURE TO EARN BUSINESS INCOME. HOWEV ER, THE ASSESSEE DID NOT FURNISH ANY COGENT DOCUMENTARY EVIDENCE TO ESTABLIS H HIS CLAIM. IT IS DERIVED BY THE ASSESSEE THAT THE FUND ON WHICH THE SAID INTERE ST EXPENSES WAS INCURRED WAS FOR THE PURPOSE OF BUSINESS. HOWEVER HE DID NOT FUR NISH ANY DOCUMENTARY EVIDENCE FOR THE SAME. HENCE THE SAID CLAIM OF THE ASSESSEE IS NOT ACCEPTED. IT IS FURTHER CLAIMED BY THE ASSESSEE THAT HE WAS HAVING SUFFICIENT CAPITAL AND INTEREST FREE FUNDS. HOWEVER HE DID NOT FURNISH ANY SUCH DET AILS OF INTEREST FREE FUNDS AVAILABLE. HENCE THIS CLAIM OF THE ASSESSEE IS ALSO NOT TENABLE. REMAINING DETAILS OF THE ASSESSEE ARE ALSO OF GENERAL NATURE & WITHOU T ANY SUPPORTING COGENT DOCUMENTARY EVIDENCE. IT IS SIGNIFICANT TO MENTIONED HERE THAT HAD THE A SSESSEE BEEN IN KNOWLEDGE OF THE FACT THAT THE SAID INTEREST EXPENSES OF RS.69,2 7,948/- IS ACTUALLY AN EXPENSES PERTAINING TO BUSINESS INCOME & NOT PERTAINING TO I NCOME FROM OTHER SOURCE. HE SHOULD HAVE FILED REVISED RETURN OF INCOME AS PER P ROVISION OF SECTION 139(5). THE ASSESSEE FAILED TO DO SO. HENCE SAID CLAIM OF THE A SSESSEE IS NOT TENABLE. FURTHER, ASSESSEE IN HIS LETTER STATED THAT THE MOS T OF THE ADVANCE MADE TO MUKESHBHAI PATEL HUF WAS MADE IN EARLIER YEAR AND I S CLEARLY ATTRIBUTABLE TO NON- INTEREST BEARING FUNDS (BEING CAPITAL AND INTEREST FREE UNSECURED LOANS) LYING AS OPENING BALANCE. ON VERIFICATION OF THE BANK STATEM ENT FILED BY THE ASSESSEE IN HIS SUBMISSION ON 23-12-2011 IT WAS SEEN THAT ASSES SEE WAS PAID RS. 12,50 Y OPO/- MUKESHBHAI B. PATEL (HUF) DURING THE YEAR UNDER CON SIDERATION. DURING FILLING OF THE RETURN OF INCOME ASSESSEE WAS CLAIMED LOSS OF R S.69,27,948/- AGAINST THE INCOME FROM OTHER SOURCE. FURTHER ASSESSEE IN HIS L ETTER REQUESTED TO ALLOW THE ABOVE SAID LOSS AS BUSINESS ACTIVITIES. IT IS ALSO SEEN THAT FROM THE BALANCE SHEET , ASSESSEE HAD INVESTED RS.2,31,21,287/- IN SHARE OF VARIOUS COMPANY. HENCE THE ARGUMENT OF THE ASSESSEE IS NOT ACCEPTABLE. THEREFO RE, THE SAID INTEREST EXPENSES ITA NO. 2615 /AHD/2013 . A.Y. 2009-10 3 OF RS.69,27,948/- DISALLOWED U/S.57(III) OF THE INC OME TAX ACT, 1961 AND ADDED TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S 271(1)( C ) OF THE I T ACT, INITIATED SEPARATELY. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND STRONGLY OBJECTED TO THE DISALLOWANCES MADE BY THE A.O. THE LD. CIT(A) F OUND THAT THE ASSESSEE WAS HAVING TOTAL INTEREST FREE FUNDS OF RS. 1208.16 LACS AND TOTAL INTEREST FREE ADVANCES OF RS. 1174.68 LACS. THE LD. CIT(A) W AS OF THE OPINION THAT THE INTEREST FREE FUNDS AVAILABLE FOR THE ASSESSEE WAS FAR MORE IN EXCESS OF THE INVESTMENTS MADE BY THE ASSESSEE. THE LD. CIT(A) AC CORDINGLY DIRECTED THE A.O. TO DELETE THE DISALLOWANCE OF INTEREST AMOUNTI NG TO RS. 40,15 ,678/-. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN S TATED BEFORE THE LOWER AUTHORITIES. 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT THAT THE INTEREST F REE FUNDS AVAILABLE WITH THE ASSESSEE WERE IN EXCESS OF THE INVESTMENT MADE. THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF RELIANCE UTILITIES A ND POWER LTD. 313 ITR 340 HAS HELD THAT WHERE THE ASSESSEE HAS BOTH OWN F UNDS AND BORROWED FUNDS THEN THE PRESUMPTION IS THAT THE INVESTMENTS HAVE COME OUT OF OWN FUNDS. THIS RATIO WAS FOLLOWED BY THE HONBLE HIGH COURT IN THE CASE OF HDFC LTD. 366 ITTR 505. ITA NO. 2615 /AHD/2013 . A.Y. 2009-10 4 8. CONSIDERING THE FINDINGS OF THE FIRST APPELLATE AUT HORITY IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF BOMBAY , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(A). 9. APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 10 - 02- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 10 /02/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD