M/s. B.K.Commodities, Ahmedabad V. Income Tax officer, Ward-5(3)(1), Ahmedabad

ITA 2644/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2715 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 30-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER M/S. B.K. COMMODITIES, 306, GALA ARGOS, SHARDAMANDIR CROSS ROAD, NR. HARIKRUPA TOWER, AHMEDABAD - 380006 PAN: AAKFB8654M (APPELLANT) VS THE IT O , WARD - 5(3)(1) , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI /MS JAYA CHAUD HARY , SR. D . R. ASSESSEE BY: SHRI TUSHAR HEMANI, A.R. DATE OF HEARING : 18 - 02 - 2 019 DATE OF PRONOUNCEMENT : 21 - 02 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCO UNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2014 - 15 , ARI SES FROM ORDER OF THE CIT(A) - 5, AHMEDABAD DATED 01 - 11 - 2 017 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2644 / A HD/20 17 A SS ESSMENT YEAR 2014 - 15 I.T.A NO. 26 44 /AHD/20 17 A.Y. 2014 - 15 PAGE NO M/S. B.K. COMMODITIES VS. IT O 2 2. THE SOLITARY GROUND OF APPEAL OF THE ASSESS EE IS AGAINST THE DECISION OF LD. CIT(A) CONFIRMING THE ADDITION OF RS. 71 , 96 , 623/ - IN RESPECT OF DISALLOWANCE OF INTERES T PAYABLE TO PARTNERS AND OF OT HER UNSECURED LOAN BECAUSE THE SAME WAS UNPAID AS ON 31 ST MARCH, 2014. 3. THE FACT IN BRIEF IS THAT ASSES SEE HAS FILED RETURN OF INCOME ON 28 TH NOV, 2014 DECL ARING TOTAL INCOME AT RS. 82320 0/ - . SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 31 ST AUGUST, 2015. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS NOTICED THAT ASESSEE HAD DEBITED PROFIT AND LOSS A/C ON ACCOUNT OF INTEREST PAYABLE OF RS. 7 , 19 , 623/ - . THE ASSESSING OFFICER WAS OF THE VIEW THAT INTEREST PAYABLE WAS IN THE NATURE OF PROVISION ONLY, THEREFORE, HE WAS OF THE VIEW OF THE AFORESAI D AMOUNT OF INTEREST PAYABLE WAS NOT AN ALLOWABLE AS EXPENDITURE . THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMI SSED THE APPEAL OF THE ASSESSEE REITERATING THE SAME REASON AS MENTIONED BY THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT IS UNDISPUTED FACT THAT ASSESSE WAS FOLLOWING MERCANTILE SYSTEM OF ACCO UNTING DURING THE YEAR UNDER CONSIDERATION . THE ASSESSEE HAS INCURRED EXPENSES IN THE FORM OF INTEREST O N UNSECURED LOANS OBTAINED FROM PARTNERS AS WELL AS OTHER PARTIES . AS PER THE MERCANTILE SYSTEM OF ACCOUNTING INTE RE ST EXPENSES ARE TO BE DEBITED TO T HE PROFIT AND LOSS ACCOUNT IRRESPECTIVE I.T.A NO. 26 44 /AHD/20 17 A.Y. 2014 - 15 PAGE NO M/S. B.K. COMMODITIES VS. IT O 3 OF THE FACT THAT AS TO WHETHER THE SAME HAS BEEN PAID OR NOT . WE O BSER VE THAT A SSESSING OFFICER AND LD. CIT(A) HAS TAKEN A INCORRECT VIEW THAT IF UNPAID INTE RE ST IS ADDED TO THE UNSECURED LOAN SUCH INTERE ST WOULD N OT APPEAR IN THE BALANCE SHEET. WE CONSIDER T HAT THE ASSESSEE HAS SHOWN THE INTEREST AMOUNT PAYABLE TO THE P ARTNERS AND OTHER AS OUTSTANDING UNDER THE MERCANTILE SY S TE M O F ACCOUNTING AND THE ASSESSING OFFICER AND LD. CIT(A) HAS COMPLETELY TAKEN A WRONG ASSUMPTION , T HEREFORE , THE IMPUGNED ADDITION DESERVES TO BE DELETED. ACCOR DI NGLY, THE APPEAL OF THE AASSESS EE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 21 - 02 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 21 /02 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,