The ACIT, Central Circle-1(1), Ahmedabad V. Shri Vijaykumar D.Gupta, Ahmedabad

ITA 270/AHD/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9699 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 20-12-2016
• Assessment Year: 1996-1997
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 270/AHD/2011 (ASSESSMENT YEAR: 1996-97) A.C.I.T. CENTRAL CIRCLE 1(1), AHMEDABAD V/S VIJAYKUMAR D. GUPTA, 8 PRATIMA SOCIETY, NR. DADASAHEBS PAGLA, NABRANGPURA, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AANPG 7703R APPELLANT BY : SHRI K. MADHUSUDAN, SR. D. R. RESPONDENT BY : SHRI TUSHAR HEMANI, A.R. ( )/ ORDER DATE OF HEARING : 20-12-2016 DATE OF PRONOUNCEMENT : 21 -12-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A)-1, AHMEDABAD DATED 18.11.2010 PER TAINING TO A.Y. 1996- 97. ITA NO. 270/ AHD/2011 . A.Y. 1996-9 7 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE PENALTY OF RS. 39,74,490/- LEVIED U/S. 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 30.03.1999 MADE U/S. 143(3) OF THE ACT WHEREIN TOTA L RETURNED LOSS OF RS. 1,35,17,998/- WAS ASSESSED AT RS. 38,08,140/-. IN T HE ASSESSMENT ORDER, THE A.O. MADE, INTERALIA, DISALLOWANCE ON ACCOUNT OF IN TEREST PAID TO SHARMA FINANCE COMPANY AT RS. 83,72,800/- AND A FURTHER DI SALLOWANCE OF INTEREST OF RS. 16,28,417/- ONCE AGAIN PAID TO SHARMA FINANC E COMPANY. 4. THE QUANTUM ADDITIONS MADE BY THE A.O. TRAVELLED UP TO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 16.03.2009 UPHELD THE ASSESSMENT. 5. ASSESSEE CARRIED THE MATTER BEFORE THE HONBLE JURI SDICTIONAL HIGH COURT AND THE HONBLE HIGH COURT WAS PLEASED TO ADMIT THE TAX APPEAL BY ADMITTING FOLLOWING QUESTIONS OF LAW:- (I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE INCOME TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE INTER EST EXPENDITURE AMOUNTING TO RS. 1,74,01,007/- INCURRED BY THE APPELLANT ON THE FUNDS BORROWED FOR THE PURPOSE OF BUSINESS OF MAKING SHARE APPLICATION IS NOT BUSINESS EXPENDITURE AND THEREFORE NOT ELIGIBLE FOR DEDUCTION? (II) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE INCOME TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN NOT APPRECIATING THAT BORROWINGS HAVE ULTIMATELY BEEN USED FOR THE PURPOSE OF BUSINESS AND THEREFORE INTEREST UPON THE SAME HAS TO BE ALLOWED AS BUSINESS EXPENDITURE U/S. 36(1)(II I) OF THE ACT? ITA NO. 270/ AHD/2011 . A.Y. 1996-9 7 3 6. AND THE FINDINGS OF THE HONBLE HIGH COURT READS AS UNDER:- 7. WE HAVE HEARD BOTH THE LEARNED COUNSEL AND ALSO PERUSED THE RECORD. WE HAVE ALSO GONE THROUGH THE JUDGMENTS CITED BEFORE U S AS WELL AS THE IMPUGNED ORDER. IT IS NOT IN DISPUTE THAT THE DECISION ON WH ICH RELIANCE IS PLACED BY THE TRIBUNAL WHILE PASSING THE IMPUGNED ORDER HAS BEEN REVERSED BY THIS COURT WHILE DECIDING TAX APPEAL NO.474 OF 2008 AND ALLIED MATTE RS. THEREFORE, WE ARE OF THE OPINION THAT THE QUESTIONS POSED FOR OUR CONSIDERAT ION ARE REQUIRED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMEN T. THE JUDGMENTS RELIED UPON BY THE LEARNED COUNSEL FOR THE RESPONDE NT ARE NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. WE ARE OF THE OPINION TH AT FOR THE BUSINESS URGENCY LOAN WAS TAKEN. THEREFORE, THE EXPENSES ARE REQUIRE D TO BE ALLOWED UNDER SECTION 36(1) (III) OF THE ACT AND IN VIEW OF THE DECISION IN TAX APPEAL NO. 474 OF 2008, THE SAME IS ACCEPTED BY DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, TAX APPEAL NOS.874, 876 AND 272 TO 2274 OF 2009 AS WELL AS TAX APPEAL NOS.1485, 1486, 1488, 1489 AND 1590 OF 2010 ARE DISPOSED OF. 7. SINCE THE QUANTUM ADDITIONS ON ACCOUNT OF INTEREST STANDS DELETED BY THE AFOREMENTIONED FINDINGS OF THE HONBLE JURISDICTION AL HIGH COURT IN TAX APPEAL NO. 874 OF 2009, WE DO NOT FIND ANY MERIT IN SOFAR AS THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT IS CONCERNED. 8. SINCE THE FOUNDATION HAS BEEN REMOVED, THE SUPER ST RUCTURE MUST FALL. 9. CONSIDERING THE FACTS RESULTING INTO THE LEVY OF PE NALTY U/S. 271(1)(C) OF THE ACT IN THE LIGHT OF THE AFOREMENTIONED DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DECLINE TO INTERFERE. ITA NO. 270/ AHD/2011 . A.Y. 1996-9 7 4 10. APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 21 - 12- 20 16. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 21 /12/2016 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