M/s Visa International Ltd., Kolkata V. DCIT, CC-1, KOLKATA, Kolkata

ITA 291/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1536 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 23-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJULA
• Assessee Lawyers: SHIKHA AGARWAL
• Keywords: Business income; Depreciation; Business expenditure
• Section: 14A; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA [BEFORE HONBLE SHRI J. SUDHAKAR REDDY, AM & HONBLE SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 291/KOL/2015 ASSESSMENT YEAR: 2010-11 M/S. VISA INTERNATIONAL LTD.............................. APPELLANT VISA HOUSE, 8/10, ALIPORE ROAD, KOLKATA 700027 [PAN: AAACV8649P] DCIT, CC-1 .RESPONDENT AAYAKAR BHAWAN, PURVA, 110, SHANTI PALLY, KOLKATA - 700107 APPEARANCES BY: MS. SHIKHA AGARWAL, AR APPEARING ON BEHALF OF THE ASSESSEE. SHRI G. MALLIKARJULA, CIT DR APPEARING ON BEHALF OF THE ASSESSEE. DATE OF CONCLUDING THE HEARING : AUGUST 01, 2017 DATE OF PRONOUNCING THE ORDER SEPTEMBER 13, 2017 ORDER PER J. SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 21, KOLKATA DATED 16.01.2015 FOR THE ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS: 1.THAT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 86,59,523/-, HOLDING THE RENT RECEIVED FROM PROPERTIES LET OUT TO SISTER CONCERNS TO BE INCOME FROM HOUSE PROPERTY IN PLACE OF BUSINESS INCOME. THE ADDITION UNJUSTIFIED AND NEEDS TO BE DELETED. 2. THAT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 68,34,866/- ON ACCOUNT OF DEPRECIATION CLAIMED ON PROPERTIES LET OUT TO SISTER CONCERNS. THE 2 I.T.A. NO. 291/KOL/2015 ASSESSMENT YEAR: 2010-11 M/S. VISA INTERNATIONAL LTD. DEPRECIATION IS AN ALLOWABLE EXPENDITURE UNDER SECTION 32 OF THE ACT AND THE SAME NEEDS TO BE ALLOWED. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF A SUM OF RS. 3,95,505/-, BEING THE EXPENDITURE INCURRED ON REPAIRING OF THE BUILDING LET OUT TO SISTER CONCERNS, HOLDING THE RENTAL INCOME TO BE INCOME FROM HOUSE PROPERTY IN PLACE OF BUSINESS EXPENSE. THE RENTAL INCOME IS BUSINESS INCOME AND THEREFORE, THE COST OF REPAIRING NEEDS TO BE ALLOWED AS BUSINESS EXPENDITURE. 4. THAT THE LD. CIT(A) ERRED IN MAKING ADDITION OF A SUM OF RS. 7,58,327/- UNDER SECTION 14A READ WITH RULE 8D(2)(II). THE ADDITION IS UNJUSTIFIED AND NEED TO BE DELETED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE, MS. SHIKHA AGARWAL DID NOT PRESS GROUND NO 1 TO 3. HENCE GROUND NO. 1 TO 3 ARE DISMISSED AS NOT PRESSED. THIS LEAVES US ONLY ONE GROUND, I.E. GROUND NO 4. 3. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE AO HAS DISALLOWED AN AMOUNT OF RS. 25,68,759/- BY INVOKING RULE 8D R.W.S. 14A OF THE INCOME TAX ACT, 1961 (THE ACT). THE FIRST APPELLATE AUTHORITY DID NOT CONSIDER THE PLEA OF THE ASSESSEE THAT IT WAS HAVING INTEREST FREE FUNDS BY WAY OF SHARE CAPITAL ETC. AND THAT THE INVESTMENT HAS BEEN DONE FROM SUCH INTEREST FREE FUNDS AND HENCE DISALLOWANCE COULD BE MADE UNDER RULE 8D(II) OF THE ACT ON ACCOUNT OF INTEREST. ON THE FINDING OF THE LD. CIT (A) THAT THE BURDEN LIES ON THE ASSESSEE TO PROVE THAT NO BORROWED FUNDS WERE UTILISED FOR MAKING 3 I.T.A. NO. 291/KOL/2015 ASSESSMENT YEAR: 2010-11 M/S. VISA INTERNATIONAL LTD. INVESTMENTS, THE LEARNED COUNSEL, MS. SIKHA AGARWAL SUBMITTED THAT THIS DECISION OF THE LD. CIT (A) IS AGAINST THE PROPOSITIONS OF LAW LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES POWER LTD. 313 ITR 340 (BOM) AND 224 ITR 627 (SC) AND 134 ITR 219 (CAL) AND CIT VS HDFC BANK LTD. 366 ITR 505 (BOM). IN THESE JUDGMENTS THE PROPOSITION OF LAW LAID DOWN IS THAT, WHEN THEY ARE BOTH INTEREST FREE FUNDS AND INTEREST BEARING FUNDS, THE PRESUMPTION IS THAT, INTEREST FREE FUNDS WERE UTILISED FOR INTEREST FREE INVESTMENTS / ADVANCES. IT IS FOR THE REVENUE TO DEMONSTRATE THAT THIS PRESUMPTION IS FACTUALLY INCORRECT. WE AGREE WITH THESE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE PRESUMPTION IS NOT REBUTTED BY REVENUE. HENCE THE DISALLOWANCE IS BAD IN LAW. 4. MOREOVER, WE FIND FROM THE ORDER OF THE ASSESSING OFFICER THAT THE DIVIDEND INCOME EARNED BY THE ASSESSEE IS ONLY RS. 1,33,397/-. THE DISALLOWANCE CANNOT EXCEED THE DIVIDEND INCOME AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS PVT. LTD. VS CIT IN ITA NO. 117/2015 JUDGMENT DATED 25.02.2015. 5. AS THE ASSESSING OFFICER HAS NOT APPLIED THE PROPOSITIONS OF LAW LAID DOWN BY THE VARIOUS HIGH COURTS AS DISCUSSED, WE SET ASIDE THIS CASE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 4 I.T.A. NO. 291/KOL/2015 ASSESSMENT YEAR: 2010-11 M/S. VISA INTERNATIONAL LTD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH SEPTEMBER, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13/09/2017 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. M/S. VISA INTERNATIONAL LTD., VISA HOUSE, KOLKATA - 700027 2. DCIT, CC 1, KOLKATA 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA