SHRI SAKET KUMAR RUNGTA, DURG V. THE INCOME TAX OFFICER, WARD 2(2), , BHILAI

ITA 3/RPR/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3204 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 09-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT M JAIN
• Keywords: Rule of consistency
• Section: 143(3)

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 03/RPR/2018 Ǔनधा[रण वष[ / Assessment Year : 2013-14 Shri Saket Kumar Rungta, 1, Rungta Bhawan, Ganj Para, Durg (C.G.)-491 001 PAN : AHQPR0955C .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-2(2), Bhilai (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri Amit M Jain, CA Revenue by : Shri G.N Singh, DR स ु नवाई कȧ तारȣख / Date of Hearing : 10.06.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 26.07.2022 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals)-II, Raipur dated 13.10.2017, which in turn arises from the order passed by 2 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 the A.O under Sec. 143(3) of the Income-Tax Act, 1961 (for short ‘the Act’) dated 03.03.2016 for assessment year 2013-14. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. On the facts and in the circumstances o the case, the learned CIT(A) has erred in confirming the disallowance made by the A.O of Rs.20,08,681/- on account of interest expenses claimed u/s.57 of the Income Tax Act. The disallowance made by the AO and sustained by the Ld. CIT(A) is unjustified, unwarranted and uncalled for. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the assessed income at Rs.20,08,681/- as assessed by the A.O instead of Rs.15,03,666/- (before claiming deduction u/s.57 of Rs.20,08,681/-). The said assessed income is not correct and is unjustified, unwarranted and uncalled for. 3. That the appellant reserves the right to add, amend or modify any grounds of appeal at the time of hearing.” 2. Succinctly stated, the assessee who is a promoter director of GDR Rungta group of institutions had filed his return of income for AY 2013-14 on 28.03.2013, declaring an income of Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of assessment proceedings, it was observed by the A.O that the assessee had as against his interest 3 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 income of Rs.1,72,482/- claimed deduction of interest paid on unsecured loan of Rs.20,08,681/- u/s.57(iii) of the Act. Accordingly, the assessee on the basis of his aforesaid claim for deduction had in his return of income shown interest income at (-) Rs.18,36,199/-. As the A.O was not persuaded to subscribe to the aforesaid claim of deduction of the assessee u/s.57(iii) of the Act, therefore, he disallowed the same and vide his order passed u/s.143(3) dated 03.03.2016 determined his income at Rs.20,08,681/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter before us. 6. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial 4 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 pronouncements that have been pressed into service by the ld. AR in order to drive home his contentions. 7. Before us, it is the claim of the Ld. Authorized Representative (for short ‘AR’) for the assessee that both the lower authorities on the basis of misconceived facts had drawn adverse inferences as regards the entitlement of the assessee towards deduction of interest paid on borrowed funds u/s.57(iii) of the Act. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that as the interest bearing amount of Rs.3.60 crore that was raised by the assessee from M/s. Dynasty Tradelink Pvt. Ltd. was to the last of the paisa advanced as interest bearing loans/deposits to GDR Educational Society, therefore, the interest expenditure so incurred on the aforesaid interest bearing loans was rightly claimed by the assessee as a deduction u/s.57(iii) of the Act. In order to buttress his aforesaid claim the Ld. AR had drawn our attention to a “chart” wherein complete details of the interest-bearing loans raised and advanced by the assessee during the year under consideration were reflected. 5 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 Apart from that, it was submitted by the Ld. AR that certain interest bearing funds which were raised by the assessee from Smt. Rajni Rungta were advanced on interest to Shri R.S. Richpal Rungta. On the basis of his aforesaid contentions, it was submitted by the Ld. AR that as the assessee’s claim for deduction of the interest paid to the aforementioned parties, viz. (i) M/s. Dynansty Tradelink Pvt. Ltd. : Rs.18,76,803/-; and (ii) Smt. Rajni Rungta : Rs.13,18,78/- was in order, therefore, both the lower authorities had erred in dislodging the same. 8. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 9. After having given a thoughtful consideration to the issue in hand in the backdrop of the contentions advanced by the Ld. Authorised Representatives for both the parties, we find that the controversy involved in the present appeal lies in a narrow compass, i.e, sustainability of the disallowance of the assessee’s claim for deduction under Sec. 57(iii) of the Act of the interest paid on the interest bearing loans raised from two persons, viz. 6 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 (i) M/s. Dynansty Tradelink Pvt. Ltd.; and (ii) Smt. Rajni Rungta. We shall hereinafter deal with the claim of the ld. AR as regards the maintainability of the assessee’s claim for deduction of the interest paid on the respective interest bearing loans raised from the aforesaid parties, as under : A. Dynasty Tradelink Pvt. Ltd.: Rs.3.60 crores :- 10. On a perusal of the details filed by the Ld. AR before us, we find that the assessee over the period, i.e., 01.09.2012 to 19.11.2012 had raised interest bearing funds of Rs.3.60 crores from M/s. Dynasty Tradelink Pvt. Ltd., which, during the said period were advanced by him on interest to GDR Educational Society. As is discernible from the assessee’s bank account No.14352041000406 with OBC bank, Branch: Bhilai, the interest bearing amounts raised by the assessee from M/s Dynasty Tradelink Pvt. Ltd. were on the very same date advanced to GDR Educational Society. On the basis of the aforesaid facts, we are of the considered view that as the interest bearing amounts raised by the assessee from M/s. Dynasty Tradelink Pvt. Ltd. had been 7 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 wholly and exclusively advanced on interest to GDR Educational Society, therefore, the interest expenditure so incurred on the interest bearing funds was rightly claimed by the assessee as a deduction u/s. 57(iii) of the Act. Our aforesaid view is fortified by the judgment of the Hon’ble Apex Court in the case of Commissioner of Income Tax Vs. Rajendra Prasad Moody (1978) 115 ITR 519 (SC) and also, the judgment of the Hon’ble High Court of Punjab and Haryana High in the case of Commissioner of Income Tax Vs. Pankaj Munjal Family Trust, 326 ITR 286 (P & H). We, thus, in terms of our aforesaid observations, taking cognizance of the fact that an inextricable nexus between the interest bearing funds raised by the assessee from M/s Dynasty Tradelink Pvt. Ltd. and the interest bearing amounts given to GDR Educational Society is proved to the hilt, therefore, set-aside the order of the CIT(Appeals) and vacate the disallowance of the assessee’s claim for deduction under Sec. 57(iii) of the interest amounting to Rs. 18,76,803/- paid to M/s Dynasty Tradelink Pvt. Ltd. 8 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 B) Rajni Rungta : Rs.1,31,878/-:- 11. It is the claim of the Ld. AR that as the assessee had raised interest bearing amounts from Smt. Rajni Rungta, which, thereafter, were advanced on interest to Shri R.S. Richpal Rungta, therefore, the interest expenditure incurred on the aforesaid interest bearing funds was allowable as a deduction u/s. 57(iii) of the Act. 12. Having given a thoughtful consideration to the issue in hand, we find substance in the claim of the ld. AR as regards the allowability of the assessee’s claim for deduction of the interest expenditure on the old loan of Smt. Rajani Rungta which was advanced as an interest bearing loan/advance for earning of interest income. Our aforesaid conviction is supported by the fact that the assessee’s claim for deduction of interest paid on the loan raised from the aforesaid person, viz. Smt. Rajani Rungta, as was raised by him in his return of income for the immediately preceding year, i.e AY 2012-13, had not been dislodged by the department, Page 11-12 of APB. Nothing to the contrary has been 9 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 brought to our notice by the ld. DR to rebut the aforesaid factual position as had been canvassed by the ld. AR before us. Considering the aforesaid facts, as the fact situation qua the issue in hand during the year under consideration remains the same as was there in the immediately preceding year, therefore, going by the principle of consistency we find no reason to take a different view, and thus, allow the assessee’s claim for deduction of interest of Rs. 1,31,878/- on the aforesaid loan. Thus, the Grounds of appeal Nos.1 & 2 raised by the assessee are allowed in terms of our aforesaid observations. 13. Ground of appeal No.3 being general in nature is dismissed as not pressed. 14. In the result, appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- RATHOD KAMLESH JAYANTBHAI RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 26 th July, 2022 *SB 10 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-II, Raipur (C.G) 4. The Pr. CIT-II, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 11 Shri Saket Kumar Rungta Vs. ITO, Ward 2(2) ITA No. 03/RPR/2018 Date 1 Draft dictated on 10.06.2022 Sr.PS/PS 2 Draft placed before author 20.06.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order