VIJAYJYOT SEATS P. LTD, MUMBAI V. DCIT 13(3)(2), MUMBAI

ITA 30/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0395 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T A KHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.30/M/2017 ASSESSMENT YEAR: 2012-13 M/S. VIJAY JYOT SEATS PVT. LTD., (NOW KNOWN AS NATROYAL INDUSTRIES PVT. LTD.) PLOT 60CD, SHLOK BLDG., 2 ND FLOOR, GOVT. INDL. EST. CHARKOP, MUMBAI 400 067 PAN: AAACV1235H VS. DCIT- 13(3)(2), AAYAKAR BHAVAN, 2 ND FLOOR, M.K. ROAD, MUMBAI 400 020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI T.A. KHAN, D.R. DATE OF HEARING : 12.06.2017 DATE OF PRONOUNCEMENT : 16.06.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 21.11.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2012-13. 2. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 2 8.09.12. ON PERUSAL OF THE BALANCE SHEET NOTE 11-LONG TERM LOANS AND ADVAN CES-(II) ADVANCES RECOVERABLE IN CASH OR KIND FOR THE YEAR UNDER CONS IDERATION. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) FOUND T HAT A SUM OF RS.30,00,000/- HAS BEEN RECORDED AS SUM GIVEN AS SECURITY DEPOSIT. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE INTEREST FREE SECURITY DEPOSI T WAS GIVEN. THE ASSESSEE HAS TAKEN THE CONTENTION THAT INTEREST FREE DEPOSIT IS A TRADE ADVANCE AS FAR IT IS GIVEN FOR BUSINESS PURPOSE. THE AO WAS NOT SATISFI ED WITH THE EXPLANATION OF THE ASSESSEE. THEREFORE, HE HAS DISALLOWED THE INT EREST OF RS.3,60,000/-. ITA NO.30/M/2017 M/S. VIJAY JYOT SEATS PVT. LTD., (NOW KNOWN AS NATROYAL INDUSTRIES PVT. LTD.) 2 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE SAME. 4. ASSESSEE DID NOT RESPOND TO THE NOTICE. HAVING HEARD THE LD. D.R., I AM OF THE OPINION THAT THE LD. CIT(A) HAS CONSIDERED A ND VERIFIED THE DOCUMENT FILED ON RECORD AND AFTER CONSIDERING THE REPLY THE AO HAS DISALLOWED THE INTEREST EXPENDITURE OF RS.3,60,000/- AND LD. CIT(A ), CONSIDERING THE SAME, WAS OF A VIEW THAT THE INTEREST BEARING FUND HAS BE EN DIVERTED TOWARDS INTEREST FREE DEPOSIT WHICH WAS NOT REQUIRED. THEREFORE, HE CONFIRMED THE ADDITION BY OBSERVING AS UNDER: 4.3. I HAVE CONSIDERED THE ISSUE UNDER APPEAL, CAR EFULLY. I FIND THAT THERE IS NO VALID AND CONVINCING REASON FOR TAKING BUNGALOW NO. 7 FOR RENT WHEREAS FACTS ON RECORD PROVE THAT THIS BUNGALOW WAS UNDER OWNERSHIP OF RELATED PERSONS OF THE COMPANY. THE WIFE AND SON OF ONE OF THE DIRECTORS A RE THE CO-OWNERS HENCE DIRECTOR CAN LIVE IN THIS BUNGALOW WITHOUT GIVING A NY RENT AS SAME IS FAMILY PROPERTY. ASSESSING OFFICER HAS VERY CLEARLY MENTIO NED ALL THESE FACTS IN THE ASSESSMENT ORDER. IT IS VERY EVIDENT FROM THE RECOR D THAT ASSESSEE HAS OBTAINED SECURED LOAN OF RS,7,34,18,929/- AND UNSECURED LOAN OF RS.4,45,81,143/- AND HAS DEBITED INTEREST EXPENDITURE OF RS.1,11,18,973/ -. OBVIOUSLY, INTEREST BEARING FUNDS HAS BEEN DIVERTED TOWARDS IN TEREST FREE DEPOSITS WHICH IS NOT REQUIRED AT ALL. THE LEAVE AND LICENSE AGREEMENT DATED 10.09.1996 IS SELF SERVING DOCUMENTS CREATED BY THE RELATED PE RSONS. THIS BUNGALOW NO.7 OF DAKSHINA MURTHY COOPERATIVE HSG. SOCIETY, PLOT NO.1 5, J.V.P.D. SCHEME, MUMBAI IS OWNED BY MOTASHA FAMILY NAMELY MRS. TARABEN MOTA SHA, MRS. ANJANA D. MOTASHA, MRS. BHAVNA MUKESH MOTASHA AND MRS. DEEPTI J. MOTASHA, MR. JAYESH MOTASHA IS THE HUSBAND OF DEEPTI MOTASHA. HE IS SO NE OF TARABEN A. MOTASHA, HENCE IT IS VERY VISIBLE THAT THIS BUNGALOW BELONGS TO WIFE AND MOTHER, HENCE IT CANNOT BE SAID THAT IN NORMAL COURSE MR. JAYESH MOT ASHA CANNOT ENJOY THIS PROPERTY AND CANNOT LIVE IN IT WITHOUT PAYING ANY R ENT THROUGH ITS COMPANY. THEREFORE, I FIND THAT FACTUAL NARRATION MADE BY AS SESSING OFFICER IS CORRECT AND THERE IS A 'MAKE, BELIEVE STORY' WHICH HAS BEEN DIS CARDED BY THE ASSESSING OFFICER. IT IS VERY EVIDENT THAT INTEREST BEARING FUND HAS B EEN DIVERTED TOWARDS INTEREST FREE DEPOSITS FOR NO VISIBLE REASON OR FOR ANY COMMERCIA L BENEFIT, THEREFORE, THE FINDING OF THE ASSESSING OFFICER IS APPROVED AND DISALLOWAN CE OF INTEREST EXPENDITURE OF RS.3,60,000/- OUT OF TOTAL INTEREST EXPENDITURE OF RS.1,11,18,973/- CORRESPONDING TO SECURITY DEPOSIT OF RS.30,00,000/- IS SUSTAINED. 10. I AGREE WITH THE VIEW OF MY PREDECESSOR IN THE APPELLATE ORDER FOR AY 2010- 11. ACCORDINGLY THE DISALLOWANCE OF RS 360,000/- (1 2% PER ANNUM ON RS.30,00,000/-) IS UPHELD AND GROUND OF APPEAL IS D ISMISSED. ITA NO.30/M/2017 M/S. VIJAY JYOT SEATS PVT. LTD., (NOW KNOWN AS NATROYAL INDUSTRIES PVT. LTD.) 3 5. DURING THE COURSE OF HEARING, THE ASSESSEE DID N OT PRODUCE ANY EVIDENCE. THEREFORE, I HAVE NO ALTERNATIVE EXCEPT TO ENDORSE THE ACTION OF LD. CIT(A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.06.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 16.06.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.