SURESH CHHAGANLAL SAKARIYA, MUMBAI V. ITO WD 6(3)(2), MUMBAI

ITA 3043/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9114 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 23-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Salary income; Opportunity of being heard

Judgement Text

, G , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM & SHRI SHAKTIJIT DEY, JM ITA NO.3043/MUM/2013 : ASST.YEARS 2009-2010 SHRI SURESH CHHAGANLAL SAKARIYA 802, MAHAVIR JAIN DERASAR LANE SANTACRUZ (WEST) MUMBAI 400 054. PAN : AOIPS4577A / VS. THE INCOME TAX OFFICER WARD 6(3)(2) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : --- NONE --- /RESPONDENT BY : SHRI V.VIDHYADHAR / DATE OF HEARING : 23.08.2017 / DATE OF PRONOUNCEMENT : 03.10.2017 / O R D E R PER SHAMIM YAHYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT(A) DATED 15.02.2013 AND PERTAINS TO ASSESSMENT YEAR 2009-2010. 2. THE GROUNDS OF APPEAL READ AS UNDER:- ' THE LEARNED COMMISSIONER OF INCOME TAX CONTENTIONS ARE DISPUTED BY THE APPELLANT. 1. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN TREATING THE EXPENDITURE MADE WHOLLY AND EXCLUSIVELY FOR MAKING OR EARNING SUCH INCOME AS PERSONAL EXPENSES OF THE ASSESSEE, WHEREAS, THE FACT IS OTHERWISE. 2. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISALLOWING THE ABOVE EXPENDITURE U/S 57 AND 58 UNDER THE INCOME TAX ACT AND ALSO FAILING TO DIFFERENTIATE BETWEEN THE ITA NO.3043/MUM/2013. SHRI SURESH CHHAGANLAL SAKARIYA. 2 EXPENDITURE INCURRED UNDER THE HEAD INCOME FROM OTHER SOURCES AND UNDER THE HEAD INCOME FROM BUSINESS. 3. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISALLOWING RS.963951/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISALLOWING RS.827840/- PAID AS INTEREST ON PL ACCOUNT. 5. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISALLOWING RS.394/- BEING BANK CHARGES. 6. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISALLOWING RS.42548/- BEING BANK PROCESSING PEES. 7. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISALLOWING MAINTENANCE CHARGES OF RS.63599/- PAID. 8. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISALLOWING RS.29570/- ON ACCOUNT OF OTHER INTEREST PAID. 9. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THAT THE AMOUNT BORROWED ON PL ACCOUNT FROM BANKS WAS NEVER PUT TO ANY PERSONAL USE AND DISALLOWED INTEREST PAID THEREON TREATING IT AS PERSONAL EXPENDITURE. 10. IT IS THEREFORE PRAYED THAT THE ADDITION OF RS.963951/- MADE BE DELETED. 11. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, DELETE OR ADD TO ANY OF THE GROUNDS OF THE APPEAL. 3. IN THIS CASE THE ASSESSEE IS AN INDIVIDUAL. HE HAS EARNED INCOME FROM SALARY AND HAS ADJUSTED LOSS FROM OTHER SOURCES FROM THE SAME. UPON ENQUIRY, THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS TAKEN PERSONAL LOANS AND HAS CLAIMED THE INTEREST AND OTHER CHARGES AS EXPENSES AND ADJUSTED ITA NO.3043/MUM/2013. SHRI SURESH CHHAGANLAL SAKARIYA. 3 THE SAME FROM THE INTEREST INCOME EARNED AND THEREAFTER HAS ADJUSTED THE RESULTANT LOSS FROM THE SALARY INCOME. FURTHERMORE THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS TAKEN LOANS AT HIGHER RATES FROM CERTAIN PRIVATE INDIVIDUALS AND HAS GRANTED LOAN TO AN INDIVIDUAL AT A LOWER RATE. THE ASSESSING OFFICER WAS OF THE OPINION THAT INTEREST ON PERSONAL LOANS AND THE RELATED EXPENSES AND THE DIFFERENTIAL OF INTEREST IS NOT AN ALLOWABLE EXPENSE. ACCORDINGLY HE MADE THE IMPUGNED DISALLOWANCES. 4. AGAINST THE ABOVE ORDER, ASSESSEE APPEALED BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) AFFIRMED THE ACTION OF THE ASSESSING OFFICER AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE CONTENTION OF THE APPELLANT. THE UNCONTROVERTED FACT IN THIS CASE IS THAT THE APPELLANT HAS TAKEN LOAN FROM THE BANK RANGING FROM 17% TO 19.50% AND THEREAFTER ADVANCED THESE LOANS TO HIRA RUPA CLOTHIERS PVT LTD. ON A INTEREST RATE TO 12% TO 15%. OBVIOUSLY THE INTEREST WAS CHARGED AT A LOWER RATE THAN WHAT WAS REQUIRED. THE APPELLANT'S CONTENTION THAT THE RATES OF INTEREST IS NOT DUE TO BREAK DOWN OF USA ECONOMY TAKING THE WORLD ALONG WITH IT INTO A RECESSION ARE NOT TENABLE. THE FACT THAT LOAN WAS ADVANCED FOR PERSONAL PURPOSES AND THE EXPENDITURE RELATING TO PERSONAL EXPENSES ARE NOT ALLOWABLE U/S 58. THE LD. ASSESSING OFFICER WAS, THEREFORE, CORRECT IN DISALLOWING THE SAME. THE FACT HAS BEEN CLEARLY BROUGHT OUT BY THE LD. ASSESSING OFFICER IN PARAS 6 & 7 OF HIS ORDER. THEREFORE, THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER IS ACCORDINGLY CONFIRMED. 5. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE. IT IS NOTED THAT THIS CASE HAS EARLIER ALSO BEEN FIXED FOR HEARING AND NONE ON BEHALF OF THE ASSESSEE HAS APPEARED. ACCORDINGLY, WE PROCEED TO ADJUDICATE THE ISSUES RAISED BY HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. ITA NO.3043/MUM/2013. SHRI SURESH CHHAGANLAL SAKARIYA. 4 7. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE ASSESSEE HAS TAKEN PERSONAL LOAN FROM BANKS AND HAS GRANTED LOANS TO OTHERS OUT OF THE SAME AND HAS EARNED INTEREST INCOME ALSO. ASSESSEE HAD CLAIMED THAT HE HAS TAKEN LOAN FROM THE BANKS AND HAS EARNED INTEREST BY GIVING THEM ON LOAN. THIS ASPECT OF ASSESSEES CLAIM HAS NOT AT ALL BEEN EXAMINED BY THE AUTHORITIES BELOW. WE FIND THAT WHEN ASSESSEE IS EARNING INTEREST INCOME BY MAKING ADVANCES OUT OF THE LOANS TAKEN FROM BANK, WE DO NOT FIND ANY REASON AS TO WHY THE INTEREST EXPENSE IN THIS REGARD SHALL BE DISALLOWED. IN THESE CIRCUMSTANCES, WE FIND THAT THE LEARNED CIT(A) HAS ALSO NOT APPLIED HIS MIND TO THE VARIOUS CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM. HE HAS PASSED A LACONIC ORDER WITHOUT CONSIDERING THE ELABORATE CONTENTIONS RAISED BY THE ASSESSEE. ACCORDINGLY, IN OUR CONSIDERED OPINION, THE ISSUES RAISED IN THIS APPEAL NEEDS TO BE REMITTED TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE AFRESH AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. THE ASSESSING OFFICER SHALL BEAR IN MIND OUR OBSERVATIONS AS ABOVE. 8. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 3 RD DAY OF OCTOBER, 2017. SD/- SD/- ( SHAKTIJIT DEY ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 03.10.2017. DEVDAS* ITA NO.3043/MUM/2013. SHRI SURESH CHHAGANLAL SAKARIYA. 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.