JAYDEEP DEVJI PALANI, MUMBAI V. ITO 20(1)(3), MUMBAI

ITA 3086/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0314 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GORADIA
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Salary income

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -JBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./3086/MUM/2014, /ASSESSMENT YEAR: 2009-10 ./I.T.A./7171/MUM/2014, /ASSESSMENT YEAR: 2010-11 SHRI JAYDEEP DEVJI PALANI 207, NIMBUS TRADE CENTRE OPP. MALAD LINK ROAD, ANDHERI (W) MUMBAI-400 053. PAN:AADPP 5318 H VS. INCOME TAX OFFICER-20)1)(3) ROOM NO.607, 6TH FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI-400 012. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: MS. ARJU GORADIA ASSESSEE BY: SHRI JITENDRA SINGH / DATE OF HEARING: 24.05.2017 / DATE OF PRONOUNCEMENT: 16.08.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDERS,DATED 28.03.2014 & 01.10.201 3,OF THE CIT(A)-31, MUMBAI THE ASSESSEE HAS FILED THE ABOVE APPEALS.ASSESSEE,AN IN DIVIDUAL,DERIVES INCOME FROM SALARY, HOUSE PROPERTY AND INTEREST ON DEPOSITS ETC..DETAI LS OF FILING OF DATE OF RETURNS OF INCOME, RETURNED INCOMES,ASSESSED INCOMES, ETC., CAN BE SUM MARIZED AS UNDER :- A.Y. ROI FILED ON RETURNED INCOME ASSESSMENT DT. AS SESSED INCOME 2009-10 30.09.2009 RS.1,72,760/- 21.12.2011 RS.28.4 9 LAKHS 2010-11 15.10.2010 RS.5,57,210/- 13.12.2012 RS.21.3 8 LAKHS ITA/3086/MUM/2014-AY.2009-10: 2. FIRST EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWA NCE OF INTEREST EXPENDITURE ON SECURED LOANS AMOUNTING TO RS.14.46 LAKHS.DURING THE ASSESS MENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD AVAILED SECURED LOANS OF RS.44.75 LAKH S AND UNSECURED LOANS TO THE TUNE OF RS.35.27 LAKHS.HE DIRECTED THE ASSESSEE TO DEMONSTR ATE THAT THE LOANS WERE TAKEN FOR BUSINESS PURPOSES AND TO EXPLAIN AS TO WHY THE INTEREST EXPE NDITURE OF RS.14.46 LAKHS SHOULD NOT BE DISALLOWED.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,THE AO CONCLUDED THAT THE ASSESSEE HAD NOT ESTABLISHED THAT THE BORROWED FUND S WERE UTILIZED FOR BUSINESS PURPOSES. ACCORDINGLY,HE DISALLOWED THE AMOUNTS CLAIMED ON AC COUNT OF INTEREST PAID ON SECURED AS WELL AS UNSECURED LOANS. 3086&7171/M/14 (JAYDEEP PALANI) 2 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) AND MADE SUBMISSIONS.AFTER CONSIDERING THE ASSESSMENT ORDER AND SUBMISSION OF THE ASSESSEE,THE FAA HELD THAT AO HAD TAKEN INTO ACCOUNT ONLY THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S. NIHAR TRADING CO.,WHEREIN THERE WAS A DEBIT BALANCE OF RS.64.03 LAKHS,THAT THE INDIVIDUAL CAPIT AL ACCOUNT FOR THE YEAR ENDED ON 31/3/2009 REFLECTED THE CREDIT BALANCE OF RS.1.91 CRORES,THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS AT HIS DISPOSAL, THAT THE ASSESSEE HAD FAILED TO ESTABLISH THAT INTEREST PAID ON SECURED AND UNSECURED LOANS WAS FOR BUSINESS PURPOSES, THAT IT HAD ALSO F AILED TO FURNISH DETAILS TO SUBSTANTIATE THE NEXUS OF INTEREST PAYMENT AND BUSINESS PURPOSES.FIN ALLY,THE FAA UPHELD THE DISALLOWANCE OF RS.16.25 LAKHS(RS.14.46 LAKHS FOR SECURED LOANS+RS. 1.79 LAKHS FOR UNSECURED LOANS). 4. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTAIVE(AR),CONTENDED THAT THE ASSESSEE HAD NOT BORROWED ANY FRESH FUND DURING THE YEAR,THAT THE BORROWALS WERE MADE DURING THE EARLIER YEARS,THAT THE INTEREST PAID ON SUCH BORROWALS WAS ALLOWED BY THE AO IN THE RESPECTIVE AY.S INCLUDING THE PREVIOUS AY.THAT MON EY WAS ADVANCED FOR BUSINESS PURPOSES TO THE SISTER CONCERN.HE REFERRED TO THE ORDER OF T HE TRIBUNAL DATED 27/3/2006 (ITA/3250/ MUM/2005-AY 2001-02)PASSED IN ASSESSEES OWN CASE.T HE DEPARTMENTAL REPRESENTATIVE (DR)ARGUED THAT THE ASSESSEE HAD NOT PROVED NEXUS B ETWEEN THE INTEREST PAYMENT AND BUSINESS PURPOSES AND SUPPORTED THE ORDER OF THE FA A. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ASSESSEE HAD CLAIMED INTEREST EXPENDITURE OF RS.1 4,46,255/- UNDER THE HEAD INTEREST PAID ON SECURED LOAN, THAT THE AO DISALLOWED THE SAID EXPEN DITURE INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT, THAT HE HELD THAT THE ASSESS EE HAD NOT DEMONSTRATED THE RELATION BETWEEN THE INTEREST PAYMENT AND THE BUSINESS ACTIVITY CARR IED OUT BY HIM.WE FIND THAT ASSESSEE HAD NOT BORROWED ANY FUND DURING THE YEAR UNDER APPEAL. THE ANNEXURE I, PART B TO FORM NO.3CD (PG-17 OF THE PB) CLEARLY PROVES THAT THE LOANS WER E OLD ONE AND WERE BORROWED IN THE EARLIER YEARS. THE AO HAS NOT BROUGHT ON RECORD THE FACTS A ND CIRCUMSTANCES THAT WERE DIFFERENT FROM THE FACTS AND CIRCUMSTANCES OF THE EARLIER YEARS,WH EREIN INTEREST EXPENDITURE FOR THE SAME LOANS WERE ALLOWED.WE FIND THAT THE MONEY WAS ADVAN CED TO SISTER CONCERN (PG-26 OF THE PB). BOTH THESE FACTS WERE NOT CONTROVERTED BY THE DR.T HE ASSESSEE HAD SUFFICIENT OWN FUNDS TO ADVANCE THE LOANS EVEN IF SAME WERE TAKEN FOR THE Y EAR UNDER CONSIDERATION. IN THE CASE OF RELIANCE UTILITIES (313ITR340), THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT IF AN ASSESSEE 3086&7171/M/14 (JAYDEEP PALANI) 3 OWNS SUFFICIENT FUNDS THE PRESUMPTION WOULD BE THAT LOANS WERE GIVEN OUT OF THE NON INTEREST BEARING FUNDS.CONSIDERING THE ABOVE,WE ARE OF THE O PINION THAT ORDER PASSED BY THE FAA CANNOT BE ENDORSED,SPECIALLY WHEN SHE HERSELF HAS G IVEN A FINDING OF FACT THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS AT HIS DISPOSAL.SO,REVERSI NG THE ORDER OF THE FAA,WE DECIDE FIRST EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSE E. 6. SECOND GROUND OF APPEAL IS ABOUT INTEREST PAID ON UNSECURED LOANS AMOUNTING TO RS.1.79 LAKHS.FOLLOWING OUR ORDER FOR SECURED LOANS,WE HOLD THAT FAA WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE. ITA/7171/MUM/2014-AY.2010-11) : 7. THE ISSUE FOR THE YEAR UNDER CONSIDERATION ARE IDEN TICAL TO GROUNDS OF THE EARLIER YEAR EXCEPT FOR THE AMOUNTS INVOLVED.THE AO HAD DISALLOW ED INTEREST EXPENDITURE OF RS.10.03 LAKHS AND RS.1.68 LAKHS UNDER THE HEAD SECURED LOAN INTEREST AND UNSECURED LOAN INTEREST. FOLLOWING OUR ORDER FOR THE EARLIER AY WE DECIDE BO TH THE GROUNDS IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEALS FILED BY ASSESSEE FOR AY.S 20 09-10 AND 2010-11 STAND ALLOWED. . . 2009-10 2010-11 . ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH ,AUGUST, 2017. , 2017 SD/- SD/ - ( / RAM LAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED :16.08 .2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.