The ACIT, Circle-8, Ahmedabad V. Shri Atul Bansilal Choksi, Ahmedabad

ITA 3089/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89276 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ ITA NO. 3089/AHD/2011 % ) *)/ ASSESSMENT YEAR: 2008-09 THE ACIT, CIR.8 AHMEDABAD. VS SHRI ATUL BANSILAL CHOKSHI A-3/4, DEVPRAYAG APARTMENT OPP: WORLD BUSINESS HOUSE AMBAWADI AHMEDABAD. PAN: ACHPC 0148 G +, / (APPELLANT) -. +, / (RESPONDENT) REVENUE BY : SHRI ROOPCHAND, SR.DR ASSESSEE(S) BY : NONE / DATE OF HEARING : 27/04/2015 / DATE OF PRONOUNCEMENT: 29 /04/2015 // O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER O F INCOME-TAX (A) XIV, AHMEDABAD DATED 12.9.2011. 2. SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IS TH AT THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF INTEREST E XPENSES U/S.57 OF THE ACT, TO THE EXTENT OF RS.4,90,548/- AND ALLOWING RE LIEF OF RS.24,49,615. 3. BRIEF FACTS, AS DISCUSSED BY THE AO ARE THAT THE ASSESSEE HAD SHOWN INTEREST INCOME ON N.R.O. FDR OF RS.36,82,696 /-. THE ASSESSEE CLAIMED DEDUCTION OF INTEREST OF RS.29,29,091/- THE RE FROM. ON A QUERY ITA NO.3089/AHD/2011 2 BY THE AO, IT WAS SUBMITTED BY THE ASSESSEE THAT TH E ASSESSEE HAS PAID INTEREST ON SBS OD A/C. RS.4,79,476/-, INTEREST OF DEMAND LOAN A/C. SBS OF RS.19,64,038/- AND INTEREST ON DEMAND LOAN A /C. WITH DENA BANK OF RS.4,85,577/-, AGGREGATING TO RS.29,29,091/ -. IT WAS EXPLAINED THAT THE FUNDS BORROWED WERE UTILIZED FOR GIVING AS ADVANCE AND ASSESSEE EARNED INTEREST INCOME THERE FROM. THE REFORE, THE INTEREST EXPENDITURE, WHICH WAS INCURRED FOR EARNING OF INTE REST INCOME, WAS ALLOWABLE DEDUCTION UNDER SECTION 57 OF THE ACT. T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE, ON THE GROUND THAT THE AMOUNT PAID BY THE ASSESSEE AS INTEREST ON LOAN THAT HE TOOK FROM THE BANK DID NOT REDUCE HIS INCOME BY WAY OF INTEREST ON FIXED DEPOS ITS PLACED BY HIM IN THE BANK. 4. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS PLACED FIXED DEPOSITS OF RS.72,41,345/- WITH THE DENA BANK AND EARNED INTEREST OF RS.6,16,190/-. THE ASSESSEE TOOK LOAN OF RS.66,16,396/- BY PLEDGING FDRS., AND INCURRED INTEREST EXPENDITURE O F RS.4,85,577/- ON THIS LOAN. THE AMOUNT BORROWED WAS GIVEN TO YOGES HWAR HEALTHCARE LTD. AS AN INTEREST BEARING LOAN, ON WHICH THE ASSE SSEE EARNED INTEREST OF RS.4,85,567/-. THEREFORE, THERE WAS A DIRECT NE XUS IN EARNING THE INTEREST INCOME OF RS.4,85,567/- FROM YOGESHWAR HEA LTHCARE LTD. AND INTEREST EXPENDITURE OF RS.4,85,577/- ON LOAN TAKEN FROM DENA BANK, AND HELD THAT THE DEDUCTION OF RS.5,85,577/- WAS AL LOWABLE TO THE ASSESSEE. 5. SIMILARLY, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS PLACED FIXED DEPOSITS OF RS.3,99,50,000/- WITH STATE BANK OF SAU RASHTRA AND EARNED INTEREST OF RS.30,66,506/-. THE ASSESSEE TOOK A LO AN OF RS.3,13,35,265/- BY PLEDGING THE FDRS AND INCURRED AN INTEREST EXPENDITURE OF RS.19,64,038/- ON THIS LOAN. THE MO NEY BORROWED WAS GIVEN TO YOGESHWAR HEALTHCARE LTD. AS AN INTEREST B EARING LOAN ON WHICH ITA NO.3089/AHD/2011 3 THE ASSESSEE EARNED INTEREST OF RS.19,56,148/-. T HEREFORE, THERE WAS A DIRECT NEXUS IN EARNING INTEREST INCOME OF RS.19, 56,148/- FROM YOGESHWAR HEALTHCARE LTD. AND INTEREST EXPENDITURE OF RS.19,64,038/- ON LOAN TAKEN FROM SBS. THEREFORE, THE CIT(A) HELD THAT DEDUCTION OF RS.19,64,038/- WAS ALLOWABLE TO THE ASSESSEE. FURT HER, THE CIT(A) HELD THAT THE ASSESSEE HAD ALSO TAKEN OVERDRAFT FACILITY FROM THE BANK BY PLEDGING THE REMAINING FIXED DEPOSIT AMOUNT, ON WHI CH IT HAD PAID INTEREST OF RS.4,79,476/- ON THIS OVER DRAFT. BORR OWED MONEY WAS UTILIZED FOR INTERIOR AND DECORATION AND FURNITURE AND FITTINGS AT DEV PARIMAL HOSPITAL, BUT NO INTEREST HAS BEEN EARNED F ROM THIS BORROWED MONEY. THEREFORE, HE HELD THAT NO DEDUCTION UNDER SECTION 57 SHALL BE ALLOWED TO THE ASSESSEE, AS THERE WAS NO NEXUS OF E ARNING OF INTEREST WITH THE INTEREST EXPENDITURE. IN THE ABOVE CIRC UMSTANCES, THE CIT(A) ALLOWED DEDUCTION FOR INTEREST EXPENDITURE OF RS.4, 85,577/- AND RS.19,64,038/- TOTALING TO RS.24,49,615/-, OUT OF T OTAL DISALLOWANCE MADE BY THE AO OF RS.24,49,615/-. 7. THE DR RELIED ON THE ORDER OF THE AO. 8. NOTICE OF HEARING WAS SENT TO THE RESPONDENT-ASS ESSEE FROM THE DEPARTMENTAL REPRESENTATIVE. THE DR HAS FILED A LE TTER DATED 16.3.2015 RECEIVED FROM DY.COMMISSIONER OF INCOME-TAX, CIR.4( 1)(1), AHMEDABAD WHO HAS STATED THAT THE NOTICE OF HEARING FIXED ON 27.4.2015 WAS SERVED ON THE ASSESSEE ON 1.4.2015, AND COPY OF THE SAME IS PLACED ON RECORD. WHEN THE CASE WAS CALLED FOR HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE, AND NEITHER ANY ADJOURNMENT PETITI ON WAS FILED. THEREFORE, THE APPEAL WAS HEARD EX PARTE QUA THE RESPONDENT-ASSESSEE, AND DISPOSED OF CONSIDERING THE SUBMISSIONS OF THE DR AND THE MATERIAL AVAILABLE ON RECORD. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, ITA NO.3089/AHD/2011 4 THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE IN THE RETURN OF INCOME HAD SHOWN THE INTEREST INCOME OF RS.36,82,69 6/- EARNED FROM N.R.O. FDR WITH STATE BANK OF SAURASHTRA AND DENA B ANK. THE ASSESSEE CLAIMED DEDUCTION FOR INTEREST EXPENDITURE OF RS.29,40,163/- AND THE SAME WAS DISALLOWED BY THE AO ON THE GROUND THAT THE AMOUNT PAID BY THE ASSESSEE AS INTEREST ON LOAN THAT HE TO OK FROM THE BANK DID NOT REDUCE HIS INCOME BY WAY OF INTEREST ON THE FDR S PLACED BY HIM IN THE BANK. 10. ON APPEAL, THE CIT(A) ALLOWED DEDUCTION FOR INT EREST EXPENDITURE OF RS,24,49,615/- BY OBSERVING THAT THE LOAN OBTAIN ED FROM THE DENA BANK OF RS.66,16,396/- BY PLEDGING FDRS. OF RS.72,4 1,345/- AND OBTAINED LOAN FROM SBS OF RS.3,13,35,265/- BY PLEDG ING THE FDRS. OF RS.3,99,50,000/- WAS ADVANCED AS INTEREST BEARING L OAN TO YOGESHWAR HEALTHCARE LTD. ON THE LOAN, SO OBTAINED BY THE A SSESSEE, THE ASSESSEE INCURRED INTEREST EXPENDITURE OF RS.4,85,5 77/- TO DENA BANK AND RS.19,64,038/- TO STATE BANK OF SAURASHTRA. AG AINST THIS INTEREST EXPENDITURE, THE ASSESSEE EARNED INTEREST INCOME OF RS.4,85,577/- AND RS.19,56,148/- FROM YOGESHWAR HEALTHCARE LTD. THE CIT(A) HAS OBSERVED THAT THE INTEREST EXPENDITURE OF RS.4,85,5 77/- AND RS.19,64,038/- WAS INCURRED FOR EARNING INTEREST IN COME FROM YOGESHWAR HEALTHCARE LTD. OF RS.4,85,567/- AND RS.1 9,56,148/-. SINCE, THERE WAS A DIRECT NEXUS BETWEEN THE EARNING OF INT EREST INCOME AND INCURRING OF INTEREST EXPENDITURE, HE ALLOWED DEDUC TION FOR INTEREST EXPENDITURE OF RS.24,49,615/-. THE DR COULD NOT PO INT OUT ANY ERROR IN THIS FINDING OF THE CIT(A). HE ALSO COULD NOT BRIN G ANY MATERIAL ON RECORD TO SHOW THAT THE AMOUNT BORROWED BY THE ASSE SSEE FROM DENA BANK AND STATE BANK OF SAURASHTRA BY PLEDGING ITS F DRS. WAS NOT ADVANCED AS INTEREST BEARING LOAN TO YOGESHWAR HEAL THCARE LTD. HENCE, IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY GOOD AND JUSTIFIABLE REASONS ITA NO.3089/AHD/2011 5 TO INTERFERE WITH THE FINDINGS OF THE CIT(A), WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY THE 29 TH APRIL, 2015 AT AHMEDABAD. SD/ SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER