PRAVIN SATRA, MUMBAI V. DCIT CEN CIR 3, MUMBAI

ITA 3096/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75885 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Unexplained expenditure
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & DR.STM PAVLAN , J M ITA NO. 3 096 / MUM/20 1 0 ( ASSESSMENT YEAR : 200 7 - 0 8 ) MR. PRAVIN SATRA, KRISHNA BHUVAN, 2 ND FLOOR, 67 NEHRU ROAD, VILE PARLE (EAST), MUMBAI - 400 057 VS. D CIT, C C - 3 (3), MUMBAI PAN/GIR NO. : A A VPS 3963 P ( APPELLA NT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI VIJAY KOTHARI /REVENUE BY : SHRI M.L.PERUMAL DATE OF HEARING : 6 TH MARCH , 201 4 DATE OF PRONOUNCEMENT : 12 TH MARCH , 20 1 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), DATED 22 - 3 - 2010 , FOR THE ASSESSMENT YEAR 200 7 - 0 8 , IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT. 2 . IN GROUND NO. 1, THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF CLAIM OF DEDUCTION OF INTEREST PAID OF RS.10,75,000/ - . 2.1 WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ASSESSEE HAS ADVANCED MONEY TO RAJENDRA BUILDERS AND PAID INTEREST ON ITA NO. 3096 /20 1 0 2 ACCOUNT OF LOAN TAKEN FR OM RELATIVES AND FRIENDS. THE AO DISALLOWED THE INTEREST ON THE PLEA THAT THERE IS NO NEXUS BETWEEN THE INTEREST EARNED ON MONIES ADVANCED AND INTEREST CLAIMED ON MONIES TAKEN FOR ADVANCING TO DARSHAN DEVELOPERS. ACCORDINGLY, THE AO DISALLOWED THE INTEREST EXPENDITURE OF RS.10,75,000/ - . BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE AO. WE FOUND THAT THE AMOUNT BORROWED HAS BEEN UTILIZED BY THE ASSESSEE FOR HIS PROPRIETARY CONCERN, INCOME OF WHICH IS LIABLE TO TAX. SIMILARLY, ADVANCE HAS BEEN GIVEN TO M/S RAJENDRA BUILDERS AGAINST WHICH THE ASSESSEE HAS EARNED INTEREST. HOWEVER, THERE IS NO CLARITY AS TO THE AMOUNT OF ADVANCE DIVERTED BY THE ASSESSEE FOR NON - BUSINESS PURPOSES, EVEN THOUGH THE AO HAS DISALLOWED THE CLAIM UNDER SECTION 57( III ). AS PER OUR CONSIDERED VIEW, EVEN WHEN INTEREST BEARING FUNDS ARE USED FOR PROPRIETARY CONCERN, THE INTEREST PAI D ON LOANS CANNOT BE DISALLOWED, I F SUCH FUNDS HAVE BEEN USED FOR THE PURPOSE OF ASSESSEES OWN PROPRIETORSHIP BUSINESS, INCOME OF WHICH IS LIABL E TO TAX. HOWEVER, THERE IS NO FI NDING AS TO THE ADVANCE GIVEN FOR NON - BUSINESS PURPOSE OR THE ADVANCES WHICH DI D NOT EARN ANY INTEREST INCOME, NOR THE ASSESSEE ESTABLISHED INCURRING OF INTEREST EXPENDITURE ON THE ADVANCES GIVEN ON INTEREST. ACCORDINGLY, W E SET ASIDE THE ORDER OF BOTH THE LOWER AUTHORITIES AND IN THE INTEREST OF JUSTICE AND FAIR - PLAY, WE RESTORE THE GROUND NO.1 TO THE FILE OF THE AO TO DECIDE AFRESH. 3 . GROUND NO.2 RELATES TO ADDITION OF DONATION OF RS. 5,25,000/ - GIVEN TO LOCAL SPORTS MAND AL. ITA NO. 3096 /20 1 0 3 3.1 THE AO DISALLOWED THE DONATION OF RS.5,25,000/ - DEBITED BY THE ASSESSEE IN ITS CAPITAL ACCOUNT. THE AO OBSERVED THAT ASSESSEE HAS NOT FURNISHED ANY EVIDENCE FOR THE DONATION GIVEN AND ACCORDINGLY TREAT ED THE SAME AS UNEXPLAINED EXPENDITURE. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ADDITION BY OBSERVING THAT ASSESSEE HAS NOT STATED TO WHICH LOCAL SPORTS MANDAL THE AMOUNT WAS PAID. 3.2 IT WAS ARGUED BY THE LEARNED AR THAT ASSESSEE HAS NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF DONATION SO GIVEN, NOR ANY DEDUCTION WAS CLAIMED UNDER SECTION 80G, THEREFORE, THERE IS NO OCCASION FOR DISALLOWANCE OF DONATION GIVEN BY THE ASSESSEE. 3.3 WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT DURING THE YEAR THE ASSESSEE HAS GIVEN DONATION OF RS. 5,25,000/ - . THE AMOUNT OF DONATION HAS BEEN DEBITED IN THE CAPITAL ACCOUNT, WHICH MEANS THE ASSESSEE HAS REDUCED HIS CREDIT BALANCE IN THE CAPITAL ACCOUNT. THE AMOUNT OF DONATION HAS NEITHE R BEEN CLAIMED AS EXPENDITURE, NOR ANY DEDUCTION HAS BEEN CLAIMED UNDER CHAPTER VIA. THE SOURCE OF MONEY IS ALSO NOT IN DOUBT. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE AO. HENCE, THE AO IS DIRECTED TO DELETE THE ADDITION MADE ON AC COUNT OF DONATION GIVEN BY THE ASSESSEE AMOUNTING TO RS.5,25,000/ - AS THE SAME HAS NEITHER BEEN CLAIMED AS EXPENDITURE NOR UNDER CHAPTER VI( A ). WE DIRECT ACCORDINGLY. ITA NO. 3096 /20 1 0 4 4 . IN GROUNDS NO.3 & 4, THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE ON MOBILE AND MOTOR C AR EXPENDITURE TO THE EXTENT OF 10%. KEEPING IN VIEW THE PERSONAL USE ON MOBILE AND MOTOR CAR EXPENDITURE CLAIMED BY THE PROPRIETOR, WE DO NOT FIND ANY INFIRMITY IN THE OBSERVATION SO MADE BY THE AO. ACCORDINGLY, WE UPHELD THE DISALLOWANCE MADE BY THE AO. 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH MARCH . 201 4 . 12 TH MARCH ,2014 SD/ - SD/ - ( ) ( S.T.M.PAVLAN ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 12 / 0 3 /2014 /PK M , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//