SHRI SANJAY PRAKASH KULSHRESTHA, JAIPUR V. INCOME TAX OFFICER (T & J) O/o PR. CIT-2, JAIPUR

ITA 311/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3095 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 06-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Commercial expediency; Rule 8D; CHAPTER IV
• Section: 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM ITA NO. 311/JP/2019 ASSESSMENT YEAR :2012-13 SANJAY PRAKASH KULSHRESTHA, 20, UNIARA HOSPITAL & RESEARCH CENTER, UNIARA GARDEN, MOTI DOONGRI ROAD, JAIPUR-302004 CUKE VS. ITO (T&J), O/O THE PR. CIT-2, JAIPUR PAN/GIR NO.: ADCPK0616R APPELLANT RESPONDENT ITA NO. 312/JP/2019 ASSESSMENT YEAR : 2014-15 SANJAY PRAKASH KULSHRESTHA, 20, UNIARA HOSPITAL & RESEARCH CENTER, UNIARA GARDEN, MOTI DOONGRI ROAD, JAIPUR-302004 CUKE VS. ITO, WARD 6(5), JAIPUR PAN/GIR NO.: ADCPK0616R APPELLANT RESPONDENT ASSESSEE BY : AKHILESH KUMAR JAIN (CA) REVENUE BY : SMT. RUNI PAL (JCIT) DATE OF HEARING : 22/01/2020 DATE OF PRONOUNCEMENT: 09/03/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF LD. CIT(A), AJMER DATED 10.12.2018 FOR A.Y 2012-13 AND DATED 14.12.2018 FOR A.Y 2014-15 RESPECTIVELY. SINCE COMMON ISSUES ARE INVOLVED, BOTH THESE APPEAL S WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER. 2. FIRST OF ALL, WE TAKE UP APPEAL OF THE ASSESSEE FOR A.Y 2012-13 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APP EAL: ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 2 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN SUSTAINING APPLICATION OF PROVISIONS OF SECTION 14A FOR AND TH US SUSTAINING ADDITION OF RS. 3,16,631/- AS PER FORMULA PRESCRIBED IN RULE 8D. 2. THE LEARNED CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN SUSTAINING ADDITION OF RS. 30,000/- OUT OF ALLEGED INTEREST PAYMENT ON UNSECURED LOANS. 3. THE LEARNED CIT(A) AGAIN ERRED ON FACTS SUSTAINI NG ADDITION OF RS. 36,965/- BY ENHANCING THE INTEREST ON INCOME TA X REFUND. 3. REGARDING GROUND NO. 1, BRIEFLY STATED, THE FACT S OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENT IN SHARES, MU TUAL FUNDS AND AGRICULTURE LAND AND ON SUCH INVESTMENTS, ASSESSEE IS EARNING E XEMPT INCOME U/S 10 OF THE INCOME-TAX ACT, 1961. THUS, ASSESSEE IS LIABLE FOR DISALLOWANCE U/S 14A WHICH IS AUTOMATIC AND COMES INTO OPERATION WITHOUT ANY EXCEPTION AS SOON AS DIVIDEND INCOME IS CLAIMED EXEMPT. THE POSSIBILITY OF INCURRING CERTAIN EXPENDITURE UNDER THE HEAD ADMINISTRATIVE EXPENDITU RE FOR EARNING DIVIDEND INCOME CANNOT BE RULED OUT. WHILE ALLOCATING EXPENS ES RELATING TO EXEMPT INCOME NOT ONLY THE DIRECT EXPENSES LIKE RECEIVING AND DEPOSITING THE DIVIDEND WARRANT HAS TO BE TAKEN INTO CONSIDERATION BUT ALSO THE INDIRECT EXPENSES INCLUDING MAJOR MANAGERIAL/CLERICAL EXPENSES WHICH ARE INVOLVED IN MAKING AND IMPLEMENTING THE DECISION ARE ALSO TO BE DISALLOWED . THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES AND INTEREST EXPENSES ON EA RNING OF DIVIDEND INCOME CLAIMED EXEMPT IS ALSO HELD/PERMITTED BY THE HONBL E SUPREME IN CASE OF CIT VS. UNITED GENERAL TRUST, 200 ITR 488 (SC). ACCORDI NGLY, A SHOW CAUSE WAS ISSUED TO THE ASSESSEE AS TO WHY DISALLOWANCE U/S 1 4A SHOULD NOT BE MADE. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT NO AMOUNT OF BORROWING ON WHICH INTEREST HAS BEEN PAID WAS UTILIZED BY THE AS SESSEE IN INVESTMENTS, INCOME FROM WHICH IS EITHER EXEMPT OR NOT INCLUDIBL E IN THE TOTAL INCOME. THUS ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 3 THERE IS NO CASE FOR APPLYING PROVISIONS OF SECTION 14A IN THE CASE OF THE ASSESSEE WHILE DETERMINING TOTAL INCOME. RULE 8D IS APPLICABLE ONLY WHEN THERE IS COMMON EXPENDITURE WHICH CANNOT BE LINKED WITH I NCOME WHICH DOES NOT FORM PART OF TOTAL INCOME AND INCOME WHICH FORMS PA RT OF TOTAL INCOME. IN THE PRESENT CASE THERE IS NO SUCH INCOME. THEREFORE, AS SESSEE CONTENDED THAT DISALLOWANCE IS NOT WARRANTED U/S 14A OF THE INCOME TAX ACT, 1961. THE SUBMISSION SO FILED BY THE ASSESSEE WAS CONSIDERED BUT NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. THE ASSESSING OFFICER STATED THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF ASSESSEE THAT IT HA S NOT INCURRED ANY EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FO RM PART OF THE TOTAL INCOME AND DISALLOWANCE WAS ACCORDINGLY COMPUTED UNDER RUL E 8D AMOUNTING TO RS. 3,16,631/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. LD. CIT(A) WHO HAS SUSTAINED THE SAID DISALLOWANCE AND THE RELEVANT FINDINGS OF THE LD. CIT(A) READ AS UNDER:- 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STAT EMENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSION CAREFULLY. IT IS SEEN THAT THE APPELLANT HAD DEBITED INTEREST EXPENSES OF RS. 72,5 9,552/-. THE APPELLANT HAS ALSO MADE INVESTMENT IN SHARES, MUTUA L FUNDS AND AGRICULTURAL LAND. THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE WITH THE HELP OF DOCUMENTARY EVIDENCE HIS CONTENTION THA T NO INTEREST BEARING BORROWED FUNDS WERE UTILIZED FOR MAKING INVESTMENT IN THE ASSETS INCOME FROM WHICH IS EXEMPT. THE DEDUCTION IN RESPECT OF I NTEREST PAID CAN BE ALLOWED FOR THE PURPOSE OF COMPUTING INCOME UNDER T HE HEAD PROFIT & GAINS FROM BUSINESS & PROFESSION ONLY, IF THE APPEL LANT PROVES THAT THE INTEREST CLAIMED AS DEDUCTION WAS PAID SOLELY IN RE SPECT OF INTEREST BEARING BORROWED FUNDS UTILIZED FOR BUSINESS PURPOS ES. IN THE CASE UNDER ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 4 CONSIDERATION, THE APPELLANT HAS FAILED TO PROVE TH AT ENTIRE INTEREST OF RS. 72,59,552/- WAS PAID ONLY IN RESPECT OF INTEREST BE ARING BORROWED FUNDS UTILIZED FOR BUSINESS PURPOSES. THERE IS INVESTMENT IN SHARES, MUTUAL FUNDS AND AGRICULTURAL LAND. THE AO HAS WORKED OUT THE DISALLOWANCE U/S 14A STRICTLY IN ACCORDANCE WITH RULE 8D. THEREFORE, IT IS HELD THAT A DISALLOWANCE U/S 14A WAS REQUIRED TO BE MADE BY THE AO AND THE DISALLOWANCE WORKED OUT BY THE AO IS CORRECT AND ST RICTLY IN ACCORDANCE WITH RULE 8D. THEREFORE, DISALLOWANCE OF RS. 3,16,6 31/- (RS. 2,96,671 + RS. 19,960) MADE BY THE AO U/S 14A IS HEREBY CONFIR MED. 5. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSEE IS ENGAGED IN TRADING IN SHARES LISTED AT BSE AND NSE STOCK EXCHANGES. THE ASSESSEE HAD CREDIT ARRANGEMENT WITH ANAND RATHI GL OBAL FINANCE LTD. AND ASSESSEE HAS BEEN DOING SHARE TRANSACTIONS THROUGH ANAND RATHI SHARE AND STOCK BROKERS LTD. IT WAS SUBMITTED THAT ANAND RATH I GLOBAL FINANCE LTD WAS MAKING DIRECT PAYMENT FROM THEIR ACCOUNT WITH HDFC BANK LTD TO ACCOUNT WITH HDFC BANK LTD. OF ANAND RATHI SHARE AND STOCK BROKE RS LTD TOWARDS PURCHASE OF SHARES BY THE ASSESSEE, AS SUCH DIVERSION OF FUN D FOR OTHER PURPOSE WAS NOT POSSIBLE. IT WAS SUBMITTED THAT AS ENTIRE INTEREST BEARING BORROWED FUNDS WERE THUS UTILIZED IN BUYING OF STOCK IN TRADE, THERE WA S NO CASE FOR DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. IT WAS SUBMIT TED THAT INTEREST PAYMENT THUS HAD LIVE AND DIRECT NEXUS WITH THE SHARES HELD AND FORMING PART OF TRADING ACTIVITY, GENERATING TAXABLE INCOME COMPUTED UNDER CHAPTER IV OF THE INCOME TAX ACT. IT WAS ACCORDINGLY SUBMITTED THAT CHARGING PROVISION OF SECTION 14A(1) IS NOT ATTRACTED AT ALL TO INVITE ADDITION BY APPLY ING RULE 8D AND RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF MAXOPP INVESTMENT LTD. VS. CIT, NEW DELHI (2018) 402 ITR 640(SC) BESI DES VARIOUS OTHER DECISIONS. ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 5 6. IT WAS FURTHER SUBMITTED THAT BOTH THE LOWER AUT HORITIES HAVE APPLIED PROVISIONS OF RULE 8D IN A MECHANICAL MANNER WITHOU T ANALYZING THE APPLICABILITY OR OTHERWISE OF CHARGING PROVISIONS C ONTAINED IN SUB SECTION 1 OF SECTION 14A OF THE ACT. IT WAS FURTHER SUBMITTED TH AT THERE IS NO RECORDING OF SATISFACTION BY THE ASSESSING OFFICER AS REQUIRED B Y SUB SECTION (2) OF SECTION 14A READ WITH RULE 8D(1). IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD ONLY EARNED DIVIDEND INCOME OF RS. 20/- WHICH DOES NOT F ORM PART OF TOTAL INCOME BEING EXEMPT UNDER CHAPTER III OF THE ACT AND THE D ISALLOWANCE, IF AT ALL REQUIRED TO BE MADE SHOULD BE RESTRICTED TO EXEMPT INCOME SO EARNED BY THE ASSESSEE. 7. PER CONTRA, THE LD. DR SUBMITTED THAT THE RESTRI CTION OF DISALLOWANCE TO THE AMOUNT OF EXEMPT INCOME CAN BE CONSIDERED ONLY IN RESPECT OF INDIRECT ADMINISTRATIVE EXPENSES AND NOT IN RESPECT OF INTER EST EXPENDITURE INCURRED BY THE ASSESSEE FOR MAKING INVESTMENTS IN THE SHARES. IT WAS FURTHER SUBMITTED THAT THE INTEREST EXPENDITURE IS INCURRED FOR MAKIN G THE INVESTMENT AND DOES NOT DEPEND UPON EARNING OF EXEMPT INCOME ON SUCH IN VESTMENT. THE LD DR ACCORDINGLY RELIED ON THE ORDER OF THE LOWER AUTHOR ITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRST CONTENTION OF THE LD AR IS THA T SINCE THE SHARES WERE HELD BY THE ASSESSEE AS STOCK-IN-TRADE AND ENTIRE INTERE ST BEARING BORROWED FUNDS WERE UTILIZED IN BUYING SUCH STOCK-IN-TRADE, THERE WAS NO CASE FOR DISALLOWANCE UNDER SEC. 14A R.W. RULE 8D. IN OUR CONSIDERED VIE W, THE AFORESAID CONTENTION OF THE LD. A.R IS ABSOLUTELY MISCONCEIVED AND CANNO T BE ACCEPTED. ON A PERUSAL OF JUDGMENT OF THE HONBLE SUPREME COURT IN THE CAS E OF MAXOPP INVESTMENT LTD. (SUPRA), WE FIND THAT THE HONBLE SUPREME COUR T HAD DISAPPROVED THE DOMINANT PURPOSE TEST THAT WAS PRESSED INTO SERVICE BY THE ASSESSEE FOR THE PURPOSE OF INTERPRETING THE SCOPE AND GAMUT OF SEC. 14A OF THE ACT. INFACT, THE ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 6 HONBLE SUPREME COURT HAD SUBSCRIBED TO THE THEORY OF THE APPORTIONMENT WHICH WAS MADE AVAILABLE BY THE LEGISLATURE BY INSE RTING SEC. 14A VIDE THE FINANCE (AMENDMENT) ACT, 2001 WITH RETROSPECTIVE AF FECT FROM 01.04.1962. IN THE AFORESAID JUDGMENT, THE HONBLE SUPREME COURT H AD OBSERVED THAT WHERE SHARES ARE HELD BY AN ASSESSEE AS STOCK-IN-TRADE, T HE EARNING OF EXEMPT DIVIDEND INCOME ON THE SAME WOULD TRIGGER THE APPLI CABILITY OF SEC. 14A OF THE ACT AND THE RELEVANT FINDINGS OF THE HONBLE SUPREM E COURT READS AS UNDER: 39. IN THOSE CASES, WHERE SHARES ARE HELD AS STOCK -IN-TRADE, THE MAIN PURPOSE IS TO TRADE IN THOSE SHARES AND EARN PROFIT S THEREFROM. HOWEVER, WE ARE NOT CONCERNED WITH THOSE PROFITS WHICH WOULD NATURALLY BE TREATED AS INCOME U NDER THE HEAD PROFITS AND GAINS FROM BUSINESS AND PROFESSION . WHAT HAPPENS IS THAT, IN THE PROCESS, W HEN THE SHARES ARE HELD AS STOCK-IN-TRADE , CERTAIN DIVIDEND IS ALSO EARNED, TH OUGH INCIDENTALLY, WHICH IS ALSO AN INCOME. HOWEVER BY V IRTUE OF SECTION 10(34) OF THE ACT, THIS DIVIDEND INCOME IS NOT TO B E INCLUDED IN THE TOTAL INCOME AND IS EXEMPT FROM TAX. THIS TRIGGERS THE AP PLICABILITY OF SECTION 14A OF THE ACT WHICH IS BASED ON THE THEORY OF APPO RTIONMENT OF EXPENDITURE BETWEEN TAXABLE AND NON-TAXABLE INCOME AS HELD IN WALFORT SHARE AND STOCK BROKERS P LTD. CASE. THEREFORE, TO THAT EXTENT, DEPENDING UPON THE FACTS OF EACH CASE, THE EXPENDIT URE INCURRED IN ACQUIRING THOSE SHARES WILL HAVE TO BE OPPORTIONED. 9. ACCORDINGLY, THE SHARES WHICH WERE HELD BY THE A SSESSEE AS STOCK-IN- TRADE WERE TO BE CONSIDERED FOR THE PURPOSE OF COMP UTING THE DISALLOWANCE UNDER SEC. 14A OF THE ACT AND THE CONTENTION SO ADV ANCED BY THE ASSESSEE CANNOT BE ACCEPTED. NOW, GIVEN THAT THE LD AR HAS SUBMITTED THAT AS ENTIRE INTEREST BEARING BORROWED FUNDS WERE UTILIZED IN BU YING OF STOCK IN TRADE AND INTEREST PAYMENT DURING THE YEAR THUS HAD LIVE AND DIRECT NEXUS WITH THE SHARES ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 7 HELD AND FORMING PART OF TRADING ACTIVITY, AND INSP ITE OF THAT, WHERE NO DISALLOWANCE WAS MADE BY THE ASSESSEE WHILE COMPUTI NG THE DISALLOWANCE UNDER SECTION 14A AND THE AO RECORDS A CATEGORICAL FINDING THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF CLAIM OF THE ASSE SSEE, WE SEE NO INFIRMITY IN RECORDING OF SATISFACTION BY THE AO AND THEREFORE, THE SECOND CONTENTION SO ADVANCED BY THE LD AR CANNOT BE ACCEPTED. REGARDIN G THE THIRD CONTENTION OF THE LD AR THAT DISALLOWANCE SHOULD BE RESTRICTED TO EXEMPT DIVIDEND INCOME, WE FIND THAT SUCH A CONTENTION CAN BE ADVANCED IN THE CONTEXT OF ADMINISTRATIVE EXPENSES AND NOT IN THE CONTEXT OF INTEREST EXPENSE WHICH IN THE INSTANT CASE HAS BEEN ADMITTED TO BE HAVE BEEN INCURRED DIRECTLY FOR PURCHASE OF SHARES. THEREFORE, DISALLOWANCE ON ACCOUNT OF ADMINISTRATIV E EXPENSES UNDER RULE 8D(III) CAN BE RESTRICTED TO THE EXTENT OF EXEMPT I NCOME SO CLAIMED BY THE ASSESSEE. ON PERUSAL OF RETURN OF INCOME, WE FIND THAT BESIDES DIVIDEND INCOME OF RS 20/- WHICH HAS BEEN CLAIMED EXEMPT U/S 10(34), THE ASSESSEE HAS ALSO CLAIMED EXEMPTION OF LONG TERM CAPITAL GAI NS U/S 10(38) OF RS 68,091/- AND DISALLOWANCE OF ADMINISTRATIVE EXPE NSES UNDER RULE 8D(III) IS ONLY RS 19,960 WHICH IS ANYWAY LESS THAN THE INCOME CLAIMED EXEMPT. THUS, THIS CONTENTION OF THE LD AR THEREFORE CANNOT BE AC CEPTED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IN THE RESULT, THE GROUND NO. 1 OF ASSESSEES APPEAL IS DISMISSED. 10. REGARDING GROUND NO. 2, BRIEFLY STATED, THE FAC TS OF CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS GIVEN INTEREST FREE LOAN AND ADVANCE A MOUNTING TO RS. 2,00,000/- TO SANJAY PRAKASH KULSHRESTHA HUF AND GI VEN THAT THE ASSESSEE HAS NOT CHARGED ANY INTEREST ON SUCH LOAN AND ADVAN CE WHEREAS HIS OWN CAPITAL IS NEGATIVE AND HE HAS TAKEN HUGE UNSECURED INTEREST BEARING FUNDS, IN ABSENCE OF ANY COMMERCIAL EXPEDIENCY, INT EREST EXPENSE @ 15% WAS DISALLOWED, WHICH ON APPEAL HAS BEEN SUSTAINED BY THE LD. CIT(A). ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 8 11. DURING THE COURSE OF HEARING, THE LD. AR SUBMI TTED THAT AO ASSUMED THAT THE AMOUNT BORROWED FROM M/S ANAND RATHI GLOBA L FINANCE LTD. WAS UTILIZED TOWARD REMITTING LOAN TO SANJAY PRAKASH KU LSHRESTHA HUF, AND DISALLOWED INTEREST @ 15% P.A ON ADHOC BASIS ON SUC H LOAN AMOUNT WITHOUT ESTABLISHING ANY NEXUS OF SUCH TRANSACTION. IT WAS SUBMITTED THAT THE AMOUNT BORROWED FROM M/S ANAND RATHI GLOBAL FIN ANCE LTD WAS UTILIZED FOR MAKING INVESTMENTS IN SHARES AND THE L OAN OF RS. 2,00,000/- WAS GIVEN TO SANJAY PRAKASH KULSHRESTHA HUF OUT OF PAST INTEREST FREE FUNDS OF THE ASSESSEE AND THEREFORE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. 12. HEARD BOTH THE PARTIES AND PURSUED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS OWN CAPITAL AND INTER EST FREE BORROWED FUNDS TO THE TUNE OF RS 4.74 CRORES BESIDES INTERES T BEARING FUNDS FROM M/S ANAND RATHI GLOBAL FINANCE LTD TO THE TUNE OF R S 4.34 CRORES AND THUS HAVE MIXED FUNDS WHERE INTEREST FREE FUNDS ARE MORE THAN INTEREST BEARING FUNDS. IN SUCH A SITUATION, A PRESUMPTION CAN BE DR AWN THAT AMOUNT ADVANCED BY THE ASSESSEE IS OUT OF INTEREST FREE FU NDS. SUCH A PRESUMPTION IS HOWEVER REBUTTAL WHERE NECESSARY NEX US IS ESTABLISHED BETWEEN THE BORROWED FUNDS AND SUBSEQUENT ADVANCEME NT THEREOF. HOWEVER, IN THE INSTANT CASE, NO SUCH NEXUS HAS BEE N ESTABLISHED BY THE REVENUE, THUS, WE FIND THAT IT CAN BE REASONABLY BE PRESUMED THAT FUNDS HAVE BEEN LENT OUT OF INTEREST FREE FUNDS. FURTHER , THE ASSESSEE HAS SUBMITTED THAT WHOLE OF INTEREST BEARING FUNDS FROM M/S ANAND RATHI GLOBAL FINANCE HAVE BEEN UTILIZED FOR MAKING PAYMEN T TOWARDS PURCHASE OF SHARES WHICH ALSO SUPPORTS THE CASE OF THE ASSESSEE . IN THE RESULT, THE ADDITION MADE BY THE AO IS HEREBY DIRECTED TO BE DE LETED. IN THE RESULT, THE GROUND NO. 2 OF THE ASSESSEES APPEAL IS ALLOWE D. ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 9 13. IN GROUND NO. 3, BRIEFLY STATED, THE FACTS OF C ASE ARE THAT INTEREST ON INCOME TAX REFUND WAS OFFERED BY THE ASSESSEE OF RS . 8,899/- (DERIVED FROM DIFFERENCE OF THE AMOUNT RECEIVED I.E. RS. 2,8 0,000/- AND THE AMOUNT CLAIM AS REFUND AMOUNTING TO RS. 2,71,101/-. HOWEVE R, AS PER THE ASSESSING OFFICER, INTEREST AMOUNT GRANTED ON REFUN D WAS RS. 48,594/- AS PER THE DEPARTMENTAL RECORDS AND ACCORDINGLY, HE AD DED THE DIFFERENTIAL AMOUNT OF RS. 36,965/- AND BROUGHT THE SAME TO TAX WHICH ON APPEAL HAS BEEN CONFIRMED BY THE LD CIT(A). 14. HEARD BOTH THE PARTIES. IT IS A MATTER OF RECO RD AS TO QUANTUM OF INCOME TAX REFUND CLAIMED BY THE ASSESSEE AND FINAL LY DETERMINED AND GRANTED TO THE ASSESSEE FOR THE RESPECTIVE ASSESSME NT YEARS AND THERE CANNOT BE ANY DISPUTE THAT WHERE INTEREST ON REFUND HAS BEEN GRANTED BY THE DEPARTMENT, THE SAME IS TAXABLE IN THE HANDS OF THE ASSESSEE. IN ABSENCE OF RELEVANT MATERIAL ON RECORD, WE DEEM IT APPROPRIATE THAT THE MATTER BE REMANDED BACK TO THE FILE OF THE ASSESSIN G OFFICER TO EXAMINE THE SAME AFRESH AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. IN THE RESULT, THE GROUND NO. 3 OF THE ASSESSEES APPEAL I S ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED IN LIGHT OF AFORESAID DIRECTIONS. 16. IN ITA NO. 312/JP/2019 FOR A.Y 2014-15, THE SOL E GROUND RAISED BY THE ASSESSEE RELATES TO SUSTENANCE OF DISALLOWANCE OF R S. 55,452/- U/S 14A R/W RULE 8D OF THE INCOME TAX RULES. BOTH THE PARTIES FAIRLY SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL AS IN I TA NO. 311/JP/2019 AND SIMILAR CONTENTIONS HAVE BEEN ADVANCED BY BOTH THE PARTIES. THEREFORE, OUR ITA NO. 311& 312/JP/2019 SANJAY PRAKASH KULSHRESTHA VS. ITO 10 FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 311/JP /2019 SHALL APPLY MUTATIS MUTANDIS TO THIS MATTER AND APPEAL OF THE ASSESSEE IS ACCO RDINGLY DISPOSED OFF. 17. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISPOSED OFF IN LIGHT OF ABOVE DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 09/03/2020. SD/- SD/- ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) JUDICIAL MEMBER ACCOU NTANT MEMBER JAIPUR DATED:- 09/03/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SANJAY PRAKASH KULSHRESTHA, JAIPUR 2. THE RESPONDENT- ITO (T&J), O/O THE PR. CIT-2, JAIPU R & ITO, WA RD 6(5), JAIPUR 3. CIT 4. CIT(A) 5. DR, ITAT, JAIPUR. 6. GUARD FILE {ITA NO. 311 & 312/JP/2019} BY ORDER, ASST. REGISTRAR