RAVINDER PAL SINGH, FARIDABAD V. ITO, WARD- 2(2), FARIDABAD

ITA 3283/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7927 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Section: 143(3); 142(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3283/DEL/2018 ASSESSMENT YEAR: 2014-15 RAVINDER PAL SINGH, PROP. M/S STAR TOOLS & CASTINGS, PLOT NO. 73, INDIRA INDUSTRIAL COMPLEX, NEAR KHERI PUL FARIDABAD CHURCH GALI, KAILA BHATTA, GHAZIABAD (PAN: AEFPB0220A) VS. ITO, WARD II(2), CGO COMPLEX, NH-IV, NIT FARIDABAD (APPELLANT) (RESPONDENT) ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 06.3.2018 PASSED BY THE LD. CIT(A), FARIDABAD RELAT ING TO ASSESSMENT YEAR 2014-15 ON THE FOLLOWING GROUNDS:- I. THE LD. CIT(A) ERRED IN PARTIALLY SUSTAINING THE DISALLOWANCE OF INTEREST RS. 161452/- U/S. 36(1)(II I) OF THE INCOME TAX ACT, 1961 IGNORING THE APPELLANT S CLAIM THAT THE ASSET IN QUESTION THE FLAT AT NAHAR PAR FARIDABAD WAS AN ASSET USED IN BUSINESS. ASSESSEE BY SH. ALOK KUMAR GUPTA, ADV. DEPARTMENT BY SH. SL ANURAGI, SR. DR. 2 II. ON FACTS AND CIRCUMSTANCES OF THE CASE AND APPLICABLE LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE INTEREST DISALLOWANCE OF RS. 206533 ON PURCHASE OF INDUSTRIAL PLOT AT FARIDABAD. III. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST RS. 247240/- U/S. 36(1)(III) OF THE IN COME TAX ACT, 1961 AND FURTHER ERRED IN IGNORING THE INTEREST FREE CAPITAL OF THE APPELLANT BEING MORE T HAN THE INTEREST FREE ADVANCE GIVEN TO SH. VIVEK SINGH AFTER HOLDING THE SAME NOT TO BE A BUSINESS ADVANCE. IV. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DELETE AND MODIFY ANY GROUNDS OF APPEAL BEFORE / DURING TH E HEARING OF THE APPEAL AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE I S ENGAGED IN MANUFACTURING OF ALUMINUM DIE CASTED COMPONENT AND FILED HIS RETURN OF INCOME ON 28.11.2014 DECLARING AN INCOME OF RS. 14, 16,780/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY TH ROUGH CASS. THE AO ISSUED VARIOUS NOTICES U/S. 143(2) AND 142(1) OF T HE INCOME TAX ACT, 1961 (IN SHORT ACT). THE ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 31.10.2015 AT AN ASSESSED INCOME OF RS . 24,99,060/- BY MAKING ADDITION OF RS. 10,82,279/- ON ACCOUNT OF IN TEREST ON BORROWED CAPITAL U/S. 36(1)(III) OF THE ACT. AGAINST THE A SSESSMENT ORDER, ASSESSEE 3 APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGN ED ORDER DATED 06.3.2018 HAS PARTLY ALLOWED THE APPEAL OF THE A SSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL. 3. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT LD. CIT(A) ERRED IN PARTIALLY SUSTAINING THE DISALLOWA NCE OF INTEREST RS. 161452/- U/S. 36(1)(III) OF THE INCOME TAX ACT, 196 1 IGNORING THE ASSESSEES CLAIM THAT THE ASSET IN QUESTION THE FLA T AT NAHAR PAR FARIDABAD WAS AN ASSET USED IN BUSINESS AND ERRED IN CONFIRMI NG THE INTEREST DISALLOWANCE OF RS. 206533 ON PURCHASE OF INDUSTRI AL PLOT AT FARIDABAD AND ALSO ERRED IN CONFIRMING THE DISALLOWANCE OF I NTEREST RS. 247240/- U/S. 36(1)(III) OF THE INCOME TAX ACT, 1961 AND FUR THER ERRED IN IGNORING THE INTEREST FREE CAPITAL OF THE ASSESSEE BEING MOR E THAN THE INTEREST FREE ADVANCE GIVEN TO SH. VIVEK SINGH AFTER HOLDING THE SAME NOT TO BE A BUSINESS ADVANCE. TO SUPPORT HIS CONTENTION, HE F ILED THE PAPER BOOK CONTAINING THE WORKING OF DISALLOWANCE OF INTEREST IF ASSETS UNDER APPEAL ARE TREATED AS NON BUSINESS ASSETS AND COPY OF BAL ANCE SHEET, PROFIT AND LOSS ACCOUNT FOR FY 2012-13. HE REQUESTED TO CANCEL THE ORDERS OF THE AUTHORITIES BELOW AND ALLOW THE APPEAL OF THE ASSES SEE. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS ESPECIALLY THE IMPUGNED ORDER. IN THE INSTANT CASE THE ASSESSEE IN CURRED THE INTEREST 4 EXPENDITURE OF RS. 1601150.74 ON VARIOUS BORROWINGS AVAILED BY HIM FOR HIS BUSINESS IN THE NAME AND STYLE M/S STAR TOOLS & CASTINGS. THE AO HAS DISALLOWED INTEREST RS. 10,82,279/- U/S. 36(1) (III) OF THE ACT HOLDING THAT INTEREST BEING FUNDS BORROWED FROM BANKS WERE DIVERTED AND USED FOR INVESTMENT IN NON-BUSINESS AND PERSONAL ASSETS APPE ARING IN THE BALANCE SHEET AS ON 31.3.2014. AS REGARDS ADDITION OF INTER EST OF RS. 3,89,469/- ON FLAT IS CONCERNED, IT IS A FACT THAT THE THIS IS HOUSING LOAN FROM AXIS BANK AND LATER TAKEN OVER BY ANDHRA BANK, HENCE, TH E INTEREST ON THESE LOANS A/C WAS RS. 136014 + RS. 25438= RS. 161452/-, HENCE, THE ADDITION WAS SUSTAINED TO THIS EXTENT AND THE REST WAS RIGHTLY DELETED, WHICH DOES NOT NEED ANY INTERFERENCE, HENCE, THE SA ME IS UPHELD. AS REGARDS THE INTEREST OF RS. 206533/- ON INDUSTRIAL PLOT SECTOR-62 FARIDABAD, IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS STILL NOT STARTED USING THE INDUSTRIAL PLOT UNDER CONSIDERATION, THU S THE ADDITION WAS RIGHTLY SUSTAINED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE, HENCE, THE SAME IS UPHELD. AS REGARDS INTEREST OF RS. 2,47,240/- ON ADVANCE TO SH. VIVEK SINGH, IT IS UNDISPUTED THAT T HE ENTRIES HAS BEEN POSTED SEPARATELY IN THE ACCOUNT OF SH. VIVEK SINGH AND M/S STAR CAST SHOWS THAT THE ADVANCE WAS NOT A BUSINESS ADVANCE T O M/S STAR CAST AND WAS A PERSONAL ADVANCE TO SH. VIVEK SINGH, HENCE, T HE ADDITION WAS RIGHTLY SUSTAINED, WHICH DOES NOT NEED ANY INTERFER ENCE, HENCE, THE SAME WAS UPHELD. IN NUTSHELL, THE ISSUE RAISED BY THE A SSESSEE WAS PARTLY ALLOWED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON MY 5 PART, HENCE, I UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUNDS RAISED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 08-01-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:08/01/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES