Shri Yashwant Singh Arora, Sarangpur V. The ITO, Shajapur

ITA 339/IND/2013

• Counselvise Citation: 33922714 RSA 2013
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 23-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A R VERMA
• Assessee Lawyers: S S DESHPANDE
• Section: 133A; 80IB

Judgement Text

PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AGAPA 1819 K I.T.A.NO. 339/IND/2013 A.Y. : 2009-10 SHRI YASHWANT SINGH ARORA 8/186, PUCCA BUILDING A.B.ROAD, SARANGPUR VS. THE INCOME TAX OFFICER SHAHJAPUR BICHOLI MARDANA, INDORE APPELLANT RESPONDENT ASSESSEE BY : SHRI S.S. DESHPANDE, CA RESPONDENT BY : SHRI A.R. VERMA, SR D.R. DATE OF HEARING : 02.09.2013 DATE OF PRONOUNCEMENT : 20.11.2013 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER PASSED BY THE CIT(A), DATED 15-03-2013 FOR THE ASSE SSMENT YEAR 2009-10, IN THE MATTER OF ORDER PASSED U/S 14 3(3) OF THE YESHWANT SINGH ARORA I.T.A.NO. 339/IND/2013 2009-10 2 PAGE 2 OF 8 INCOME-TAX ACT, 1961, WHEREIN FOLLOWING THREE GROUN DS HAVE BEEN TAKEN BY THE ASSESSEE. 1. THE LD. CIT(A) HAS ERRED IN MAINTAINING THE REJECTION OF CLAIM U/S 80IB(11A) OF RS. 1.46,564/-. 1.1 IT WAS PROVED BEFORE THE LD. CIT(A) THAT THE CONDITIONS UNDER 80IB(11A) ARE FULFILLED. MERELY ON THE GROUND THAT NO TRANSPORTATION FACILITY HAS BEEN PROVIDED, THE CLAIM IS REJECTED, WHICH IS BAD IN LAW. 2. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE INTEREST PAID ON THE BANK OVERDRAFT OF RS. 1,93,691/-. 3. THE LD. CIT(A) HAS ERRED IN MAINTAINING THE ADDITION OF RS. 12,00,000/- ON THE ALLEGED ADVANCES GIVEN BY THE ASSESSEE FOR THE CASH YESHWANT SINGH ARORA I.T.A.NO. 339/IND/2013 2009-10 3 PAGE 3 OF 8 IN HAND. THE ADDITION HAS BEEN UPHELD ON SURMISES AND DESERVES TO BE DELETED. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PE RUSED. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL DERIVING INCOME FROM WAREHOUSE AND INTER EST FROM BANK. THE RETURN HAS BEEN FILED DECLARING THE TOTAL INCOME OF NIL, AFTER CLAIMING THE DEDUCTION U/S 80IB (11A) ON 31-07- 2009. THE ASSESSEE HAS A WAREHOUSE AND KEEPS THE GO ODS OF VARIOUS PARTIES INCLUDING THE GODS FROM ITC LTD. AN D NATIONAL BULK HANDLING CORPORATION. THE CHARGES FROM ALL THE CUSTOMERS ARE CHARGED ON THE BASIS OF THE GOODS KEP T IN THE WAREHOUSE AND NOT ON THE MONTHLY BASIS. THE AO HAS DISALLOWED ASSESSEES CLAIM OF DEDUCTION U/S 80IB(1 1A). INTEREST PAID ON BORROWINGS AGAINST FDR WERE NOT AL LOWED AGAINST INTEREST INCOME RECEIVED ON THESE FDR. A.O. ALSO COMPUTED INTEREST INCOME ON THE AMOUNT WITHDRAWN FR OM BANK ACCOUNT AND ALLEGED TO BE ADVANCED AT INTEREST OF 18 %. YESHWANT SINGH ARORA I.T.A.NO. 339/IND/2013 2009-10 4 PAGE 4 OF 8 ALL THESE THREE ADDITIONS WERE CONFIRMED BY CIT(A) AND ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. WITH REGARD TO DISALLOWANCE OF CLAIM OF RS. 1,46,564/-, WE FOUND T HAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS. THEREFORE, DEDUC TION WAS CLAIMED U/S 80IB(11A) OF THE ACT ON THE INCOME DERI VED FROM WAREHOUSING. THE AO OBSERVED THAT SINCE THE ASSESSE E WAS NOT HAVING FACILITY OF TRANSPORTATION AND THE EXPENDITU RE WAS DEBITED IN THE PROFIT & LOSS ACCOUNT ALSO DO NOT SU BSTANTIATE THE CLAIM OF THE ASSESSEE THAT HE IS HAVING PROVISI ONS OF ALL KINDS OF FACILITIES AND SERVICES NECESSARY AS PER N ATURE OF BUSINESS ACTIVITY AS DEFINED U/S 80IB(11A) OF THE A CT. THEREFORE, A.O. HELD THAT THE ASSESSEE WAS NOT ENTI TLED FOR BENEFIT OF DEDUCTION U/S 80IB(11A) OF THE ACT. THE ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT(A). YESHWANT SINGH ARORA I.T.A.NO. 339/IND/2013 2009-10 5 PAGE 5 OF 8 4. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAD SHOWN RECEIPT OF WAREHOUSE RENT FROM ITC AND NATIONAL BUL K HANDLING CORPORATION ON WHICH DEDUCTION WAS CLAIME D U/S 80IB (11A) OF THE ACT . MERELY BECAUSE THE ASSESSEE WAS NOT HAVING HIS OWN FACILITY OF TRANSPORTATION, THE ASSE SSEES CLAIM WAS DECLINED. WE FOUND THAT THE ASSESSEE WAS HAVING FULL FACILITY OF WAREHOUSE AND STORAGE, HOWEVER, TRANSPO RTATION FACILITY WAS TAKEN ON HIRE. MERELY BECAUSE THE ASSE SSEE WAS NOT HAVING TRANSPORTATION FACILITIES OF HIS OWN, TH E CLAIM OF DEDUCTION CANNOT BE DECLINED. IN THE INTEREST OF JU STICE, WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO FOR D ECIDING IT AFRESH AFTER TAKING INTO ACCOUNT THE ACTUAL TRANSPO RTATION UNDERTAKEN BY THE ASSESSEE SO AS TO FACILITATE THE SERVICES OF HANDLING AND STORAGE WHICH WAS ALREADY HAVING WITH HIM. WE DIRECT ACCORDINGLY. 5. THE AO HAS ALSO MADE ADDITION OF RS. 1,93,691/- ON ACCOUNT OF INTEREST RECEIVED ON BANK DEPOSITS. THE AO FOUND THAT THE ASSESSEE HAS NOT DISCLOSED INTEREST ACCRUE D ON FDRS. THE CLAIM OF THE ASSESSEE WAS THAT THE ASSESSEE HAS OBTAINED YESHWANT SINGH ARORA I.T.A.NO. 339/IND/2013 2009-10 6 PAGE 6 OF 8 LOAN FROM BANK AMOUNTING TO RS. 23.80 LACS ON WHICH INTEREST OF RS. 1,93,691/- WAS CHARGED. IT WAS CONTENTION OF THE ASSESSEE THAT THE LOAN WAS UTILIZED FOR CONSTRUCTIO N OF BOUNDARY WALL AND ROAD IN THE WAREHOUSE. IT WAS ALS O PLEADED THAT THE LOAN HAS BEEN TAKEN AGAINST FDR. THEREFORE , INTEREST HAS NOT BEEN INCORPORATED IN THE BOOKS OF ACCOUNT A ND HAS BEEN ADJUSTED AGAINST INTEREST RECEIVABLE FROM THE BANK. IT APPEARS THAT THE ASSESSEE HAS NETTED INTEREST EXPEN DITURE AGAINST INTEREST RECEIVABLE FROM FDRS. HOWEVER, IT IS NOT CLEAR FROM THE RECORD AS TO WHETHER BORROWING WAS MADE BY THE ASSESSEE OUT OF FDRS OR IT WAS A SEPARATE BORROWING . IN CASE THE ASSESSEE HAS BORROWED OUT OF FDRS, THE INTEREST RECEIVABLE ON FDR IS LIABLE TO BE ADJUSTED AGAINST INTEREST PA YABLE ON BORROWINGS AGAINST THESE FDRS. IN THE INTEREST OF J USTICE, THIS GROUND OF THE ASSESSEE IS ALSO RESTORED BACK TO THE FILE OF THE AO TO VERIFY THE FACTUAL POSITION AND TO ALLOW THE NETTING OF INTEREST INCOME ON FDRS AGAINST THE INTEREST PAYABL E ON THE BORROWINGS TAKEN AGAINST THESE FDRS. WE DIRECT ACCO RDINGLY. YESHWANT SINGH ARORA I.T.A.NO. 339/IND/2013 2009-10 7 PAGE 7 OF 8 6. THE AO HAS ALSO MADE ADDITION OF RS. 12.00 LACS ON ACCOUNT OF INTEREST EARNED ON MONEY LENDING BUSINES S UNDERTAKEN BY THE ASSESSEE WHICH HE ACCEPTED DURING THE COURSE OF SURVEY U/S 133A OF THE ACT. FROM THE RECO RD, WE FOUND THAT DURING THE COURSE SURVEY, THE ASSESSEE H AS ACCEPTED THE FACT OF ADVANCING THE MONEY ON INTERES T. IN RESPECT OF THE CASH AMOUNT WITHDRAWN FROM THE BANK, THE AO COMPUTED THE INTEREST AT 18% WHICH COMES TO RS. 12. 00 LACS AND ADDED THE SAME IN ASSESSEES INCOME. KEEPING IN VIEW FACTS AND CIRCUMSTANCES OF THE CASE VIS--VIS PREVA ILING MARKET RATE OF INTEREST, WE DIRECT THE AO TO RESTRICT THE ADDITION ON ACCOUNT OF INTEREST INCOME BY COMPUTING THE SAME @ 12% INSTEAD OF 18%. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER YESHWANT SINGH ARORA I.T.A.NO. 339/IND/2013 2009-10 8 PAGE 8 OF 8 DATED : 20 TH NOVEMBER, 2013. RNM*