Shri Praveen Kumar Sethi, New Delhi V. ITO, New Delhi

ITA 3817/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97802 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 13-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS RAKHI VIMAL
• Assessee Lawyers: K R MANJANI
• Keywords: Earning of tax free income
• Section: 80C; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-II : NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO.3817/DEL/2015 ASSESSMENT YEAR : 2009-10 PRAVEEN KUMAR SETHI, PROP. M/S A.P. MOTORS, 2730, NEAR MINERVA CINEMA, KASHMERE GATE, ]NEW DELHI. PAN: AJOPK9993R VS. ITO, WARD-20(2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.R. MANJANI, ADVOCATE DEPARTMENT BY : MRS. RAKHI VIMAL, JCIT DATE OF HEARING : 13. 08.2015 DATE OF PRONOUNCEMENT : 04.11.2015 ORDER THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(A)-12, NEW DELHI, DATED 25.02.2015 FOR THE ASSE SSMENT YEAR 2009- 10. ITA NO.3817/DEL/2015 2 2. I HAVE HEARD SHRI K.R. MANJANI, THE LD. COUNSEL FOR THE ASSESSEE AND MRS. RAKHI VIMAL, THE LD. DR. THE ASSESSEE IS THE PROPRIETOR OF M/S A.K. MOTORS WHICH IS ENGAGED IN TRADING OF AUTO PARTS. THE ISSUES THAT ARISE FOR MY CONSIDERATION ARE DEALT WITH GROUND-WISE. 3. GROUND NO.1 IS AGAINST THE DISALLOWANCE OF DEPRE CIATION, INTEREST AND REPAIR AND RUNNING EXPENSES OF CARS AMOUNTING T O RS.2,23,620/-, TELEPHONE EXPENSES OF RS.13,298/- AND RS.425/- BEIN G SHORT PAYMENT RECEIVED FROM CLIENTS. THE LD. COUNSEL FOR THE ASS ESSEE PLEADS THAT 10% DISALLOWANCE WOULD BE JUSTIFIED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. AS THE ASSESSEE DOES NOT DENY THE USE OF THE ABOVE VEHICLES FOR NON-BUSINESS PURPOSES, IN MY VIEW, THE DISALLOWANCE MADE BY THE AO, AS CONFIRMED BY THE FIRST APPELLATE AUTHORITY, DOES NO T CALL FOR ANY INTERFERENCE. 4. IN THE RESULT, THIS GROUND OF THE ASSESSEE IS DI SMISSED. 5. GROUND NO.2 IS AGAINST THE DISALLOWANCE OF RS.90 ,123/- ON THE GROUND THAT INTEREST BEARING FUNDS HAVE BEEN DIVERT ED FOR NON-INTEREST BEARING PURPOSES. THE ASSESSEE CLAIMS THAT IT HAS INTEREST FREE FUNDS ITA NO.3817/DEL/2015 3 AVAILABLE AND SUBMITTED THAT THE HONBLE BOMBAY HIG H COURT IN CIT VS. RELIANCE UTILITIES AND POWER LTD. (2009) 313 ITR 34 0 (BOM), HAS HELD THAT IF THERE ARE INTEREST FREE FUNDS AVAILABLE WIT H THE ASSESSEE SUFFICIENT TO MEET ITS INVESTMENT AND, AT THE SAME TIME, LOAN HAS BEEN RAISED, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM INTEREST FR EE FUNDS AND, RESULTANTLY, NO DISALLOWANCE OF INTEREST CAN BE MAD E. IT WAS ALSO SUBMITTED THAT RECENTLY, THE HONBLE BOMBAY HIGH CO URT IN CIT VS. HDFC BANK LTD. (2014) 366 ITR 505 (BOM) , HAS HELD THAT NO DISALLOWANCE OF INTEREST CAN BE MADE U/S 14A IF THE ASSESSEES OWN CAPITAL IS MORE THAN THE INVESTMENTS FETCHING EXEMPT INCOME . THE ASSESSEE FILED THE BALANCE SHEET TO DEMONSTRATE THE AVAILABILITY O F INTEREST FREE FUNDS. AS THIS ASPECT HAS NOT BEEN EXAMINED BY THE LD. AO, I DEEM IT FIT TO RESTORE THIS ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICA TION IN ACCORDANCE WITH THE LAW. THE AO SHALL FOLLOW THE PROPOSITION LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD.(SUPRA) ITA NO.3817/DEL/2015 4 6. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO.3 IS AGAINST THE DISALLOWANCE OF DEDUC TION U/S 80C AND 80D. AS THE ASSESSEE ALLEGES THAT THE RECEIPTS FIL ED BY THE ASSESSEE WERE NOT CONSIDERED BY THE REVENUE AUTHORITIES, I DEEM I T FIT TO SET ASIDE THE ISSUE TO THE FILE OF AO. THE AO SHALL VERIFY THE R ECEIPTS AND DISPOSE OF THIS ISSUE IN ACCORDANCE WITH THE LAW. 8. NO OTHER ISSUE HAS BEEN ARGUED BEFORE US. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. THE ORDER PRONOUNCED IN THE OPEN COURT ON 04.11.201 5. SD/- [J.SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED, 04 TH NOVEMBER, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.