Smt. Pooja Gupta, New Delhi V. DCIT, New Delhi

ITA 406/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5684 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 20-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPALI CHANDRA
• Keywords: Business income; Earning of tax free income; Valuation report
• Section: 143(3); 14A; 132

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 406/DEL/2015 (ASSESSMENT YEAR: 2011 - 12 ) POOJA GUPTA 43/1, RAIPUR ROAD, CIVIL LINES, NEW DELHI PAN: AAG P G4156K VS. DCIT, CENTRAL CIRCLE - 4, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RS SINGHVI, CA REVENUE BY: SMT DEEPALI CHANDRA, CIT DR DATE OF HEARING 23/04/2018 DATE OF PRONOUNCEMENT 2 2 / 06 /2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XXXIII, NEW DELHI DATED 28.10.2014 FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 454540/ - MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ER RED IN CONFIRMING THE ADDITION OF RS. 507826/ - ON ACCOUNT OF DIFFERENCE IN THE VALUATION OF JEWELLERY WHICH IS ILLEGAL. THEREFORE, THE SAME IS LIABLE TO BE DELETED. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE FILED HER RETURN OF INCOME ON 30.09.2011 DECLARING NIL INCOME. SEARCH U/S 132 WAS CARRIED OUT ON 21.01.2011 IN DS GROUP CASES. THE ASSESSEE IS ONE OF THE FAMILY MEMBERS OF THAT GROUP. THE ASSESSMENT U/S 143(3) READ WITH SECTION 153 WAS PASSED ON 18.03.2013 AT RS. 2119511/ - . THE ASSESSE E PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. ON THE ADDITION SUSTAINED THE ASSESSEE IS IN APPEAL BEFORE US. POOJA GUPTA VS DCIT, ITA NO. 406/DEL/2015 (ASSESSMENT YEAR: 2011 - 12) PAGE | 2 4. THE FIRST GROUND OF APPEAL IS WITH RESPECT TO THE ADDITION OF RS. 454540/ - FOR DISALLOWANCE OF INTEREST. DURING THE YEAR THE ASSESSEE HAS CLAIMED PAYMENT OF INTEREST OF RS. 514197/ - ON VARIOUS LOANS. IT HAS ALSO PAID INTEREST OF RS. 404540/ - TO A PARTNERSHIP FIRM WHERE THE ASSESSEE IS A PARTNER. AS THE INTEREST PAID TO PARTNERSHI P FIRM IS NOT RELATED TO EARNING OF ANY INCOME THE LD AO DISALLOWED THE SAME. FURTHER , WITH RESPECT TO THE BALANCE EXPENDITURE OF INTEREST OF RS. 109657/ - THE LD AO HELD THAT THE ASSESSEE DID NOT GAVE THE COMPLETE UTILIZATION OF THE LOAN AND THEREFORE, HE ESTIMATED THE EXPENDITURE OF RS. 50000/ - DISALLOWABLE. CONSEQUENTLY, RS. 454540/ - WAS DISALLOWED. ON APPEAL BEFORE THE LD CIT(A) THE ABOVE DISALLOWANCE WAS CONFIRMED. 5. THE LD AR SUBMITTED THAT AS THE ASSESSEE HAS PAID INTEREST TO THE PARTNERSHIP FIRM IN WH ICH THE ASSESSEE IS A PARTNER , THE INTEREST IS ALLOWABLE. HE FURTHER REFERRED TO THE PROVISION OF SECTION 28(V) OF THE ACT WHEREIN, SUCH INCOME IS CHARGEABLE TO TAX AS BUSINESS INCOME . HE THEREFORE, SUBMITTED THAT IF INTEREST IS PAID SAME IS ALSO A BUSINES S LOSS/ EXPENDITURE INCURRED DURING THE YEAR , HENCE, IT SHOULD BE ALLOWED. 6. THE LD DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND FIND THAT THE ASSESSEE HAS PAID INTEREST OF RS. 404540/ - TO THE VA RIOUS PARTNERSHIP FIRM WHERE THE ASSESSEE IS A PARTNER. THE INCOME FROM SUM RECEIVED BY THE ASSESSEE AS INTEREST IS CHARGEABLE TO TAX UNDER THE HEAD BUSINESS INCOME U/S 28(V) OF THE ACT. THEREFORE, EVEN IF ANY NEGATIVE INCOME I.E. EXPENDITURE IS INCURRED B Y THE ASSESSEE SAME SHOULD ALSO BE COMPUTED UNDER THE HEAD PROFIT AND GAINS OF THE BUSINESS OR PROFESSION. IT IS NOT THE CASE OF THE LD AO THAT THE PROVISION OF SECTION 14A ARE APPLIED TO IT. IT IS ALSO NOT THE CASE OF THE LD AO THAT MONEY IS NOT BORROWED FOR THE PURPOSE OF THE BUSINESS. HE MERELY HELD THAT PAYMENT OF INTEREST TO FIRM IS NOT RELATED TO EARNING OF ANY INCOME WHICH IS CHARGEABLE TO TAX. EVEN OTHERWISE ON LOOKING AT THE ASSESSMENT ORDER WE DO NOT FIND THAT THE ASSESSEE HAS ANY EXEMPT INCOME . T HEREFORE , PROVISION OF SECTION 14A POOJA GUPTA VS DCIT, ITA NO. 406/DEL/2015 (ASSESSMENT YEAR: 2011 - 12) PAGE | 3 DISALLOWANCE ALSO CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. FURTHER, THE AD HOC DISALLOWANCE OF RS. 50000/ - OUT OF OTHER INTEREST PAYMENT IS ALSO WITHOUT ANY BASIS. IN VIEW OF THIS WE ALLOW GROUND NO. 1 OF THE APPEAL O F THE ASSESSEE AND DIRECT THE LD AO TO DELETE THE DISALLOWANCE OF INTEREST OF RS. 454540/ - . 8. GROUND NO. 2 IS WITH RESPECT TO ADDITION OF RS. 5078 26/ - ON ACCOUNT OF DIFFERENCE OF VALUATION OF JEWELLERY. DURING THE COURSE OF SEARCH IT WAS FOUND THAT JEWELLER Y OF RS. 4435951/ - WAS FOUND. FURTHER THE JEWELLERY AS PER ANOTHER VALUATION REPORT WAS ALSO FOUND TO RS. 598900/ - . THEREFORE, TOTAL JEWELLERY FOUND WITH THE ASSESSEE WAS RS. 3944851/ - . THE ASSESSEE EXPLAINED THE JEWELLERY STATING THAT IT WAS RECEIVED BY H ER ON THE OCCASION OF MARRIAGE FROM HER RELATIVES. IT WAS FURTHER STATED THAT SHE IS FILING HER RETURN OF WEALTH TAX FOR PAST SEVERAL YEARS AND THIS JEWELLERY IS DISCLOSED IN THAT RETURN. THE LD AO REJECTED THE EXPLANATION OF THE ASSESSEE AND HE STATED THA T AS THE WEALTH TAX RETURN WAS FILED AFTER THE DATE OF SEARCH FOR ASSESSMENT YEAR 2010 - 11, HE MADE AN ADDITION OF RS. 1764971/ - ON ACCOUNT OF UNACCOUNTED JEWELLERY. THE LD CIT(A) CONFIRMED THE ADDITION OF RS. 507826/ - ONLY. THE ASSESSEE IS NOW IN APPEAL. 9. THE LD AR SUBMITTED THAT AS ON THE DATE OF THE FILING OF THE WEALTH TAX RETURN THE JEWELLERY WAS VALUED AT RS. 1298.28/ - PER GRAM WHEREAS THE RATE ON THE DATE OF SEARCH I.E. 21.01.2011 WAS RS. 1504.78 GRAM. HE SUBMITTED THAT THERE IS NO DIFFERENCE IN THE QUANTITY. 10. THE LD DR RELIED UPON THE ORDER OF THE LOWER AUTHORITIES. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FIND THAT IF THE DIFFERENCE IS ONLY ON ACCOUNT OF RATE AS PER WEALTH TAX RETURN AND AS ON THE DATE OF THE SEARCH AND IF THER E IS NO DIFFERENCE IN THE NUMBER OF GRAMS OF THE JEWELLERY FOUND , WE ARE OF THE VIEW THAT SUCH ADDITION CANNOT BE MADE. DURING THE COURSE OF HEARING THE LD AR HAS SUBMITTED A CHART OF THE JEWELLERY GIVING THE RATE ON VARIOUS DATES OF JEWELLERY. THE ABOVE C HART COULD NOT BE CONTROVERTED BY THE LD DR. IN VIEW OF THIS WE DIRECT THE LD AO TO DELETE THE ADDITION OF RS. 507826/ - ON ACCOUNT OF POOJA GUPTA VS DCIT, ITA NO. 406/DEL/2015 (ASSESSMENT YEAR: 2011 - 12) PAGE | 4 JEWELLERY FOUND DURING THE COURSE OF SEARCH IN ABSENCE OF ANY FINDING BY THE LOWER AUTHORITIES AS WELL AS BY THE LD DR THA T THERE IS ANY DIFFERENCE IN THE WEIGHT OF GOLD FOUND DURING THE COURSE OF SEARCH WITH THE WEALTH TAX RETURN AND SUBSEQUENT, ACQUISITION OF THE GOLD. IN THE RESULT GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT THE APPEAL OF THE ASSE SSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 / 06 /2018. - S D / - - S D / - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 / 06 /2018 A K KEOT COPY FOR WARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI