ARTI R. KATHOTIA, MUMBAI V. DCIT 12(3), MUMBAI

ITA 4207/MUM/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8980 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 10-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Proportionate interest

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER, ITA NO.4207/MUM/2014 ASSESSMENT YEAR: 2006-07 ARTI R KATHOTIA, THE INTERNTIONAL HOUSWE, 4 TH FLOOR, NEW MARINE LINES, CROSS ROAD NO.1, NO.16 M. K. ROAD, CHURCHGATE, MUMBAI-400020 / VS. DCIT - 12(3), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( /ASSESSEE) ( / REVENUE) P.A. NO. AGSPL0722H / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE LD CIT(A)-23, MUMBAI, DATED 21/03/2014 AND IT PERTAINS TO ASSESSM ENT YEAR-2006-07. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. FOR THAT THE LD. CIT (APPEALS) ERRED IN LAW AS WELL AS IN FACTS IN CONFIRMING THE DISALLOWANCES OF RS. 12,56,2657- IN RESPECT OF INTEREST EXPENSE U/S 36 (III) OF THE INCOME TAX ACT, 1961 (' THE ACT'). 2. FOR THAT THE LD. CIT (APPEALS) ERRED IN LAW AS WELL AS IN FACTS IN CONFIRMING THE DISALLOWANCES OF RS. 1,50,0007- U/S 24(B) OF THE ACT, ON ACCOUNT OF INTEREST ON BORROWED CAPITAL FOR PURCHAS E OF PROPERTY, WITHOUT ! / ASSESSEE BY NONE ! / REVENUE BY SHRI V. K. CHATURVEDI / DATE OF HEARING : 25/06/2019 / DATE OF ORDER: 28/06/2019 2 SMT. ARTI R. KATHOTIA SPECIFYING THE CONDITION WHICH STATED TO HAVE NOT B EEN SATISFIED FOR CLAIMING DEDUCTION U/S 24 (B) OF THE ACT. 3. FOR THAT ORDER OF CIT (A) IN CONFIRMING THE DI SALLOWANCES MADE BY THE ASSESSING OFFICER IS HIGHLY EXCESSIVE AND BAD I N LAW AND CANNOT BE JUSTIFIED UNDER THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS DEBITED INTEREST AMOUNTING TO RS.18,41,873/- ON BORROWED FUNDS. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, THE AO NOTED THAT INTEREST HAS BEEN PAID ON LOANS BORROWED FROM M/S K HAZANA TRADELINKS LTD. THE AO FURTHER NOTED THAT LOAN BORROWED FROM M/S KHAZANA TRADELINK S LTD. HAD BEEN USED FOR PURCHASE OF RESIDENTIAL FLAT AND OTHER INVESTMENTS WHICH ARE NO T RELEVANT TO HER BUSINESS, THEREFORE, HE OPINED THAT INTEREST ON LOAN CLAIMED AGAINST BUSINE SS INCOME CANNOT BE ALLOWED AS DEDUCTION, ACCORDINGLY DISALLOWED TOTAL INTEREST CL AIMED UNDER SECTION 36(1)(III) OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A), BUT COULD NOT SUCCEED. THE LD. CIT(A) FOR T HE DETAILED REASONS RECORDED IN ITS APPELLATE ORDER AND CONFIRMED ADDITIONS MADE BY THE AO. THE ASSESSEE CARRIED THE MATTER, IN FURTHER APPEAL BEFORE ITAT. THE ITAT IN ITS ORDE R IN ITA NO. 3357/MUM/2010 DATED 20/04/2011 RESTORED THE MATTER BACK TO THE FILE OF LD. AO WITH CERTAIN OBSERVATIONS. CONSEQUENT TO ITAT ORDER, THE AO HAD TAKEN UP FRESH PROCEEDINGS AND CALLED UPON THE ASSESSEE TO FILE NECESSARY DETAILS IN LIGHT OF OBSE RVATIONS MADE BY THE ITAT. IN RESPONSE, THE ASSESSEE VIDE HER LETTER DATED 2ND JUNE 2011 FI LED REQUISITE DETAILS. THE AO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALS O TAKEN NOTE OF OBSERVATIONS OF THE TRIBUNAL, DISALLOWED PROPORTIONATE INTEREST, OUT OF TOTAL INTEREST DEBITED INTO THE PROFIT AND 3 SMT. ARTI R. KATHOTIA LOSS ACCOUNT ON THE BASIS OF UTILISATION OF FUNDS F OR PURCHASE OF PROPERTY AND OTHER INVESTMENTS AND ACCORDINGLY DETERMINED TOTAL DISALL OWANCE OF RS.14,06,265/-. FURTHER, THE AO HAS DETERMINED DISALLOWANCE OF RS.7,23,017/- IN RESPECT OF UTILISATION OF FUNDS FOR PURCHASES OF PROPERTY. IN SO FAR AS, ASSESSEES CLA IM OF INTEREST DEDUCTION U/S 24(B) OF THE ACT, THE AO REJECTED THE CLAIM OF THE ASSESSEE ON T HE GROUND THAT THERE IS NO SUCH DIRECTIONS FROM THE ITAT IN RESPECT OF DEDUCTION TO WARDS INTEREST ON LOAN BORROWED FOR THE PURPOSE OF PURCHASE OF RESIDENTIAL HOUSE PROPERTY. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A). BEFORE THE LD CIT(A), THE ASSESSEE HAS REIT ERATED HER SUBMISSIONS MADE BEFORE THE AO TO ARGUE THAT INTEREST DISALLOWANCE WORKED OUT B Y THE AO ON THE BASIS OF UTILISATION OF FUNDS IS INCORRECT AND ALSO EXCESSIVE. THE ASSESSEE HAD ALSO CHALLENGED THE FINDINGS OF THE AO IN REJECTION OF INTEREST ON LOAN USED FOR PURCHA SE OF PROPERTY, WHICH IS DEDUCTIBLE UNDER SECTION 24(B) OF THE ACT. THE LD CIT (A) AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT AO HAD GIVEN CATEGORICAL FINDINGS AFTER E XAMINATION OF BANK STATEMENT, INVESTMENT IN PROPERTY, JEWELLERY, SHARE APPLICATION MONEY AND SHARE DEBENTURES AS PER WHICH FUNDS TO THE TUNE RS.2,59,65,718/- HAS BEEN USED FOR NON-BUS INESS PURPOSES, THEREFORE, THE AO HAS RIGHTLY COMPUTED DISALLOWANCE OF INTEREST. AS REGAR DS CLAIM OF DEDUCTION OF INTEREST U/S 24(B) OF THE ACT, THE ARGUMENTS OF THE ASSESSEE CANNOT BE ACCEPTED IN VIEW OF THE REASONS GIVEN BY THE AO AND ALSO THE FACT THAT THE ASSESSEE HAS N OT SHOWN THAT CONSTRUCTION OF THE BUILDING STOOD COMPLETED IN THE YEAR UNDER CONSIDER ATION AND THAT CONDITIONS LAID DOWN IN SECTION 24(B) OF THE ACT ARE SATISFIED. ACCORDINGLY , DISMISSED APPEAL FILED THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD CIT(A), ASSESSEE I S IN APPEAL BEFORE US. 4 SMT. ARTI R. KATHOTIA 4. NONE APPEARED FOR THE ASSESSEE. 5. WE HAVE HEARD LD DR, PERUSED THE MATERIAL AVAILA BLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE A O HAS GIVEN CATEGORICAL FINDINGS IN LIGHT OF VARIOUS EVIDENCE FILED BY THE ASSESSEE, INCLUDING B ANK STATEMENT AND ARRIVED AT UTILISATION OF FUNDS TO THE EXTENT OF RS.2,59,65,718/- OUT OF T OTAL BORROWED FUNDS FOR NON-BUSINESS PURPOSES AND ACCORDINGLY, WORKED OUT INTEREST DISAL LOWANCE UNDER SECTION 36(1)(III) OF THE ACT. WE FURTHER NOTED THAT THE AO HAS ALSO GIVEN CA TEGORICAL FINDING IN RESPECT OF INTEREST DEDUCTION UNDER SECTION 24(B) AND HELD THAT THE ASS ESSEE HAS FAILED TO PROVE WITH NECESSARY EVIDENCE THAT THE BUILDING CONSTRUCTION H AS BEEN COMPLETED FOR THE YEAR UNDER CONSIDERATION AND CONDITIONS PRESCRIBED U/S 24(B) O F THE ACT, HAS BEEN SATISFIED IN ORDER TO GIVE BENEFIT OF DEDUCTION TOWARDS INTEREST ON BORRO WED CAPITAL U/S 24(B) OF THE ACT. BEFORE US, THE ASSESSEE HAS NEITHER APPEARED NOR FILED ANY DETAILS TO CONTROVERT THE FINDINGS OF THE FACT RECORDED BY THE LD AO AS WELL AS LD CIT(A). TH EREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY LD. CIT(A) AND HENCE WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD CIT(A) AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/06/2019. SD/- SD/- ( SAKTIJIT DEY ) (G. MANJUNAT HA) '!# /JUDICIAL MEMBER $!# / ACCOUNTANT MEMBER MUMBAI; DATED : 28/06/2019 F{X~{T F{X~{T F{X~{T F{X~{T? P.S / /. . . %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT (RESPECTIVE ASSESSEE) 2. #$%!' / THE RESPONDENT. 5 SMT. ARTI R. KATHOTIA 3. &% &% ' ( ) / THE CIT, MUMBAI. 4. &% &% ' / CIT(A)- , MUMBAI, 5. )*+ %# , , &% %, . , / DR, ITAT, MUMBAI 6. +/0 / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI