Rajesh Pagaria, Kolkata V. I.T.O.,Ward-46(3), Kolkata

ITA 430/KOL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7309 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-08-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 06-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MADHUMITA GHOSH CIT SR D R RE
• Keywords: Depreciation

Judgement Text

ITA NO. 430/KOL/2019 AS SESSMENT YEAR: 2011-2012 RAJESH PAGARIA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ & HZ) I.T.A. NO. 430/KOL/2019 ASSESSMENT YEAR: 2011-2012 RAJESH PAGARIA,.................................... ......................................APPELLANT C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE NO. 213, 2 ND FLOOR, KOLKATA-700 069 [PAN: AFTPP9012M] -VS.- INCOME TAX OFFICER,................................ ...................................RESPONDENT WARD-46(3), KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700 001 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, FOR THE APPELLANT SMT. MADHUMITA GHOSH, ADDL. CIT, SR. D.R , FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : AUGUST 20, 2019 DATE OF PRONOUNCING THE ORDER : OCTOBER 18, 2019 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-14, KOLKATA DA TED 18.01.2019 AND THE GROUNDS RAISED THEREIN READ AS UNDER:- (1) FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE ESTIMATED DISALLOWANCE OF RS.5,80,588/- MADE BY THE AO OUT OF MOTOR CAR EXPENSES WRONGLY ATTRIBUTIN G IT TOWARDS PERSONAL USE. ITA NO. 430/KOL/2019 AS SESSMENT YEAR: 2011-2012 RAJESH PAGARIA 2 (2) (A) FOR THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED T HE PROFESSIONAL FEES PAID AND BANK CHARGES PAID FOR PURCHASE OF SHARES AMOUNTING TO RS.1,98,669/-. (B) FOR THAT IN THE ALTERNATIVE, THE AFORESAID EXPE NSES BE DIRECTED TO BE CAPITALISED WITH THE COST OF SHAR ES. (3) FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE DISALLOWANCE OF RS.4,14,163/- MADE BY THE A.O. BEING INTEREST PAYMENT. 2. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS T HE ISSUE INVOLVED IN GROUND NO. 1 RELATING TO THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) OUT OF MOTOR CAR EXPENSES, IT IS OBSERVED THAT THE ASSESSEE HAD SHOWN INCOME OF RS.9 ,65,000/- RECEIVED FROM HIRING OF ONE CAR, WHILE THE EXPENSES CLAIMED ON MAINTENANCE OF THE SAID MOTOR CAR INCLUDING DEPRECIATION STOOD AT RS.1 1,61,475/-. SINCE NO RECORD IN THE FORM OF LOG BOOK, ETC. WAS MAINTAINED BY THE ASSESSEE TO SHOW THAT THE SAID CAR WAS SOLELY USED FOR GIVING I T ON HIRE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE CHANCES OF PERSONA L USE OF CAR BY THE ASSESSEE COULD NOT BE RULED OUT. HE ACCORDINGLY MAD E A DISALLOWANCE OF RS.5,80,588/- BEING 50% OF THE CAR EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF USE FOR PERSONAL ELEMENT. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE MADE BY THE ASSESSI NG OFFICER. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL AVAILABLE ON RECORD, I AM INCLINED TO AGRE E WITH THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DISALLOWA NCE OF 50% OF THE CAR EXPENSES MADE BY THE AUTHORITIES BELOW IS ON THE HI GHER SIDE KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE IN CLUDING ESPECIALLY THE FACT THAT RENTAL INCOME OF RS.9,65,000/- WAS RECEIV ED BY THE ASSESSEE FROM HIRING THE SAID CAR. IN MY OPINION, IT WOULD B E FAIR AND REASONABLE TO RESTRICT THE DISALLOWANCE OUT OF CAR EXPENSES TO 20 %. THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) IS ACCORDINGLY MODIFIED AND THE ASSESSING OFFICER ITA NO. 430/KOL/2019 AS SESSMENT YEAR: 2011-2012 RAJESH PAGARIA 3 IS DIRECTED TO RESTRICT THE DISALLOWANCE OUT OF CAR EXPENSES TO 20%. GROUND NO. 1 OF THE ASSESSEES APPEAL IS THUS PARTL Y ALLOWED. 4. AT THE TIME OF HEARING BEFORE ME, THE LD. COUNSE L FOR THE ASSESSEE HAS NOT PRESSED GROUND NO. 2 RAISED IN THIS APPEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 5. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 3 RE LATING TO THE DISALLOWANCE ON ACCOUNT OF INTEREST MADE BY THE ASS ESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS), IT IS OBSERVED T HAT INTEREST EXPENDITURE OF RS.8,30,163/- INCURRED IN RESPECT OF UNSECURED LOAN OF RS.1.95 CRORES WAS CLAIMED BY THE ASSESSEE AS DEDUC TION. AS NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSEE HAD GIVEN INTEREST-FREE LOANS OF RS.2.34 C RORES. SINCE THE ASSESSEE HAD RECEIVED INTEREST INCOME OF RS.4,16,00 0/- DURING THE YEAR UNDER CONSIDERATION, THE NET INTEREST AMOUNTING TO RS.4,14,163/- WAS DISALLOWED BY HIM. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE OBSERVING THAT THERE WAS FAILURE ON TH E PART OF THE ASSESSEE TO ESTABLISH ANY NEXUS BETWEEN THE LOANS GIVEN FREE OF INTEREST AND HIS BUSINESS. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL AVAILABLE ON RECORD, I FIND THAT THE UNSEC URED LOANS TAKEN ON INTEREST WERE UTILIZED BY THE ASSESSEE FOR GIVING I NTEREST-FREE LOANS. SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THE BUSINESS E XPEDIENCY OF THE UNSECURED LOANS SO GIVEN EITHER BEFORE THE AUTHORIT IES BELOW OR EVEN BEFORE THE TRIBUNAL, I AM OF THE VIEW THAT THE INTE REST EXPENDITURE CLAIMED BY THE ASSESESE CANNOT BE ALLOWED AS DEDUCT ION. MOREOVER, AS RIGHTLY POINTED OUT BY THE LD. D.R., THE ASSESSING OFFICER HAS TAKEN A VERY FAIR AND REASONABLE STAND ON THE MATTER WHILE DISAL LOWING ONLY NET INTEREST EXPENDITURE AFTER ADJUSTING THE INTEREST R ECEIVED BY THE ASSESSEE. I, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORD ER OF THE LD. ITA NO. 430/KOL/2019 AS SESSMENT YEAR: 2011-2012 RAJESH PAGARIA 4 CIT(APPEALS) CONFIRMING THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF INTEREST AND UPHOLDING THE SAME, I DI SMISS GROUND NO. 3 OF THE ASSESSEES APPEAL. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 18, 2019. SD/- (P.M. JAGTAP) VICE-PRESIDENT (KOLKATA & HYDERABAD ZONES) KOLKATA, THE 18 TH DAY OF OCTOBER, 2019 COPIES TO : (1) SHRI RAJESH PAGARIA, C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE NO. 213, 2 ND FLOOR, KOLKATA-700 069 (2) INCOME TAX OFFICER, WARD-46(3), KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-14, KOLK ATA, (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.