Ashish Jindal , Delhi V. ITO ward- 52(4), New Delhi

ITA 4383/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2985 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 14-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Salary income

Judgement Text

1 ITA NO. 4383/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I(2) + SM C-1 NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 4383/DEL/2019 ( A.Y 2015-16) ASHISH JINDAL 8-SUNDAR NAGAR DELHI PIN: 110003 PAN: AEXPJ2013H (APPELLANT) VS ITO WARD-52(4) NEW DELHI PIN 110002 (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH. PRADEEP SINGH GAUTAM, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 11/04/2019 PASSED BY CIT(A)-18 FOR ASSESSMENT YEAR 2015-16. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER PASSED BY THE LEARNED CIT(A) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE DI SALLOWANCE OF 13,41,068/- MADE ON ACCOUNT OF INTEREST EXPENSES INVOKING THE P ROVISIONS OF SECTION 36(1 )(III) OF THE ACT. (II) THAT THE DISALLOWANCE HAS BEEN CONFIRMED REJ ECTING THE EXPLANATION AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE IN THIS REGARD. DATE OF HEARING 04.03.2020 DATE OF PRONOUNCEMENT 13.03.2020 2 ITA NO. 4383/DEL/2019 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ACTION OF THE AO REJECTING THE CONTENTION OF THE ASSESSEE THAT THE ADVANCES HAVING BEEN MADE OUT OF THE OWNED FUNDS OF THE ASSESSEE, NO DISALLOWANCE U/S 36 (1 )(II) CAN BE MADE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CON TENTION OF THE ASSESSEE THAT THE INTEREST CLAIMED BY THE ASSESSEE HAVING DIRECT NEXUS WITH THE BUSINESS EXPEDIENCY OF THE ASSESSEE, NO DISALLOWANCE UNDER S ECTION 36(1 )(III) CAN BE MADE.' 3. DURING THE YEAR, THE ASSESSEE HAS SHOWN INCOME FROM SALARY FROM M/S JINDAL COSMETICS PVT. LTD., INCOME FROM BUSINESS AN D PROFESSION AND INCOME FROM OTHER SOURCES AND DECLARED TAXABLE INCOME OF R S. 16,85,897/-. THE ASSESSING OFFICER OBSERVED THAT AN AMOUNT OF RS. 27 ,11,471/- WAS DEBITED TO PROFIT AND LOSS ACCOUNT FOR A.Y. 2015-16 AS PAYMENT OF INTEREST. IT ALSO APPEARS THAT THIS INTEREST IS PAID ON SECURED LOANS OF RS. 2,26,52,053/-, WHEREAS, HE HAS ALSO GIVEN INTEREST FREE ADVANCES O F RS. 1,12,03,500/-. THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 13,41,06 8 OUT OF INTEREST EXPENSES. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF TH E ASSESSEE. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE AND THER E IS NO ADJOURNMENT APPLICATION ON BEHALF OF THE ASSESSEE. THE NOTICE HAS BEEN SERVED TO THE ASSESSEE. THEREFORE, WE ARE TAKING OF THE SUBMISSI ONS OF THE ASSESSEE BEFORE THE CIT(A) AS WELL AS BEFORE THE ASSESSING OFFICER . 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE THE LD. DR AND PERUSED THE MATERIAL AVAI LABLE ON RECORD. FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT CAN BE SEEN THAT THE ASSESSEE 3 ITA NO. 4383/DEL/2019 SUBMITTED BEFORE THE ASSESSING OFFICER THAT THERE I S NO DIVERSION OF FUNDS FROM BUSINESS BEYOND THE LEVEL HELD AS ON 31.03.2014, TH EREFORE IT CAN BE CONCLUDED THAT INTEREST HAS BEEN PAID FOR BUSINESS NEEDS. BUT THE ASSESSEE COULD NOT ESTABLISH THE ACTUAL BUSINESS NEXUS WITH THE INTERE ST FREE LOANS. THEREFORE, THE ASSESSING OFFICER WAS RIGHT IN DISALLOWING INTEREST FREE LOAN ON THE PROPORTIONATE BASIS TO THE EXTENT OF 25% ONLY. BEFO RE CIT(A) ALSO THE ASSESSEE WAS UNABLE TO SPECIFY THE PARTICULAR UTILIZATION OF BORROWED FUNDS. THE CIT(A)WAS RIGHT IN HOLDING THAT THE INTEREST COMPON ENT CORRESPONDING TO THE INTEREST-BEARING FUNDS DIVERTED FOR NONBUSINESS PU RPOSES NEEDS TO BE DISALLOWED ON PROPORTIONATE BASIS. THUS, APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 13TH MARCH , 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 13/03/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 4 ITA NO. 4383/DEL/2019 DATE OF DICTATION 06.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 09.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 3 .03.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 3 .03.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 3 .03.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER