ANIL K SHAH, MUMBAI V. ITO 29(1)(1), MUMBAI

ITA 4396/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1478 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 05-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MICHAEL JERALD
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 4396 / MUM . /201 8 ( ASSESSMENT YEAR : 20 13 14 ) SHRI ANIL K. SHAH 703, 7 TH FLOOR, SUPARSHVA SARVODAY N AGAR, NAHUR ROAD MULUND (W), MUMBAI 400 080 PAN AAPPS6042M . APPELLANT V/S INCOME TAX OFFICER WARD 29(1)(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI DEVENDRA JAIN REVENUE BY : SHRI S. MICHAEL JERALD DATE OF HEARING 10.12.2019 DATE OF ORDER 13.12.2019 O R D E R PER M. BALAGANESH, A.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 20 TH MARCH 2018 , PASSED BY THE LEARNED CIT(A) 39 , MUMBAI, FOR THE ASSESSMENT YEAR 20 13 14 . 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL OF THE ASSESSEE IS, WHETHER OR NOT THE LEARNED CIT(A),IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WAS JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER 2 SHRI ANIL K. SHAH IN DISALLOWANCE OF INTEREST EXPENDITURE OF ` 6,11,9 94, PAID BY THE ASSESSEE ON BORROWED FUNDS . 3. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS A PROPRIETOR OF M/S. K.J. STEELS, ENGAGED IN THE BUSINESS OF TRADING AND DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DERIVED INCOME FROM OTHER SOURCES. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013 14 WAS FILED BY THE ASSESSEE ON 27 TH MARCH 2014, DECLARING TOTAL INCOME OF ` 3,00,140. WE FIND THAT IN THE SAID RETURN OF INCOME, THE ASSES SEE HAD CLAIMED DEDUCTION UNDER SECTION 57(III) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) IN RESPECT OF INTEREST PAID IN THE SUM OF ` 6,11,994. THE ASSESSING OFFICER DIRECTED THE ASSESSEE TO SUBSTANTIATE THE NEXUS BETWEEN THE INTEREST RECEIVED ON F IXED DEPOSIT BY THE ASSESSEE AND THE INTEREST PAID ON BORROWED FUND AS ABOVE ALONG WITH DOCUMENTARY EVIDENCES. THE ASSESSEE, VIDE LETTER DATED 3 RD MARCH 2016, GAVE A RESPONSE BEFORE THE ASSESSING OFFICER. ON A PERUSAL OF THE DETAILS FURNISHED BY THE ASSESS EE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PAID INTEREST TO VARIOUS PARTIES AGAINST LOAN TAKEN BY HIM TO THE TUNE OF ` 5,46,617, AND INTEREST PAID ON OVERDRAFT AMOUNTING TO ` 65,337, THEREBY TOTALING TO ` 6,11,994, TOWARDS INTEREST PAID. WE FI ND THAT THE ASSESSING OFFICER HAD OBSERVED THAT THE ASSESSEE HAD NOT CLEARLY DEMONSTRATED THE NEXUS BETWEEN THE INTEREST 3 SHRI ANIL K. SHAH INCOME WITH THE INTEREST PAID ON BORROWED FUNDS SO AS TO MAKE HIM ELIGIBLE FOR DEDUCTION UNDER SECTION 5 7 (III) OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER MADE DISALLOWANCE OF INTEREST PAID UNDER SECTION 5 7 (III) OF THE ACT IN THE SUM OF ` 6,11,994, WHILE COMPLETING THE ASSESSMENT. THIS ACTION OF THE ASSESSING OFFICER WAS UPHELD BY THE LEARNED COMMISSIONER (APPEALS). 4. WE FIND THAT THE L EARNED AUTHORISED REPRESENTATIVE HAD PLEADED THAT THE ASSESSEE HAD EARNED INTEREST INCOME ON FIXED DEPOSIT TO THE TUNE OF ` 9,49,659. THIS FACT IS ALSO EVIDENT FROM THE COMPUTATION OF TOTAL INCOME ENCLOSED IN PAGE 25 OF THE PAPER BOOK FILED BY THE ASSESSEE . THE LEARNED AUTHORISED REPRESENTATIVE ALSO PLEADED THAT THE LOANS BORROWED BY THE ASSESSEE WERE UTILIZED FOR MAKING INVESTMENT IN FIXED DEPOSIT WHICH IN TURN HAD FETCHED INTEREST INCOME TO THE ASSESSEE. ACCORDINGLY, HE ARGUED THAT THE NEXUS BETWEEN THE I NTEREST PAID AND INTEREST RECEIVED STAND ESTABLISHED. THE LEARNED AUTHORISED REPRESENTATIVE, HOWEVER, FAIRLY CONCEDED THAT LET THIS ASPECT TO BE FACTUALLY VERIFIED BY THE ASSESSING OFFICER AFRESH. WHEN THIS WAS PUT BEFORE THE LEARNED DEPARTMENTAL REPRESENT ATIVE, HE VEHEMENTLY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND PROPER IN THE INTEREST OF JUSTICE AND FAIR PLAY TO REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ADJUDICATION IN ACCORDANCE WITH LAW. 4 SHRI ANIL K. SHAH THE ASSESSEE IS AT LIBERTY TO FURNISH NECESSARY EVIDENCES IN SUPPORT OF HIS CONTENTIONS. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, ASSESSEES APPE AL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN C OURT ON 13.12.2019 SD/ - MAHAVIR SINGH JUDICIAL MEMBER SD/ - M. BALAGANESH ACCOUNTANT MEMBER MUMBAI, DATED: 13.12.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI