SANDHU BUILDERS, MUMBAI V. ITO 19(3)(4), MUMBAI

ITA 441/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0212 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 20-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Keywords: Proportionate interest
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ./I.T.A. NO.441/MUM/2014 ( / ASSESSMENT YEAR: 2008-09) SANDHU BUILDERS 41, PALI HILL, BANDRA WEST, MUMBAI-400 050 / VS. ITO, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI ./ ./PAN/GIR NO. AAXFS 4480 K ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. DINKLE HARIYA / RESPONDENT BY : DR. A. K. NAYAK / DATE OF HEARING : 20.06.2017 / DATE OF PRONOUNCEMENT : 18.08.2017 / O R D E R PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMIS SIONER OF INCOME TAX (APPEALS)-18 [CIT(A)], MUMBAI DATED 06.11.2013 FOR THE ASSESSMENT YEAR (AY) 2008-09. THOUGH THE ASSESSEE HAS RAISED AS MAN Y AS NINE GROUNDS OF APPEAL, HOWEVER, AS PER OUR CONSIDERED VIEW THERE I S ONLY TWO SUBSTANTIATE 2 ITA NO. 441/MUM/2014 (A.Y. 2008-09) SANDHU BUILDERS VS. ITO GROUNDS OF APPEAL; REST OF THE GROUNDS OF APPEAL ARE REPETITIVE OR NAR RATIVE IN NATURE. (I) WHETHER THE LD. CIT(A) ERRED IN CONFIRMING THE DISA LLOWANCE OF PROPORTIONATE INTEREST OF RS.42,94,355/-. (II) WHETHER THE LD. CIT(A) ERRED IN CONFIRMI NG THE DISALLOWANCE OF RS.4,00,000/- OUT OF TOTAL TRAVELLING EXPENSES O F RS.8,75,000/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTIONS, FILED ITS RETURN OF INCO ME FOR THE RELEVANT ASSESSMENT YEAR ON 09.06.2008 DECLARING TOTAL INCOME AT NIL. THE AS SESSMENT WAS COMPLETED U/S. 143(3) ON 30.12.2010. THE A.O. WHILE PASSING THE AS SESSMENT ORDER DISALLOWED THE INTEREST EXPENSES OF RS.42,94,355/- AND TOUR AND TR AVEL EXPENSES OF RS.4 LACS. ON APPEAL, BOTH THE ADDITION/ DISALLOWANCE WERE CONFIR MED. FURTHER AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE PRESENT APPEAL IS FILE D BEFORE US. 3. WE HAVE HEARD THE LD AR FOR THE ASSESSEE A ND LD DR FOR THE REVENUE. AT THE OUTSET, ON HEARING THE LD. AR OF THE ASSESSEE HAS H ELD THAT GROUND NO.1 RAISED IN THE PRESENT APPEAL IS COVERED BY THE DECISION OF ASSESS EES OWN CASE FOR A.Y. 2007-08. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ARGUE D THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE DIFFERENT. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAV E COMPARED THE FACTS OF THE ASSESSMENT YEAR 2007-08 AND THE YEAR UNDER CONSIDER ATION AND FIND THAT THE FACTS OF 3 ITA NO. 441/MUM/2014 (A.Y. 2008-09) SANDHU BUILDERS VS. ITO BOTH THE YEARS ARE SIMILAR. WE HAVE FURTHER SEEN TH AT THE SIMILAR DISALLOWANCE WAS MADE FOR THE A.Y. 2007-08 AND THE ASSESSEE FILED TH E APPEAL BEFORE THE TRIBUNAL IN ITA NO. 1328/M/2012. THE TRIBUNAL VIDES ITS ORDER D ATED 14.02.2014 PASSED THE FOLLOWING ORDER: 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTE NTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL O F THE RECORDS, IT IS SEEN THAT THE ASSESSEE HAS TAKEN LOANS FROM VARIOUS PERSONS WHICH ARE COMING AS OPENING BALANCE IN THIS YEAR. THE MAIN IS SUE PERTAINS TO INTEREST DEBITED IN THE WORK-IN-PROGRESS AS ON 31ST MARCH 2007 I.E., THE INTEREST EXPENDITURE HAVE BEEN CAPITALIZED IN T HE BOOKS. THE REVENUE'S CASE IS THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE LOAN AND, ACCORDINGLY, THE INTEREST HAS BEEN DI SALLOWED AND HAD BEEN DEDUCTED FROM WORK-IN-PROGRESS. THE ASSESSEE'S CONTENTION IS THAT MAJORITY OF THESE LOANS TAKEN FROM THE THREE P ARTIES ON WHICH THE INTEREST HAS BEEN DISALLOWED, HAS BEEN TAKEN IN THE EARLIER YEARS, HENCE, NO DISALLOWANCE IS CALLED FOR IN THIS YEAR. THE ASSESSEE HAS ALSO DEDUCTED TDS ON SUCH INTEREST PAYABLE AND HAS ALSO DEPOSITED THE SAME. WE AGREE WITH THE CONTENTION OF THE LEARNED C OUNSEL THAT ONCE THE LOAN HAS BEEN RECEIVED IN THE EARLIER ASSESSMEN T YEAR WHICH ARE DULY REFLECTED IN THE BALANCE SHEET FILED ALONG WIT H THE RETURN OF SANDHU BUILDERS INCOME AND THE SAME HAS NOT BEEN DI STURBED BY THE DEPARTMENT, THEN SUCH A LOAN TAKEN IN THE EARLIER Y EARS CANNOT BE HELD TO BE NON - GENUINE IN THIS YEAR. IF THE INTEREST H AS BEEN PAID / PAYABLE IN THE EARLIER YEARS, AS WELL AS IN THE PRESENT ASS ESSMENT YEAR, THEN THERE CANNOT BE A QUESTION OF DOUBTING THE GENUINEN ESS OF THE LOAN IN THIS YEAR, ONLY FOR THE PURPOSE OF DISALLOWING THE INTEREST IN THIS YEAR. TO DISALLOW THE INTEREST IN THIS YEAR ON LOANS TAKE N, THEN, THE ASSESSING OFFICER OUGHT TO HAVE BEEN MADE ADDITION UNDER SECT ION 68 IN THE EARLIER YEAR IF HE HAD ANY DOUBT ABOUT THE GENUINEN ESS OF THE LOAN. ONCE NO ADDITION HAS BEEN MADE ON ACCOUNT OF UNEXPL AINED CREDIT OF LOAN IN THE EARLIER YEAR UNDER SECTION 68 , THEN NO DISALLOWANCE CAN BE MADE OUT OF INTEREST IN THE PRESENT YEAR. MOREOVER, THE ASSESSEE HAS DULY DEDUCTED TDS ON SUCH PAYMENT OF INTEREST AND H AS BEEN DEPOSITED WITH THE GOVERNMENT ACCOUNT, THE DETAILS OF WHICH ARE ALREADY THERE IN THE RECORD. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT DISALLOWANCE OF INTEREST BY WAY OF REDUCING THE 4 ITA NO. 441/MUM/2014 (A.Y. 2008-09) SANDHU BUILDERS VS. ITO WORK-IN-PROGRESS AS ON 31ST MARCH 2007, IS UNCALLED FOR. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. CONSIDERING THE DECISION OF TRIBUNAL IN THE ASSESSE ES OWN CASE, ON SIMILAR FACT , FOLLOWING THE PRINCIPAL OF CONSISTENCY THE GROUND O F APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 5. GROUND NO. 2 RELATES TO THE DISALLOWANCE OF TOUR AND TRAVEL EXPENSES OF RS.4 LACS. THE LD. AR OF THE ASSESSEE ARGUED THAT THE AS SESSEE HAS FILED SUFFICIENT EVIDENCE RELATING TO THE EXPENSES CLAIMED ON ACCOUN T OF TOUR AND TRAVEL. THE A.O. HAS CONCLUDED THAT THE ASSESSEE HAS NOT FILED SUPPO RTING BILLS AND VOUCHERS. IN FACT, NO SUCH DOCUMENT IN THE FORM OF BILL AND VOUCHER WA S CALLED FOR. EVEN THE LD. CIT (A) NOT REQUIRED ANY FURTHER EVIDENCE THOUGH THE AS SESSEE HAS SUFFICIENT EVIDENCE TO SUBSTANTIATE ITS CLAIM. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL MAY BE RESTORED TO THE FILE OF THE A.O. FOR VERIFIC ATION OF THE DOCUMENT. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED TH E ORDER OF THE AUTHORITIES BELOW. HOWEVER, LD. DR HAS NO OBJECTION IF THIS GROUND OF APPEAL IS RESTORED TO THE FILE OF THE A.O. FOR VERIFICATION OF THE DOCUMENTARY EVIDEN CE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A. O. MADE THE DISALLOWANCE THAT CLAIM IS NOT SUPPORTED BY PROPER BILLS AND VOUCHERS . THE LD. CIT(A) CONFIRMED THE ORDER OF THE A.O. ON SIMILAR LINES. CONSIDERING THE SUBMISSIONS OF THE LD AR FOR THE ASSESSEE THAT THIS GROUND OF APPEAL MAY BE RESTORE D TO THE FILE OF THE A.O. FOR 5 ITA NO. 441/MUM/2014 (A.Y. 2008-09) SANDHU BUILDERS VS. ITO PROPER VERIFICATION OF THE BILLS, VOUCHERS AND OTHE R SUPPORTIVE DOCUMENTS IN SUPPORT OF CLAIM OF THE ASSESSEE. ON WHICH THE LD DR HAS NO OBJECTION. CONSIDERING THE FACTS OF THE PRESENT CASE AND THE DOCUMENTARY EVIDE NCES FILED BEFORE US, WE DEEM IT NECESSARY TO RESTORE THIS GROUND OF APPEAL TO THE F ILE OF ASSESSING OFFICER TO PASS THE ORDER AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO S AY THAT THE A.O. SHALL GRANT ADEQUATE /AND SUFFICIENT OPPORTUNITY BEFORE PASSING THE ORDER IN ACCORDANCE WITH THE LAW. THIS GROUND OF APPEAL IS ALLOWED FOR STATI STICAL PURPOSE. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. #$% &'(# ) * ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 18, 2 017 SD/- SD/- (G. S. PANNU) (PAWAN SINGH) / ACCOUNTANT MEMBER .& / JUDICIAL MEMBER $ MUMBAI; 0 DATED : 18.08.2017 . & . ./ROSHANI , SR. PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 1 ( ) / THE CIT(A) 4. 1 / CIT - CONCERNED 5. 234 &&5' , 5' , $ / DR, ITAT, MUMBAI 6. 46( / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI