Ashok Dash, Cuttack V. ITO, Ward-2(1), Cuttack, Cuttack

ITA 451/CTK/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7580 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO.451/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 SHRI ASHOK DASH, PROP. M/S. JAY JAGANNATH TRAVEL, BACK SIDE OF SHYAMKUNJ APARTMENT, KHAN NAGAR, CUTTACK VS. ITO, WARD 2(1), CUTTACK PAN/GIR NO. AFDPD 0347 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI SUNIL MISHRA, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 2 6 /10 / 2016 DATE OF PRONOUNCEMENT : 26 /10 / 2016 O R D E R THIS I S AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 11.8.2014 , FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. GROUND NOS.1 & 7 OF THE APPEAL ARE GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION. 2 ITA NO.451/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 3. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,45,594/ - UNDER THE HEAD EXCESS CLAIM OF INTEREST ON VEHICLE. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER FOUND THAT IN THE REPAYMENT OF SCHEDULE OF VEHICLE LOAN ACCOUNT , TOTAL INTEREST OF RS.12,19,238.64 WAS CHARGED BY DIFFERENT PRIVATE FINANCIERS, WHEREAS THE A SSESSEE HAS CLAIMED AN AMOUNT OF RS.14,64,833.52 TOWARDS INTEREST ON VEHICLE LOAN. THE ASSESSING OFFICER, THEREFORE, ADDED THE DIFFERENTIAL AMOUNT OF RS.2,45,594.88 AS EXCESS INTEREST CLAIM ON VEHICLE LOAN TO THE INCOME OF THE ASSESSSEE. 5. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 6. BEFORE ME, IT WAS SUBMITTED BY THE LD A.R. OF THE ASSESSEE THAT IT IS AN ADMITTED FACT THAT AS PER REPAYMENT SCHEDULE OF VEHICLE LOAN, THE ASSESSEE WAS REQUIRED TO PAY RS.12,19,238.64 AS INTEREST ON VEHICLE LOAN BUT THE ASSESSEE WAS DEFAULTER IN SOME INSTALMENTS FOR WHICH, IT HAD TO PAY EXCESS INTEREST TO THE FINANCIERS. THE ASSESSING OFFICER WITHOUT MAKING ANY ENQUIRY AND WITHOUT ADDUCING CONTRARY EVIDENCE, MADE THE ADD ITION AND THE SAME SHOULD BE D ELETED. 7. ON THE OTHER HAND, LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 3 ITA NO.451/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 8. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE PAYMENT OF RS.14,64,833.52 TOWARDS INTEREST ON VEHICLE LOAN TO THE FINANCIERS IS N OT IN DOUBT OR DEBATE. THE ONLY OBJECTION OF THE ASSESSING OFFICER IS THAT AS PER REPAYMENT SCHEDULE OF VEHICLE LOAN, THE ASSESSEE HAD TO PAY INTEREST OF RS.1 2,19,238.64 BUT THE ASSESSEE HAD PAID RS.14,64,833.52. THEREFORE, HE MADE THE ADDITION OF RS.2,45,594.88 TO THE INCOME OF THE ASSESSEE BY DISALLOWING EXCESS INTEREST PAID ON VEHICLE LOAN. THE ASSESSEE EXPLAINED BEFORE THE LOWER AUTHORITIES THAT THE ASSESSEE WAS DEFAULTER IN SOME INSTA LMENTS DUE TO WHICH, IT HAD TO PAY THE DIFFERENTIAL AMOUNT OF INTEREST OF RS.2,45,594.88. THIS EXPLANATION OF THE ASSESSEE HAS NOT BEEN FOUND TO FALSE AFTER EXAMINATION BY EITHER OF THE LOWER AUTHORITIES. I FIND THE EXPLANATION OF THE ASSESSEE AS A PLAUS IBLE ONE AND, THEREFORE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND VACATE THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.2,45,594.88 AND ALLOW THIS GROUND OF APPEAL. 9. IN GROUND NOS.3 & 4, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ENHANCED THE DISALLOWANCE OF INTEREST PAID TO FINANCIERS BY RS.12,19,238.64 BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 10. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD . THE LD CIT(A) FOUND THAT THE ASSESSEE HAS MADE INTEREST PAYMENT OF RS.12,19,238.64 ON VEHICLE LOANS TO DIFFERENT PRIVATE FINANCIERS AND THE ASSESSEE FAILED TO DEDUCT TDS AS PER PROVISIONS OF SECTION 194A OF 4 ITA NO.451/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 THE ACT. THEREFORE, BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE LD CI T(A) ENHANCED THE DISALLOWANCE BY RS.12,19,238.64. 11. BEFORE ME, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PAID EMI ON LOANS TAKEN FROM DIFFERENT PRIVATE FINANCIERS BY WAY OF POST DATED CHEQUES. THUS, THE ASSESSEE HAD NO CONTROL OVER THE PA YMENT OF INTEREST ON LOAN. IT WAS ALSO THE SUBMISSION OF THE LD A.R. OF THE ASSESSEE THAT NO PAYMENT OF INTEREST WAS OUTSTANDING AND PAYABLE AS AT THE END OF THE YEAR AND, THEREFORE, IN VIEW OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VICTOR SHIPPING SERVICES (P) LTD., (2013) 357 ITR 642(ALL), WHEREIN, IT HAS BEEN HELD THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSION ON THE GROUND THAT TAX HAS NOT BEEN DEDUCTED AT SOURCE, THE AMOUNT SHOULD BE PAYABLE AND NOT IT HAS BEE N PAID BY THE END OF THE YEAR. HE FURTHER SUBMITTED THAT THE SLP FILED AGAINST THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT VIDE JUDGMENT DATED 2.7.2014 IN CC NO.(S) 8068/2014. THEREFORE, IN VIEW OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VICTOR SHIPPING SERVI C ES (P) LTD (SUPRA), NO DISALLOWANCE U/S.40(A)(IA) WAS WARRANTED IN THE CASE OF THE ASSESSEE. HE SUBMITTED THAT WHERE THERE ARE CONTRARY DECISIONS OF HONBLE HIGH COURTS ON AN ISS UE AND NONE OF WHICH IS HONBLE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS.VEGETABLE PRODUCTS LTD., 88 ITR 192 (SC). 5 ITA NO.451/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 12. IN THE FACTS AN D CIRCUMSTANCES OF THE CASE, I FIND THAT THERE IS NO AMOUNTING OUTSTANDING AND PAYABLE AT THE END OF THE YEAR. THEREFORE, I SET ASIDE THE ORDER OF THE LD CIT(A) AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CI T VS. V ICTOR SHIPPING SERVICES (P) LTD(SUPRA) DELETE THE ENHANCED DISALLOWANCE OF INTEREST OF RS.12,19,238.64 BY THE LD CIT(A) . THUS, THESE GROUNDS ARE ALLOWED. 13. GROUND NOS.5 & 6 READ AS UNDER: 5. FOR THAT THE LD CIT(A) COULD HAVE SOUGHT FOR REMAND REPORT FROM THE ASSESSING OFFICER TO VERIFY IN WRITING AS TO WHICH ARE THE BANKS EXEMPTED BY RBI AND WHICH OTHER ARE HOLDERS OF NON - DEDUCTION CERTIFICATE. HENCE, THE ORDER IS NOT SUSTAINABLE IN THE EYE OF LAW. 6. FOR THAT THE ADDITION OF RS.88,056/ - IS ILLEGAL, ARBITRARY AND EXCESSIVE EXERCISE OF JURISDICTION, SINCE THE LD A.O. HAS NOT APPRECIATED THAT THE TOTAL REPAYMENT OF RS.2,38,056/ - MADE DURING THE YEAR, OUT OF WHICH RS.1,50,000/ - IS THE PERSONAL DRAWINGS AND BALANCE OF RS.88,056/ - IS OUT OF PERSON AL SAVINGS AND PERSONAL SAVINGS CANNOT BE RULED OUT SINCE THE APPELLANT HAS BEEN ASSESSED TO INCOME TAX SINCE LAST 10 YEARS. 14. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING ABOVE GROUNDS AND ALSO MADE AN ENDORSEMENT TO THIS EFFECT TO GROUNDS OF APPEAL APPENDED TO APPEAL MEMO. IN VIEW OF ABOVE, I DISMISS B OTH THE GROUNDS AS NOT PRESSED. 6 ITA NO.451/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 26 /10 /2016 IN THE PR ESENCE OF PARTIES. SD/ - ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 26 /10 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : SHRI ASHOK DASH, PROP. M/S. JAY JAGANNATH TRAVEL, BACK SIDE OF SHYAMKUNJ APARTMENT, KHAN NAGAR, CUTTACK 2. THE RESPONDENT. ITO, WARD 2(1), CUTTACK 3. THE CIT(A) CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//