SANJEEV GUPTA, FARIDABAD V. ITO, WARD- 11(3), FARIDABAD

ITA 4604/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3142 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 14-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R MISHRA
• Assessee Lawyers: MAHENDER GUPTA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.4604/DEL/2017 ASSESSMENT YEAR : 2014-15 SANJEEV GUPTA, AKGS & ASSOCIATES, 1F/34-35, B.P. OPP. VAISHNO DEVI MANDIR, NIT, FARIDABAD, HARYANA. VS. ITO, WARD- 11(3), FARIDABAD. PAN : AAPPG7614P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHENDER GUPTA, CA DEPARTMENT BY : SHRI B. R. MISHRA, SR.DR DATE OF HEARING : 13-02-2018 DATE OF PRONOUNCEMENT : 28-02-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 29.05.2017 OF CIT(A), FARIDABAD RELATING TO ASSESSM ENT YEAR 2014-15. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS A DOCTOR RUNNING HOSPITAL IN THE NAME AND STYLE M/S C ITY HOSPITAL MATER HOME (CHMC). HE FILED HIS RETURN OF INCOME ON 23.09.201 4 DECLARING TOTAL INCOME OF RS.2,16,260/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IN HIS PROFIT & LOSS ACCOUNT HAS DEBITED INTEREST TO THE TUNE OF RS.22,24,957/-. OUT OF ABO VE, INTEREST OF RS.3,58,740/- RELATES TO LOAN ON CARS AND THE BALANCE INTEREST OF RS.18,66,217/- IS ON ACCOUNT OF 2 ITA NO.4604/DEL/2017 SECURED LOANS RAISED FROM HDFC BANK, DUETCHPOST BAN K HOME FINANCE AND STANDARD CHARTERED BANK. THE ASSESSING OFFICER ANA LYZED THE INVESTMENTS MADE BY THE ASSESSEE, THE INTEREST FREE FUNDS AVAIL ABLE WITH HIM AND OTHER RELEVANT DETAILS AND DISALLOWED INTEREST OF RS.11,1 3,877/- U/S 36(1)(III) OF THE I.T. ACT. 3. BEFORE THE LD. CIT(A), THE ASSESSEE FURNISHED TH E DETAILS OF CALCULATION OF NON-BUSINESS ASSETS AS WELL AS THE INTEREST BEARING AND NON-INTEREST BEARING FUNDS AVAILABLE WITH THE ASSESSEE AND SUBMITTED THA T NO SUCH DISALLOWANCE IS CALLED FOR. HOWEVER, LD. CIT(A) WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT OUT OF TOTAL INTERE ST PAID AMOUNTING TO RS.22,24,957/-, AN AMOUNT OF RS.3,58,740/- HAS BEEN PAID ON CAR LOANS AND BALANCE AMOUNT OF RS.18,66,271/- HAS BEEN PAID TO V ARIOUS BANKS FOR INVESTMENT IN PROPERTIES. THE ASSESSING OFFICER HAS NOT PROPE RLY COMPUTED THE DISALLOWANCE U/S 36(1)(III) OF THE I.T. ACT. HE, T HEREFORE, CONFRONTED THE SAME TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. SIN CE THE ASSESSEE HAD UTILIZED A PORTION OF THE LOAN FOR A PROPERTY WHICH IS NOT BEI NG UTILIZED FOR HIS BUSINESS/PROFESSION AND THE PROPERTY IN QUESTION HA S BEEN FULLY CONSTRUCTED AND IS IN THE POSSESSION OF THE ASSESSEE, HE HELD THAT THE INTEREST AMOUNT OF RS.18,66,217/- WHICH WAS THE INTEREST PAID FOR THE PERSONAL ASSET AND NOT FOR BUSINESS PURPOSE IS NOT ALLOWABLE AS DEDUCTION. HE ACCORDINGLY DISALLOWED AN 3 ITA NO.4604/DEL/2017 AMOUNT OF RS.18,66,217/- BY ENHANCING THE DISALLOWA NCE MADE BY THE ASSESSING OFFICER AT RS11,13,877/-. 4. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S :- 1. THAT IGNORING THE FACTS AND CIRCUMSTANCES OF TH E CASE, LD. CIT (APPEALS) HAS ARBITRARILY CONFIRMED / INCREASED THE DISALLOWANCE TO RS.18,66,217/-. APPEAL WAS FILED BEFORE HONBLE CIT (APPEALS), FARIDABAD AGAIN ST AD-HOC ADDITION OF RS.11,13,877/- MADE BY THE A.O. U/S 36(1)(III) OF I NCOME TAX ACT, 1961 BEING INTEREST @ 12% ON ACCOUNT ON NON BUSINESS INVESTMENT OF RS.9 2,82,302/-. 2. THAT THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEAL), FARIDABAD IS BAD IN LAW AND ON FACTS. 3. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODI FY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL TH E ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT THE ASSESSING OFFICER HAS TREATED THE INVESTMENT IN THE FIRM AS PERSONAL INVESTMENT. ALTHOUGH DETAILED CHART WAS FURNISHED BEFORE THE AS SESSING OFFICER, HE HAS NOT CONSIDERED THE SAME. FURTHER, CERTAIN CALCULATION ERRORS ARE APPARENT WHILE COMPUTING THE DISALLOWANCE OF INTEREST. SINCE THE PROPERTY WAS USED FOR BUSINESS PURPOSE AND THE ASSESSEE HAS NOT CLAIMED A NY RENT, THEREFORE, THE DISALLOWANCE OF INTEREST MADE BY THE ASSESSING OFFI CER AND ENHANCED BY THE LD. CIT(A) IS LIABLE TO BE SET-ASIDE. 6. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT SINCE THE ASSESSEE COULD NOT EXPLAIN TO THE 4 ITA NO.4604/DEL/2017 SATISFACTION OF THE LD. CIT(A) HE HAS ENHANCED THE DISALLOWANCE OF INTEREST. THEREFORE, THE ORDER OF THE LD. CIT(A) SHOULD BE UP HELD. 7. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE DL. CIT(A) AND PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSING OFFICER DISALLOWED AN AMO UNT OF RS.11,13,877/- OUT OF THE INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE U/ S 36(1)(III) OF THE I.T. ACT. I FIND THE LD. CIT(A) ENHANCED SUCH DISALLOWANCE TO R S.18,66,217/-. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE ARE SOME CALCULATION ERROR ON ACCOUNT OF AVAILABILITY OF FUNDS AND THE D ISALLOWANCE OF INTEREST HAS BEEN WRONGLY CALCULATED. FURTHER, THE INVESTMENT I N THE FIRM HAS BEEN TREATED BY THE ASSESSING OFFICER AS PERSONAL INVESTMENT WHICH IS UNCALLED FOR. CONSIDERING THE TOTALITY OF FACTS OF THE CASE AND I N THE INTEREST OF JUSTICE, I DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE A SSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUB STANTIATE WITH EVIDENCE TO HIS SATISFACTION REGARDING THE CLAIM OF INTEREST EXPEND ITURE. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WIT H LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLO WED FOR STATISTICAL PURPOSES. 5 ITA NO.4604/DEL/2017 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH FEBRUARY, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 28-02-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI