VITHAL V. KAMAT HUF, MUMBAI V. DCIT RG 12(3), MUMBAI

ITA 4620/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2921 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 13-10-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 09-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Additional evidence

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND RAMLAL NEGI , (JM) ./ I.T.A. NO. 4620 / MUM/20 12 ( / ASSESSMENT YEAR : 2004 - 05 ) VITHAL V KAMAT HUF, 70 - C,NEHRU ROAD, VILE PARLE (E), MUMBAI - 400099 / VS. DY.COMMISIONER OF INCOME TAX , RANGE 12(3), 2 ND FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN : AABHV8882Q / APPELLANT BY SHRI R C JAIN / RSPONDENT BY SHRI CHANDIP SINGH / DATE OF HEARING : 14.10 . 201 5 / DATE OF PRONOUNCEMENT : 14. 10 . 201 5 / O R D E R PER B.R. BASKARAN (AM) THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST DATED 12.4.2012 PASSED BY LD CIT(A) - 23 , MUMBAI AND IT RELATES TO ASSESSMENT YEAR 2004 - 05, WHEREIN THE ASSESSEE IS ASSAILING THE DECISION OF LD. CIT(A) RENDERED ON FOLLOWING ISSUES : A ) DISALLOWANCE OF INTEREST; B ) DISALLOWANCE OF BROKERAGE AND COMMISSION; AND C ) DISALLOWANCE OF LEGAL AND PROFESSIONAL FEES. ITA NO. 4620 / MUM/20 12 2 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE AO COMPLETED THE PRESENT ASSESSMENT CONS EQUENT TO THE ORDER PASSED BY THE ITAT IN ITA NO.6907/MUM/2007 AND 6708/MUM/2008.. 3. THE ASSESSEE IS A HUF AND DERIVES INCOME FROM INTEREST ON LOAN AND NCD ETC. IT DOES NOT CARR Y ON ANY BUSINESS ACTIVITY. THE FIRST ISSUE RELATES TO DISALLOWANCE OF PR OPORTIONATE INTEREST EXPENSES OF RS.8,11,948 / - . WE NOTICE THAT THE SAID DISALLOWANCE WAS MADE ON THE REASONING THAT THE ASSESSEE COULD NOT ESTABLISH NEXUS BETWEEN THE INTEREST EXPENDITURE AND THE INVESTMENT MADE ON WHICH THE INCOME WAS EARNED. DURING THE COURSE OF HEARING, WE PERUSED THE BALANCE SHEET FILED BY THE ASSESSEE AT PAGE 3 OF THE PAPER BOOK AND WE NOTICE D THAT THE ASSESSEE HAS BORROWED A SUM OF RS.39.36 CRORES . HOWEVER, THE ASSESSEES CAPITAL ACCOUNT WA S SHOWING A DEBIT BALANCE OF RS.23.10 CRORE S , MEANING THEREBY THE PART O F LOAN AMOUNT HAS BEEN USED BY THE ASSESSEE. WHEN THIS FACTUAL ASPECTS WERE PUT TO THE LD.AR, HE COULD NOT OFFER ANY CONVINCING EXPLANATION , EXCEPT S T A T ING THAT THE LOANS HAVE BEEN INVESTED FOR PURCHASE OF SHARES AND HENCE NO DISALLOWANCE IS CALLED FOR. HOWEVER, AS STATED EARLIER , THE FACTS REMAIN THAT THE LOANS HAVE ALSO BEEN UTILIZED BY THE ASSESSEE FOR PERSONAL PURPOSE S AND HENCE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) RENDERED ON THIS ISSUE. 4 . THE NEXT ISSUE RE LATES TO EXPENDITURE CLAIMED UNDER THE HEAD BROKERAGE AND COMMISSION. THE ASSESSEE CLAIMED THAT THE ABOVE SAID BROKERAGE AND COMMISSION WAS PAID TO THE PARTIES , WHO HAD ARRANGED THE LOANS IN THE EARLIER YEARS. HE FURTHER SUBMITTED THAT THE ASSESSEE IS FO LLOWING CASH SYSTEM OF ACCOUNTING AND THE BROKERAGE AND COMMISSION WAS PAID DURING THE YEAR UNDER CONSIDERATION AND HENCE THEY HAVE BEEN CLAIMED AS EXPENDITURE IN THIS YEAR. HE SUBMITTED THAT THE IMPUGNED DISALLOWANCE WAS MADE ONLY ON THE REASONING THAT TH E ASSESSEE DID NOT ITA NO. 4620 / MUM/20 12 3 FURNISH THE RELEVANT DETAILS . THE LD AR SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE NAMES, ADDRESSES, PAN NUMBERS OF ALL THE PERSONS WHO RECEIVED THE BROKERAGE AND COMMISSION AS ADDITIONAL EVIDENCES BEFORE THE TRIBUNAL. ACCORDINGLY HE PRAYED THAT THE ADDITIONAL EVIDENCES BE ACCEPTED. 5 . WE HEARD THE LD. DR. WE NOTICE THAT THE ASSESSEE HAS FURNISHED THE DETAILS BEFORE THE TRIBUNAL FOR THE FIRST TIME AND HENCE THIS ISSUE REQUIRES FRESH EXAMINATION BY CONSIDERING THE ADDITIONAL EVIDE NCES . ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR FRESH EXAMINATION BY DULY CONSIDERING THE DOCUMENTS FURNISHED BY THE ASSESSEE. 6 . THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF LEGAL AND PROFESSIONAL FEES OF RS.7,20,000/ - PAID TO THE SOLICITORS . WE NOTICE THAT THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE ON THE REASONING THAT THE TRIBUNAL, IN THE EARLIER PROCEEDING, HAS OBSERVED THAT THE ASSESSEE FAILED TO ESTABLISH THE NEXUS BETWEEN THE LEGAL CHARGES PAID AND THE INCOME EARNED BY HIM . HOWEVER, AT THE TIME OF HEARING THE LD.AR INVITED OUR ATTENTION TO VARIOUS DOCUMENTS TO SHOW THAT THE LEGAL AND PROFESSIONAL FEES WAS PAID IN CONNECTION WITH THE SETTLEMENT OF DISPUTE THAT AROSE BETWEE N THE ASSESSEE AND ONE OF THE LENDER S . HE FU RTHER SUBMITTED THAT , DUE TO INTERVENTION OF THE SOLICITORS , THE ASSESSEES LIABILITY TO PAY INTEREST HAS COME DOWN BY ABOUT RS.1 CRORES. ACCORDINGLY HE SUBMITTED THAT THERE IS NEXUS BETWEEN THE PAYMENT OF FEE AND THE BUSINESS OF THE ASSESSEE. SINCE THE ASSESSEE HAS FURNISHED THE DOCUMENT S RELATING TO THE SAID CLAIM AND SINCE T HEY HA VE NOT BEEN EXAMINED BY THE TAX AUTHORITIES , IN OUR VIEW , THIS ISSUE ALSO REQUIRES FRESH EXAMINATION AT THE END OF THE AO. ACCORD INGLY, WE SET ASIDE THE ORDER OF L D. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF AO FOR FRESH EXAMINATION . ITA NO. 4620 / MUM/20 12 4 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 14TH OCT , 2015. 14TH OCT , 2015 SD SD ( RAMLAL NEGI ) ( B.R. BASKAR AN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 14 OCT , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLA NT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, (ASSTT. REGISTRAR) , /ITAT, MUMBAI