ACIT 10(1), MUMBAI V. JST REALTY P.LTD, MUMBAI

ITA 4695/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79476 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 29-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 13-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Proportionate interest

Judgement Text

, ,, , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MU MBAI . . ! , ' #$% & & & & '&& &( , ) #$% #* #* #* #* BEFORE, SHRI N.K.BILLAIYA, AM AND SHRI VIVEK VARMA, JM # ./ I.T.A. NO. 4695 /MUM/2012 ( ) ( ) ( ) ( ) ( &+( &+( &+( &+( / ASSESSMENT YEAR: 2009-10) THE DCIT-10(1), 455, AAYKAR BHAVAN, 4 TH FLOOR, M.K.MARG, MUMBAI-400020 / VS. M/S JST REALTY PVT. LTD. 6 TH FLOOR, DHEERAJ ARMA, ANANT KANEKAR MARG, STATION ROAD, BANDRA(E), MUMBAI-400051 %, ' # ./ PAN : AACCD0500D ( ,- / APPELLANT ) .. ( ./,- / RESPONDENT ) ,- 0 1 # / APPELLANT BY : DURGA DUTT ./,- 0 1 # / RESPONDENT BY : NARESH JAIN # & 0 2' / DATE OF HEARING : 28 /07/2014 34+ 0 2' / DATE OF PRONOUNCEMENT : 28 /07/2014 $5 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-21, MUMBAI DATED 11/04/2012 PERTAINING T O A.Y. 2009- 10. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE C IT(A) ERRED IN DELETING THE DISALLOWANCE OF PROPORTIONATE INTEREST OF RS.83,37,862/- MADE BY THE ASSESSING OFFICER AS THE ASSESSEE UTILIZED THE BORROWED FUNDS FOR NON-BUSINESS PURPOS E. 3. THE ASSESSEE IS IN THE BUSINESS OF LEASING COMM ERCIAL PROPERTY. FOR THE YEAR UNDER CONSIDERATION THE RETU RN WAS FILED ON 2 28/09/2009 DECLARING LOSS OF RS.3.33 CRORES. THE R ETURN WAS SELECTED FOR SCRUTINY ASSESSMENT, STATUTORY NOTICES WERE ACCORDINGLY ISSUED AND SERVED UPON THE ASSESSEE. 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEE DINGS, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED INTEREST C OST OF RS.7.81 CRORES. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS ADVANCED LOAN OF RS.6.60 CRORES TO M/S M.S. LUVISH PROPERTIE S PVT. LTD. ON WHICH NO INTEREST HAS BEEN CHARGED. THE ASSESSEE W AS ASKED TO JUSTIFY THE CLAIM OF INTEREST WHEN IT HAS ADVANCED INTEREST FREE LOAN. IT WAS EXPLAINED THAT THE SAID SUM WAS GIVEN AS ADV ANCE FOR PURCHASE OF PROPERTY; THEREFORE THERE WAS NO QUESTI ON OF CHARGING INTEREST THEREIN. THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO. THE AO WAS OF THE OPINION THAT THE ASSE SSEE HAS BORROWED SECURED LOAN OF RS.68.52 CRORES OUT OF WHI CH IT HAS ADVANCED INTEREST FREE LOAN, THEREFORE THE PROPORTI ONATE INTEREST NEED TO BE DISALLOWED. THE AO COMPUTED SUCH DISALL OWANCE AT RS.83,37,862/-. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). IT WAS EXPLAINED THAT THIS ISSUE WAS ALSO THERE IN A.Y. 2008-09 WHEREIN THE AO HAD MADE DISALLOWANCE OF INTEREST EXPENDITUR E OF RS.7,49,945/-. THE ASSESSEE HAS CHALLENGED SUCH DI SALLOWANCE BEFORE THE CIT(A), BUT SINCE THE APPEAL WAS BARRED BY LIMITATION THE SAME WAS DISMISSED AND MERITS OF THE CASE WERE NOT DECIDED BY THE APPELLATE AUTHORITIES. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE CIT(A) AT PARA 7 OF HIS ORDER OBSERVED THAT THE INTEREST FREE LOANS WERE GIVEN ON 15/02/2008 AND 14/03/2008. THE SAID LOAN WAS GIVEN FROM AXIS BANK ACCOUNT. THE CIT(A) FURTHER O BSERVED THAT THE ASSESSEE HAD GIVEN LOAN OUT OF THE CLEAR BALANCE IN AXIS BANK ACCOUNT. THEREFORE, THERE WAS NO NEXUS BETWEEN THE BORROWED 3 FUNDS AND THE AMOUNT ADVANCED. THE CIT(A) DELETED THE DISALLOWANCE OF RS.79.20 LAKHS. FOR THE BALANCE DIS ALLOWANCE OF RS.4,17,862/-, THE CIT(A) AT PARA 2.3.(C) OF HIS OR DER OBSERVED THAT THE ASSESSEE HAS GIVEN INTEREST FREE LOAN TO ITS SI STER CONCERN M/S M.S.WINES PVT. LTD. OUT OF ITS OWN FUND AND ACCORDI NGLY DELETED THE DISALLOWANCE OF RS.4,17,862/- 5. AGGRIEVED BY THIS REVENUE IS BEFORE US, THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF THE AO. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE CIT(A) HAS GIVEN A VERY CATEGORICAL FIN DING THAT THE LOAN TO M/S LUVISH PROPERTIES PVT. LTD. WAS GIVEN IN A.Y. 2008-09. THE CIT(A) HAS ALSO OBSERVED THAT THE SAID LOAN WAS GIV EN OUT OF CLEAR BALANCE IN AXIS BANK ACCOUNT. A PERUSAL OF THE ORD ER OF THE CIT(A) SHOW THAT THIS WAS NEVER CONTENDED BEFORE THE AO, T HE COUNSEL FOR THE ASSESSEE WAS ALSO NOT CLEAR WHETHER ANY ADDITIO NAL EVIDENCES WAS SUBMITTED BEFORE THE CIT(A). THEREFORE, IN OUR CONSIDERED VIEW, THIS ISSUE NEED FRESH VERIFICATION BY THE AO. IN TH E INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE BACK TO THE FI LES OF THE AO. THE AO IS DIRECTED TO VERIFY THE FACTUAL FINDINGS OF TH E CIT(A) FROM THE BANK STATEMENT OF AXIS BANK. THE ASSESSEE IS DIREC TED TO FILE NECESSARY DETAIL BEFORE THE AO TO SHOW THAT THE LOA N GIVEN TO M/S LUVISH PROPERTY PVT. LTD. WAS OUT OF CLEAR BALANCE FROM AXIS BANK ACCOUNT. LEVY OF INTEREST AMOUNTING TO RS.79.20 LA KH IS SET-ASIDE. IN SO FAR AS THE BALANCE INTEREST OF RS.4,17,862/- IS CONCERNED, WE FIND THAT THE CIT(A) HAS CORRECTLY ANALYSED THE FAC TUAL POSITION IN PARA 2.3(C) OF HIS ORDER AND AFTER ANALYZING THE FA CTUAL POSITION THE CIT(A) HAS GIVEN THE FINDING THAT THE LOAN WAS GIVE N OUT OF OWN 4 CAPITAL DURING THE YEAR UNDER CONSIDERATION. WE TH EREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF T HE CIT(A) THE ADDITION OF RS.4,17,862 STANDS DELETED 7. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STA TISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28/07/2014 $5 0 34+ ' 6$ 28/07/2014 , 4 0 7 SD/- (VIVEK VARMA) SD/- (N.K.BILLAIYA) ) #$% / JUDICIAL MEMBER ' #$% / ACCOUNTANT MEMBER MUMBAI; 6$ /DATED : 28 TH JULY, 2014. F{X~{TA F{X~{TA F{X~{TA F{X~{TA P.S. P.S. P.S. P.S. $5 $5 $5 $5 0 00 0 .)28' .)28' .)28' .)28' 9'+2 9'+2 9'+2 9'+2 / COPY OF THE ORDER FORWARDED TO : 1. ,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. : ( ) / THE CIT- , MUMBAI. 4. : / CIT(A)- , MUMBAI 5. '&;7 .)2) , , / DR, ITAT, MUMBAI 6. 7<( = / GUARD FILE. $ $ $ $5 # 5 # 5 # 5 # / BY ORDER, #/'2 .)2 //TRUE COPY// > >> > / #? #? #? #? (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI