Meka Kasi Viswswarudu, Vizianagaram V. The Income Tax Officer, Ward-2, , Vizianagaram

ITA 488/VIZ/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3226 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 19-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMA KRISHNA
• Assessee Lawyers: Y APPA RAO
• Keywords: Capital asset; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER I . T . A . NO. 488 /VIZ/2019 (ASST. YEAR : 200 9 - 1 0 ) MEKA KASI VISESWARUDU, K - 5, PRADEEP NAGAR, V.T. AGRAHARAM, VIZIANAGARAM. VS. ITO, WARD - 2 , VIZIANAGARAM . PAN NO. ABVPM 2320 H (APP ELLANT ) (RESPONDENT) ASSESSEE BY : SHRI Y. APPA RAO , FCA DEPARTMENT BY : SHRI RAMA KRISHNA , SR. DR DATE OF HEARING : 04 / 0 3 /2020 . DATE OF PRONOUNCEMENT : 11 / 0 3 /20 20 . O R D E R PER V. DURGA RAO , JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , VISAKHAPATNAM , DATED 0 8 /0 5 /201 9 FOR THE ASSESSMENT YEAR 200 9 - 1 0 . 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO ALLOWABILITY OF INTEREST PAID BY THE ASSESSEE . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT ASSESSEE HAS CLAIMED INTEREST ON VARIOUS LOANS IT CANNOT BE SAID THAT IT IS WHOLLY AND EXCLUSIVELY LAID 2 ITA NO. 488/VIZ/2019 ( MEKA KASI VISWESARUDU ) OUT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. NOT ONLY THAT, THE INVESTMENT IN PURCHAS E OF IMMOVABLE ASSETS IS OF CAPITAL IN NATURE . T HEREFORE , THE EXPENDITURE CLAIMED BY WAY OF INTEREST ON LOANS IS FOUND TO BE NOT ADMISSIBLE. WHEN THE ABOVE FACT S ARE PUT TO THE ASSESSEE TO JUSTIFY HOW INTEREST CLAIMED IS ATTRIBUTABLE TO THE BUSINESS, THE LD.AR CONCEDED THAT PART OF THE INTEREST CLAIMED IS NOT ADMISSIBLE. HOWEVER, IT IS SUBMITTED THAT THE INTEREST ATTRIBUTABLE TO THE EXTENT OF CHIT CONTRIBUTIONS IS ADMISSIBLE BECAUSE SUCH CONTRIBUTIONS ARE FOR BUSINESS PURPOSE AND THE DIVIDENDS ALLOWED BY THE CHIT FUND COMPANIES ARE ADMITTED AS BUSINESS INCOME. ACCORDINGLY, THE CHIT AMOUNT OF RS. 85,740/ - ALLOWED AS BUSINESS INCOME AND THE REMAINING INTEREST BALANCE OF RS. 2,70,180/ - WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3 . ON APPEAL BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE AMOUNT OF RS. 1,15,028/ - PAID AGAINST THE GOLD LOAN WHICH IS USED FOR THE BUSINESS PURPOSE, THERE F ORE THE SAME MAY BE ALLOWED. THE LD. CIT(A) AFTER CONSIDERING THE SAME GAVE A FINDING THAT INTEREST AMO UNT OF RS. 1,15,028/ - IS PAID AGAINST THE GOLD LOAN WHICH IS USED FOR BUSINESS PURPOSE. ACCORDINGLY, ALLOWED THE SAME AND DIRECTED THE ASSESSING OFFICER TO TAX THE REMAINING INTEREST OF 3 ITA NO. 488/VIZ/2019 ( MEKA KASI VISWESARUDU ) RS. 1,55,152/ - . FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER : - IT IS THE CASE OF THE ASSESSING OFFICER THAT THE APPELLANT ACQUIRED CAPITAL ASSETS AND THEY ARE NOT FOR BUSINESS PURPOSE. HENCE NOT ADMISSIBLE. THE ASSESSING OFFICER IS ALSO OF THE OPINION THAT THE AR OF THE APPELLANT H AD CONCEDED THE FACT AND ACCORDINGLY THE ADDITION OF RS. 2,70,180/ - WAS DISALLOWED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AR OF THE APPELLANT PLEADED THA T THE INTEREST PAID ON CAPITAL IS NOT DEBITED TO P & L ACCOUNT BUT ONLY TO CAPITAL ACCOUNT. HOWEVER, THE WHOL E DISCRETION IN THE ASSESSMENT ORDER IS REGARDING WHAT IS ATTRIBUTABLE TO BUSINESS AND WHAT IS NOT ATTRIBUTABLE TO BUSINESS. IN THE GROUNDS THE APPELLANT RAISED A POINT THAT THE INTEREST OF AMOUNT OF RS. 1,15 ,028/ - IS PAID AGAINST THE GOLD LOAN WHICH IS USED IN THE BUSINESS . I FIND SOME REA SON IN THE ARGUMENT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW RS.1,15,028/ - AND TAX THE REMAINING INTEREST OF RS. 1,55,152/ - 4 . WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 1 1 T H DAY OF MARCH , 2020 . S D / - S D / - (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 1 T H FEBRUARY , 20 20 . VR/ - 4 ITA NO. 488/VIZ/2019 ( MEKA KASI VISWESARUDU ) COPY TO: 1. THE ASSESSEE - MEKA KASI VISESWARUDU, K - 5, PRADEEP NAGAR, V.T. AGRAHARAM, VIZIANAGARAM. 2. THE REVENUE ITO, WARD - 2, VIZIANAGARAM. 3. THE PR. CIT - 1 , VISAKHAPATNAM. 4. THE CIT(A) - 1 , VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.