SHRI. SUNILKUMAR SITARAM AGARWAL, Mumbai V. ASST. CIT 17(3), Mumbai

ITA 4894/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3783 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 23-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Business income; Opportunity of being heard; Set aside
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S HRI SAKTIJIT DEY (J M ) ITA NO. 4894 /MUM/2019 ASSESSMENT Y EAR: 2014 - 15 SHRI SUNILKUMAR SITARAM AGARWAL C/O. M/S. SHANKARLAL JAIN & ASSOCIATES, CHARTERED ACCOUNTANTS 12, ENGINEER BLD G, 265 PRINCESS STREET, MUMBAI - 400002 . PAN: AABPA0705F VS. ASST. CIT 17(3) AAYAKAR BHAVAN, QUEENS ROAD, MUMBAI - 400020. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. L. JAIN (AR) REVENUE BY : MS. SMITA VERMA (DR ) DATE OF HEARING: 02 / 0 2 /202 1 DATE OF PRONOUNCEMENT: 22 / 02 /202 1 O R D E R PER SAKTIJIT DEY , JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 25.04 .2019 OF LEARNED COMMISS IONER OF INCOME TAX (APPEALS) 28 , MUMBAI F OR THE ASSESSMEN T YEAR 2014 - 15 . 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO DISALLOWANCE OF INTEREST EXPENDITURE OF RS.6,00 ,596/ - . 3 . BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM HOUSE PROPERTY , BUSINESS AND OTHER SOURCES. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 1 8.0 9 .20 14 DECLA RING TOTAL INCOME OF RS.20,67,220 / - . IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT AGAINST THE INTEREST INCOME EARNED FROM BANK AMOUNTING TO RS.3,158/, T HE ASSESSEE HAS CLAIMED DEDUCTION OF INTEREST EXPENDITURE OF RS.6,00,596/ - . T HEREBY , SHOWING A NEGATIVE NET INTEREST INCOME OF RS.55,97,438/ - . AFTER CALLING UPON THE ASSESSEE TO FURNISH THE DOCUMENTARY 2 ITA NO. 4894 / MUM/2019 ASSESSMENT YEAR: 20 14 - 15 EVIDENCE TO JUSTIF Y THE CLAIM OF INTEREST EXPENDITURE U/S 57(III) AND ALLEGING THAT THE ASSESSEE , DESPITE AMPLE OPPORTUNITY BEING PROVIDED , WAS UNABLE TO PRODUCE ANY DOCUMENTARY EVIDENCE TO SHOW THE NEXUS BETWEEN THE INTEREST INCOME AND EXPENDITURE CLAIM , DISALLOWED AN AMOU NT OF RS. 6,00,596/ - . THOUGH, THE ASSESSEE CONTESTED THE AFORESAID DISALLOWANCE BEFORE LEARNED COMMISSIONER (APPEALS), HOWEVER, HE WAS UNSUCCESSFUL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE LOAN ON WHICH THE ASSESSEE HAD PAID INTEREST WAS BOR ROWED IN THE PRECEDING ASSESSMENT YEAR. DRAWING OU R ATTENTION TO REPLY DATED 29.11.2016 FILED BEFORE THE ASSESSING OFFICER PLACED AT PAGE NO. 3 OF THE PAPER BOOK, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LOAN WAS AVAILED FOR INVESTING IN HIS PRO PRIETARY CONCERN AS WELL AS TOWARDS CAPITAL IN PARTNERSHIP FI RM . H E SUBMITTED , SINCE THE LOAN WAS UTILIZED FOR THE PURPOSE OF BUSINESS , THE INTEREST E XPENDITURE HAS TO BE ALLOWED AS DEDUCTION FROM THE INCOME EARNED UNDER THE HEAD BUSINESS AND PROFESSION. W ITHOUT PREJUDICE, THE LEAR NED COUNSEL SUBMITTED , IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2013 - 14, T HE ASSESSEE HAS CLAIMED DEDUCTION OF INTEREST PAID ON LOAN AVAILED AGAINST THE INCOME FROM HOUSE PROPERTY. THUS, HE SUBMITTED , THE INTEREST EXP ENDITURE SHOULD BE ALLOWED EITHER AGAINST THE BUSINESS INCOME OR AGAINST THE INCOME FROM HOUSE PROPERTY. THE LEARNED COUNSEL ALSO SUBMITTED , IF THE ASSESSEE HAD CLAIMED THE EXPENDITURE UNDER A WRONG HEAD OF INCOME , HE COULD NOT BE PREVENTED FROM CLAIMING S UCH EXPENDITURE AGAINST THE CORRECT HEAD OF INCOME. 5 . THE LEARNED DEPARTMENTA L REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATION S OF THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS) SUBMITTED , THE ASSESSEE HAVING FAILED TO FURNISH ANY EVIDENCE TO ESTABLISH THE NEXUS BETWEEN THE INTEREST EXPENDITURE AND THE INTEREST INCOME , THE DISALLOWANCE MADE IS JUSTIFIED . FURTHER, SHE SUBMITTED , THE ALTERNATIVE CLAIM OF DEDUCTION AGAINST BUSINESS INCOME OR INCOME FROM HOUSE PROPERTY H AVING NOT BEEN MADE EITH ER BEFORE THE ASSESSING OFFICER OR BEFORE LEA RNED COMMISSIONER (APPEALS) COULD NOT BE ENTERTAINED AT THIS STAGE. 3 ITA NO. 4894 / MUM/2019 ASSESSMENT YEAR: 20 14 - 15 6 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . IT IS EVIDENT FROM THE COMPUTATION OF TOTAL INCOME FILED ALONG WITH RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR, A COPY OF WHICH IS AT PAGE 1 OF THE PAPER BOOK , THE ASSESSEE HA S CLAIM ED INTEREST EXPENDITURE ON THE LOAN AVAILED AGAINST THE BANK INTEREST SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSING OF FICER HAS ALLEGED THAT THE IN COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SHOW THE NEXUS BETWEEN INCOME EARNED AND EXPENDITURE INCURRED. THE ALLEGATION OF LEARNED COMMISSIONER (APPEALS) WHILE UPHOLDING THE DISALLOWANCE I S IDENTICAL. H OWEVER, BEFORE M E, L EARNED COUNSEL HAS SUBMITTED THAT THE INTEREST EXPENDITURE WAS WRONGLY CLAIMED AGAINST THE INTEREST INCOME AND IT HAS TO BE ALLOWED AGAINST EITHER THE BUSINESS INCOME OR INCOME FRO M HOUSE PROPERTY. AS IT APPEARS, THE AFORE SAID ALTERNATIVE CLAIM HAS BEEN MADE FOR THE FIRST TIME BEFORE THE TRIBUNAL AND WAS NEVER MADE B EFORE THE DEPARTMENTAL AUTHORITIES . OF COURSE , IN REPLY DATED 29.11.2016 STATED TO HAVE BE EN FILED BEFORE THE ASSESSING OFFICER IN COURSE OF ASSESSMENT PROCEEDI NGS FOR THE IMPUGNED ASSE SSMENT YEAR, THE ASSESSEE HAS SUBMITTED THAT THE LO AN AVAILED HAS BEEN INVESTED IN HIS BUSINESS CONCERN. FURTHER, IT APPEARS FROM THE COMPUTATION OF TOTAL INCOME ACCOMPANYI NG THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2013 - 14, T HE ASSESSEE HAS CLAIMED THE INTEREST EXPENDITURE ON THE LOAN AVAILED AGAINST THE HOUSE PROPERTY INCOME. IN MY CONSIDERED OPINION, THE ALTERNATIVE CLAIM MADE BY ASSESSEE FOR DEDUCTION OF INTEREST EXPENDITURE EITHER AGAINST THE BUSINESS INCOME OR AGAINS T THE HOUSE PROPERTY INCOME NEEDS TO B E EXAMINED BY ASSESSING OFFICER H AVING REGARD TO THE EVIDENCE S BROUGHT ON RECORD BY ASSESSEE. ACCORDINGLY, I SET ASIDE THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) AND RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND S ARE ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 4 ITA NO. 4894 / MUM/2019 ASSESSMENT YEAR: 20 14 - 15 ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 ND F EBRUARY , 2021 . SD/ - ( SAKTIJIT DEY ) JUDICIAL MEMBER MUMBAI ; DATED: 22 / 0 2 / 202 1 VIJAY PAL SINGH (SR. PS) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A ) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI