VISHAL SUSHILKUMAR GOENKA, MUMBAI V. ITO 14(2)(2), MUMBAI

ITA 4967/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3769 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 25-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKASH KUMAR AGARWAL
• Keywords: Presumptive income; Earning of tax free income; Revised return
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 4967/MUM/2013 (ASSESSMENT YEAR : 2009-10) VISHAL SUSHILKUMAR GOENKA, PLOT NO.6 F11/12, WICEL, OPP. SEEPZ, MIDC, ANDHERI (E), MUMBAI 400 093 PAN: AABPG 5548C ... APPELLANT VS. INCOME TAX OFFICER-14(2)(2) MUMBAI. .... RESPOND ENT ASSESSEE BY : NONE REVENUE BY : SHRI VI KASH KUMAR AGARWAL DATE OF HEARING : 22/02/2016 DATE OF PRONOUNCEMENT : 24/02/2016 ORDER PER JASON P. BOAZ, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-25, MUMBAI DATED 27/08/2012 IN RESPECT OF THE ORDER OF ASSESSMENT PASSED UNDER SECTION 143|(3) OF THE INC OME TAX ACT, 1961 ( IN SHORT THE ACT) FOR ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 2 ITA NO. 4967/MUM/2013 (ASSESSMENT YEAR : 2009-10) 1. LEARNED COMMISSIONER OF INCOME TAX (APPEAL)-25, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, HAS ERRED IN DISALLOWING INTEREST EXPENSES OF RS.9,90,741/- THE APPELLANT RESPECTFULLY SUBMITS THAT CIT(A) OUG HT TO HAVE CONSIDERED THAT PROCEEDS OF THE LOAN TAKEN ON WHICH INTEREST EXPENS E WAS INCURRED, WERE UTILIZED FOR INVESTING IN PARTNERSHIP FIRM FOR EARN ING INTEREST INCOME WHICH IS LIABLE TO BE TAXED UNDER THE HEAD INCOME FROM BUSI NESS OR PROFESSION AND THEREFORE INTEREST EXPENSES WAS A LEGITIMATE BUSINE SS EXPENSES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL)-25 HAS ERRED I N NOT CONSIDERING AND DEALING WITH SUBMISSIONS MADE BY AUTHORIZED REPRESE NTATIVE OF THE APPELLANT VIDE HIS LETTER DATED 21 ST AUGUST, 2012. THE APPELLANT RESPECTFULLY SUBMITS THAT CIT(A) OUGH T TO HAVE CONSIDERED SUBMISSIONS MADE IN THE COURSE OF APPELLATE PROCE EDINGS TO DISTINGUISH THE CASE LAW RELIED UPON BY CIT(A). 3. APPELLANT CRAVES LEAVE TO ADD TO AND/OR AMEND AN D /OR MODIFY AND/OR ALTER AND/OR DELETE THE AFORESAID GROUNDS OF APPEAL . 3. IN SPITE OF AS MANY AS TEN OPPORTUNITIES AFFORD ED TO THE ASSESSEE, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE NOR WAS ANY APPLICATION FOR ADJOURNMENT FILED. WHENEVER THE BENCH DID NOT FUNC TION, THE PARTIES WERE INFORMED OF THE ADJOURNED DATES THROUGH THE NO TICE BOARD. TODAY I.E. 22/2/2016, WHEN THE CASE WAS CALLED FOR HEARING, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE BUT THE LD. DEPAR TMENTAL REPRESENTATIVE FOR THE REVENUE WAS PRESENT. IN THE SE CIRCUMSTANCES WE ARE OF THE OPINION THAT THE ASSESSEE IS NOT SERI OUS ABOUT PURSUING THIS APPEAL AND WE PROCEED TO DISPOSE THE SAME WITH THE ASSISTANCE OF THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AND THE MATERIAL ON RECORD. 4. IN RESPECT OF THE ONLY ISSUE RAISED IN GROUNDS A T S.NO.1 TO 3, ON THE ISSUE OF DISALLOWANCE OF THE ASSESSEES CLAIM F OR DEDUCTION OF 3 ITA NO. 4967/MUM/2013 (ASSESSMENT YEAR : 2009-10) INTEREST PAYMENT OF RS.9,90,741/- TO LIC AND HDFC B ANK LTD., THE LD. CIT(A) IN THE IMPUGNED ORDER HAD HELD AT PARA 5 THE REOF AS UNDER:- I HAVE GIVEN MY CAREFUL CONSIDERATION TO SUBMISS ION IN ORAL AS WELL AS WRITTEN, PERUSED MATERIAL ON RECORD AND DULY CONS IDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. IF IS UNDISPUTED THAT ASSESSEE HAD SHOWN INTEREST INCOME OF RS. 22,870/- ON ACCOUN T OF POSTAL MONTHLY INCOME AND INTEREST ON SAVINGS BANK ACCOUNT. AGAINS T THIS INCOME, ASSESSEE HAD CLAIMED DEDUCTION OF RS. 9,90,741/- ON ACCOUNT OF INTEREST PAID TO LIC AND HDFC BANK. BY CLAIMING SUCH A HUGE INTEREST THE ASS ESSEE HAD CLAIMED LOSS OF RS. 9,67,871/- UNDER THE HEAD 'INCOME FROM OTHER SO URCES'. IT IS UNDISPUTED THAT ASSESSEE HAD NOT FILED ANY REVISED RETURN. THE REFORE THE ACTION OF THE AO AS CORRECT IN VIEW OF (ORIGINAL) RETURN OF INCOME F ILED BY THE ASSESSEE FOR THE REASON THAT THE IMPUGNED INTEREST PAYMENT WAS NOT F OR THE PURPOSE OF EARNING INTEREST INCOME FROM SAVINGS BANK ACCOUNT A ND POSTAL MONTHLY INCOME SCHEME AS DISCLOSED IN (ORIGINAL) RETURN OF INCOME. IT IS SETTLED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F GOETZE (INDIA) LTD. V/S CIT (284 ITR 323) THAT ASSESSING AUTHORITY CANNOT ENTERTAIN ANY CLAIM OTHERWISE THAN BY WAY OF REVISED RETURN. IN THE CA SE OF GOETZE (INDIA) LTD., THE LD.CIT(A) HAD ALLOWED THE ASSESSEE'S APPEAL/ CL AIM BUT HON'BLE ITAT HAD ALLOWED THE APPEAL OF THE DEPARTMENT THE DECISION OF THE LD. CIT(A) . THE HON'BLE SUPREME COURT HAD UPHELD THE DECISION OF , HONBLE ITAT ALLOWING THE DEPARTMENTAL APPEAL AND UPHOLDING THE ORDER OF AD. AS DISCUSSED HEREIN ABOVE THERE WAS NO REVISED RETURN AND THEREFORE ASS ESSEE'S APPEAL IS NOT ALLOWABLE FOR THIS REASON ITSELF. WITHOUT PREJUDICE , THE ASSESSEE'S' APPEAL FAILS ON MERIT ALSO. IT IS ADMITTED THAT NO INTEREST INCO ME IS RECEIVED FROM THE FIRM IN WHICH ASSESSEE HAD MADE IMPUGNED INVESTMENT FOR WHICH INTEREST CLAIM IS MADE BY A SIMPLE LETTER. IF THERE IS NO INTEREST IN COME, NO QUESTION ARISE FOR ALLOWING DEDUCTION AGAINST THE NOTIONAL/PRESUMPTIVE INCOME. EVEN OTHERWISE AS PER BASIC ACCOUNTING PRINCIPLE OF 'MATCHING OF E XPENSES WITH REVENUE', BEING NO CORRESPONDING REVENUE, IMPUGNED INTEREST E XPENSES ARE NOT ALLOWABLE. APART THERE FROM, THERE IS AN ANOTHER RE ASON WHICH DISENTITLES THE ASSESSEE FOR MAKING THE SAID CLAIM. AS PER THE ARGU MENTS OF THE LD.AR, BORROWINGS WERE MADE FOR THE PURPOSE OF CAPITAL REQ UIREMENT/INVESTMENT IN FIRM IN WHICH ASSESSEE IS A PARTNER. IT IS UNDISPUT ED THAT SHARE OF PROFIT FROM THE FIRM IS AN EXEMPT INCOME. THEREFORE SECTION 14 A IS SQUARELY APPLICABLE FOR THE REASON THAT IMPUGNED INVESTMENT WAS FOR THE PURPOSE OF EARNING EXEMPT INCOME. IF THE AO WOULD HAVE APPLIED SECTION 14A AND COMPUTED DISALLOWANCE UNDER RULE 80, RESULTANT DISALLOWANCE WOULD BE MUCH MORE THAN INSTANT DISALLOWANCE. THEREFORE FROM ALL ANGLES THE CLAIM OF THE ASSESSEE IS NOT TENABLE IN THE EYES OF LAW AND APPEARS THAT IT WAS MADE TO REDUCE TAXABLE 4 ITA NO. 4967/MUM/2013 (ASSESSMENT YEAR : 2009-10) INCOME SHOWN IN RETURN OF INCOME. ACCORDINGLY RELEV ANT GROUND OF APPEAL IS REJECTED AND ACTION OF THE AO IS UPHELD AND SUPPLEM ENTED WITH MORE REASONS FOR DISALLOWANCE. THE AO IS ADVISED TO VERIFY THE RETURNS OF PRECEDING SUCCEEDING YEARS AND IF IDENTICAL CLAIM IS MADE ON IDENTICAL FACTS, HE IS FREE ( ALBEIT DUTY BOUND) TO TAKE NECESSARY ACTION AS PER LAW IN RELEVANT YEAR. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE IN THE MATTER IN SUPPORT OF THE IMPUGNED O RDER OF THE LD. CIT(A) ON THIS ISSUE AND PERUSED AND CAREFULLY CONS IDERED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS BEEN UNAB LE TO REBUT OR CONTROVERT THE FINDINGS OF THE LD. CIT(A)(SUPRA) IN RESPECT OF THE DISALLOWANCE OF INTEREST PAYMENTS OF RS.9,90,741/- TO LIC AND HDFC BANK LTD. IN THE ABSENCE OF ANY SUCH EXPLANATION A ND MATERIAL EVIDENCE, WE DECLINE TO INTERFERE WITH OR DEVIATE F ROM THE FINDINGS AS RECORDED BY THE LD. CIT(A) AND ACCORDINGLY UPHOLD A ND CONFIRM THE SAME. WE CONSEQUENTLY, DISMISS THE GROUNDS NO.1 T O 3 RAISED Y THE ASSESSEE. 6. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSM ENT YEAR 2009-10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/02/2016 SD/- SD/- (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 24/02/2016 VM , SR. PS 5 ITA NO. 4967/MUM/2013 (ASSESSMENT YEAR : 2009-10) 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