SURENDRAKUMAR P. JAIN, MUMBAI V. ACIT - 17 (3), MUMBAI

ITA 4993/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0402 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 28-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANSLD
• Assessee Lawyers: R M JAINLD
• Keywords: Fair market value
• Section: 143(3)

Judgement Text

1 ITA NO.4993/MUM/2018 A.Y. 2013-14 SURENDRA KUMAR P.JAIN - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4993/MUM/2018 ( / ASSESSMENT YEAR:2013-14 ) SHRI SURENDRAKUMAR P.JAIN 47/3, SAFIA MANZIL MAHESHWARI ROAD MUMBAI-400 009. / VS. A CIT - 17(3) 1 ST FLOOR, AAYKAR BHAVAN M.K. ROAD MUMBAI-400 020. '# ./ ./PAN/GIR NO. AAAPJ-7029-C ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE BY : SHRI R.M. JAIN-LD. AR / DATE OF HEARING : 11/09/2019 / DATE OF PRONOUNCEMENT : 11/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2013-14 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-28 MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-28/IT- 2 ITA NO.4993/MUM/2018 A.Y. 2013-14 SURENDRA KUMAR P.JAIN 164/303/ACIT-17(3)/2016-17 DATED 15/06/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 2. YOUR APPELLANT STATE THAT INTEREST PAID ON UNSEC URED LOAN TO PERSON SPECIFIED U/S. 40A(2)(B) @18% IS REASONABLE AND NOT EXCESS. 3. YOUR APPELLANT THEREFORE PRAYS THAT ADDITION MAD E ON ACCOUNT OF INTEREST PAID MAY PLEASE BE DELETED. AS EVIDENT FROM GROUNDS OF APPEAL, THE ONLY ISSUE U NDER CONSIDERATION BEFORE US IS THE REASONABLENESS OF THE RATE OF INTE REST PAID BY THE ASSESSEE TO CERTAIN PERSONS AS SPECIFIED U/S 40A(2)(B). 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE DEALING IN GOLD ORNAMENTS A ND COINS UNDER PROPRIETORSHIP CONCERN NAMELY M/S SHELAJI ASAJI & C O. WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S 143(3) ON 27/02/2016 W HEREIN THE INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.31.81 LACS A FTER SOLE ADDITION OF INTEREST FOR RS.8.41 LACS AS AGAINST RETURNED INCOM E OF RS.23.39 LACS FILED BY THE ASSESSEE ON 29/09/2013. 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE PAID INTEREST ON LOANS ETC. TO CERTAIN PERSONS AS SPECIF IED U/S 40A(2)(B) AT THE RATE OF 18% AS AGAINST THE RATE OF 12% PAID TO OTHE R PARTIES. CONSEQUENTLY, INVOKING THE PROVISIONS OF SECTION 40A, LEARNED AO DISALLOWED DIFFERENTIAL INTEREST OF 6% WHICH GAVE RISE TO ADDITION OF RS.8. 41 LACS IN THE HANDS OF THE ASSESSEE. THE SAME, UPON CONFIRMATION BY FIRST APPELLATE AUTHORITY, IS UNDER CHALLENGE BEFORE US. 3 ITA NO.4993/MUM/2018 A.Y. 2013-14 SURENDRA KUMAR P.JAIN 3. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS RAISE D BY RESPECTIVE REPRESENTATIVES. 4. UPON CAREFUL CONSIDERATION, WE FIND THAT AS PER THE PROVISIONS OF SECTION 40A(2)(A), ANY EXPENDITURE WOULD NOT BE ALL OWABLE AS DEDUCTION, IF THE SAME, IN THE OPINION OF LD. AO, WAS EXCESSIVE O R UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF GOODS / SERVICES FOR WHICH THE PAYMENT WAS MADE BY THE ASSESSEE. UPON PERUSAL OF RATE OF I NTEREST CHART AS PLACED BEFORE US, IT IS SEEN THAT THE ASSESSEE HAS PAID IN TEREST AT THE RATES RANGING BETWEEN 15% TO 18% TO UNRELATED PARTIES WHEREAS IT HAS PAID INTEREST OF 18% TO RELATED PARTIES. THEREFORE, THIS BEING THE C ASE, THE INTEREST PAID TO RELATED PARTIES COULD NOT BE SAID TO BE EXCESSIVE O R UNREASONABLE. NOTHING HAS BEEN BROUGHT ON RECORD BY LOWER AUTHORITIES TO DEMONSTRATE THAT THE SAID RATE WAS EXCESSIVE OR UNREASONABLE, IN ANY MAN NER, HAVING REGARD TO THE MARKET RATES. THEREFORE, WE DELETE THE IMPUGNED ADDITIONS. 5. RESULTANTLY, THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11/09/2019 SR.PS:-JAISY VARGHESE 4 ITA NO.4993/MUM/2018 A.Y. 2013-14 SURENDRA KUMAR P.JAIN #$ %$ / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. . ( ) / THE CIT(A) 4. . / CIT CONCERNED 5. /0 &) , , / DR, ITAT, MUMBAI 6. 0234 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.