ASHWANI APPARELS AND PROPERTIES PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER 12(1)(2), MUMBAI

ITA 5538/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8162 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 01-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Proportionate interest; Set aside
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT ITA NO. 5538/MUM/2018 : A.Y : 2012 - 13 ASHWANI APPARELS AND PROPERTIES PRIVATE LIMITED, 12, RAM JANKI, 356, LINKING ROAD, KHAR (W), MUMBAI 400 052. PAN : AACCA0905B (APPELLANT) VS. ITO, WARD 12(1)(2), MUMBAI. (RESPONDENT) APPELLANT BY : MS. RUTUJA N. PAWAR RESPONDENT BY : SHRI CHAITANYA ANJARIA DATE OF HEARING : 20/02/2020 DATE OF PRONOUNCEMENT : 17 /06/2020 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT(A) DATED 30 .0 6 .20 18 AND PERTAINS TO ASSESSMENT YEAR 2012 - 13 . 2. TH E ISSUE RAISED RELATES TO DISALLOWANCE OF RENT PAID AMOUNTING TO RS. 30,000 / - AND DISALLOWANCE OF INTEREST ON BORROWED MONEY AMOUNTING TO RS. 3,54,354 / - . 3. B RIEF FACTS OF THE CASE ARE THAT ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR CLAIM ED THAT IT HAS CHANGED ITS BUSINESS FROM LEASING OF PROPERTY TO TRADING AND MANUFACTURING OF READ Y - MADE GARMENT. IN THIS REGARD , ASSESSEE 2 ITA NO. 5538/MUM/2018 ASHWANI APPARELS & PROPERTIES PVT. LTD. ALSO SUBMITTED THAT FOR THIS PURPOSE THERE HAS BEEN A CHANGE IN THE NAME OF THE COMPANY ALSO. ASSESSEE STATED THAT IT HAS JUST SET UP THE BUSINESS AND HAS OBTAINED PREMISES ON RENT AND HAS PAID RENT OF RS. 30,000 / - . THE DISALLOWANCE BY THE ASSESSING OFFICER IN THIS REGARD ON THE GROUND THAT NO EVIDENCE FOR THE COMMENCEMENT OF THE BUSINESS HAS BEEN SHOWN WAS CONFIRMED BY LEARNED CIT(A) . 4. AGAINST THIS ORDER , ASSESSEE HAS FILED APPEAL BEFO RE ITAT. UPON HEARING B OTH THE COUNSE L AND PERUSING THE RECORDS , I FIND THAT THE DISALLOWANCE HAS BEEN MADE WITHOUT ANY COGENT BASIS. THERE IS NO DENIAL THAT THE RENT HAS BEEN ACTUALLY PAID. THE PAYMENT HAS NOT BEEN TREATED AS BOGUS. THE ASSESSEE HAS DULY CHANGED ITS NAME TO R EFLECT THAT IT IS ALSO NOW DEALING IN APPARELS. HENCE , ASSESSEE HAS TAKEN A SPACE ON RENT TO DO THE SAID BUSINESS. THERE IS NO RULE THAT ASSESSEE HAS TO COMMENCE THE ENTIRE DEALING RIGHT FROM THE WORD GO. ACCORDINGLY , IN MY CONSIDERED OPINION , THE DISALLO WANCE IS NOT SUSTAINABLE. ACCORDINGLY , I SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND HOLD THAT THE EXPENDITURE IN THIS REGARD DESERVES TO BE ALLOWED. 5. FURTHERMORE , ASSESSEE HAS ALSO CLAIMED THAT IT HAS OBTAINED PROPERTY ALONG WITH OTHER CO - OWNERS AND HAS CLAIMED PAYMENT OF MUNICIPAL TAX. THIS WAS DISALLOWED BY THE ASSESSING OFFICER , THE SAME WAS ALLOWED BY COMMISSIONER OF INCOME TAX ON APPEAL. REGARDING THE SAME PROPERTY , ASSESSEE HAD CLAIMED THAT FOR THE PURCHASE OF THE PROPERTY , CO - OWNER S HAVE JOINTLY TAKEN LOAN FROM HDFC BANK. FURTHER , I N T E R E S T PAID LETTER FROM THE HDFC BANK WAS PRODUCED. THIS LETTER WAS ADDRESSED TO ALL THE CO - OWNERS TOGETHER. THIS WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT NO SPECIFIC 3 ITA NO. 5538/MUM/2018 ASHWANI APPARELS & PROPERTIES PVT. LTD. LETTER FOR ASSESSEE S SHARE WAS MENTIONED THEREIN. THIS WAS CONFIRMED BY THE LEARNED CIT(A) . 6. AGAINST THE ABOVE ORDER , ASSESSEE HAS FILED APPEAL. UPON HEARING BOTH THE COUNSE L AND PERUSING THE RECORDS , I FIND THAT WHEN THE AUTHORITIES BELOW ARE ALLOWING THE MUNICIPAL TAX PAID ON THE SAME PROPERTY , THERE IS NO REASON WHY THE INTEREST PAID FOR THE BORROWED MONEY SHOULD BE DISALLOWED. WHEN THE FACT IS NOT DENIED THAT PROPERTY HAS BEEN PURCHASED ON CO - OWNERSHIP BASIS, THERE IS NO REASON AS TO WHY THE PROPORTIONATE INTEREST S HOULD BE DISALLOWED. THE ASSESSEES NAME IS DULY REFLECTED IN THE LETTER OF THE BANK AS A CO - OWNER. IN MY CONSIDERED OPINION , THE CLAIM OF INTEREST SHOULD BE ALLOWED. I DIRECT ACCORDINGLY. 7. IN THE RESULT , THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWE D . O RDER PRONOUNCED IN COURT ON 1 7 T H JUNE, 2020 U N D E R R U L E 3 4 ( 4 ) O F I T A T R U L E S . SD/ - (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI, DATE : 1 7 T H JUNE, 2020 *SSL* 4 ITA NO. 5538/MUM/2018 ASHWANI APPARELS & PROPERTIES PVT. LTD. COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI