LALIT KUMAR P. SHAH, MUMBAI V. ITO 14(3)(3), MUMBAI

ITA 5553/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9297 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 27-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N M PORWAL
• Keywords: Corroborative evidences

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R.K.GUPTA , J M ITA NO. 5553 / MUM/ 20 1 1 ( ASSESSMENT Y EAR : 200 8 - 20 0 9 ) SHRI LALIT KUMAR P. SHAH, 42/48,CHINTAMANI BLDG., 3 RD FLOOR, CAVEL X LANE NO.1, MUMBAI - 400 002 VS. ITO 14(3)(3) , MUMBAI PAN/GIR NO. : A SCP S 6791 C ( APPELLANT ) .. ( RESPONDENT ) /A SSESSEE BY : MR. N.M.PORWAL /RE VENUE BY : MR. MOHIT JAIN DATE OF HEARING : 6 TH DEC ., 2012 DATE OF PRONOUNCEMENT : 12 TH DEC. ,2012 O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 24 - 5 - 2011 OF LEANED CIT(A) - 25 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 8 - 0 9 . 2 . THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS AGAINST CONFIRMING THE DISALLOWANCE OF RS. 2,35,220/ - , ON ACCOUNT OF EXC ESS PAYMENT OF INTEREST . ITA NO. 5553 /20 1 1 2 3 . DURING THE ASSESSMENT, THE ASSESSING OFFICER NOT ICED THAT THE ASSESSEE HAS TAKEN LOAN OF RS. 1,18,60,364/ - AND ADVANCES OF RS. 66,75, 756/ - . THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD PAID INTEREST OF RS. 3,82,808/ - TO BA NK AND RS. 9,55,659/ - TO PRIVATE PARTIES, WHEREAS THE ASSESSEE HAD RECEIVED INTEREST OF RS. 2,27,848/ - ONLY. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD PAID INTEREST AT THE RATE OF 12% PER ANNUM WHEREAS HE HAS CHARGED INTEREST ON THE LOAN GIVEN T O HIS PROPRIETORSHIP CONCERN @9% . ON QUERY IT WAS SUBMITTED THAT LOAN TO THE PARTIES WERE GIVEN TO BUSINESS CONSIDERATION AS THESE PARTIES WERE SET UP THEIR BUSINESS AND THEREAFTER THEY HAVE AGREED TO SUPPLY THEIR PRODUCTS TO THE ASSESSEE. IT WAS ALSO SUBM ITTED THAT THE LOAN WAS GIVEN IN THE FAG END OF THE YEAR, THEREFORE, THE INTEREST WAS NOT PROVIDED. HOWEVER, IN THIS VIEW, THE ASSESSING OFFICER OBSERVED THAT AS THE ASSESSEE COULD NOT FILE ANY SUPPORTING EVIDENCE, THEREFORE, HE CALCULATED THE INTEREST ON INTEREST FREE ADVANCES WHICH WERE FOR NON - BUSINESS PURPOSE AND DISALLOWED THE SUM OF RS. 2,35,220/ - . SAME CONTENTION WAS REITERATED BEFORE THE LEARNED CIT(A) ALSO. 4 . THE DETAILS OF LOAN ADVANCES AND LOAN RECEIPTS WERE FILED. LEARNED CIT(A) NOTED THAT LOA N WAS TAKEN FRO M RELATED PRIVATE PARTIES TO WHOM THE INTEREST HAS BEEN PAID @12% WHEREAS TO CERTAIN PARTIES, NO INTEREST HAS BEEN CHARGED BY THE ASSESSEE. THE CIT(A) ALSO NOTED THAT ON ACCOUNT OF HEAVY PAYMENT OF INTEREST, THE NP OF THE ASSESSEE ITA NO. 5553 /20 1 1 3 HAS GONE D OWN DRASTICALLY. KEEPING IN MIND ALL THESE FACTS, HE CONFIRMED THE DISALLOWANCE. 5 . AFTER CONSIDERING THE SUBMISSION , COPY OF WHICH HAS BEEN PLACED ON RECORD, WHICH WAS FILED BEFORE THE CIT(A) AND PERUSING OTHER MATERIAL ON RECORD, I FOUND THAT THE ASSES SING OFFICER AS WELL AS CIT(A0 WERE JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE. IT IS NOTED THAT THE ASSESSEE IS PAYING INTEREST ON THE BORROWED FUNDS @12%, WHEREAS THE LOAN WAS GIVEN TO CERTAIN PARTIES FROM WHOM NO INTEREST WAS CHARGED. THE ASSESS EE TRIED TO EXPLAIN THIS ASPECT THAT THERE WAS BUSINESS EXPEDIENCY BETWEEN THE PARTIES AND THE ASSESSEE TO WHOM LOAN HAS BEEN GIVEN BY THE ASSESSEE ON WHICH NO INTEREST HAS BEEN CHARGED. THE CONTENTION OF THE LEARNED AR THAT KEEPING IN MIND THE FUTU RE PROSPECT OF THE BUSINESS, THE INTEREST FREE ADVANCES WERE GIVEN, IN MY CONSIDERED VIEW, IT WAS WITHOUT ANY LOGIC. THEREFORE, I CONFIRM THE ACTION OF THE ASSESSING OFFICER AND THE LEARNED CIT(A) FOR DISALLOWANCE OF THE INTEREST. HOWEVER, I FIND THAT CERT AIN FUNDS WERE AVAILABLE WITH THE ASSESSEE ON WHICH NO IN TEREST WAS PAID BY THE ASSESSEE, S UCH AMOUNT OF RS. 9,00,000/ - . T HEREFORE, I FEEL THAT DISALLOWANCE OF INTEREST IF CONFIRM AT RS. 2,00,000/ - AGAINST DISALLOWANCE OF RS. 2,35 , 220/ - , THAT WILL MEET THE E ND OF JUSTICE. I ORDER ACCORDINGLY. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON THIS D AY OF DEC. 2012. ITA NO. 5553 /20 1 1 4 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 12 /12 / 2012 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI