Ram Ji Lal Suraj Bhan , Kanpur V. Income Tax Officer-1(3) , Kanpur

ITA 567/LKW/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1667 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 22-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Opportunity of being heard
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW SMC BENCH, LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER ITA NO. 567/LKW/2012 ASSESSMENT YEAR: 2009 - 10 RAM JI LAL SURAJ BHAN 51/56, SHAKKAR PATTI KANPUR V. INCOME TAX OFFICER 1(3) KANPUR PAN: A AEFR6597F (APPELLANT) (RESPONDENT) APPELLANT BY: NONE (WRITTEN SUBMISSIONS) RESPONDENT BY: SMT. RANU BISWAS, D.R. DATE OF HEARING: 17.12.2012 DATE OF PRONOUNCEMENT: 29.01.2013 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF TH E LD. CIT(A) ON VARIOUS GROUNDS , WHICH ARE AS UNDER: - 1 . THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED BOTH IN LAW AS WELL AS IN FACTS IN MAKING AND IN RETAINING THE DISALLOWANCE OF RS. 44,518 / - OUT OF INTEREST PAID ON UNSECURED LOANS AND ON OVERDRAFT TO BAN K. 2 . THAT THE MERITS AND THE CIRCUMSTANCES OF THE CASE DID NOT WARRANT ANY DISALLOWANCE. 3 . THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN NOT ALLOWING SET OFF OF BROUGHT FORWARD LOSS OF ASSESSMENT YEAR 2007 - 08 AMOUNTING TO RS. ( - ) 63,984 / - AND THE LEARNED C.I .T.(A) - II, KANPUR HAVE ERRED IN NOT CONSIDERING GROUND NUMBER 4 OF THE GROUNDS OF : - 2 - : APPEAL FILED BEFORE HIM. 4 . THAT THE ORDERS OF THE LEARNED LOWER AUTHORITIES ARE AGAINST THE MERITS, CIRCUMSTANCES AND THE LEGAL ASPECT OF THE CASE. 2 . THIS APPEAL CAME UP FOR HEA RING ON 17.12.2012, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. THE ASSESSEE, HOWEVER, FILED WRITTEN SUBMISSIONS WITH A REQUEST FOR DISPOSAL OF THE APPEAL. ACCORDINGLY THE REVENUE WAS HEARD. 3 . APROPOS GROUND NO.1, IT IS NOTICED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF INTEREST OF ` 44,518/ - AFTER HAVING NOTICED THAT THE ASSESSEE HAS PAID INTEREST ON UNSECURED LOAN TAKEN FROM A SPECIFIED PERSON @ 15% UNDER SECTION 40A(2)(B) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') . TR EA TING THIS INTEREST IS BEING PAID ON HIGHER SIDE , THE ASSESSING OFFICER RESTRICTED IT TO 12% AND MADE ADDITION OF THE DIFFERENCE OF 3% , WHICH COMES TO ` 44,518/ - , TO THE INCOME OF THE ASSESSEE. 4 . BEFORE THE LD. CIT(A) IT WAS CO NTENDED THAT FOR OBTAINING LOAN F ROM BANKERS , THE ASSESSEE IS REQUIRED TO FULFILL VARIOUS FORMALITIES AND ALSO TO FURNISH SOME SECURITY , WHEREAS UNSECURED LOAN CAN BE OBTAINED FROM SPECIFIED PERSONS WITHOUT FURNISHING ANY SECURITY . T HEREFORE, THE RATE OF INTEREST IS HIGHER THAN THE RATE OF INTEREST PAID FOR THE LOAN OBTAINED FROM BANKS. IT WAS ALSO CONTENDED THAT UNSECURED LOAN CAN BE OBTAINED FROM THE SPECIFIED PERSON AT ANY POINT OF TIME WITHOUT FURNISHING ANY SECURITY WHEREAS THE LOAN CANNOT BE OBTAINED FROM THE BANK AT ANY POINT OF T IME. IT IS TO BE APPLIED WELL IN ADVANCE AND BANK ALWAYS TAKE S ITS OWN TIME TO SANCTION THE LOAN. THEREFORE , HIGHER RATE OF INTEREST WAS PAID ON ACCOUNT OF BUSINESS EXIGENCY. THESE SUBMISSIONS OF THE ASSESSEE WERE NOT ACCEPTED BY THE LD. CIT(A) AND HE C ONFIRMED THE DISALLOWANCE, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. : - 3 - : 5 . I FIND SUBSTANCE IN THE CONTENTIONS O F THE ASSESSEE. IT IS TRUE THAT THE BANKS WOULD NOT GIVE ANY LOAN WITHOUT TAKING ANY SECURITY AND MOST OF THE TIME IT TAKES TIME I N PROCESSING THE REQUEST OF LOAN WHEREAS FROM A PRIVATE PERSON OR EVEN FROM A SPECIFIED PERSON , THE LOAN CAN BE OBTAINED IN TIME WITHOUT FURNISHING ANY SECURITY. THEREFORE, IF THE RATE OF INTEREST IS HIGHER THAN THE INTEREST RATE , ON WHICH LOAN CAN BE OBT AINED FROM THE BANK , THE PAYMENT OF HIGHER RATE OF INTEREST CANNOT BE DISALLOWED FOR THE SIMPLE REASON THAT LOAN CAN NOT BE OBTAINED FROM THE SPECIFIED PERSON. ACCORDINGLY I FIND NO JUSTIFICATION IN THE AFORESAID D ISALL OWANCE. THEREFORE, THE ORDER OF THE LD. CIT(A) IN THIS REGARD IS SET ASIDE AND ADDITION IS DELETED. 6 . SO FAR AS GROUND NO.3 IS CONCERNED, IT IS NOTICED THAT THE ASSESSEE HAS RAISED THIS GROUND BEFORE THE LD. CIT(A) AS GROUND NO.4 , BUT IT HAS ESCAPED THE ATTENTION OF THE LD. CIT(A) FROM ADJUDIC ATION. I, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO ADJUDICATE THIS GROUND AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.1.2013. S D/ - [ S UNIL KUMAR Y ADAV ] JUDICIAL MEMBER DATED: 29.1.2013 JJ: 2801 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR