Gem Enterprises, CHENNAI V. ACIT, CHENNAI

ITA 570/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8845 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 17-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : CHENNAI . . . , [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ] ./ I.T.A.NO.570/MDS/2016 / ASSESSMENT YEAR : 2009-10 M/S GEM ENTERPRISES CISONS COMPLEX, R.NO.9 NO.150, MONTIETH ROAD EGMORE, CHENNAI 600 008 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS CIRCLE VI CHENNAI [PAN AAAFG 0520 B] ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : NONE /RESPONDENT BY : SHRI SUPRIYO PAL, JCIT / DATE OF HEARING : 17 - 06 - 2016 / DATE OF PRONOUNCEMENT : 15 - 0 7 - 2016 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-10, CHENN AI, DATED 30.12.2015 AND PERTAINS TO ASSESSMENT YEAR 2009-10 . 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS PAYMENT OF INTEREST ON THE OVER DRAWINGS BY THE PARTNERS OF THE ASSESS EE-FIRM. 3. NO ONE APPEARED FOR THE ASSESSEE EVEN THOUGH NOTIC E WAS ISSUED, THEREFORE, I HEARD THE LD. DEPARTMENTAL REP RESENTATIVE AND PROCEEDED TO DISPOSE OF THE APPEAL ON MERIT. ITA NO. 570/16 :- 2 -: 4. SHRI SUPRIYO PAL, LD. DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT THE ASSESSEE BORROWED MONEY FROM HDFC BANK @ 14% INTEREST AND PAID THE INTEREST WHICH WAS DEBITED IN THE PROF IT & LOSS ACCOUNT. THE ASSESSEE HAS ALSO ALLOWED THE PARTNERS TO OVER DRAW FROM THE FIRMS ACCOUNT, HOWEVER, DID NOT CHARGE INTEREST ON THE LOAN GIVEN TO THE PARTNERS. ACCORDING TO THE LD. DR, IF THE ASSE SSEE DID NOT EXTEND LOAN TO THE PARTNERS, THERE WAS NO NECESSITY FOR TH E ASSESSEE-FIRM TO BORROW LOAN FROM THE BANK. THEREFORE, THE INTEREST PAID BY THE ASSESSEE-FIRM TO HDFC BANK TO THE EXTENT OF MONEY D RAWN BY THE PARTNERS CANNOT BE ALLOWED. THEREFORE, THE CIT(A) H AS RIGHTLY CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OF FICER. 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE BORROWED MONEY FROM HDFC BANK AND PAID INT EREST @ 14%. THE PARTNERS OF THE ASSESSEE-FIRM OVERDRAWN MONEY FROM THE ACCOUNT, HOWEVER, NO INTEREST WAS CHARGED BY THE A SSESSEE-FIRM. THEREFORE, IT IS OBVIOUS THAT THE MONEY BORROWED BY THE ASSESSEE WAS NOT USED FOR THE BUSINESS PURPOSES. AS RIGHTLY SUB MITTED BY THE LD. DR, IF THE PARTNERS WERE NOT ALLOWED TO WITHDRAW MO NEY, THERE WAS NO NECESSITY FOR THE ASSESSEE TO BORROW MONEY FROM TH E BANK AND PAY INTEREST. THEREFORE, THE INTEREST PAID BY THE ASS ESSEE IS NOT FOR BUSINESS PURPOSE AND HENCE, THE CIT(A) HAS RIGHTLY DISALLOWED THE ITA NO. 570/16 :- 3 -: CLAIM OF THE ASSESSEE. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND ACCORDIN GLY, THE SAME IS CONFIRMED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2016, AT CHENNAI. SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 15 TH JULY, 2016 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF