Smt. Parulben Hitenkumar Desai, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2 (2), RAJKOT-GUJARAT

ITA 575/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2339 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 23-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: RD LALCHANDANI
• Keywords: Business income
• Section: 14A; 6

Judgement Text

I.T.A. NO.: 575 /RJT/201 5 ASSESSMENT YEAR: 20 10 - 11 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT [ C ONDUCTED THROUGH E COURT AT AHMEDABAD] [ CORAM: PRAMOD KUMAR AM AND S S GODARA JM ] ITA NO. 575/RJT /20 15 ASSESSMENT YEAR: 2010 - 11 PARULBEN HITENKUMAR DESAI, ....... .. . .....APPELLANT ILLA VILLA SHAPURA ROAD, B/H. KISHORSINHJI SCHOOL, RAJKOT. [PAN A BIPD 9934 D ] VS. INCOME TAX OFFICER, .........................RESPONDENT WARD 2(2), RAJKOT. APPEARANCES BY: R.D. LALCHANDANI, FOR THE A PPELLANT C.S. ANJARIA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JANUARY 21 ST , 201 6 DATE OF PRONOUNCING THE ORDER : JANUARY 29 TH , 201 6 O R D E R 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST LEARNED CIT(A) S ORDER DATED 9 TH OCTOBER, 2015, FOR THE ASSESSMENT YEAR 20 10 - 11. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS RAISED HE FOLLOWING GRIEVANCE : - THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.65,557/ - FOR VIOLATION OF SECTION 14A. ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE. THE DISALLOWANCE IS UNWARRANTED AND UNJUSTIFIED. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS PAID INTEREST OF RS.3,88,770/ - ON HER BORROWINGS. IT WAS ALSO I.T.A. NO.: 575 /RJT/201 5 ASSESSMENT YEAR: 20 10 - 11 PAGE 2 OF 4 NOTED THAT THE ASS ESSEE HAS INVESTED RS.4,00,000/ - , OUT OF BORROWED FUNDS, IN THE MUTUAL FUND. IT WAS ALSO NOTED THAT BORROWINGS ARE USED FOR FIXED DEPOSITS WITH BANKS. HOWEVER, WHEN THESE OBSERVATIONS WERE PUT TO THE ASSESSEE, IT WAS CLARIFIED BY THE ASSESSEE THAT THE RE LATED INVESTMENTS WERE MADE IN EARLIER YEARS AND THE INVESTMENTS WERE MADE FROM OWN FUNDS. HOWEVER, THE ASSESSING OFFICER PROCEEDED TO DISALLOW, UNDER SECTION 14A OF THE INCOME TAX ACT, 1961, INTEREST ON BORROWINGS RELATABLE TO MUTUAL FUND (RS.4,00,000/ - ) , ICICI BANK FDR (RS.5,03,777/ - ) AND SBI FDR (RS.5,00,000/ - ) WHICH WORKED OUT TO RS.65,557/ - . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD T HE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 5. WE FIND THAT THE INVESTMENT IN MUTUAL FUNDS WAS FROM ASSESSEE S OWN FUNDS IN THE JANKALYAN SAHKARI BANK LIMITED. NO P ARTS OF THE BORROWED FUNDS WERE USED FOR THIS PURPOSE. TO THAT EXTENT, THEREFORE, THE DISALLOWANCE UNDER SECTION 14A IS INDEED UNCALLED FOR. ACCORDINGLY, WE DELETE THE DISALLOWANCE OF RS.48,000/ - . THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 6. GROUND NO .1 IS THUS PARTLY ALLOWED. 7. IN GROUND NO.2, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: - THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ASSESSING OFFICER S ACTION OF NOT ALLOWING THE SET OFF OF THE LOSS BROUGHT FORWARD EAR LIER YEAR AGAINST PROPERTY AND BUSINESS INCOME AMOUNTING TO RS.1,98,148/ - . I.T.A. NO.: 575 /RJT/201 5 ASSESSMENT YEAR: 20 10 - 11 PAGE 3 OF 4 8. THE SET OF WAS DECLINED BY THE ASSESSING OFFICER WITHOUT ASSIGNING ANY REASONS. IN APPEAL, LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS : - 5.2 GROUND NO.2 IS REGARDING SET OFF OF BROUGHT FORWARD LOSS OF EARLIER YEARS AGAINST HOUSE PROPERTY INCOME. THE A.O. HAS NOT ALLOWED SET OFF OF THE SAID LOSS AGAINST PROPERTY INCOME. NO DOCUMENTARY EVIDENCE HAVE BEEN FURNISHED BY THE APPELLANT IN THIS REGARD TO JUSTIFY THE BASIS FOR THE CLAIM OF THE BROUGHT FORWARD BUSINESS LOSS OF EARLIER YEARS TO BE SET OFF AGAINST THE PROPERTY INCOME. IN PRINCIPLE, THE CLAIM OF THE APPELLANT OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS AGAINST PROPERTY INCOME CANNOT BE ALLOWED AS PER THE LAW BASED ON THE FACTS AVAILABLE ON RECORD. GROUND NO.2 IS THUS DISMISSED. 9. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE FIND THAT THE FACT OF LOSSE S HAVING BEEN INCURRED IN THE EARLIER YEARS IS A MATTER OF RECORD AND THE SET OF CANNOT BE DECLINED WITHOUT ASSIGNING ANY REASONS. NO FURTHER DOCUMENTARY EVIDENCES ABOUT INCURRING OF LOSSES ARE REQUIRED AT THIS STAGE, AS THE LOSSES HAVE BEEN QUANTIFIED I N THE EARLIER ASSESSMENT YEARS. THAT ASPECT OF THE MATTER CANNOT BE TINKERED NOW. THE ASSESSING OFFICER HAS TO ONLY IMPLEMENT COROLLARIES, INCLUDING SET OFF, OF SUCH LOSSES. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO ALLOW THE ELIGIBLE SET OFF IN AC CORDANCE WITH THE LAW. 10. GROUND NO.2 IS THUS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED AS INDICATED ABOVE. P RONOUNCED IN THE OPEN COURT TODAY ON 29 TH JANUARY, 2016. S D / - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD , THE 29 TH DAY OF JANUARY , 201 6 I.T.A. NO.: 575 /RJT/201 5 ASSESSMENT YEAR: 20 10 - 11 PAGE 4 OF 4 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTM ENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT