Natu Satkar & Associates, Pune V. I.T.O. Ward 1(1) Pune, Pune

ITA 586/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3234 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Proportionate interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI B. RAMAKOTAIAH, AM I.T.A. NO. 586/PN/2009 : A.Y. 2004-05 NATU SATKAR & ASSOCIAT ES 1346 KASBA PETH PUNE-411 011 PAN AAALN 9997 P APPELLANT VS. I.T.O. WARD 1(1) PUNE RESPONDENT APPELLANT BY : SMT. DEEPA KHARE RESPONDENT BY: SHRI ABHAY DAMLE ORDER PER B. RAMAKOTAIAH, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A) I PUNE DATED 19-2-2009 ON THE POINT OF CO NFIRMATION OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT FOR A.Y. 2004-05. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSMENT WA S COMPLETED U/S 143(3). DURING THE ASSESSMENT PROCEEDINGS, THE A.O NOTICED THAT THE ASSESSEE HAS DEBITED BANK INTEREST OF RS. 13,71,555 /- IN RESPECT OF LOANS AVAILED BY IT WHERE THE PARTNERS WERE HAVING DEBIT BALANCE OF RS. 65,46,621/- IN RESPECT OF WHICH NO INTEREST WAS CHA RGED BY THE ASSESSEE. THE A.O INFERRED THAT THE ASSESSEE HAS DIVERTED INT EREST BEARING FUNDS FOR GIVING INTEREST FREE ADVANCES TO THE PARTNERS. THE CONTENTION OF THE ASSESSEE THAT THE BORROWINGS MADE BY THE PARTNERS F OR BUSINESS CONSIDERATION WAS NOT ACCEPTED BY THE A.O. HE ACCO RDINGLY DISALLOWED THE PROPORTIONATE INTEREST PAYABLE ON THE FUNDS GIV EN TO THE PARTNERS WITHOUT CHARGING INTEREST AMOUNTING TO RS. 10,47,45 9/- AND LEVIED THE PENALTY U/S 271(1)(C) IN RESPECT OF SAID DISALLOWAN CE. THE CIT(A) ALSO CONFIRMED THE PENALTY IMPOSED BY THE A.O.