Rohit Nandlal Trust, Ahmedabad V. The Income Tax Officer, Ward-3(4), Ahmedabad

ITA 607/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8375 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 18-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH JIWADE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC/B BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 607/AHD/2015 (ASSESSMENT YEAR: 2011-12) ROHIT NANDLAL TRUST, PROP. MODERN TUBES, 12, 2 ND FLOOR, SHANTI SADAN ESTATE, MIRZAPUR, AHMEDABAD 380 001 AP PELLANT VS. THE INCOME TAX OFFICER, WARD 3(4), AHMEDABAD PRATYAKSH KAR BHAVAN, PANJARAPOLE, AMBAWADI, AHMEDABAD 380015 RESPONDENT PAN: AABTR1227R /BY ASSESSEE : URVASHI SHODHAN, A.R. /BY REVENUE : MAHESH JIWADE, CIT D.R. /DATE OF HEARING : 04.09.2017 /DATE OF PRONOUNCEMENT : 13.10.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2011-12 ARISES AGAINST THE CIT(A)-10, AHMEDABADS ORDER DATED 19 TH JANUARY, 2015 IN CASE NO. CIT(A)- 10/WD-3(4)/278/14-15, UPHOLDING ASSESSING OFFICERS ACTION DISALLOWING INTEREST AMOUNT OF RS.2,89,878/- PAID TO ITS BENEFICIARIES N AMELY ROHIT N. VORA, HANSABEN B. VORA, MILAN R. VORA AND BIPIN N. VORA HUF IN ASS ESSMENT ORDER DATED ITA NO. 607/AHD/15 [ROHIT NANDLAL TRUST VS. ITO] A.Y. 2011-12 - 2 - 09.01.2014, IN PROCEEDINGS U/S. 143(3) OF THE INCOM E TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH PARTIES REITERATING THEIR RESPECTIVE STA NDS. CASE FILE PERUSED. 2. RELEVANT FACTS ARE IN A VERY NARROW COMPASS. BO TH THE LOWER AUTHORITIES ADMITTEDLY DISALLOW ASSESSEES INTEREST PAID TO ITS BENEFICIARIES TOTALING TO RS.2,89,878/- BY FOLLOWING THEIR RESPECTIVE ORDERS IN PRECEDING ASSESSMENT YEAR 2010-11. THE ASSESSING OFFICER PARTICULARLY HELD T HAT ASSESSEES DETAILS FILED DURING SCRUTINY ALONGWITH ITS BOOKS NOWHERE PROVED ANY UNSECURED LOANS IN THE NAMES OF ITS BENEFICIARIES RELEVANT FOR THE IMPUGNE D INTEREST PAYMENTS. THE CIT(A) FOLLOWS HIS REASONING IN PRECEDING ASSESSMEN T YEAR TO UPHOLD ASSESSING OFFICERS ACTION. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL SUBMISSIONS. CASE FILE RECORDS THAT A CO-ORDINATE BENCH IN ASSESSEES CASE ITSELF ITA NOS. 476 & 477/AHD/2014 DECIDED ON 09.10.2017 FOR PRECEDING TW O ASSESSMENT YEARS HAS ALREADY DELETED IDENTICAL DISALLOWANCE AS UNDER: 7. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS ADMITTED THAT IT HAS CO MMITTED AN ERROR IN THE PRESENTING ITS ACCOUNTS. IT WAS POINTED OUT THAT IN ANNEXURE-A TO THE BALANCE SHEET, THE CAPITAL ACCOUNT OF SHRI ROHIT N. VORA TRUST IS SHOWN SEPARATELY. WI TH THE HELP OF OTHER DETAILS THE ASSESSEE HAS DEMONSTRATED THAT BENEFICIARIES HAVE OPENING CA PITAL BALANCE AS ON 1.4.2008 AT RS.72,20,281/-. CLOSING BALANCE AS ON 31.3.2009 WAS RS.26,99,090/-. SIMILARLY, CLOSING BALANCE AS ON 31.03.2010 WAS RS.46,62,141/-. THE OPENING BALANCE OF LOAN FROM THE BENEFICIARIES WAS USED BY THE TRUST FOR THE PUR POSE OF BUSINESS. THERE IS SOME ERROR IN PRESENTING THE ACCOUNT, AND THEREFORE, THE LD.AO IN STEAD OF STRICTLY GOING THROUGH THE ENTRIES SHOWN IN THE BOOKS, OUGHT TO HAVE VERIFIED THE CONTENTIONS OF THE ASSESSEE WITH OTHER DETAILS. IN THE GROUNDS, THE ASSESSEE HAS SPE CIFICALLY POINTED OUT AS TO HOW THE BENEFIT MEANT FOR THE BENEFICIARIES HAVE BEEN ACCUM ULATED AND NOT PAID TO THEM OVER A PERIOD OF TIME. THESE UNDISTRIBUTED BENEFITS HAVE B EEN TREATED AS CAPITAL OF THE BENEFICIARIES IN THE TRUST, WHICH HAS BEEN USED FOR THE PURPOSE OF BUSINESS. THERE ARE VARIOUS OTHER ASPECTS ALSO NAMELY, THE LD.DR POINTE D OUT THAT THE ASSESSEE HAS BEEN USING PAN OF A FIRM, WHEREAS IT SHOULD HAVE A SEPARATE AC COUNT NUMBER. ALL THESE ASPECTS HAVE CONFUSED THE LD.AO. THERE MAY BE CERTAIN SHORT COM ING IN MAINTAINING THE ACCOUNTS OR AVAILING PAN BUT THESE ARE NOT SO MAJOR WHICH CAN P ERSUADE THE AO TO DISALLOW THE CLAIM. THEREFORE, TAKING INTO CONSIDERATION OTHER DETAILS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS UNDISTRIBUTED BENEFIT OF THE BENEFICIARIES WHICH HA S BEEN CONSTRUED AS CAPITAL BALANCE, AND AS PER THE DECISION TAKEN BY THE TRUST, INTEREST HA S BEEN PROVIDED ON SUCH CAPITAL BALANCE OF THE BENEFICIARIES. THEREFORE, THE DEDUCTION OUG HT TO BE ALLOWED TO THEM. ITA NO. 607/AHD/15 [ROHIT NANDLAL TRUST VS. ITO] A.Y. 2011-12 - 3 - LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO PINPO INT ANY DISTINCTION IN THE IMPUGNED ASSESSMENT YEAR VIS--VIS THE RELEVANT FAC TS INVOLVED IN SAID EARLIER ASSESSMENT YEARS AS TAKEN NOT IN THE LOWER APPELLAT E ORDER. WE THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED DISALLOWAN CE. 4. THIS ASSESSEES APPEAL IS ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 13 TH DAY OF OCTOBER, 2017.] SD/- SD/- ( MANISH BORAD ) ( S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL M EMBER AHMEDABAD: DATED 13/10/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0