GIRVAR SINGH, Jaipur V. ITO, Jaipur

ITA 627/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5421 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 26-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Assessee Lawyers: D KUMAR

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 627/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06. SHRI GIRVAR SINGH, J-234, MAHAVEER MARG, C-SCHEME, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 6(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AIDPS 1777 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI D. KUMAR (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/01/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 29/02/2016. VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS ASSESSEES APPEAL FILED AGAINST THE ORDER OF THE LD. CIT (A)-II, JAIPUR DATED 30.03.2015 FOR THE ASSESSMENT YEAR 2005-06 AGITATIN G THAT - (I) THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN LAW AND FACTS IN RESTRICTING THE CARRY FORWARD OF SHORT TERM CAPITAL LOSS TO RS. 28,673/- INSTEAD OF RS. 2,03,218/- U/S 94(7) OF THE IT ACT. (II) THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN LAW AND FACTS IN MAKING ADDITION OF RS. 5,68,812/- BY DISALLOWING TH E CLAIM OF INTEREST PAID TO THE BANK. (III) THE LEARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN DETERMINING AND CHARGING INTEREST U/S 234A, 234B, 234C AND 234D. 2 ITA NO. 627/JP/2015 SHRI GIRVAR SINGH VS. ITO 2. THE APPEAL HAS BEEN FILED LATE BY 11 DAYS. THE A SSESSEE HAS FILED CONDONATION APPLICATION SUPPORTED BY AFFIDAVIT CONTENDING THAT ASSESSEE WAS OUT OF INDIA DURING THE IMPUGNED PERIOD. THEREFORE, THE DELAY WAS CAUSED BY A SUFFICIENT REASON. AFTER HEARING THE PARTIES, THE DELAY IS CONDONED. 2. BRIEF FACTS ARE THAT THE ASSESSEE HAS DECLARED S HORT TERM CAPITAL LOSS OF RS. 2,03,218/- AND PUT UP A CLAIM FOR CARRY FORWARD THE REOF. THE AO HAS SET OFF THE DIVIDEND INCOME FROM THE SHORT TERM CAPITAL LOSS AN D RESTRICTED THE CLAIM OF CARRY FORWARD LOSS TO RS. 28,673/- BY APPLYING PROVISIONS OF SECTION 94(7) OF THE IT ACT. 3. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL. THE LD. CIT (A) CONFIRMED THE ORDER OF THE AO BY FOLLOWING OBSERVATIONS :- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE S UBMISSION MADE. THE APPELLANT CLAIMED CAPITAL LOSS OF RS. 2,25,379/- BU T THE AO AFTER EXAMINE THE ISSUE RESTRICT THE LOSS TO RS. 28,673/- AS PER PROVISIONS OF SECTION 94(7) OF THE IT ACT. THE A/R COULD NOT CONTROVERT T HE FINDINGS OF THE AO AND HE REITERATED THE SUBMISSION FILED BEFORE AO. THE FINDINGS GIVEN BY THE AO IN THE ASSESSMENT ORDER IS FAIR AND REASONAB LE. HENCE, THE FINDINGS OF THE AO IN RESPECT OF THIS GROUND IS JUSTIFIED AN D THE SAME IS SUSTAINED. THE APPELLANT FAILS ON THIS GROUND. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 4.1. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT SECTION 94(7) IS APPLICABLE ON THE CONDITION THAT THE ASSESSEE HAS ACQUIRED THE SECURI TIES OR UNIT WITHIN A PERIOD OF THREE MONTH PRIOR TO RECORD DATE AND SELLS THE SAME WITHI N PERIOD OF THREE MONTH OF THE RECORD AND CLAIM THE DIVIDEND INCOME AS EXEMPT. ALL THE THREE CONDITIONS SHOULD BE SIMULTANEOUSLY SATISFIED AS HELD IN THE CASE OF INC OME TAX OFFICER VS. SHAMBHU MERCANTILE LTD. (2008) 116 TTJ 784 (ITAT-DELHI). IN THE PRESENT CASE THE THREE 3 ITA NO. 627/JP/2015 SHRI GIRVAR SINGH VS. ITO CONDITIONS ARE NOT SIMULTANEOUSLY SATISFIED AND THE REFORE RESTRICTION OUGHT NOT HAVE BEEN APPLIED BY ASSESSING AUTHORITY. FROM THE TABLE GIVEN AT PAGE 2 AND 3 OF ASSESSMENT ORDER THE FACTS HAVE BEEN MENTIONED BY T HE ASSESSING AUTHORITY. IN THE CASE OF HDFC CONDITION UNDER CLAUSE (A) OF SECTION 97(7) IS SATISFIED AS DATE OF PURCHASE 20.01.2004 IS WITHIN THREE MONTHS PRIOR TO RECORD DATE, BUT CONDITION UNDER CLAUSE (B) WITH REGARD TO SALE IS NOT SATISFIED AS DATE OF SALE I.E. 29.06.2004 IS BEYOND THREE MONTHS FROM RECORD DATE 19.03.2004 THEREFORE SHORT TERM CAPITAL LOSS OF RS. 2,19,783/- CANNOT BE REDUCED TO THE EXTENT OF DIVID END INCOME IS ON 20.03.2004 I.E. AFTER THE RECORD (A) IS NOT SATISFIED. FURTHER WITH REGARD FRANKLIM INDIA BLUE CHIP FUND THE CONDITION UNDER CLAUSE (A) IS SATISFIED AS THE DATE OF PURCHASE I.E. 20.01.2004 IS WITHIN THREE MONTHS PRIOR TO RECORD DATE 03.02.2004 , BUT CONDITION UNDER CLAUSE (B) IS NOT SATISFIED AS DATE OF SALE I.E. 29.06.2004 IS BE YOND THREE MONTHS FROM THE RECORD DATE 03.02.2004. FURTHER REINVESTMENT OF THE DIVIDE ND INCOME IS ON 06.02.2004 I.E. AFTER THE RECORD DATE 03.02.2004 AND THUS CONDITION UNDER CLAUSE (A) IS NOT SATISFIED. THUS, RESTRICTION OF SHORT TERM CAPITAL LOSS TO THE EXTENT OF DIVIDEND INCOME IS NOT JUSTIFIED. 4.2. THE LD. D/R SUPPORTED THE ORDER OF THE AO. 4.3. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IN MY CONSIDERED VIEW, WITH REGARD TO FRANKLIN INDIA BLUE CHIP FUND, THE CONDITION UNDER CLAUSE (A) IS SATISFIED AS THE DATE OF PURCHASE I.E . 20.01.2004 IS WITHIN THREE MONTHS PRIOR TO RECORD DATE 03.02.2004, BUT CONDITION UNDE R CLAUSE (B) IS NOT SATISFIED AS DATE OF SALE I.E. 29.06.2004 IS BEYOND THREE MONTHS FROM THE RECORD DATE 03.02.2004. 4 ITA NO. 627/JP/2015 SHRI GIRVAR SINGH VS. ITO FURTHER REINVESTMENT OF THE DIVIDEND INCOME IS ON 0 6.02.2004 I.E AFTER THE RECORD DATE 03.02.2004 AND THUS CONDITION UNDER CLAUSE (A) IS N OT SATISFIED. THUS, RESTRICTION OF SHORT TERM CAPITAL LOSS TO THE EXTENT OF DIVIDEND I NCOME IS NOT JUSTIFIED. IN VIEW THEREOF, GROUND NO. 1 OF THE ASSESSEE IS ALLOWED. 5. APROPOS GROUND NO. 2, FACTS BEING SIMILAR, THE I NTEREST WAS DISALLOWED IN ASSESSMENT YEARS 2005-06 AND 06-07. THE ASSESSEES APPEAL FOR A.Y. 2006-07 CAME UP FOR EARLY HEARING AND VIDE ORDER DATED 17.08.2010 T HE LD. CIT (A) ALLOWED THE ASSESSEES CLAIM BY FOLLOWING OBSERVATIONS :- I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS TAKEN BY SH. DEVENDRA KUMAR QUITE CAREFULLY. IT IS SEEN THAT FAC TUALLY ALL THE LOANS GIVEN BY THE APPELLANT WERE DRAWN ON ICICI BANK AND THE I NTEREST CLAIM IS ALSO PAYABLE TO ICICI BANK. THIS FACT IS PROVED WITH THE ACCOUNT COPIES OF THESE PARTIES ALONGWITH BANK STATEMENT OF RELEVANT PERIOD. THIS CLEARLY ESTABLISH THE NEXUS BETWEEN BORROWED FUNDS AND USE OF THE SAME FOR GIVING FUNDS ON WHICH INTEREST INCOME HAS BEEN EARN ED AND SHOWN AS INCOME BY THE APPELLANT. UNDER THESE CIRCUMSTANCES, THE SAID DISALLOWANCE OF INTEREST OF RS. 1,68,696/- IS HEREB Y DELETED. 5.1. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT PROPER EXPLANATION WAS GIVEN THAT THE INTEREST HAS BEEN RECEIVED FROM THE FOLLOW ING PARTIES :- SANJAY KUMAR GUPTA RS. 1,80,000/- AKSHITA EXPORTS RS. 2,25,000/- HOTEL MAHARANI PALACE RS. 1,20,000/- NARAYAN COLONIZERS PVT. LTD. RS. 60,000/- AND ALL LOANS ARE GIVEN FROM THE SAID ICICI BANK AC COUNT AND THE INTEREST EARNED THEREFROM HAS BEEN OFFERED FOR TAXATION, WHICH HAS BEEN WRONGLY HELD BY THE LEARNED 5 ITA NO. 627/JP/2015 SHRI GIRVAR SINGH VS. ITO AUTHORITIES BELOW THAT ASSESSEE HAS FAILED TO ESTAB LISH ANY NEXUS. IT IS CONTENDED THAT BOTH THE AUTHORITIES BELOW HAVE OBSERVED THAT ALL T HE LOANS ARE CONTINUED FROM 2006-07 WHICH ITSELF INDICATES THAT THE AMOUNTS WERE GIVEN FROM THE BORROWINGS OF ICICI BANK. THEREFORE, THE INTEREST EARNED QUA THIS BORROWING H AS AN ADMITTED NEXUS WITH THE ICICI BANK. THIS IS THE PRECISE REASON THAT LD. CIT (A) HAS ALLOWED THE ASSESSEES CLAIM FOR A.Y. 2006-07. FACTS AND CIRCUMSTANCES, BORROWED AC COUNT AND LENDERS BEING SAME AND BORROWINGS HAVING CONTINUED FROM EARLIER YEAR, THER E IS NO JUSTIFICATION IN DEVIATING FROM THE ORDER OF LD. CIT (A) IN PRECEDING YEAR. THEREF ORE, THE GROUND OF THE ASSESSEE DESERVES TO BE ALLOWED. 5.2. THE LD D/R SUPPORTED THE ORDER OF A.O. 5.3. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. I FIND MERIT IN THE ARGUMENTS LD. COUNSEL FOR THE ASSESSEE . THE FACTS AND CIRCUMSTANCES ARE SIMILAR TO A.Y 2005-06, THE NEXUS OF THE ASSESSEES PAYMENT OF INTEREST AND BORROWINGS ARE VERIFIABLE FROM THE RECORD. IN VIEW THEREOF, T HE DISALLOWANCE OF INTEREST IS DELETED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/02/2016. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29/02/2016. DAS/ 6 ITA NO. 627/JP/2015 SHRI GIRVAR SINGH VS. ITO VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI GIRVAR SINGH, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO WARD 6(3), JAIPUR. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.627/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR