Sh. Jitender Dhawan, Delhi V. ITO, New Delhi

ITA 629/DEL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4014 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-05-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 03-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR JIWANI
• Assessee Lawyers: V RAJ KUMAR
• Keywords: Business income; Proportionate interest

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C+SMC : NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 629/DEL/2017 (ASSESSMENT YEAR: 2013 - 14 ) JITENDER DHAWAN, 335, SAINNIK VIHAR, PITAMPURA, DELHI PAN: AAJPK1491J VS. ITO, WARD - 48(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.RAJ KUMAR, ADV REVENUE BY: SHRI VIJAY KUMAR JIWANI, SR. DR DATE OF HEARING 07/08 / 2018 DATE OF PRONOUNCEMENT 0 2 / 11 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 16, NEW DELHI FOR THE ASSESSMENT YEAR 2013 - 14. THE ASSESSEE HAS RAISED EFFECTIVELY 5 GROUNDS OF APPEAL OUT OF WHICH GROUND NO. 1, 2 5 AND 6 ARE NOT PRESSED, THEREFORE, ONLY GROUND NO. 3 AND 4 REMAINS WHICH ARE AS UNDER: - 3. THAT THE ORDER OF THE LD CIT(A) U/S 250(6) OF INCOME TAX ACT ON ACCOUNT OF DISALLOWANCE OF INTEREST OF RS. 3,33,361/ - IS UNJUSTIFIED AND SHOULD BE DELETED. 4. THAT THE ORDER OF CIT(A) U/S 250(6) OF INCOME TAX ACT ON ACCOUNT OF ADDITION OF DRAWINGS FOR HOU SEHOLD EXPENSES OF RS. 4,77,530/ - IS UNJUSTIFIED AND SHOULD BE DELETED WHEN CASE HAS BEEN SELECTED THROUGH CASS ON THE POINT OF EXEMPTED INCOME. 2. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF CLOTH. DURING THE YEAR THE ASSESSEE PAID BANK INTEREST OF RS. 349923/ - . THE LD AO NOTED THAT THE ASSESSEE HAS AN INVESTMENT OF RS. 12617518/ - . THEREFORE, THE LD AO NOTED THAT THE ASSESSEE HAS UTILISED INTEREST BEARING LOAN FUNDS IN THE FORM OF SECURED LOAN AND OVERDRAFT LOAN JITENDER DHAWAN VS. ITO ITA NO. 629/DEL/2017 (ASSESSMENT YEAR: 2013 - 14) PAGE | 2 FO R THE PURPOSE OF INVESTMENT IN THE NON INTEREST BEARING INVESTMENTS. THEREFORE, ACCORDING TO HIM THE PROPORTIONATE INTEREST IS NOT ALLOWABLE TO THE ASSESSEE AS DEDUCTION FROM BUSINESS INCOME. THE LD AO HELD THAT NON - INTEREST BEARING FUNDS IN THE FORM OF CA PITAL PLUS NET PROFIT AND NON INTEREST BEARING UNSECURED LOAN AMOUNTING TO RS. 3993669/ - ARE NOT SUFFICIENT FOR INVESTMENT IN BUSINESS IN FIXED ASSETS AND INVESTMENT OF RS. 13329577/ - AND THEREFORE, HE PROPORTIONATELY DISALLOWED THE SUM OF RS. 333361/ - OUT OF INTEREST EXPENDITURE. THE LD CIT(A) ON APPEAL UPHELD THE ORDER OF THE LD AO. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US ON THIS ISSUE. 3. THE LD AR VEHEMENTLY STATED THAT THE INTEREST EXPENDITURE ARE ALLOWABLE BECAUSE THE ASSESSEE HAS NON - INTEREST BE ARING FUNDS AVAILABLE WITH IT IN THE FORM OF UNSECURED LOAN OF THE RELATIVES THEN THE AMOUNT OF INVESTMENT MADE DURING THE YEAR. IT WAS STATED THAT AMOUNT OF INTEREST BEARING LOAN ARE UTILISED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. HE FURTHER STATED THAT IN THE PRECEDING YEAR IDENTICAL DISALLOWANCE WAS MADE AND SAME WAS DELETED BY THE LD CIT(A). HE FURTHER STATED THAT INVESTMENT MADE DURING THE YEAR OF RS. 17.76 LAKHS ARE FAR LESS THAN NON INTEREST BEARING UNSECURED LOAN OF RS. 19.36 LAKHS OF THE ASSE SSEE. 4. THE LD DR VEHEMENTLY CONTESTED THE ARGUMENT OF THE LD AR AND RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. APPARENTLY, THE ASSESSEE HAS MADE INTEREST EXPENDITURE OF RS. 349923/ - . THE ASSESSEE HAS MADE AN INVESTMENT OF RS. 1.26 CRORES IN PLOT AND LANDS AND OTHER SECURITIES. THE LD AO HELD THAT THE ASSESSEE DID NOT HAVE NON INTEREST BEARING FUNDS MORE THAN INVESTMENT WHICH DOES NOT YIELD ANY INTE REST. THEREFORE, HE DISALLOWED RS. 333361/ - . IT IS SUBMITTED THAT IN THE EARLIER YEARS IDENTICAL DISALLOWANCES WERE MADE AND SAME WAS DELETED BY THE LD CIT(A) AND ADMITTEDLY REVENUE COULD NOT SHOW US THAT WHETHER THE SAME HAS BEEN CONTESTED OR NOT. WE HAVE ALSO PERUSED THE ORDER FOR ASSESSMENT YEAR JITENDER DHAWAN VS. ITO ITA NO. 629/DEL/2017 (ASSESSMENT YEAR: 2013 - 14) PAGE | 3 2012 - 13 OF THE LD CIT(A) WHERE 2 ND GROUND OF APPEAL ON IDENTICAL FACTS, THE LD CIT(A) HAS DELETED THE SAME. THE LD DR COULD NOT SHOW US ANY DEVIATION IN THE FACTS. IN VIEW OF THIS WE DO NOT F I ND ANY REASON TO SUS TAIN THE ADDITION FOR THIS YEAR. FOR THIS REASON ALON E WE REVERSE THE FINDING OF THE LD CIT(A) AND ALLOW GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE. 6. THE GROUND NO. 4 AND ISSUE NO. 2 IN THE APPEAL IS REGARDING ADDITION ON ACCOUNT OF HOUSEHOLD EXPENDITURE O F RS. 477530/ - . THE LD AO NOTED THAT THE ASSESSEE HAS SHOWN WITHDRAWAL OF RS. 122470/ - . THE ASSESSEE WAS QUESTION ED FOR LOW HOUSEHOLD WITHDRAWAL. THE ASSESSEE SUBMITTED THAT A SUM OF RS. 265766/ - HAS BEEN CONTRIBUTED FOR THE SAME AND HIS WIFE CONTRIBUTED R S. 1,20,000/ - . HE ALSO SUBMITTED THE PAN OF HIS WIFE. THE LD AO DID NOT AGREE WITH THE SAME AND STATED THAT THE ASSESSEE IS LIVING IN POSH LOCALITY AND HUGE INVESTMENT SHOWS THAT THE ASSESSEE HAS UNDISCLOSED SOURCE OF INCOME AND OUT OF WHICH HE ESTIMATED T HE HOUSEHOLD EXPENDITURE OF RS. 50,000/ - PER MONTH. 7. CONSEQUENTLY, HE MADE AN ADDITION OF RS. 4775 3 0/ - . THE LD CIT(A) ALSO CONFIRMED THE ABOVE ADDITION. THE LD AR SUBMITTED THAT WIFE OF THE ASSESSEE HAS WITHDRAWN RS. 120000/ - AND NO CREDIT FOR WHICH HAS BEEN GIVEN BY THE LD AO. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORD ERS OF THE LOWER AUTHORITIES. IN THE PRESENT CASE THE ASSESSEE HAS SHO WN HOUSEHOLD WITHDRAWALS OF RS. 265776/ - FROM HIS OWN ACCOUNT WHERE THE DRAWINGS IN CASH WERE SHOWN OF RS. 120000/ - AND OTHER EXPENSES WERE INCURRED BY CHEQUE. THE WIFE OF THE ASSESSEE H AS WITHDRAWN A SUM OF RS. 1,20,000/ - . THE LD ASSESSING OFFICER WHILE MAKING THE ADDITION HAS FIRSTLY NOT GRANTED THE BENEFIT OF RS. 1,20,000/ - . THE LD AO HAS FURTHER ESTIMATED THE HOUSEHOLD EXPENDITURE @50,000/ PER MONTH JUST FOR THE REASON THAT ASSESSEE H AS MADE HUGE INVESTMENT IN PROPERTIES AND BUSINESS ASSETS. THE LD AO WAS ALSO SWAYED THAT ASSESSEE WAS RESIDING IN ONE OF THE POSH LOCALITIES. IN ANY WAY NO EXPENDITURE OF HOUSEHOLD WAS FOUND TO BE INCURRED OUTSIDE BOOKS BY THE ASSESSEE. THE LD JITENDER DHAWAN VS. ITO ITA NO. 629/DEL/2017 (ASSESSMENT YEAR: 2013 - 14) PAGE | 4 ASSESSING O FFICER ALSO COULD NOT SHOW THAT THE EXPENDITURE SHOWN BY THE ASSESSEE IS INADEQUATE LOOKING TO THE SIZE OF THE FAMILY. FURTHER, THE LD CIT(A) HAS ALSO CONFIRMED THE ADDITION WITHOUT FINDING ANY REASON TO SUSTAIN THE ADDITION. THE LD CIT(A) DESPITE ASSESSEE SUBMITTING THE EXPLANATION BEFORE THE LD AO AND ALSO BEFORE THE LD CIT(A) HAS DISMISSED THE GROUND OF APPEAL. IN VIEW OF THE FACT THAT THE LD ASSESSING OFFICER COULD NOT SHOW THE INADEQUACY OF HOUSEHOLD WITHDRAWAL INCURRED BY THE ASSESSEE AND HER WIFE COM PARED WITH FAMILY SIZE AND LIVING STANDARD. HENCE, THE ADDITION MADE BY THE LD ASSESSING OFFICER OF RS. 477530/ - ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS IS NOT SUSTAINABLE. IN THE RESULT GROUND NO. 4 OF THE APPEAL IS ALLOWED. 9. FURTHER, BEFORE US THE GROUN D NO. 1,2 5 AND 6 ARE NOT PRESSED AND THEREFORE, THEY ARE DISMISSED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 2 / 11 / 2018 . - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 2 / 11 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI JITENDER DHAWAN VS. ITO ITA NO. 629/DEL/2017 (ASSESSMENT YEAR: 2013 - 14) PAGE | 5 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR O RDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER