KHURANA GASES P. LTD, MUMBAI V. ASST CEN CIR 3(2), MUMBAI

ITA 6598/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0213 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 10-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MRS RENU KAPOOR
• Keywords: Bonafide belief; Additional evidence

Judgement Text

M/S KHURANA GASES P. LTD. VS. ACIT, CENTRAL CIRCLE 3(2), MUMBAI ITA NO. 6598/MUM/2016 A.Y 2012 - 13 1 IN THE INCOME TAX APPELLATE TRIBUNAL ' H ' BENCH, MUMBAI BEFORE SHRI MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NOS.6598/MUM/2016 (ASSESSMENT YEAR: 2012 - 13 ) M/S KHURANA GASES PVT. LTD. 501, RAHEJA CENTRE, FREE PRESS JOURNAL MARG, 214, NARIMAN POINT, MUMBAI - 400 021 VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 3(2), ROOM NO. 402, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400 020 PAN AAACK2853L ASSESSEE REVENUE ASSESSEE BY : MRS. RENU KAPOOR, A.R REVENUE BY : SHRI MANOJ KUMAR SINGH, D.R DATE OF HEARING : 11 .09.2018 DATE OF PRONOUNCEMENT: 19 .09.2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 51, MUMBAI, DATED 30.08.2016, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3)(II) OF THE INCOME - TAX ACT, 1961, DATED 30.03.2015 FOR A.Y 2012 - 13. THE ASSESSEE HAS ASSAILED T HE ORDER OF THE CIT(A) ON THE FOLLOWING SHORT GROUNDS OF APPEAL: 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LA W AND ON THE FACTS OF THE CASE IN SUSTAINING THE DISALLOWANCE OF INTEREST RS. 11,51,488 / - U/S 24(B) OF THE INCOME TAX ACT. 2. THE ASSESSEE COMPANY CRAVES LEAVE TO ADD, ALTER OR AMEND THE ABOVE GROUND OF APPEAL. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH DURING THE YEAR UNDER CONSIDERATION WAS NOT HAVING ANY BUSINESS ACTIVITY , BUT DERIVING ITS INCOME FROM HOUSE PROPERTY AND OTHER SOURCES , HAD FILED ITS RETURN OF INCOME FOR A.Y M/S KHURANA GASES P. LTD. VS. ACIT, CENTRAL CIRCLE 3(2), MUMBAI ITA NO. 6598/MUM/2016 A.Y 2012 - 13 2 2012 - 13 ON 30.09.2012, DECLARING TOTAL INCOME OF RS. 1,65,79,926/ - . T H E RETURN OF INCOME WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD SHOWN RENTAL INCOME OF RS. 85,50,000/ - FROM A PROPERTY AT RAHEJA CENTRE, FREE PRESS JOURNAL MARG, 214, NARIMAN POINT, MUMBAI. FURTHER , IT WAS NOTICED BY T HE A.O THAT THE ASSESSEE HAD CLAIMED A DEDUCTION OF INTEREST EXPENDITURE UNDER SEC. 24(B) OF RS. 11,51,488/ - IN RESPECT OF THE AFORESAID PROPERTY. IN ORDER TO VERIFY THE VERACITY OF THE SAID CLAIM THE ASSESSEE WAS CALLED UPON BY THE A. O TO FURNISH DOCUMENTARY EVIDENCE ESTABLISHING THAT LOAN FUNDS IN RESPECT OF WHICH THE INTEREST EXPENDITURE WAS CLAIMED AS DEDUCTION WERE UTILISED FOR THE PURPOSE OF PURCHASE OF THE AFORESAID PROPERTY. HOWEVER, AS THE ASSESSEE FAILED TO FILE ANY REPLY, THU S THE A.O DISALLOWED THE INTEREST EXPENDITURE AND AFTER ALLOWING THE DEDUCTION UNDER SEC. 24(A) OF RS. 25,65,000/ - REWORKED THE NET ANNUAL VALUE OF THE AFORESAID PROPERTY AT RS. 59,85,000/ - . 4. AGGRIEVED, THE ASSESSEE ASSAILED THE AFORESAID DISALLOWANCE OF INTEREST EXPENDITURE CLAIMED BY HIM UNDER SEC. 24(B) BEFORE THE CIT(A). DURING THE COURSE OF THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT AS THE INTEREST EXPENDITURE WAS ALLOWED BY THE REVENUE IN THE EARLIER YEARS, HENCE THE S AME WAS NOT LIABLE TO BE DISALLOWED DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE CIT(A) OBSERVED THAT AS THE ASSESSEE DESPITE REPEATED OPPORTUNITIES HAD FAILED TO SUBSTANTIATE ITS CLAIM OF INTEREST EXPENDITURE AND ESTABLISH THAT THE LOAN FUNDS WERE UT ILIZED IN RELATION TO THE SUBJECT PROPERTY, UPHELD THE DISALLOWANCE. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT THE ASSESSEE HA S FILED AN APPLICATION UNDER RULE 29 OF THE APPELLAT E TRIBUNAL RULES, 1963 SEEKING LIBERTY FOR PLACING ON RECORD CERTAIN DOCUMENTS BY WAY OF ADDITIONAL EVIDENCE. THE LD. A.R SUBMITTED THAT AS THE SAID DOCUMENTS WHICH CLEARLY M/S KHURANA GASES P. LTD. VS. ACIT, CENTRAL CIRCLE 3(2), MUMBAI ITA NO. 6598/MUM/2016 A.Y 2012 - 13 3 ESTABLISHED THE NEXUS BETWEEN THE LOAN FUNDS AND THE ACQUISITION OF THE SUBJECT PRO PERTY HA S A STRONG BEARING ON THE ISSUE UNDER CONSIDERATION, THUS LIBERTY MAY BE GRANTED FOR PLACING THEM ON RECORD. ON A QUERY , AS TO WHY THE SAID DOCUMENTS WHICH AS CLAIMED HAD A MATERIAL BEARING ON THE ADJUDICATION OF THE ISSUE UNDER CONSIDERATION WERE NOT FILED BEFORE THE LOWER AUTHORITIES, IT WAS SUBMITTED BY THE LD. A.R THAT AS THE LOAN FUNDS WERE RAISED IN THE PRECEDING YEARS AND INTEREST EXPENDITURE AS CLAIMED BY THE ASSESSEE WAS ALLOWED IN THE SAID RESPECTIVE YEARS, THUS , THE ASSESSEE REMAINED UNDER A BONAFIDE BELIEF THAT THERE WAS NO REQUIREMENT FOR AGAIN ESTABLISHING THE NEXUS BETWEEN THE LOAN FUNDS AND THE SUBJECT PROPERTY. IT WAS SU BMITTED BY THE LD. A.R THAT AS THE INTEREST EXPENDITURE PERTAINING TO THE AFORESAID LOAN FUNDS WAS ALLOWED BY THE REVENUE IN THE PRECEDING YEARS, THUS THE INTEREST EXPENDITURE PERTAINING TO THE BROUGHT FORWARD BALANCES OF SUCH LOANS COULD NOT HAVE BEEN DIS ALLOWED DURING THE YEAR UNDER CONSIDERATION. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD DESPITE SUFFICIENT OPPORTUNITY FAILED TO PRODU CE THE SAID DOCUMENTS BEFORE THE LOWER AUTHORITIES , THUS THE SAME MAY NOT BE ADMITTED. 6. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES OF BOTH THE PARTIES IN CONTEXT OF THE ISSUE PERTAINING TO ADMISSION OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. WE FIN D FROM A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES THAT THE ASSESSEE DESPITE SUFFICIENT OPPORTUNITY HAD FAILED TO SUBSTANTIATE ITS CLAIM OF DEDUCTION UNDER SEC. 24(B) BEFORE THEM. HOWEVER, FINDING FORCE IN THE CONTENTION OF THE LD. A.R THAT AS ITS CL AIM OF DEDUCTION OF THE INTEREST EXPENDITURE PERTAIN ING TO THE LOAN FUNDS RAISED FOR THE SUBJECT PROPERTY IN THE PRECEDING YEARS WAS ACCEPTED BY THE REVENUE IN THE THOSE YEARS , THUS THERE WAS SUFFICIENT REASON FOR THE ASSESSEE TO BELIEVE THAT THERE WAS NO REQUIREMENT OF AGAIN ESTABLISHING THE NEXUS BETWEEN THE LOAN FUNDS AND THE SUBJECT PROPERTY DURING THE YEAR UNDER CONSIDERATION . WE THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. M/S KHURANA GASES P. LTD. VS. ACIT, CENTRAL CIRCLE 3(2), MUMBAI ITA NO. 6598/MUM/2016 A.Y 2012 - 13 4 7. WE HAVE PERUSED THE ADDITIONAL EVIDENCE AND FIND THAT IT IS THE CLAIM OF THE ASSESSEE TH AT IT HAD PURCHASED THE PROPERTY UNDER CONSIDERATION VIZ. RAHEJA CENTRE, FREE PRESS JOURNAL MARG, 214, NARIMAN POINT, MUMBAI , VIDE A DEED OF TRANSFER ON 22.12.2009 FOR A CONS IDERATION OF RS. 9,32,06,000/ - . THE ASSESSEE EXPLAINING THE SOURCE OF THE AFORESAID PURCHASE CONSIDERATION , HAD AT PAGE 1 OF HIS APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE FILED A CHART EXPLAIN ING THE SOURCE OF THE AFORESAID FUNDS. IT IS CLAIMED BY THE ASSESSEE THAT IN ADDITION TO ITS OWN FUNDS, IT HAD RAISED INTEREST BEARING LOANS FROM THREE PARTIES VIZ. (I). SH. PUSHKAR KHURANA: RS. 85,00,000/ - (ON 02.12.2009); (II). EKC LTD. : RS. 3,00,00,000/ - (ON 22.12.2009) ; AND SH. P.K KHURANA : RS. 5,00,00, 000/ - [ (ON 22.12.2009) & RS. 1,98,00,000/ - (ON 23.12.2009) ] . THE ASSESSEE HAD IN HIS CHART FURTHER MADE A MENTION AS REGARDS THE UTILISATION OF THE AFORESAID AMOUNTS FOR ACQUISITION OF THE SUBJECT PROPERTY. WE FURTHER FIND THAT AT PAGE 10 - 37 OF THE PAPER BOOK OF THE ASSESSEE (FOR SHORT APB) A COPY OF THE DEED OF TRANSFER PERTAINING TO THE SUBJECT PROPERTY HAS BEEN FILED. WE FIND FROM A PERUSAL OF THE DEED OF TRANSFER THAT THE SUBJECT PROPERTY WAS TRANSFERRED TO THE ASSESSEE FOR A CONSID ERATION OF RS. 9,32,06,000/ - ON 22.12.2009 . 8. WE ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE HIS CLAIM OF EXPENDITURE IN RESPECT OF ITS CLAIM OF DEDUCTION UNDER SEC. 24(B) , AND THE DOCUMENTS FILED BEFORE US BY WAY OF ADDITIONAL EVIDENCE W ERE NOT THERE BEFORE THE A.O, THUS IN ALL FAIRNESS RESTORE THE MATTER TO THE FILE OF THE A.O FOR FRESH ADJUDICATION OF THE SAID CLAIM OF THE ASSESSEE. THE ASSESSEE SHALL DURING THE COURSE OF THE SET ASIDE PROCEEDINGS SUBSTANTIATE ON THE BASIS OF DOCUMENTARY EVIDENCE THAT AN AMOUNT OF RS. 11,51,488/ - AS CLAIMED IN ITS RETURN OF INCOME WAS INCURRED/PAYABLE TOWARDS INTEREST EXPENDITURE DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF THE LOAN FUNDS WHICH WERE UTILISED FOR THE SUBJECT PROPERTY . FURTHER, THE A.O SHALL DURING THE COURSE OF THE SET ASIDE PROCEEDINGS VERIFY THAT NO PART OF THE BROUGHT FORWARD BALANCES OF THE RESPECTIVE LOANS ON 01.04.2011 , WHICH AS CLAIMED BY THE ASSESSEE WERE RAISED FROM THE AFORESAID LENDERS IN THE F.Y 2009 - 10 VIZ. (I). SH. PUSHKAR KHURANA: RS. 85,00,000/ - (ON M/S KHURANA GASES P. LTD. VS. ACIT, CENTRAL CIRCLE 3(2), MUMBAI ITA NO. 6598/MUM/2016 A.Y 2012 - 13 5 02.12.2009); (II). EKC LTD. : RS. 3,00,00,000/ - (ON 22.12.2009); AND (III). SH. P.K KHURANA: [ RS. 5,00,00,000/ - (ON 22.12.2009) & RS. 1,98,00,000/ - (ON 23.12.2009) ] , DOES ARISE FROM DIVERSION /UTILISATION OF THE SAID FUNDS EXCEPT FOR THE PURPOSE OF ACQUISITION OF THE SUBJECT PROPERTY UNDER CONSIDERATION. WE THUS , SET ASIDE THE MATTER TO THE FILE OF THE A.O FOR FRESH ADJUDICATION IN TERMS OF OUR AFORESAID OBSERVATIONS. 9. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH SEPTEMBER, 2018 SD/ - SD/ - ( M ANOJ KUMAR AGGARWAL) (RAVISH SOOD) AC COUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 19 .09 .2018 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ ASSTT. REGISTRAR) , / ITAT, MUMBAI M/S KHURANA GASES P. LTD. VS. ACIT, CENTRAL CIRCLE 3(2), MUMBAI ITA NO. 6598/MUM/2016 A.Y 2012 - 13 6