Shri Kaushikbhai Ratilal Patel, Ahmedabad V. The Income tax Officer,Ward-8(4), Ahmedabad

ITA 672/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9279 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KETAN H SHAH
• Keywords: Revised return

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.672/AHD/2014 / ASSTT. YEAR: 2010-2011 SHRI KAUSHIKBHAI RATILAL PATEL C/O. KETAN H. SHAH, ADOCATE 903, SAPPHIRE COMPLEX C.G. ROAD, NAVRANGPURA, AHMEDABAD. PAN : AAXPP 0913 C VS. ITO, WARD - 8(4) AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI KETAN H. SHAH REVENUE BY : SHRI JAMES KURIAN, SR.DR / DATE OF HEARING : 08/02/2017 / DATE OF PRONOUNCEMENT: 08/02/2017 +,/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE A SSESSEE AGAINST ORDER OF LD.CIT(A)-XXI, AHMEDABAD DATED 20.1.2014 PASSED FOR THE ASSTT.YEAR 2010-11. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF INTEREST EXPENDITURE AMO UNTING TO RS.11,40,521/-. ITA NO.672/AHD/2014 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 1.2.2011 DECLARING TOTAL INCOME AT RS.19, 50,012/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. WHILE TAK ING US THROUGH THE RECORD, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS OBTAINED A LOAN OF RS.25.00 LAKHS FROM MAHIMA TRADING AND INVESTMEN T P. LTD. VIDE CHEQUE NO.182077 ON 15.6.2006. SIMILARLY, THE ASSESSEE HA S TAKEN A LOAN OF RS.15.00 LAKHS ON 1.7.2006 VIDE CHEQUE NO.182080. THESE AMO UNTS WERE DEPOSITED WITH STATE BANK OF INDIA IN FIXED DEPOSITS SCHEME A ND FROM WHERE HE EARNED INTEREST INCOME. THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE UNDER SECTION 57(III) OF THE INCOME TAX ACT, 1961 ON THE LOANS OB TAINED FROM MAHIMA TRADING AND CMC (I) P.LTD. ACCORDING TO THE LD.COU NSEL FOR THE ASSESSEE, THESE LOANS WERE USED FOR MAKING INVESTMENT IN FDRS . FROM WHERE THE ASSESSEE HAS EARNED INTEREST INCOME. THEREFORE, TH E ASSESSEE IS ENTITLED FOR INTEREST EXPENDITURE. HE ALSO POINTED OUT THAT SIM ILAR CLAIM WAS MADE IN THE ASSTT.YEARS 2008-09 AND 2009-10. THE AO HAS DISALL OWED CLAIM OF THE ASSESSEE IN THE ASSTT.YEAR 2008-09 AND THE ASSESSEE WENT IN APPEAL BEFORE THE LD.CIT(A) WHO HAS ALLOWED THE CLAIM OF THE ASSESSEE . BUT THE TRIBUNAL HAS SET ASIDE ORDER OF THE CIT(A) IN ITA NO.2082/AHD/2011 A ND RESTORED THIS ISSUE TO THE FILE OF THE CIT(A). THE DISPUTE IS STILL PENDI NG FOR THE ASSTT.YEAR 2008- 2009. HE POINTED OUT THAT ISSUE WAS SET ASIDE TO T HE FILE OF CIT(A) IN THE ASSTT.YEAR 2008-09 FOR THE REASON THAT DOCUMENTARY EVIDENCE EXHIBITING INVESTMENT IN THE FDR WAS NOT FILED. IT WAS NOT DE MONSTRATED BEFORE THE TRIBUNAL AS TO HOW THESE AMOUNTS WERE USED FOR THE PURPOSE OF INVESTMENT IN FDR. THIS THE LACUNAE IN THIS YEAR HAS BEEN REMOVED, THE ASSESSEE HAS PL ACED ON RECORD COPY OF THE CERTIFICATE OBTAINED FROM BAN K EXHIBITING THE FACT THAT AMOUNTS WERE DIRECTLY USED FOR MAKING FDRS. HE DRE W OUR ATTENTION TOWARDS PAGE NO.38 OF PAPER BOOK WHERE SUCH CERTIFICATE IS AVAILABLE. HE POINTED OUT ITA NO.672/AHD/2014 3 THAT THE ASSESSEE FAILED TO CLAIM INTEREST EXPENDIT URE ORIGINALLY IN THE RETURN, BUT FILED REVISED COMPUTATION DURING SCRUTINY ASSES SMENT. THE LD.AO HAS REFUSED CLAIM OF THE ASSESSEE ON THE GROUND THAT SU CH CLAIM SHOULD HAVE BEEN MADE BY WAY OF REVISED RETURN. ON THE STRENGTH OF THE ITATS ORDER IN THE CASE OF UDIT NARAIN AGARWAL VS. DCIT, (138 ITD 51) HE CONTENDED THAT IF DURING THE COURSE OF SCRUTINY ASSESSMENT A REVISED CLAIM IS BEING MADE BY THE ASSESSEE THAT DESERVES TO BE ENTERTAINED. FOR BUTT RESSING HIS PROPOSITION, THE LD.COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECIS ION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS & SHAREHOLDERS P. LTD., 74 DTR(BOM) 321. HE HAS PLACED ON RECORD COPIES OF TH ESE DECISIONS. ON THE STRENGTH OF THESE DECISIONS, HE CONTENDED THAT THE ASSESSEE HAS PROVIDED NEXUS OF LOAN OBTAINED AND THEIR INVESTMENT FROM WHERE TH E ASSESSEE HAD EARNED INTEREST INCOME, THEREFORE, THE ASSESSEE IS ENTITLE D FOR INTEREST EXPENDITURE. 4. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE AO AND SUBMITTED THAT THE ASSESSEE SHOULD HAVE FILED REVIS ED RETURN BEFORE CLAIMING INTEREST EXPENDITURE. 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. ON PAGE NO.32 OF THE PAPER BOOK, COPY O F THE ASSESSEES ACCOUNT IN THE BOOKS OF MAHIMA TRADING HAS BEEN PLACED. THIS ACCOUNT EXHIBITS THAT THE ASSESSEE HAS AVAILED A LOAN OF RS.40 LAKHS ON TWO O CCASIONS. ON PAGE NO.33 THE ASSESSEE HAS PLACED ON RECORD COPY OF BANK CERT IFICATE EXHIBITING DETAILS OF CHEQUES RECEIVED FROM MAHIMA TRADING AND CMC AND TH EIR INVESTMENT IN THE FDR. THUS, A DIRECT NEXUS HAS BEEN DEMONSTRATED BY THE ASSESSEE. ON PAGE NO.30 OF THE PAPER BOOK, THE ASSESSEE HAS PLACED ON RECORD COPY OF THE REVISED COMPUTATION. THE ASSESSEE HAS SHOWN INTEREST INCOM E FROM FDR AT RS. 19,19,270/-. AFTER CLAIMING DEDUCTION OF RS.11,40, 51/- AS INTEREST ITA NO.672/AHD/2014 4 EXPENDITURE, THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS.7,80,211/-. A PERUSAL OF THESE DETAILS IT REVEALED THAT THERE IS A DIRECT NEXUS BETWEEN THE AVAILMENT OF LOAN VIS--VIS INVESTMENT IN THE FDR W HICH HAS GIVEN RISE TO INTEREST INCOME. THEREFORE, WE ARE OF THE VIEW THA T THE ASSESSEE IS ENTITLED FOR DEDUCTION OF INTEREST EXPENDITURE. 6. SIMILARLY, THE LD.COUNSEL FOR THE ASSESSEE HAS D EMONSTRATED THE FACT AS TO HOW FUNDS OBTAINED FROM CMC (INDIA) )P.LTD. HAS B EEN USED FOR THE PURPOSE OF FDR, WHICH HAS GIVEN RISE TO INTEREST INCOME. T HE ASSESSEE HAS INCURRED INTEREST EXPENDITURE OF RS.5,22,144/- ON THE LOANS AVAILED FORM THE CMC. THE DETAILS ARE AVAILABLE ON PAGE NO.37 ONWARDS. THE N EXUS BETWEEN LOAN AND THEIR INVESTMENT GIVING RISE OF INTEREST INCOME HAS BEEN ESTABLISHED. THUS, ASSESSEE IS ENTITLED FOR INTEREST EXPENDITURE. 7. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE AP PEAL OF THE ASSESSEE AND DELETE THE DISALLOWANCE OF INTEREST EXPENDITURE . 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 8 TH FEBRUARY, 2017 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 08/02/2017