Bimla Devi, New Delhi V. ACIT, Circle-50(1), New Delhi

ITA 6991/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9145 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 22-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KATARIA
• Assessee Lawyers: Y P RAWLA
• Keywords: Depreciation; Earning of tax free income; Revised return; Unabsorbed depreciation
• Section: 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 6991/DEL/2017 : ASSTT. YEAR : 2013-14 BIMLA DEVI, 2/6, EAST PATEL NAGAR, NEW DELHI-110008 VS ACIT, CIRCLE-50(1), NEW DELHI-110002 (APPELLANT) (RESPONDENT) PAN NO. A BCPD3481D ASSESSEE BY : SH. Y. P. RAWLA, CA REVENUE BY : SH. V. K. KATARIA, SR. DR DATE OF HEAR ING: 1 8 . 02 .20 2 1 DATE OF PRONOUNCEMENT: 19 .03 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-17, NEW DELHI DATED 29. 09.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THE IMPUGNED ORDER OF ASSESSMENT MADE BY ASSESSING OFFICER AND UPHELD BY LD.CIT (A) IS BAD I N LAW, WRONG ON FACTS AND ABSOLUTELY BASED ON SUSPICION, SURMISES AND CONJECTURES. 2. THE ASSESSING OFFICER AND LD.CIT (A) HAS ERRED I N REJECTING THE REVISED COMPUTATION FILLED DURING THE ASSESSMENT PROCEEDINGS. THE ADDITIONAL CLAIM IN THE REVISED RETURN WAS INTEREST PAID ON O. D. LIMIT OF BANK UTILIZED FOR BUSINESS PURPOSE. 3. THE ASSESSING OFFICER AND LD.CIT (A) HAS ERRED IN DISALLOWING EXPENSES WHICH WERE EXCLUSIVELY FOR ITA NO. 6991/DEL/2017 BIMLA DEVI 2 BUSINESS PURPOSE AND THERE IS NO JUSTIFICATION OF T HE DISALLOWANCE. 4. THE CIT APPEAL HAS ERRED IN DISMISSING THE GROUNDS OF APPEAL REGARDING THE REJECTION OF REVISE D RETURN. 5. IT IS PRAYED THAT APPELLANT MAY BE ALLOWED TO AD D FURTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. IT IS PRAYED THAT THE ADDITION MADE OF RS. 2,26,854 /- MAY BE DELETED AND THE REVISED COMPUTATION MAY BE CONSIDERED WHEREIN THE BUSINESS LOSS IS INCREASED B Y RS. 90,24,572/-. 3. THE ASSESSEE FILED ORIGINAL RETURN OF INCOME DEC LARING A LOSS OF RS.1,65,97,098/- WHICH HAS BEEN ASSESSED AT RS.1,63,70,250/- BY MAKING 20% DISALLOWANCE OF EXPE NSES OF RS.2,26,844/- ON ACCOUNT OF, A. BUSINESS PROMOTION RS.1,47,440/- B. CAR EXPENSES & REPAIR RS.42,837/- B. FESTIVAL EXPENSES RS.1,17,434/- C. TELEPHONE EXPENSES RS.2,21,777/- D. STAFF WELFARE RS.5,61,928/- E. GENERAL EXPENSES RS.42,802/- 4. FURTHER, THE ASSESSEE FILED REVISED COMPUTATION OF INCOME DURING THE ASSESSMENT PROCEEDINGS DECLARING A LOSS OF RS.2,56,21,670/- THUS INCREASING THE LOSS BY RS.90, 24,572/- WHICH THE ASSESSING OFFICER HAS REJECTED HOLDING TH AT THE REVISED COMPUTATION WAS NOT SUPPORTED BY THE REVISE D RETURN IN ACCORDANCE WITH SECTION 139(5) OF THE INCOME TAX AC T, 1961. 5. THE LD. CIT (A) CONFIRMED THE ORDER OF THE ASSES SING OFFICER. ITA NO. 6991/DEL/2017 BIMLA DEVI 3 6. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 7. THE REVISED COMPUTATION SUBMITTED BEFORE THE AO IS AS UNDER: INCOME FROM BUSINESS AND PROFESSION -11,962, 975.00 REGENT GRAND BUSINESS LOSS AS PER ORIGINAL COMPUTATION -27,189. 00 UNABSORBED DEPRECIATION -2,911,214.00 LESS: INTEREST PAID ON OVERDRAFT -1,917,560.00 -4,855,963.00 PROPERTY BUSINESS LOSS AS PER PROFIT & LOSS ACCOUNT -7,107,012.00 NOT CLAIMED IN THE ORIGINAL COMPUTATION INCOME FROM CAPITAL GAIN -13,674,227.00 AS PER ORIGINAL COMPUTATION OF INCOME INCOME FROM OTHER SOURCES -15,532.00 NET LOSS -25,621,670.00 TO BE CARRIED FORWARD CAPITAL GAIN -13,674,227.00 UNABSORBED DEPRECIATION -2,911,214.00 CARRIED FORWARD BUSINESS LOSS -9,051,761.00 EXEMPT INCOME AGRICULTURAL INCOME -1,116,020.00 REFUND DUE -8,180,00 ITA NO. 6991/DEL/2017 BIMLA DEVI 4 THE REASON FOR REVISED COMPUTATION: THE ASSESSEE HAS CLAIMED LOSS ON ACCOUNT OF INTERES T PAID ON OD A/C WITH BANK OF BARODA. THE DETAIL IS EXPLAINED AS UNDER: THE ASSESSEE HAD PURCHASED A PLOT AT 13/12, WEA, KA ROL BAGH, NEW DELHI, FOR TRADING PURPOSE. DETAIL OF SOURCE OF PURCHASE AMOUNT WAS AS UNDER: THE PAYMENT OF RS. 800 LACS WAS MADE FROM PAID OUT OF BORROWINGS FROM BANK OF BARODA OD A/C WITH BANK OF BARODA JOINTLY WITH SH. SATBIR SINGH. THE ASSESSEE DEPOSITED RS. 200 LACS IN THE SAID OD A/C OUT OF SALE OF FARM HOUSE (CAPITAL GAIN OF THE SAME IS DEC LARED IN THE COMPUTATION) AND RS. 100 LACS FROM OTHER UNSECURED LOANS RAISED DURING THE YEAR DEPOSITED TO THE SAID OD A/C . ON THE BASIS OF THE UTILIZATION OF OD AMOUNT AND INTEREST AMOUNT COMES TO RS. 71,07,012/- ON OD ACCOUNT WHICH WAS UTILIZED FOR THE ACQUISITION OF STOCK IN TRADE. BUT AT THE TIME OF FILING THE INCOME TAX RETURN THE SAID PROPERTY WAS DECLARED IN STOCK IN TRADE OF SH. SATB IR SINGH. THE ASSESSMENT OF SH. SATBIR SINGH IS ALSO UNDER PROCES S BEFORE INCOME TAX OFFICER, WARD 51(5), NEW DELHI AND WE HA VE ALREADY FILED THE MODIFIED TRADING ACCOUNT BEFORE THE INCOM E TAX OFFICER, WARD 51(5), NEW DELHI. THE ASSESSEE PAID INTEREST ON THE OD LIMIT WHICH WA S NOT CLAIMED IN THE ORIGINAL RETURN. A TRADING, PROFIT & LOSS ACCOUNT HAS ALREADY BEEN SUBMITTED. ITA NO. 6991/DEL/2017 BIMLA DEVI 5 COPY OF THE SAID OD A/C BANK STATEMENT IS ENCLOSED FOR VERIFICATION. THE ASSESSEE HAS PAID FURTHER INTERES T ON OD LIMIT AND CALCULATION OF INTEREST ON THE BASIS OF UTILIZA TION OF THE AMOUNT FOR BUSINESS PURPOSE INTEREST PAID UPTO 15/1 0/2012 COMES TO RS. 14,92,217/- WHICH NEEDS TO BE CAPITALI ZED TO ASSETS I.E. EQUIPMENT AND OTHER PLANT & MACHINERY A ND INTEREST PAID AFTER 15/10/2012 OF RS. 19,17,560/- IS ALLOWAB LE AS BUSINESS EXPENSE. THE ASSESSEE WAS CONSTRUCTING BUILDING AND PURCHASI NG EQUIPMENTS, AIR-CONDITIONER, AND OTHER PLANT & MACH INERY FOR THE USE OF FIRM M/S. REGENT GRAND. THE FUNDS WERE T RANSFERRED FROM THE OD LIMIT IN THE SAVING ACCOUNT AND IN THE FIRM M/S. REGENT CONTINENTAL FOR REPAYMENT OF EMI OF ICICI BA NK TERM LOAN AND ALSO FOR PURCHASE OF ASSETS. WHILE FINALIZ ING THE BALANCE SHEET OF THE FIRM, THE PAYMENT MADE BEFORE 15TH OCT, 2012 WERE TAKEN TO CAPITAL A/C WITHOUT GOING INTO D EPTH ABOUT THE SOURCES OF CAPITAL. THE INTEREST PAID ON OD WIT HDRAWAL ON ACCOUNT OF THE ASSESSEE HAS BEEN WORKED OUT AND SUB MITTED TO YOUR OFFICE. THE INTEREST PAID IS ALLOWABLE AS BUSI NESS EXPENSE THUS THE SAME IS CLAIMED IN THE REVISED COMPUTATION . DUE TO TIME LIMITATION, THE REVISED RETURN CANNOT B E FILED THUS THE CLAIM MADE DURING THE ASSESSMENT PROCEEDINGS MA Y BE ALLOWED. THE DETAIL OF AMOUNT UTILIZED OUT OF THE S AID OD A/C IS SEPARATELY FURNISHED FOR VERIFICATION SOURCES OF CAPITAL IN THE FIRM THE ASSESSEE HAD TAKEN LOAN OF RS. 1260 LACS FROM I CICI BANK IN OCT, 2010 FOR PURCHASE OF LAND AND CONSTRUCTION OF BUILDING. ITA NO. 6991/DEL/2017 BIMLA DEVI 6 THE ASSESSEE PURCHASED PLOT FOR CONSTRUCTION OF HOT EL OF RS. 804 LACS AND PAID STAMP DUTY. TOTAL AMOUNT RS.8,36,66,1 00/-. AMOUNT USED FOR CONSTRUCTION OF THE BUILDING WAS RS.2,72,16,464/-. AMOUNT USED FOR REPAYMENT OF INTEREST UPTO 15/10/20 12 WAS RS. 2,19,83,666/ AMOUNT USED FOR PAYMENT OF VENDORS FOR PURCHASE OF EQUIPMENTS, PLANT & MACHINERY WAS RS. 1,52,73,716/- THE LOAN FROM ICICI BANK OUTSTANDING AS ON 10/10/2012 WAS RS.1,18,43,121/- BALANCING AMOUNT WAS TAKEN TO CAPITAL A/C. THE ASSESSEE HAS UTILIZED THE OD LIMIT WITH BANK OF BARODA JOINTLY HELD WITH SH. SATBIR SINGH FOR THE PURCHASE OF BUSINESS ASSETS SUCH AS EQUIPMENT, AIR-CONDITIONER, PLANT & MACHINERY, ETC. AND REPAYMENT OF EMI OF ICICI BANK. THE EMI WE RE REPAID THROUGH A PARTNERSHIP FIRM, REGENT CONTINENTAL. COPY OF CAPITAL ACCOUNT OF REGENT CONTINENTAL FOR 2 011-12 & 2012-13 IS ENCLOSED FOR VERIFICATION OF REPAYMENT O F EMI OF ICICI BANK. ON THE BASIS OF SCRUTINY OF THE SAID OD A/C, THE TOTAL AMOUNT UTILIZED COMES TO RS. 2,84,57,000/-FOR BUSINESS PURPOSE. 8. THE SOURCES OF REGENT CONTINENTAL ARE FROM OD A/ C BANK OF BARODA. THE SAME IS SUMMARIZED AS UNDER: ITA NO. 6991/DEL/2017 BIMLA DEVI 7 1. TRANSFER FROM OD A/C TO REGENT CONTINENTAL 1,68 ,00,000 FROM REGENT CONTINENTAL TO EMI 1,65,77,211 FROM REGENT CONTINENTAL TO VENDOR 50,66,138 AMOUNT REFUNDED BY REGENT GRAND TO REGENT CONTINENTAL 26,05,350 2. FROM OD A/C TO SAVING BANK A/C 99,75,000 FROM SAVING BANK TO CONSTRUCTION 55,76,478 PAYMENT TO VENDORS 76,74,616 THE EMI OF ICICI WAS ROUTED THROUGH REGENT CONTINEN TAL. IT WAS WRONGLY DEBITED TO SATBIR SINGH CAPITAL A/C UPTO 31 /03/2012. THE SAME WAS TRANSFERRED DURING THE YEAR 2012-13 BY THE FIRM. COPY OF BANK PASS BOOK IS ENCLOSED FOR VERIFICATION OF CAPITAL INVESTED IN THE BUSINESS. 9. THE REVENUE AUTHORITIES REFUSED THE CLAIM OF THE ASSESSEE ON THE FOLLOWING GROUNDS: THE OD LIMIT FROM BANK OF BARODA IS HELD JOINTLY BY THE APPELLANT AND HER HUSBAND SH. SATBIR SINGH. THE OD LIMIT WAS UTILIZED FOR THE PURPOSE OF PURCH ASE OF SHARE IN OLD BUILDING. THE BUILDING IS IN THE NAME OF MRS. BIMLA DEVI I.E. THE APPELLANT. THIS BUILDING WAS DECLARED AS STOCK IN TRADE OF SH. SATBIR SINGH. ITA NO. 6991/DEL/2017 BIMLA DEVI 8 THERE IS NO CLARIFICATION AS TO WHETHER THE CLAIM O F BUILDING AS STOCK IN TRADE OF SH. SATBIR SINGH HAS BEEN LATE R REVISED. A REVISED COMPUTATION OF SMT. BIMLA DEVI WAS HOWEVE R, FILED CLAIMING THAT THE SAME BUILDING WAS STOCK IN TRADE OF PROPERTY BUSINESS OF THE APPELLANT THUS THE APPELLANT MADE A FRESH CLAIM OF EXISTENCE OF A NEW BUSINESS INTEREST - PROPERTY BUSINESS - WHICH W AS NEVER IN EXISTENCE AT THE TIME OF FILING OF ORIGINA L RETURN OR IN THE PRECEDING PREVIOUS YEAR. THERE IS NO EVIDENCE THAT THE APPELLANT IS IN THE B USINESS OF PURCHASE AND SALE OF PROPERTY. THE ONLY INSTANCE FILED AS EVIDENCE BY THE APPELLAN T IS ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004-05 IN WHI CH THE APPELLANT HAD PURCHASED LAND AND CONSTRUCTED SO ME SHOPS WHICH WERE SOLD DURING THE YEAR, BUT THESE WE RE ALSO SHOWN AS PROFIT ON SALE OF SHOPS AND NOT AS A PROPE RTY BUSINESS. THUS IT IS APPARENT THAT THE CLAIM MADE BY THE APPE LLANT OF EXISTENCE OF PROPERTY BUSINESS IS AN AFTERTHOUGHT T O CLAIM INTEREST PAID ON THE OD LIMIT OF BANK OF BARODA, WH ICH IS OTHERWISE NOT AN ADMISSIBLE EXPENSE SINCE, THERE IS NO NEXUS WITH THE EXISTING BUSINESS OF THE APPELLANT. KEEPING IN VIEW THE ABOVE FACTS, THE CLAIM OF THE A PPELLANT THAT THE REVISED COMPUTATION MAY BE TAKEN FOR COMPUTATION OF INCOME CANNOT BE ACCEPTED. FURTHER, THE ITA NO. 6991/DEL/2017 BIMLA DEVI 9 DECISION OF THE AO TO REJECT IT ON THE BASIS OF DEL AY IN CLAIM AND THE RELIANCE ON THE DECISION OF GOETZE IN DIA LTD. VS. CIT IS ALSO UPHELD. 10. CULLING THE RELEVANT FACTS, WE FIND THAT THE AS SESSEE HAS PAID INTEREST ON OD LIMIT FROM BANK OF BARODA. THE ASSESSEE HAS UTILIZED OD LIMIT JOINTLY HELD WITH SHRI SATBIR SIN GH FOR THE PURCHASE OF BUSINESS ASSETS. THERE ARE TWO ENTITIES NAMELY REGENT GRAND AND REGENT CONTINENTAL, THE EMI HAS BE EN PAID FROM REGENT CONTINENTAL WHICH WAS WRONGLY DEBITED T O SATBIR SINGH CAPITAL ACCOUNT UPTO 31.03.2012. 11. HAVING GONE THROUGH THE CRUX OF THE ISSUE, THE INTEREST PAID BY THE ASSESSEE HAS TO BE GIVEN BENEFIT OF DED UCTION UNLESS FOUND CONTRA. WE IN PRINCIPLE HOLD THAT THE ASSESSE E IS ELIGIBLE TO FILE REVISED COMPUTATION WHICH HAS TO BE GIVEN D UE CONSIDERATION BY THE REVENUE AUTHORITIES. 12. THE MATTER IS REFERRED TO THE FILE OF THE ASSES SING OFFICER FOR VERIFICATION OF THE FACTS TO EXAMINE THE CLAIM OF THE ASSESSEE WITH REGARD TO THE LOAN AVAILED, INTEREST PAID AND IF THE INTEREST HAS BEEN DEBITED TO CAPITAL ACCOUNT OF SHRI SATBIR SINGH OR NOT BY GOING THROUGH THE BANK STATEMENTS. 13. THE APPELLANT HAS ALSO CHALLENGED THE DISALLOWA NCE OF 20% OF THE EXPENSES. THE DISALLOWANCE WAS MADE BY THE R EVENUE AUTHORITIES ON THE BASIS THAT THE APPELLANT WAS UNA BLE TO FILE COMPLETE BILLS/VOUCHERS AND OTHER DETAILS, SUCH AS LOG BOOKS, AND OTHER DOCUMENTARY EVIDENCE TO SUPPORT THE EXPEN SES. IT HAS ALSO BEEN POINTED OUT BY THE AO THAT SOME EXPEN SES HAVE BEEN INCURRED IN CASH AND THERE ARE HAND WRITTEN AN D SELF-MADE ITA NO. 6991/DEL/2017 BIMLA DEVI 10 VOUCHERS. THE LD. CIT (A) HELD THAT THERE IS ALWAYS POSSIBILITY TO INFLATE THE EXPENDITURE ON THE BASIS OF SELF-MADE V OUCHERS WHICH WE ARE UNABLE TO ACCEPT. 14. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE REASON GIVEN BY THE ASSESSING OFFICER THAT THE EXPE NSES ARE NEITHER FULLY VOUCHED NOR FULLY VERIFIABLE. THE AO DID NOT BRING ON RECORD AS TO WHAT ENQUIRIES HE WANTED TO CONDUCT FOR VERIFICATION OF THE VOUCHERS. NO DISALLOWANCE IS WA RRANTED OWING TO NON-VERIFICATION OF THE VOUCHERS PRODUCED BY THE ASSESSEE. WITH REGARD TO THE EXPENSES FOR WHICH NO VOUCHERS H AVE BEEN PRODUCED, THE ASSESSEE IS HEREBY GIVEN ANOTHER OPPO RTUNITY TO PRODUCE ALL THE BILLS AND VOUCHERS BEFORE THE REVEN UE AUTHORITIES. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19/03/2021. SD/- SD/- (SUCHITRA KAMBLE) (DR. B. R. R. KUMAR) JUDICIAL MEMBER AC COUNTANT MEMBER DATED: 19/03/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR