K. uttamchand Darla, Bangalore V. ITO, Bangalore

ITA 781/BANG/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5520 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH JT BENGALURU
• Assessee Lawyers: H N KHINCHA
• Keywords: Opportunity of being heard
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 781/BANG/2016 ASSESSMENT YEAR : 2011 - 12 SHRI K. UTTAMCHAND DARLA, ARIST KUNJ, NO.75, H.B. SAMAJA ROAD, BASAVANGUDI, BENGALURU 560 004. PAN: ACXPD 4681P VS. THE INCOME TAX OFFICER, WARD 2(2)(5), BENGALURU. APP ELLANT RESPONDENT A PPELLANT BY : SHRI H.N. KHINCHA, CA RE SPONDENT BY : SHRI B.R. RAMESH, JT. CIT(DR)(ITAT), BENGALURU. D ATE OF HEARING : 31 . 0 1.201 8 DATE OF PRONOUNCEMENT : 28 . 0 2 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PAS SING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE ORDERS BEING BAD IN LAW AND LIABLE TO BE QUASHED. 2. IN ANY CASE AND WITHOUT PREJUDICE, THE LEARNED ASSESSING OFFICER HAD ERRED IN DISALLOWING THE INTEREST OF RS . 12,74,894/- AND THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE SAME. ON PROPER APPRECIATION OF THE FACTS OF THE ITA NO.781/BANG/2016 PAGE 2 OF 5 CASE AND THE LAW APPLICABLE, THE DISALLOWANCE OF IN TEREST AS MADE / CONFIRMED BEING ERRONEOUS IS TO BE DELETED. 3. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST AMOUNTING T O RS. 12,74,894/- HOLDING THAT A) OUT OF ABOVE A SUM OF RS. 4,59,252/- HAS NOT BEE N DISPUTED BY THE APPELLANT. B) THE BALANCE SUM OF RS. 8,15,642/- IS NOT ALLOWAB LE U/S. 56(III) OF THE ACT. C) THE SAID INTEREST IS NOT EXPENDED WHOLLY FOR EAR NING INTEREST INCOME. THE VARIOUS CONCLUSIONS DRAWN ARE CONTRARY BOTH TO FACTS AND LAW IS TO BE DISREGARDED AND DISALLOWANCE OF INTEREST AS CONFIRMED IS TO BE DELETED. 4. THE AUTHORITIES BELOW HAVE NOT PROPERLY APPRECI ATED THE FACTS OF THE CASE. THE APPELLANT HAVING RIGHTLY CLA IMED THE DEDUCTION FOR INTEREST PAID AND THE SAME IS TO BE A CCEPTED WITHOUT ANY VARIATION. 5. THE APPELLANT DENIES THE LIABILITY TO PAY INTER EST LEVIED U/S. 234B AND 234D OF I.T. ACT, 1961. THE INTEREST HAVIN G BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 6. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE AD DUCED AT THE TIME OF HEARING IT IS REQUESTED THAT THE IMPUGN ED ORDER BE QUASHED OR ATLEAST THE DISALLOWANCE OF INTEREST AS MADE / CONFIRMED BE DELETED AND INTEREST LEVIED U/S. 234B AND 234D OF I.T. ACT, 1961 BE DELETED. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS CONTENDED THAT NEITHER THE AO NOR THE CIT(APPEALS) HAS APPRECIATED THE CORRECT FACTS AND HAS MADE A DISALLOWANCE OF THE EX PENDITURE CLAIMED BY ITA NO.781/BANG/2016 PAGE 3 OF 5 THE ASSESSEE. IN SUPPORT OF HIS CONTENTIONS, THE L D. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE WRITTEN S UBMISSIONS FILED BEFORE THE CIT(APPEALS) IN WHICH IT IS CATEGORICALLY STATE D THAT HE HAS MADE CERTAIN DEPOSITS TO THE BANK AND ALSO TOOK A LOAN FROM THE BANK WHICH WAS LATER ON DISBURSED TO SOME OF THE DEBTORS FROM WHOM ASSESSEE RECEIVED THE INTEREST INCOME. THE ASSESSEE IN FACT CLAIMS THE S ET OFF OF INTEREST EXPENDITURE AGAINST INTEREST INCOME RECEIVED ON THE LOANS ADVANCED TO VARIOUS PARTIES, BUT THE AO OR THE CIT(A) HAVE NOT CONSIDERED THESE FACTS AND THEY HAVE MADE THE DISALLOWANCE OF THE CLAIM OF EXPENDITURE HAVING OBSERVED THAT THE ASSESSEE IS TRYING TO ADJUST THE INTEREST EXPENDITURE AGAINST THE INTEREST INCOME EARNED ON FDRS. SINCE THE CLAIM OF ASSESSEE WAS NOT PROPERLY EXAMINED BY THE LOWER AUTHORITIES, THE ORDER OF CIT(APPEALS) BE SET ASIDE IN THE INTEREST OF JUSTIC E AND MAY BE RESTORED TO HIM FOR READJUDICATION OF THE ISSUE IN THE LIGHT OF THE ASSESSEES CONTENTIONS. 3. THE LD. DR, HOWEVER, PLACED RELIANCE UPON THE OR DER OF THE CIT(APPEALS). 4. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE AO/CIT(APPEA LS) HAVE GONE A DIFFERENT PREMISE WHILE DISALLOWING THE CLAIM OF AS SESSEE, WHEREAS IN THE WRITTEN SUBMISSIONS BEFORE THE CIT(A), THE ASSESSEE HAS TRIED TO EXPLAIN THAT HIS CLAIM OF ADJUSTMENT OF INTEREST EXPENDITUR E AGAINST INTEREST INCOME ITA NO.781/BANG/2016 PAGE 4 OF 5 EARNED FROM THE DEBTORS TO WHOM LOAN WAS ADVANCED. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CONTENTI ON OF THE ASSESSEE REQUIRES A FRESH ADJUDICATION BY THE CIT(APPEALS). ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO READJUDICATE THE IMPUGNED ISSUES AFTER AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ALSO AFTER CONSIDERING THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE TH E CIT(APPEALS). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY, 2018. SD/- SD/- ( INTURI RAMA RAO ) ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH FEBRUARY, 2018. / D ESAI S MURTHY / ITA NO.781/BANG/2016 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BAN GALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.