Ramoji Rao (HUF), Hyderabad, Hyderabad V. DCIT, Circle-16(2), Hyderabad, Hyderabad

ITA 815/Hyd/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7376 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 30-06-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NOS. 810 & 815/HYD/2017 ASSESSMENT YEARS: 2012-13 & 2011-12 CH.RAMOJI RAO (HUF) HYDERABAD [PAN: AADHR6836E] VS DY.COMMISSIONER OF INCOME TAX, / ASST.COMMISSIONER OF INCOME TAX CIRCLE-16(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V.SIVA KUMAR, AR FOR REVENUE : SHRI ROHIT MUJUMDAR, DR DATE OF HEARING : 30-06-2021 DATE OF PRONOUNCEMENT : 17-08-2021 O R D E R PER S.S.GODARA, J.M. : THESE TWO ASSESSEES APPEALS FOR AYS.2012-13 & 2011 -12 ARISE FROM THE CIT(A)-4, HYDERABADS ORDER(S) DATED 2 8-02- 2017 & 13-03-2017 PASSED IN CASE NOS.0131 & 051 / 1 5-16 & 14-15 / DCIT,CIR.16(2) / CIT(A)-4 / HYD /16-17, INV OLVING PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [I N SHORT, THE ACT]; RESPECTIVELY. HEARD BOTH THE PARTIES. CASE FILES PERUSED. ITA NOS. 810 & 815/HYD/2017 :- 2 -: 2. IT EMERGES AT THE OUTSET THAT THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE HEREIN CHALLENGES IDENTICAL ACT ION OF THE LEARNED LOWER AUTHORITIES DISALLOWING INTEREST EXPENDI TURE OF RS.30,02,657/- IN BOTH THESE ASSESSMENT YEARS. HIS LO WER APPELLATE DISCUSSION (AY.2012-13) TO THIS EFFECT READS AS FOLLOWS: 5.3.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT SUBMI TTED STATEMENT SHOWING DETAILS OF INTEREST PAID AND INTEREST PROVI DED FOR THE FINANCIAL YEAR 2011-12 ALONG WITH COPY OF LEDGER ACCOUNT, COP Y OF UNION BANK OF INDIA, ESCROW ACCOUNT AS PER BOOKS OF ACCOUNT, E TC. ON VERIFICATION OF THE DETAILS AND CASH FLOW STATEMENT FURNISHED BY THE APPELLANT IT WAS FOUND THAT THE APPELLANT HAS NOT UTILIZED THE B ORROWED FUNDS FOR THE PURPOSE OF INVESTMENTS WHICH EARN INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME AND HENCE, THE APPLICABILITY O F SECTION 14A DOES NOT ATTRACT IN THIS CASE. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER IN THIS REGARD IS DELETED. 5.3.2 HOWEVER, IT WAS NOTICED THAT THE APPELLANT HA S CLAIMED INTEREST OF RS.30,02,657/ - IN THE PROFIT AND LOSS ACCOUNT. SINCE THE APPELLANT IS HAVING BORROWED FUNDS AND THE BORROWED FUNDS HAV E BEEN UTILIZED FOR PURPOSES OTHER THAN BUSINESS, THE INTEREST OF R S.30 LAKHS IS NOT ALLOWED AS EXPENDITURE AND THEREFORE, THE INTEREST AMOUNT WAS CONFIRMED. BOTH THE LEARNED REPRESENTATIVES REITERATED THEIR RESPECTI VE STANDS AGAINST AND IN SUPPORT OF THE LOWER AUTHORITIES ACTION DISALLOWING THE IMPUGNED IDENTICAL INTEREST AMOUNT OF RS.30,02,657/-. WE NOTICE IN THIS FACTUAL BACKDROP THAT THE ASSESSING OFFICER HEREIN HAD FRAMED HIS IDENTICAL SE CTION 143(3) REGULAR ASSESSMENTS ON 30-03-2015 & 19-03-20 14; RESPECTIVELY INVOKING SECTION 14A DISALLOWANCES. IT I S FURTHER AN ADMITTED FACT THAT THE ASSESSEE PREFERRED APPEAL(S) WH EREIN THE CIT(A) HAS ALTHOUGH DELETED THE CORRESPONDING SECTI ON 14A DISALLOWANCES BUT HAS PROCEEDED TO DISALLOW THE IMPUG NED INTEREST FIGURES IN THE INSTANT TWIN ASSESSMENT YEARS. ITA NOS. 810 & 815/HYD/2017 :- 3 -: 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO ASSESS EES SOLE SUBSTANTIVE GRIEVANCE AND FIND MERIT IN THE SAME. THIS IS FOR THE REASON THAT THE ASSESSING OFFICER HAD NEVER DEC LINED SUCH AN INTEREST CLAIM AS THE SAME HAS EMANATED FROM S ECTION 14A R.W. RULE 8D DISALLOWANCES COMPUTATION PERTAINING TO THIS TAXPAYERS ALLEGED EXEMPT INCOME. THE QUESTION AS TO WHETHER THE CIT(A) ENHANCES ASSESSEES INCOME BY WAY OF MAKI NG ALTOGETHER A NEW DISALLOWANCE IS FOUND TO BE NO MORE RES INTEGRA IN VIEW OF THE CIT VS. SHAPORJI PALLONJI MISTRY (196 2) [44 ITR 891] (SC), SAIT BANSILAL AND RAGGISETTI VEERA NNA (1972) 83 ITR 750 (AP), GURVINDER MOHAN SINGH NINDRAJOG (2 012) [348 ITR 170] (DEL), CIT VS. UNION TYRES 240 ITR 55 6 (DEL) ADJUDICATED THE SAME IN ASSESSEES FAVOUR AND AGAINS T THE DEPARTMENT. THEIR LORDSHIPS HOLD THAT SUCH AN ENHANCEMENT IS RESTRICTED ONLY TO THE ADDITIONS MADE IN THE ASSESS MENT ONLY . WE THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED IDENTICAL INTEREST DISALLOWANCES IN BOTH THE SE ASSESSMENT YEARS. NO OTHER GROUND HAS BEEN PRESSED BEFORE US. 4. BOTH THESE ASSESSEES APPEALS ARE ALLOWED IN ABOV E TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE R ESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 17-08-2021 TNMM ITA NOS. 810 & 815/HYD/2017 :- 4 -: COPY TO : 1.CH.RAMOJI RAO (HUF), NO.3, CHIKOTI GARDENS, BEGUM PET, HYDERABAD. 2.THE DY.COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD. 3.THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE-16(2) , HYDERABAD. 4.CIT(APPEALS)-4, HYDERABAD. 5.PR.CIT-4, HYDERABAD. 6.D.R. ITAT, HYDERABAD. 7.GUARD FILE.