SUNIL KOTHARI, Kota V. ACIT, Kota

ITA 824/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4828 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH JCIT DHK
• Assessee Lawyers: B V MAHESHWARI

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHAR AT, JM VK;DJ VIHY LA-@ ITA NO. 824/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI SUNIL KOTHARI 30-31, KOTHARI BHAWAN NEW GRAIN MANDI, KOTA CUKE VS. THE ACIT CIRCLE- 1 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACWPK 8049 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI B.V. MAHESHWARI JKTLO DH VKSJ LS@ REVENUE BY :SMT. NEENA JEPH, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/12/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 23 /12/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF LD. CIT(A) , KOTA DATED 29.10.2014 FOR THE ASSESSMENT YEAR 2009 -10 RAISING THEREIN FOLLOWING GROUND OF APPEAL:- THAT THE AO GROSSLY ERRED IN DISALLOWING THE INTE REST PAID RS. 7,61,641/- ON BORROWED FUNDS UTILIZED FOR PURCHASE OF PROPERTY PUT ON THE LEASE. THE LD. CIT(A) ALSO E RRED IN CONFIRMING THE SAID DISALLOWANCE MADE BY THE AO. 2.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE CLAIMED INTEREST EXPENSES INCOME FROM HOUSE PROPERTY WHEN DETAILS AN D JUSTIFICATION WAS ITA NO. 824/JP/2014 SHRI SUNIL KOTHARI VS. ACIT, CIRCLE- 1, KOTA . 2 CALLED FOR BY THE AO FROM THE ASSESSEE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. THE LD. AR OF THE ASSESSEE SUBMITTED THE COPY OF ACCOUNTS, HOWEVER, IT WAS NOT PROVED BY THE ASSE SSEE THAT LOAN WAS TAKEN FOR THE CONSTRUCTION OR PURCHASE OF HOUSE PRO PERTY. THE AO OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE ANY SU FFICIENT EVIDENCE BY WHICH HE COULD SUBSTANTIATE HIS CLAIM. THE AO NOTIC ED THAT THE ASSESSEE TOOK LOAN FROM T.C. KOTHARI AND SONS ON 10-06-2008 AND PROPERTY WAS ALREADY COMPLETED AND ACCORDING TO THE AO, IT WAS NOT LOOKING GENUINE THAT LOAN WAS TAKEN FOR HOUSE PROPERTY. THE AO ASKE D THE ASSESSEE TO JUSTIFY THE INTEREST EXPENSES WITH COMPLETE SUPPORT ING EVIDENCES. HOWEVER, THE ASSESSEE HAD NOT PRODUCED ANY DETAILS EXCEPT COPY OF ACCOUNT WHEREIN AMOUNT INTEREST WAS AT RS. 1,27,046 /- BESIDES THE ASSESSEE ALSO PROVIDED A COPY OF ACCOUNT IN WHICH I NTEREST AMOUNT WAS DIFFERENT AND THUS THEY WERE CONTRADICTORY. THE AO THUS OBSERVED THAT THE PURPOSE OF TAKING LOAN BY THE ASSESSEE IS NOT CLEAR . THE ASSESSEE FAILED TO PRODUCE THE NEXUS BETWEEN INTEREST AND HOUSE PROPER TY INCOME AND WITHOUT NEXUS DEDUCTION COULD NOT BE ALLOWED. HENCE , THE INTEREST EXPENSES WAS NOT ALLOWED BY THE AO U/S 24(B) OF THE ACT AND MADE ADDITION OF RS. 7,61,641/- IN THE HANDS OF THE ASSE SSEE. 2.2 IN FIRST APPEAL, THE LD. CIT(A) OBSERVED THAT T HE ASSESSEE FAILED TO PROVE THAT THE AMOUNT BORROWED WAS USED FOR PURCHAS ING THE HOUSE ITA NO. 824/JP/2014 SHRI SUNIL KOTHARI VS. ACIT, CIRCLE- 1, KOTA . 3 PROPERTY. THEREFORE, THE INTEREST PAID ON BORROWED AMOUNT COULD NOT BE ALLOWED AGAINST HOUSE PROPERTY INCOME. THUS, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 7,61,641/-MADE BY THE AO. 2.3 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAD ERRED IN CONFIRMING THE DIS ALLOWANCE OF THE INTEREST AMOUNT OF RS. 7,61,641/- PAID BY THE ASSES SEE OUT OF THE BORROWED FUNDS. 2.4 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE ORDER OF T HE LD. CIT(A) THAT THE ASSESSEE HAD FAILED TO PROVE THAT THE AMOUNT BORROW ED WAS USED FOR PURCHASING THE HOUSE PROPERTY. THEREFORE, THE INTER EST PAID OF RS. 7,61,641/- ON BORROWED AMOUNT WAS NOT ALLOWED BY TH E AO AGAINST HOUSE PROPERTY INCOME. THE SAME WAS CONFIRMED BY LD. CIT( A) IN THE HANDS OF THE ASSESSEE. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE WAS ASKED BY THE BENCH TO SUBMIT THE DETAILS OF THE BA NK ACCOUNT FROM WHERE THE AMOUNT WAS PAID FOR ACQUISITION OF PROPERTY SI TUATED AT PAM BEACH GALLERY, MUMBAI. FROM THE FACTS OF THE CASE, IT IS NOTICED THAT RS. 63.50 LACS WAS PAID ON 5-10-2007 OUT OF CREDIT AMOUNT OF RS. 1,03,83,120/-. ON THE ENQUIRY, THE LD. AR SUBMITTED THAT THIS AMOUNT WAS RECEIVED ON THE ITA NO. 824/JP/2014 SHRI SUNIL KOTHARI VS. ACIT, CIRCLE- 1, KOTA . 4 SALE OF SHARES. THUS IT IS CLEAR FROM THE RECORDS T HAT RS. 63.50 LACS WAS NOT OUT OF BORROWED FUNDS BUT FROM ASSESSEE'S OWN F UNDS. HOWEVER, THE AMOUNT OF RS. 19,83,300/- WAS PAID OUT OF THE BORRO WED FUNDS. THEREFORE, THE ASSESSEE IS NOT ENTITLED TO CLAIM INTEREST ON T HE BORROWED FUNDS I.E. UPTO RS. 63.50 LACS AND INTEREST ON THE BALANCE INV ESTMENT IS AN ALLOWABLE EXPENSES. ACCORDINGLY, THE AO WILL WORK OUT THE SAM E AS ALLOWABLE INTEREST. HENCE, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-12-2016. SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23 /12/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SUNIL KOTHARI, KOTA 2. IZR;FKHZ@ THE RESPONDENT-THE ACIT, CIRCLE- 1, KOTA 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 824/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR