SHRI NARESH KUMAR VAISHNAV, Burhanpur V. THE ITO, Burhanpur

ITA 92/IND/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5728 (ITAT-INDORE)
• Duration Of Justice: 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 27-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED DR

Judgement Text

NARESHKUMAR VAISHNAV ITA NO. 92/IND/2016` 1 , , IN THE INCOME TAX APPELLATE TRIB UNAL, INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 92/IND/2016 ASSESSMENT YEAR 2011-12 SHRI NARESH KUMAR VAISHNAV BURHANPUR PAN ACXPV-5066G :: /APPELLANT VS. INCOME TAX OFFICER BURHANPUR :: / RESPONDENT !' / ASSESSEE BY SHRI PANKAJ SHAH #$% !' / REVENUE BY SHRI MOHD. JAVED - DR ! & %' ( DATE OF HEARING 1.5.2017 )*+,- ( DATE OF PRONOUNCEMENT 2 .5.2017 / O R D E R PER SHRI C.M. GARG, JM THIS APPEALS HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, INDORE, DATED 19.10.2015 IN FIRST APPEAL NO. IT-311/13-14/80 FOR THE ASSESSMENT YEAR 2011-12. NARESHKUMAR VAISHNAV ITA NO. 92/IND/2016` 2 2. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NOS. 1 TO 3 OF THE APPEAL OF THE A SSESSEE AND AS SUCH THE SAME ARE DISMISSED. 3. GROUND NOS. 4 TO 6 RELATE TO THE ADDITION OF RS. 1,07,307/- ON ACCOUNT OF INTEREST PAID TO DEPOSITORS @ 15% DISALL OWED BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 4. BRIEFLY STATED, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS PAID INTEREST @ 15% AMOUNTING TO RS.6,24,322/- TO PERSONS SPECIFIED UNDER SECTION 40A(2)(B) OF THE ACT. IN T HIS CONNECTION, THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE LO ANS ARE EASILY AVAILABLE FROM NATIONALISED AND PRIVATE BANKS AT LE SSER RATE OF INTEREST, IT WAS BEYOND UNDERSTANDING THAT THE ASSE SSEE HAS TAKEN LOANS FROM HIS RELATIVES AT HIGHER RATE. HE, THEREF ORE, REQUIRED THE ASSESSEE TO EXPLAIN HIS STAND WITH REGARD TO DISPAR ITY IN THE INTEREST ALLOWED AND CHARGED. IN REPLY, THE ASSESSEE SUBMITT ED THAT THE RATE OF INTEREST IS REASONABLE AND IT IS CUMBERSOME TO T AKE LOAN FROM BANKS. THE ASSESSING OFFICER DID NOT ACCEPT THIS C ONTENTION OF THE ASSESSEE AND WAS OF THE VIEW THAT THE ASSESSEE HAD TAKEN LOAN WITHIN THE FAMILY AND HAS DISTRIBUTED INTEREST TO T HE FAMILY NARESHKUMAR VAISHNAV ITA NO. 92/IND/2016` 3 MEMBERS AT EXORBITANT RATE THEREBY BUILDING THEIR C APITAL AND REDUCING THE MARGIN OF PROFIT CONSIDERABLY. IN THIS VIEW OF THE MATTER, THE ASSESSING OFFICER DISALLOWED THE INTERE ST PAID IN EXCESS OF 12% TO FAMILY MEMBERS AMOUNTING TO RS. 1,07,307/ - TREATING THE SAME AS ADVANCED TO REDUCE THE PROFIT MARGIN AND AD DED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. HAVING BEEN DISALLOWANCE-SATISFIED WITH THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER, THE ASSESSEE APPROAC HED THE COMMISSIONER OF INCOME TAX (APPEALS) BY WAY OF FILI NG FIRST APPEAL. ON CONSIDERATION OF THE SUBMISSIONS OF THE ASSESSEE IN THE WAKE OF THE FACTS OF THE CASE, THE COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ADDITION ON THE GROUND THAT THE ASSES SEE-APPELLANT COULD NOT JUSTIFY ITS CLAIM IN THE APPELLANT PROCEE DINGS ALSO. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER DATED 8.2.2011 OF THE COORDINATE BENCH IN THE CASE OF M/S BALKISHAN JAGANNATH GOYAL (HUF) IN ITA NO. 590/IND/ 2009 WHEREIN THE TRIBUNAL AFTER CONSIDERING THE FACTS OF THE CASE HAS HELD THE PAYMENT OF INTEREST @ 18% AS AGAINST THE RATE O F INTEREST ADOPTED BY THE ASSESSING OFFICER AND THE CIT(A) AT 15%. NARESHKUMAR VAISHNAV ITA NO. 92/IND/2016` 4 6. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW WITH THE SUBMISSION THAT WHEN THE LOANS ARE EASILY AVAILABLE FROM NATIONALISED BANKS AT LESSER RATE OF INTEREST, THE ASSESSEE WAS NOT JUSTIFIED IN TAKING LOANS FROM THE FAMILY MEMBERS AT HIGHER RATE OF INTEREST. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE S IDES. WE FIND THAT AN IDENTICAL ISSUE HAS BEEN DECIDED BY THE COO RDINATE BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 8.2.2011 IN THE C ASE OF M/S BALKISHAN JAGANNATH GOYAL (HUF) (SUPRA) WHEREIN RAT E OF INTEREST AT 18% HAS BEEN HELD TO BE JUSTIFIED. WE, THEREFORE , FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, REVERSE THE ORDERS OF THE AUTHORITIES BELOW WITH THE DIRECTION TO ACCEPT THE CLAIM OF THE ASSESSEE IN REGARD TO PAYMENT OF INTEREST. WE DIRECT ACCORDINGL Y. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 2.5. 2017. SD/- SD/- '( !$ !$ (O.P.MEENA) (C.M. GARG) ACCOUNTANT MEMBER J UDICIAL MEMBER 2.5.2017. DN/ NARESHKUMAR VAISHNAV ITA NO. 92/IND/2016` 5