Smt. Vibha Singh, Kanpur V. Asstt. Commissioner of Income Tax-5, Kanpur

ITA 97/LKW/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92222 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PINKI MAHAWAR
• Keywords: Business income
• Section: 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 97 /LKW/201 4 ASSESSMENT YEAR: 2008 09 SMT. VIBHA SINGH , 1 01, INCOME TAX HOUSING SOCIETY , VINAYAKPUR, KANPUR 208 0 05 . PAN:A HAPS3595B VS. A CIT 5 , KANPUR (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY SMT. PINKI MAHAWAR, SR. DR DATE OF HEARING 02/07/2015 DATE OF PRONOUNCEMENT 2 8 /07/2015 O R D E R PER A. K. GARODIA, A.M. T HIS IS ASSESSEE S APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT( A ) - I, KANPUR DATED 2 6 . 1 1 .201 3 FOR A.Y. 2008 09 . 2. THE ASSESSEE HAS RAISED AS MANY AS 5 GROUNDS BUT THE ONLY GRIEVANCE OF THE ASSESSEE IS FOR CONFIRMING THE ADDITION OF RS. 412,743/ - MADE BY THE A.O. OUT OF PAYMENT OF INTEREST AFTER GRANTING PART RELIEF. 3 . LEARNED AR OF THE ASSESSEE SUBMITTED THAT LEARNED CIT (A) HAS CONSIDERED ONLY SECTIO N 36 (1) (III) AND SECTION 37 (1) BUT HE SHOULD HAVE CONSIDERED SECTION 57 (III) ALSO. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF CIT (A) . 4 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE BALANCE SHEET IS AVAILABLE ON PAGE 17 OF THE PAP ER BOOK. THE BORROWED FUND ON WHICH INTEREST PAID IS RS.32,66,769.01. THE ASSESSEE IS EARNING INTEREST INCOME AND 2 TO THAT EXTENT, RELIEF IS ALLOWED BY CIT (A) BUT THE RELIEF ALLOWED BY HIM IS EQUAL TO INTEREST INCOME. IN OUR CONSIDERED OPINION, INTEREST P AID ON THE BORROWING TO THE EXTENT ADVANCED FOR EARNING INTEREST INCOME IS ALLOWABLE EVEN IF THE INTEREST PAID IS MORE THAN INTEREST EARNED. THE ASSESSEE IS ALSO SHOWING INCOME OF RS. 9.06 LACS ON ACCOUNT OF DEALING IN COMMODITY AND IN THE BALANCE SHEET, T HE ASSESSEE IS SHOWING SUNDRY DEBTORS RS. 421,216/ - , CASH IN HAND RS. 31,401/ - AND CASH AT BANK RS. 91,216.94. THESE AMOUNTS ARE BUSINESS ASSETS AND HENCE, INTEREST ON BORROWING TO THIS EXTENT IS ALSO ALLOWABLE. IN THIS MANNER, INTEREST O N BORROWING OF RS. 28,47,516.94 (RS. 23,03,682.90+421,216.10+31,401+91,216.94) IS TO BE ALLOWED AND TOTAL INTEREST BEARING BORROWED FUNDS IS RS. 32,66,789.01. THEREFORE, 87.16 % OF BORROWED FUNDS ARE USED FOR EARNING TAXABLE INCOME EITHER INTEREST OR BUSINESS INCOME AND HENC E, 87.16% OF INTEREST EXPENDITURE SHOULD BE ALLOWED PARTLY U/S 36 (1) (III) AND PARTLY U/S 57 (III). SO TOTAL INTEREST ALLOWABLE WORKS OUT TO RS. 562,847/ - AND THEREFORE, THE DISALLOWANCE SHOULD BE RESTRICTED TO RS.82,916/ - . WE ORDER ACCORDINGLY. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 2 8 /0 7 /201 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR