Sh. Suresh Chand Bansal, Panchkula V. Addl. CIT, Chandigarh

ITA 982/CHANDI/2011

• Counselvise Citation: 98221514 RSA 2011
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Proportionate interest
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE SHRI H L KARWA, VP AND SHRI D K SRIVASTAVA, AM ITA NO. 982/CHD/2011 ASSESSMENT YEAR 2007-08 SURESH CHAND BANSAL V. ADDL C.I.T. R-III, CHANDIG ARH PROP. BANSAL BUILDERS 1076, SECTOR 2 PANCHKULA ABDPB 3172 G APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY: SHRI AKHILESH GUPTA DATE OF HEARING: 19.1.2012 DATE OF PRONOUNCEMENT: 09 .03.2012 ORDER D K SRIVASTAVA: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) ON 29.7.2011, ON THE FOLLOWING GROUNDS: 1 THAT THE ORDER OF LD. CIT(A) IS BAD AND AGAINST THE FACTS AND LAW. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 124322/- ON ACCOUNT OF INTEREST PAID TO M/S CHO LA MANDLAM INVESTMENT & FINANCE COMPANY U/S 40(A) (IA) OF THE ACT. 3. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST AMOUNTING TO RS. 364764/- ON THE ADVANC ES GIVEN IN ORDINARY COURSE OF BUSINESS AND PAYMENT/DRAWINGS MA DE FOR PERSONAL REASONS IN EARLIER YEARS WITHOUT APPRECIAT ING THE NATURE OF PAYMENT AND CAPITAL BALANCE OF ASSESSEE. 4. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE @ 10% OF TELEPHONE AND DEPRECIATION OF CAR. 5. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE @ 10% OF TELEPHONE AND DEPRECIATION OF CAR. 6. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 50,000/- OUT OF TRAVELING EXPENSES. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD AND DI SPOSED OFF. 2. AT THE TIME OF HEARING, GROUND NOS. 1,2,4,5 AND 7 WERE NOT PRESSED. THEY ARE, THEREFORE, DISMISSED AS NOT PRE SSED. 3. APROPOS GROUND NO. 3, THE CASE OF THE AO IS THAT THE ASSESSEE HAS GIVEN INTEREST FREE ADVANCES TO SMT. RANJIT KAUR (R S. 39,700), SMT. SURESH CHAND BANSAL V. ADDL CIT ITA NO. 982/CHD/2011 2 GARITA SINGH (RS. 8.00 LAKHS), SMT. SUSHMA SHARMA ( RS. 6.00 LAKHS), SMT. RAJ BALA (RS. 4.00 LAKHS), BRS DENTAL COLLEGE (RS. 3.50 LAKHS) AND SHRI SUKHWINDER SINGH (RS. 8.50 LAKHS). THE AO DISA LLOWED ON PROPORTIONATE BASIS THE AMOUNT OF INTEREST ALLOCABL E TO THE AFORESAID INTEREST FREE LOANS AND ADVANCES GIVEN BY THE ASSES SEE. THE ACTION OF THE AO HAS BEEN CONFIRMED BY THE LD. CIT(A). 4. THE CASE OF THE ASSESSEE IS THAT A SUM OF RS. 3. 50 LAKHS WAS GIVEN TO BRS DENTAL COLLEGE AS SECURITY FOR SECURING CONS TRUCTION OF COLLEGE BUILDING AND THEREFORE IT WAS GIVEN FOR THE PURPOSE OF BUSINESS. IT IS ALSO THE CASE OF THE ASSESSEE THAT A SUM OF RS. 8.5 0 LAKHS WAS GIVEN TO SHRI SUKHWINDER SINGH AS ADVANCE FOR PURCHASE OF MA TERIAL. IT WAS SUBMITTED THAT THE REMAINING SUMS WERE IN THE NATUR E OF PERSONAL EXPENSES WHICH WERE WITHDRAWN AGAINST BALANCES STAN DING IN THE NAME OF THE ASSESSEE IN HIS CAPITAL ACCOUNT AND THEREFOR E NO DISALLOWANCE OUT OF INTEREST WAS CALLED FOR. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AS WELL AS THE MATERIALS ON RECORD. IN OUR VIEW TH E PROPORTIONATE INTEREST CANNOT BE DISALLOWED WITH REGARD TO WITHDR AWALS MADE BY THE ASSESSEE AGAINST THE BALANCES STANDING IN HIS CAPIT AL ACCOUNT. DISALLOWANCE OF INTEREST TO THE AFORESAID EXTENT IS DELETED. 6. AS REGARDS DISALLOWANCE OF INTEREST RELATING TO ADVANCES GIVEN TO BRS DENTAL COLLEGE AS SECURITY FOR SECURING CONSTRU CTION OF COLLEGE BUILDING AND FURTHER SUM OF RS. 8.50 LAKHS GIVEN T O SHRI SUKHWINDER SINGH AS ADVANCE FOR SUPPLY OF MATERIAL, IT IS CONS IDERED PROPER TO DIRECT THE AO TO VERIFY THE CLAIM OF THE ASSESSEE. HE WILL DELETE THE INTEREST IF HE FINDS THAT THE AFORESAID SUMS WERE GIVEN BY THE ASSESSEE FOR THE PURPOSE FOR WHICH THEY ARE CLAIMED TO HAVE BEEN GIV EN BY HIM. GROUND NO. 3 IS PARTLY ALLOWED. SURESH CHAND BANSAL V. ADDL CIT ITA NO. 982/CHD/2011 3 7. APROPOS GROUND NO. 6, THE DISALLOWANCE OF RS. 50 ,000/- OUT OF TRAVELING EXPENSES HAS BEEN CONFIRMED BY THE LD. CI T(A) ON ACCOUNT OF PERSONAL ELEMENT IN THE SAID EXPENSES. IT IS THE C ASE OF THE ASSESSEE THAT THE IMPUGNED EXPENSES ARE FULLY VOUCHED. KEEP ING IN VIEW THE NATURE AND EXPENSES, SCALE OF EXPENSES, BUSINESS NE EDS ETC. THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A) IS ON HIGH ER SIDE AND EXCESSIVE. IT IS THEREFORE REDUCED TO 25.000/-. GROUND NO. 6 IS PARTLY ALLOWED. 8. APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 09 .03.2012 SD/- SD/- (H L KARWA) (D K SRIVAST AVA) VICE PRESIDENT ACCOUNANT MEMBER CHANDIGARH, 09 .03.2012 SURESH COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH ASSISTANT REGISTRAR, ITAT, CHANDIGARH