Shri Piyushbhai Bharatbhai Patel, Ahmedabad V. ACIT, Central Circle-2(4), Ahmedabad

ITSSA 158/AHD/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3458 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-07-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 17-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 153A

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘सी’ अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद । ।। । IN THE INCOME TAX APPELLATE TRIBUNAL “ C ” BENCH, AHMEDABAD ] ] BEFORE SHRI PRAMOD M. JAGTAP, VICE PRESIDENT AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER Sl. No. IT(ss)A No(s) Assess- ment Year (s) Appeal(s) by: Appellant vs. Respondent Appellant Respondent 1. 158/Ahd/2018 2013-14 Shri Piyushbhai Bharatbhai Patel 18, Astha Palace Nr. Vrundavan Party Plot Nr. Sola Bhagvat Temple, Sola Ahmedabad- 380 060 PAN:AIFPP 0950 M The ACIT Cen.Circle-2(4) Ahmedabad 2. 159/Ahd/2018 2014-15 -do- Assessee -do- Revenue 3. 160/Ahd/2018 2013-14 Shri Kanubhai Babaldas Patel -address same- PAN: AJHPP 2489 A -do- Revenue 4. 161/Ahd/2018 2014-15 -do- Assessee -do- Revenue 5. 162/Ahd/2018 2013-14 Shri Jagdishbhai Punjabhai Patel 1, Shayona Kutir Bungalows Nr.Bhagvat Vidhyapith, Sola Ahmedabad– 380 060 PAN:AQGPP 1775 M -do- Revenue 6. 163/Ahd/2018 2014-15 -do- Assessee -do- Revenue Assessees by : Shri R.B. Tank, CA Revenue by : Shri A.P. Singh, CIT-DR स /Date of Hearing : 18/07/2022 /Date of Pronouncement : 22/07/2022 IT(ss)A Nos.158 to 163/Ahd/2018 S/Shri Piyushbhai B.Patel, Kanubhai B.Patel and Jagdishbhai P.Patel vs.ACIT AYs 2013-14 & 2014-15 2 आदेश/O R D E R PER BENCH Out of these six appeals, two appeals being IT(ss)A Nos. 158 & 159/Ahd/2018 filed by the assessee Shri Piyushbhai Bharatbhai Patel are directed against a common order of Ld. Commissioner of Income-tax (Appeals)-12, Ahmedabad [CIT(A)] dated 20/03/2018 for Assessment Years (AYs) 2013-14 & 2014-15, two appeals filed by the assessee; namely, Shri Kanubhai Babaldas Patel being IT(ss)A Nos.160 & 161/Ahd/2018 are directed against a common order of Ld.CIT(A)-12, Ahmedabad dated 28/02/2018 for AYs 2013-14 & 2014-15 while the remaining two appeals being IT(ss)A Nos.162 & 163/Ahd/2018 filed by the assessee; namely, Shri Jagdishbhai Punjabhai Patel are directed against a common order of Ld.CIT(A)-12, Ahmedabad dated 21/03/2018 for AYs 2013-14 & 2014-15. Since these appeals filed in the case of assessees belonging to the same group, involve common issues, the same have been heard together and are being disposed of by a single consolidated order for the sake of convenience. 2. A common issue involved in these appeals relates to the following disallowances made on account of interest expenditure: Sl. No . Name of the Assessee Assess- ment Year Disallowance of Interest u/s.57(iii)/36(1) (iii) of the IT Act (Rs.) Disallowance of Interest u/s.14A of the IT Act (Rs.) 1. Shri Piyushbhai Bharatbhai Patel 2013-14 3,55,225/- 2,00,839/- IT(ss)A Nos.158 to 163/Ahd/2018 S/Shri Piyushbhai B.Patel, Kanubhai B.Patel and Jagdishbhai P.Patel vs.ACIT AYs 2013-14 & 2014-15 3 2. -do- 2014-15 7,34,125/- 2,47,133/- 3. Shri Kanubhai Babaldas Patel 2013-14 9,77,424/- 3,12,412/- 4. -do- 2014-15 10,56,685/- 2,80,224/- 5. Shri Jagdishbhai Punjabhai Patel 2013-14 8,55,251/- 3,15,140/- 6. -do- 2014-15 NIL 2,44,581/- 2. The brief facts of the case are that all the three assessees in these cases are individuals who belonged to Shayona Group. A search action u/s.132 of the Income Tax Act, 1961 was conducted in the cases belonging to Shayona Group on 15/10/2013 including cases of present three assessees. Pursuant to the search action, notices u/s.153A of the Act were issued by the Assessing Officer inter alia for both the years under consideration, i.e. AYs 2013-14 & 2014-15 to all the three assessees and in the assessments completed u/s.143(3) r.w.s. 153A of the Act, disallowance on account of interest expenditure claimed by the assessees was made by the Assessing Officer as under:- Sl. No. Name of Assessee(s) AY Total Interest expenditure claimed Interest disallowed u/s.57(iii)/ 36(1)(iii) Interest disallowed u/s.14A 1. Shri Piyushbhai Bharatbhai Patel 2013-14 5,07,464/- 3,55,225/- 2,00,839/- 2. -do- 2014-15 7,34,125/- NIL 2,47,133/- 3. Shri Kanubhai Babaldas Patel 2013-14 9,77,424/- 9,77,424/- 3,12,412/- IT(ss)A Nos.158 to 163/Ahd/2018 S/Shri Piyushbhai B.Patel, Kanubhai B.Patel and Jagdishbhai P.Patel vs.ACIT AYs 2013-14 & 2014-15 4 4. -do- 2014-15 10,56,685/- 10,56,685/- 2,80,224/- 5. Shri Jagdishbhai Punjabhai Patel 2013-14 8,55,251/- 8,55,251/- 3,15,140/- 6. -do- 2014-15 8,06,200/- 8,06,200/- 2,44,581/- The disallowance made by the Assessing Officer on account of interest expenditure as above, was challenged by all the three assessees in the appeals filed before the Ld.CIT(Appeals) and since the submissions made by them in support of their cases were not found acceptable by him, the Ld.CIT(Appeals) confirmed the entire disallowances made by the Assessing Officer on account of interest in cases of all the three assessees for both the years under consideration. Aggrieved by the orders of the Ld. CIT(A), the assessees have preferred these appeals before the Tribunal. 3. We have heard the arguments of both the sides and also perused the relevant material available on record. The Ld.counsel for the assessee has mainly raised two contentions before us. The first contention raised by him is that the disallowance on account of assessee’s claim for deduction on account of interest u/s.57(iii) of the Act is made by the Assessing Officer on adhoc basis without verifying the actual utilization of interest-bearing borrowed funds by the assessee for earning interest income. He has contended that the Assessing Officer, for instance, has made a disallowance on account of interest u/s.57(iii) of the Act to the extent of 30% in the AY 2013-14 in the case of Shri Piyushbhai Bharatbhai Patel ignoring that the borrowed funds on which interest of Rs.5,07,464/- was paid by the assessee IT(ss)A Nos.158 to 163/Ahd/2018 S/Shri Piyushbhai B.Patel, Kanubhai B.Patel and Jagdishbhai P.Patel vs.ACIT AYs 2013-14 & 2014-15 5 had been substantially utilized for earning interest income of Rs.4,63,852/- in the AY 2013-14. 3.1. The Ld.DR, on the other hand, has contended that this claim of the assessee requires verification by the Assessing Officer and the matter may be sent back to the Assessing Officer for such verification. We find merit in this contention of the Ld.DR. This issue relating to the disallowance on account of interest u/s.57(iii) of the Act is accordingly restored to the file of the Assessing Officer with a direction to consider and decide the same afresh after ascertaining the quantum of interest expenditure actually incurred by the assessee for earning the interest income by verifying the actual utilization of interest-bearing borrowed funds for earning the interest income. 4. The other contention raised by the Ld.counsel for the assessee before us is that the entire interestexpenditure claimed by all the three assessees for the two years under consideration was disallowed by the AO u/s.57(iii)/36(1)(iii) of the Act except in the case of Shri Piyushbhai Bharatbhai Patel where the claim of the assessee for interest expenditure was allowed only to the extent of Rs.1,52,239/- u/s.57(iii) of the Act. He has contended that no deduction on account of interest expenditure as claimed by all the three assessees in both the years under consideration was allowed and in these circumstances, there was no justification to make a disallowance u/s.14A of the Act on account of interest expenditure since the entire interest expenditure claimed by the assessee was already disallowed or was allowed partly u/s.57(iii) of the Act in the case of Shri Piyushbhai Bharatbhai Patel for AY 2013-14. He has contended that the disallowance IT(ss)A Nos.158 to 163/Ahd/2018 S/Shri Piyushbhai B.Patel, Kanubhai B.Patel and Jagdishbhai P.Patel vs.ACIT AYs 2013-14 & 2014-15 6 made by the Assessing Officer and confirmed by the Ld.CIT(A) on account of interest expenditure u/s.14A of the Act in the case of all the three assessees for the two years under consideration thus has resulted in a double disallowance of interest. We accept this contention of the Ld.counsel for the assessee in principle. However, keeping in view, the contention raised by the Ld.DR that this claim also requires verification by the Assessing Officer, we restore this issue also to the file of the Assessing Officer with a direction that disallowance u/s.14A of the Act on account of interest expenditure can be made only when the assessee is allowed deduction on account of interest other than the interest allowed as deduction u/s.57(iii)/36(1)(iii) of the Act. 5. In the result, all the six appeals of the assessees are treated as allowed for statistical purposes to the extent indicated above. Order pronounced in the Court on 22 nd July, 2022 at Ahmedabad. Sd/- Sd/- ( SUCHITRA KAMBLE) JUDICIAL MEMBER (PRAMOD M. JAGTAP) VICE-PRESIDENT Ahmedabad, Dated 22/ 07/2022 .सी. य , . .स./T.C. NAIR, Sr. PS IT(ss)A Nos.158 to 163/Ahd/2018 S/Shri Piyushbhai B.Patel, Kanubhai B.Patel and Jagdishbhai P.Patel vs.ACIT AYs 2013-14 & 2014-15 7 ! "# /Copy of the Order forwarded to : 1. "!ी $% / The Appellant 2. &य$% / The Respondent. 3. स'(')* य य + / Concerned CIT 4. य य + )"!ी (/ The CIT(A)-12, Ahmedabad 5. . /ीय )* , य "!ी य ")* , ज /DR,ITAT, Ahmedabad, 6. / 12 3 /Guard file. स / BY ORDER, स&य ! //True Copy// सह य !'जी (Asstt. Registrar) य "!ी य ")* , ITAT, Ahmedabad 1. Date of dictation (dictation pad 19- pages attached with file) : 19.7.2022 2. Date on which the typed draft is placed before the Dictating Member. : 20.7.2022 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 22.7.’22 7. Date on which the file goes to the Bench Clerk. : 22.7.’22 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order :