The ACIT, Central Circle-1(4), Ahmedabad V. Shri Manilal Virchandbhai Patel, Mehsana

ITSSA 68/AHD/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8605 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-01-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 30-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MADHUSUDHAN
• Section: 143(3); 153A; 132

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM AND D.C.AGRAWAL, AM ASSTT.CIT, CEN.CIR.1(4), AHMEDABAD. VS. MR. MANILAL VIRCHANDBHAI PATEL, GANGA MAIYA SOCIETY, OPP. PATEL AUTO, MEHSANA HIGHWAY, OPP. CLASSIC PLAZA, MEHSANA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI K. MADHUSUDHAN, SR.D.R. RESPONDENT BY:- SHRI ANIL KSHATRIYA, AR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOL LOWING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETION OF ADDITION OF RS.40,66,558/- ON ACCOUNT OF DISALLOWAN CE OF BANK INTEREST. 2. AT THE OUTSET THE LD. AR FOR THE ASSESSEE POINTE D OUT THAT ADDITION FOR THE SAME ASST. YEAR OF THE SAME AMOUNT WAS DONE IN REGULAR ASSESSMENT WHICH WAS DELETED BY THE TRIBUNAL VIDE I TS ORDER IN ITA NO.443/AHD/2007 & C.O. NO.53/AHD/2007 PRONOUNCED ON 28.9.2007.BUT ON ACCOUNT OF SEARCH HAVING BEEN CARRIED OUT BY THE DEPARTMENT THE SAME ADDITION HAS BEEN MADE IN THE ASSESSMENT FRAMED UND ER SECTION 153A. 3. THE LD. DR DID NOT DISPUTE THE ABOVE FACTS. IT(SS)A NO.68/AHD/2009 ASST. YEAR 2003-04 IT(SS)A NO.68/AHD/2009 ASST. YEAR 2003-04 2 4. WE NOTICE THAT IN THE REGULAR ASSESSMENT FRAMED UNDER SECTION 143(3) THE AO HAD MADE THE ADDITION OF RS.40,66,558 /- ON ACCOUNT OF DISALLOWANCE OF INTEREST. THE ASSESSEE HAD DEBITED THIS SUM AGAINST BANK INTEREST ON ACCOUNT OF THE FACT THAT IT HAD TO PAY THE SAME TO MEHSANA URBAN CO-OP. BANK LTD. AGAINST THE ADVANCE TAKEN TO PURCHASE THE PROPERTY TO THE EXTENT OF RS.3 CRORES. THE AO, HOWE VER, WAS OF THE VIEW THAT IT IS ONLY ACCOUNTING ADJUSTMENT, ABSOLUTE RIG HT OF THE PROPERTY WAS WITH MAHALAXMI BHAVAN CO-OP. HOUSING SOCIETY AND TH E ASSESSEE IS ONLY A DEVELOPER AND ASSESSEE HAD NO ASSET WHICH COULD B E PUT TO USE FOR THE BUSINESS PURPOSE. THE LD. CIT(A) HAD DELETED THE AD DITION AND THE DEPARTMENT HAD APPEALED BEFORE THE TRIBUNAL. THE OR DER OF LD. CIT(A) WAS CONFIRMED BY THE TRIBUNAL BY OBSERVING AS UNDER :- 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND TH AT THE ASSESSEE HAS FILED A PAPER BOOK AND ON PAGE 14 OF THE PAPER BOOK, THE APPLO ORGANISER & BUILDER IN ITS BALANCE SHEET HAS SHOWN THE BOOKING DEPOSITS FOR ASSETS PURCHASED AS RS.3,00,71,389/-. THE ASSESSEE HAS PAI D INTEREST ON THE SAID MONEY TO MEHSANA URBAN CO-OP.BANK LTD. THE ASSESSEE IS CARRYING OUT THE BUSINESS IN THE NAME AND STYLE OF APPLO ORGANIS ER AND BUILDER. THE ASSESSEES BUSINESS IS OF DEVELOPMENT OF LAND AND A CTIVITIES CONNECTED WITH IT. THE ASSESSEE HAS BORROWED THE MONEY FROM T HE BANK AND UTILIZED FOR BOOKING OF PLACES IN THE COMMERCIAL COMPLEX AND THAT IS FOR THE PURPOSE OF BUSINESS. THE ASSESSEE HAS BOOKING RIGHT IN THE SAID COMMERCIAL COMPLEX WHICH IS THE BUSINESS ACTIVITIES OF THE ASSESSEE. THE ASSESSEE HAS ACQUIRED THE BUSINESS RIGHT WHICH IS S HOWN IN HIS BALANCE SHEET. THEREFORE, MONEY BORROWED HAS BEEN USED FOR THE PURPOSE OF BUSINESS. THEREFORE, INTEREST IS PAID ON THIS AMOUN T AND THEREFORE, IT CANNOT BE HELD THAT INTEREST HAS BEEN PAID FOR NON- BUSINESS PURPOSE. THE CIT(A) HAS VERIFIED THE SAME ON RECORD. IN THE CASE OF RAJENDRA PRASAD MOODY 115 ITR 517 (SC) AND IN THE CASE OF H. K. (IN VESTMENT) CO. (P) LTD. 211 ITR 511 (GUJ) WE FIND THAT IT IS NOT NECES SARY TO SHOW THAT THE EXPENDITURE IS A PROFITABLE ONE OR THAT IN FACT ANY PROFIT IS EARNED. FURTHER, EXPENDITURE IN THE COURSE OF THE TRADE WHI CH WAS UNREMUNERATIVE WAS NONETHELESS A PROPER DEDUCTION, IF WHOLLY AND E XCLUSIVELY MADE FOR IT(SS)A NO.68/AHD/2009 ASST. YEAR 2003-04 3 THE PURPOSE OF TRADE. IN VIEW OF THE ABOVE, WE CONF IRM THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. SUBSEQUENTLY, SEARCH UNDER SECTION 132 WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE IN CONSEQUENCE TO WHICH PROCEEDINGS UN DER SECTION 153A WAS CARRIED OUT. THE AO REPEATED THE SAME ADDITION WHICH WAS AGAIN DELETED BY THE LD. CIT(A) VIDE HIS ORDER DATED 16.6 .2009. THE REVENUE IS IN APPEAL AGAINST THIS ORDER AND IT WAS SUBMITTED T HAT DEPARTMENT HAS FILED APPEAL BEFORE THE HONBLE GUJARAT HIGH COURT AGAINS T THE DECISION OF THE TRIBUNAL IN THE ORIGINAL ASSESSMENT. 5. SINCE THE FACTS REMAIN THE SAME AND ADDITION IS ALSO OF THE SAME AMOUNT UNDER THE SAME FACTS AND CIRCUMSTANCES OF TH E CASE, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE SAME YEAR. AS A RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 4.2.11. SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 4.2.11. MAHATA/- IT(SS)A NO.68/AHD/2009 ASST. YEAR 2003-04 4 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 31/1/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 31/1/ 2011 MEMBER.OTHER MEMBER. 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 THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..