MAHESHWAR PRASAD,RANCHI V. DCIT CENTRAL CIRCLE-2, RANCHI

ITSSA 22/RAN/2023

AI Insights

The case involves appeals by Maheshwar Prasad against the orders of the CIT(A), Patna, concerning several assessment years. The primary issues revolved around the disallowance of interest on a loan claimed as set off against the partner's remuneration and interest on capital, and disallowance of depreciation. A significant search operation on the assessee's premises in 2015 led to these disputes. The tribunal considered whether incriminating material was used in the assessments for the years prior to 2016-17 and whether the interest on the loan for the year 2016-17 was justifiably set off against the income from partnership firms.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633685 (ITAT-RANCHI)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Other Referred Cases: Abhisar Buildwell vs. 459 ITR 212 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER IT(SS)A No. 19 to 23/Ran/2023 (Assessment Years-2011-12 & 2013-14 to 2016-17) Maheshwar Prasad, Ayodhya Enclave 18, Cherish Home Road, Bariatu, Ranchi-834009 (Jharkhand) PAN No. ALLPP 4566 A Vs. D.C.I.T., Central Circle-2, Ranchi. Appellant/ Assessee Respondent/ Revenue Assessee represented by Sri R.R. Mittal, A.R. Department represented by Smt. Rinku Singh, CIT-DR Date of hearing 10/06/2025 Date of pronouncement 10/06/2025 O R D E R PER: BENCH 1. These are the appeals filed by the assessee against the orders of the ld. CIT(A), Patna-3, Patna dated 10/02/2023 and 30/03/2023 for the A.Y. 2011-12 and A.Y. 2013-14 to 2016-17 respectively. As all the issues in these appeals of the assessee relate to the common issues, therefore, they are being disposed off by this common order. 2. Sri R.R. Mittal, ld A.R. is represented on behalf of the assessee and Smt. Rinku Singh, ld. CIT-DR is represented on behalf of the revenue. It was submitted by the ld. AR of the assessee that there was a search on the premises of the assessee on 20/08/2015. It was a submission that the main issues in the appeal was the disallowance of the interest on loan which was claimed as set off against the partner’s remuneration and interest on capital received by the assessee. There are also issues in respect of disallowance of depreciation and IT(SS)A No. 19 to 23/Ran/2023 Maheshwar Prasad Vs DCIT 2 other issues. It was a submission that for the A.Ys. 2011-12, 2013-14, 2014-15 and 2015-16, no incriminating material has been used by the Assessing Officer for the purpose of assessment. It was a submission that consequently in view of the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell reported in 459 ITR 212 (SC), no valid assessment order could be sustained. For the A.Y. 2016-17, it was the submission that the only issue was the set off of the interest expenditure against the partner’s remuneration and interest on capital. It was a submission that the assessee had taken a loan of Rs. 1.00 crore and had invested the same in four partnership firms in which the assessee was a partner. It was a submission that the assessee was paying interest on the loan taken and as the same was used for introduction as capital in the four partnership firms, the interest earned on the said loan was liable to be allowed as an expenditure when computing the income from the partnership firms in the form of interest on the capital as also remuneration from the partnership firms. It was the submission that the Assessing Officer and the ld. CIT(A) did not accept the contentions of the assessee. 3. In reply, the ld. CIT-DR submitted that admittedly no incriminating material has been used in the assessment for the A.Ys. 2011-12, 2013-14, 2014-15 and 2015-16. It was a submission that in respect of A.Y. 2016-17, admittedly, there is no evidence to show that the said loan of Rs. 1.00 crore has been used for introduction as capital in the four partnership firms. 4. We have considered the rival submissions. A perusal of the assessment orders for the A.Ys. 2011-12, 2013-14 and 2014-15 clearly shows that the Assessing Officer has not used any incriminating material for making any of the additions IT(SS)A No. 19 to 23/Ran/2023 Maheshwar Prasad Vs DCIT 3 in the assessment orders passed under Section 153 r.w.s 143(3) of the Act. Consequently, in view of the principles laid down by the Hon’ble Supreme Court in the case of Abhisar Buildwell (supra), the assessment orders are liable to be quashed and we do so. 5. In regard to the A.Y. 2016-17 which is the year of search, there is no averment by the Assessing Officer that the loan of Rs. 1.00 crore taken by the assessee has not been used for introduction in the four partnership firms, in fact, no evidence has been found anywhere to show that the amount of Rs. 1.00 crore, loan taken by the assessee has been used for any other purpose other than the introduction of capital in the four partnership firms as the capital has been introduced by taking a loan, the interest on such loan is liable to be allowed as an expenditure against the remuneration and interest on capital received from the partnership firms. In the result, the appeals of the assessee for the A.Y. 2011-12, 2013-14 and 2014-15 are allowed in so far as the assessment orders stands quashed following the decision of Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) and for the A.Y. 2016-17 it is allowed on merits in so far as the assessee is held to be entitled to the set off of the interest paid on the loan against the interest received and the remuneration received from the four partnership firms. 6. In the result, all the appeals of the assessee are allowed. Order announced in open court on 10th June, 2025. Sd/- Sd/- (RATNESH NANDAN SAHAY) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated: 10/06/2025 IT(SS)A No. 19 to 23/Ran/2023 Maheshwar Prasad Vs DCIT 4 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Ranchi "