PRITESHKUMAR VIKRAMBHAI PATEL,SURAT V. ITO, WARD 3(3)(5), SURAT

ITA 1013/SRT/2024

AI Insights

This case involves an appeal by Priteshkumar Vikrambhai Patel against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2016-17. The primary issues in the appeal were the addition of Rs.81,000 as unsecured loan under section 68 of the Income-tax Act, 1961, and the disallowance of Rs.9,01,670 as interest expense on funds used for property investments under section 37. The Tribunal referenced the judgment of the Hon'ble jurisdictional High Court in the case of PCIT v. Merrygold Gems Pvt. Ltd. to support its decision that no addition was called for regarding the unsecured loan, as all amounts had been repaid. For the interest expense, the Tribunal directed a modification in the disallowance, allowing the use of the assessee's own funds and loans in calculating the disallowed amount.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831263 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 30-09-2024
• Other Referred Cases: PCIT v. Merrygold Gems Pvt. Ltd., [2024] 164 taxmann.com 764 (Gujarat)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY UKE
• Assessee Lawyers: KAMLESH BHATT

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER I.T.A. No. 1013/SRT/2024 (Assessment Year: 2016-17) Priteshkumar Vikrambhai Patel, 703, Laxmi Residency Near Gajera School Katargam, Surat - 395004 [PAN: AKIPP2105P] Vs. ITO, Ward – 3(3)(5), Surat (Appellant) .. (Respondent) Appellant by : Shri Kamlesh Bhatt, CA Respondent by: Shri Ajay Uke, Sr. DR Date of Hearing 19.01.2026 Date of Pronouncement 22.01.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT: This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “Ld. CIT(A)”] dated 31.07.2024, under section 250 of the Income-tax Act, 1961 [in short “the Act”] for the Assessment Year 2016-17. Ground No.2: 2. The Assessing Officer made addition of Rs.81,000/- u/s 68 of the Act on account of unsecured loan. Before us, Ld. AR submitted that the statement of repayment of unsecured loans which took place even before the passing of the assessment order on 26.12.2028. The same are reproduced below: Printed from counselvise.com ITA No. 1013/Ahd/2024 Priteshkumar Vikrambhai Patel Asst. Year : 2016-17 - 2– 3. Since all the amounts have been repaid, keeping the judgement of Hon’ble jurisdictional High Court in case of PCIT v. Merrygold Gems Pvt. Ltd., [2024] 164 taxmann.com 764 (Gujarat) we hold that no addition called for. Ground No.1: 4. The disallowance of Rs.9,01,670/- u/s 37 was made on account of interest expense claimed in profit and loss account for fund utilized for investment in property. The Assessing Officer made disallowance of Rs.9,01,670/- by alleging that the amount Printed from counselvise.com ITA No. 1013/Ahd/2024 Priteshkumar Vikrambhai Patel Asst. Year : 2016-17 - 3– received on loan has been utilized for acquisition of properties, but not related to the business. It was submitted before us that the investment was made out of the assessee’s own fund Rs.34,26,300/- and loans and advances of Rs.24,85,000/-. Total investment made by the assessee on the properties was to the tune of Rs.1,42,11,300/-. The amount of Rs.34,26,300/- and Rs.24,85,000/- can be considered as investment made out of his own funds. Hence, the interest should be disallowed only on the remaining amount of Rs.83,00,000/- (Rs.1,42,11,300 – Rs.59,11,300). The AO is directed to modify the disallowance accordingly. 5. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 22.01.2026. Sd/- Sd/- (SUCHITRA R. KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Surat; Dated: 22.01.2026 **SAMANTA आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण,/ DR, ITAT, Surat 6. गाडŊ फाईल / Guard file. BY ORDER, // TRUE COPY // Asstt. Registrar, Surat Printed from counselvise.com "