Smt. Aruna Murarka, Kolkata v. DCIT, C ircle- 37, Kolkata, Kolkata

ITA 1140/KOL/2010 | 2006-2007
Pronouncement Date: 31-03-2011

Appeal Details

RSA Number 114023514 RSA 2010
Assessee PAN AFLPM1837R
Bench Kolkata
Appeal Number ITA 1140/KOL/2010
Duration Of Justice 9 month(s) 23 day(s)
Appellant Smt. Aruna Murarka, Kolkata
Respondent DCIT, C ircle- 37, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Assessee
Bench Allotted C
Tribunal Order Date 31-03-2011
Date Of Final Hearing 31-03-2011
Next Hearing Date 31-03-2011
Assessment Year 2006-2007
Appeal Filed On 07-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE /AND . . !' ) [BEFORE HONBLE SRI MAHAVIR SINGH JM & HONBLE SHR I C. D. RAO AM] # # # # / I.T.A NO. 1140/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR : 2006-07 SMT. ARUNA MURARKA VS DEPUTY COMMISSIONER OF IN COME-TAX (PAN-AFLPM 1837 R) CIRCLE-37 KOLKATA ( )* /APPELLANT ) (+ )*/ RESPONDENT ) FOR THE APPELLANT: SHRI M. TIWARI FOR THE RESPONDENT: SHRI V. A. RAJU !- / ORDER PER MAHAVIR SINGH JM ( ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-XXIV KOLKATA IN APPEAL NO.539/CIT(A)-XXIV/C-37/08-09 DATED 10.03.20 10. THE ASSESSMENT WAS FRAMED BY DCIT CIRCLE-37 KOLKATA U/S. 143(3) OF T HE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEAR 2006-07 VIDE HIS ORDER DATED 20.11.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING ACTION OF ASSESSING OFFICER IN DISALLOW ING INTEREST EXPENDITURE BY HOLDING THAT THERE IS NO DIRECT NEXUS BETWEEN INTEREST PAYM ENT AND INTEREST EARNED. FOR THIS THE ASSESSEE RAISED THE FOLLOWING EFFECTIVE GROUND: THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN HOLDING THAT THERE IS NO DIRECT NEXUS OF INTEREST P AYMENT AS DEBITED IN PROFIT & LOSS A/C WITH INTEREST EARNED FROM M/S. SATVIC PROM OTERS PVT. LTD. AND THEREBY CONFIRMING THE DISALLOWANCE OF RS.3 02 076/- U/S. 5 7(III) OF INCOME TAX ACT 1961. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASSESSEE FILED RETURN OF INCOME ON 31.10.2006 FOR ASSESSMENT YEAR 2006-07 DECLARING TO TAL INCOME AT RS.15 87 590/-. ASSESSEE IS DERIVING INCOME ON ACCOUNT OF SHARE OF PROFIT FROM M/S. VENTURE CAPITAL GAINS INTEREST AND DIVIDEND INCOME. ASSESSING OFF ICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT SHE HAS CLAIMED EXPENSES OF INTEREST PAID AT RS.2 63 144/- AND 2 ITA 1140K/201 0 ARUNA MURARKA A.Y. 06-07 RS.38 932/- TO BANK. THE ASSESSEE IS PARTNER IN TH E FIRM M/S. VENTURE FROM WHERE SHE DERIVES SHARE OF PROFIT AS WELL AS INTEREST ON CAPI TAL. ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY INTEREST CLAIMED AMOU NTING TO RS.3 02 076/- BE NOT DISALLOWED HOLDING THAT THE SAME IS NOT BUSINESS EX PENDITURE. ASSESSEE EXPLAINED THAT THE LOAN WAS TAKEN FOR EARNING INTEREST AND WAS INV ESTED IN M/S. VENTURE. ACCORDING TO ASSESSEE SHE HAS RECEIVED INTEREST FROM FIRM M/S. VENTURE AMOUNTING TO RS.10 18 509/- WHICH IS TAXABLE. THE ASSESSEE CLAIMED THAT INTERE ST PAID ON LOAN TAKEN FROM BANK OF MAHARASTRA WAS INVESTED IN M/S. SATVIC PROMOTERS PV T. LTD. (HEREINAFTER REFERRED TO AS SPPL) AND INTEREST IS DEBITED TO PROFIT & LOSS AC COUNT. ASSESSING OFFICER NOTED THAT ASSESSEE COULD NOT CORRELATE THE NEXUS OF INTEREST PAID AND INTEREST EARNED. HENCE HE DISALLOWED THE ENTIRE INTEREST PAID OF RS.3 02 076/ -. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) CONFIRMED THE ACT ION OF ASSESSING OFFICER BY GIVING FOLLOWING FINDING: DURING THE COURSE OF APPELLATE PROCEEDINGS THE APP ELLANT WAS ASKED TO SUBMIT COPY OF BANK STATEMENT OF M/S. SATVIC PROMOT ERS P. LTD. AND COPY OF BANK STATEMENT OF THE APPELLANT TO ESTABLISH THAT T HE AMOUNT OF RS.49 00 000/- WAS GIVEN TO M/S SATVIC PROMOTERS P. LTD. THE BANK STATEMENTS WERE SUBMITTED BY THE APPELLANT AND IT WAS POINTED OUT T O THE APPELLANT THAT THE DEPOSIT IN BANK ACCOUNT OF SATVIC PROMOTERS P. LTD. WAS NOT FROM ARUNA MURARKA BUT MANGALAM KOTAK. THE APPELLANT WAS ASKED TO SUBMIT A CLARIFICATION HOWEVER NO CLARIFICATION WAS SUBMITTE D BY THE APPELLANT. 2.3. IN VIEW OF THE ABOVE DISCUSSION THE CLAIM OF T HE APPELLANT THAT THERE WAS A DIRECT NEXUS BETWEEN THE INTEREST PAID TO BANK OF M AHARASHTRA AND INTEREST EARNED FROM SATVIC PROMOTERS P LTD IS NOT FOUND TO HAVE BEEN ESTABLISHED. IN RESPECT OF THE OTHER INTEREST ALSO THE APPELLANT HA S NOT ABLE TO ESTABLISH ANY NEXUS BETWEEN INTERESTS PAID AND THE UTILIZATION OF THESE INTERESTS BEARING FUNDS FOR EARNING ANY INCOME. IN VIEW OF THE ABOVE THE CLAIM OF THE APPELLANT IS FOUND TO BE NOT COVERED BY THE PROVISION OF SEC. 57(III). THE DISALLOWANCE OF INTEREST OF RS.3 02 076/-IS THEREFORE CONFIRMED IN APPEAL. THESE GROUNDS OF THE APPELLANT ARE THEREFORE DISMISSED. AGGRIEVED NOW ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT INTEREST OF RS.3 02 076/- WAS P AID ON LOAN OF RS.49 LAKH TAKEN FROM BANK OF MAHARASTRA WHICH WAS INVESTED IN SPPL AND INTEREST WAS DEBITED TO P&L ACCOUNT ON ACCOUNT OF INTEREST PAID ON THE ABOVE LO AN. ASSESSEE CONTENDED BEFORE US THAT ON THE INVESTMENT OF RS.49 LAKH WITH SPPL S HE HAS EARNED INTEREST OF RS.5 12 677/- WHICH WAS INCLUDED IN THE TOTAL INCOM E OF THE ASSESSEE. ASSESSEE 3 ITA 1140K/201 0 ARUNA MURARKA A.Y. 06-07 CONTENDED THAT THERE WAS A DIRECT NEXUS BETWEEN INT EREST PAID AND INTEREST EARNED AND THEREFORE IN VIEW OF PROVISION OF SECTION 57(III) OF THE ACT THE INTEREST EXPENDITURE WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING I NTEREST INCOME AND WAS ALLOWABLE. WE FIND THAT THE ASSESSEE HAS FILED COPY OF ACCOUNT OF HDFC BANK LTD BY VIRTUE OF WHICH SHE DRAWN OUR ATTENTION TO THE ENTRIES DATED 20.9.2004 OF RS.49 LAKH VIDE CHEQUE NO. 0972067 AND THE SAME WAS DEPOSITED IN THE HDFC BANK LTD. BY SPPL. ASSESSEE ALSO FILED COPY OF ACCOUNT OF BANK OF MAHARASTRA WH EREIN SHE HAS OBTAINED LOAN OF RS.49 LAKH ON 9.9.2004. EVEN SPPL HAS DEDUCTED TDS ON THIS INTEREST PAID TO THE ASSESSEE. HENCE WE FIND THAT THERE IS A DIRECT NEXUS OF INTE REST EARNED AND INTEREST PAID ON THIS LOAN OF RS.49 LAKH TAKEN FROM BANK OF MAHARASTRA AN D INVESTED WITH SPPL. CIT(A) CONFUSED HIMSELF BY NOTING THE FACT THAT THE LOAN I S FROM MANGALAM KOTAK WHICH FINDING IS WRONG AS THIS LOAN IS DEPOSITED IN HDFC BANK LTD. FOR SPPL. ACCORDINGLY WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS ESTABLISHED DIRECT NEXUS AND THE INTEREST IS ALLOWABLE. AS THE ASSESSEE HAS FILED T HESE DETAILS BEFORE US AND EXPLAINED AS NOTED ABOVE THESE REQUIRE VERIFICATION. HENCE WE SET ASIDE THE ISSUE TO THE FILE OF A.O. IN RESPECT TO THE OTHER INTEREST ASSESSEE HAS FILE D THE DETAILS OF THE PARTIES WHICH ARE AS UNDER: A) NIGHTINGALE MERCHANTS P. LTD. 13 329 B) RANDHER BUSINESS P. LTD. 12 466 C) CLIMATE PACK-TECH P. LTD. 5 274 D) S.M.R. BUSINESS P. LTD. 7 863 38 932 NEITHER ASSESSING OFFICER NOR CIT(A) HAS GIVEN ANY FINDING ON THIS INTEREST SINCE THE ASSESSEE HAS EXPLAINED THE NEXUS AND GOING THROUGH PECULIAR FACTS OF THE CASE AND DUE TO SMALLNESS OF AMOUNT INVOLVED WE ALLOW THE CLAIM OF THE ASSESSEE. 5. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. 6. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31.3.20 11. SD/- SD/- . . !' (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED 31ST DAY OF MARCH 2011 4 ITA 1140K/201 0 ARUNA MURARKA A.Y. 06-07 !- . +/ 0!/&1- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SMT. ARUNA MURARKA 23A BALLYGUNGE PLACE KOLKATA-700 019. 2 + )* / RESPONDENT DCIT CIRCLE-37 KOLKATA 3 . -$ ( )/ THE CIT(A) KOLKATA 4. 5. -$ / CIT KOLKATA / 78 +$ / DR KOLKATA BENCHES KOLKATA / +/ TRUE COPY !-$9/ BY ORDER : /ASSTT. REGISTRAR .