DCIT 15(3), MUMBAI v. KESAR SONS, NAVI MUMBAI

ITA 3194/MUM/2010 | 2006-2007
Pronouncement Date: 13-07-2011 | Result: Allowed

Appeal Details

RSA Number 319419914 RSA 2010
Assessee PAN AALFM3689G
Bench Mumbai
Appeal Number ITA 3194/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 20 day(s)
Appellant DCIT 15(3), MUMBAI
Respondent KESAR SONS, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 13-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted G
Tribunal Order Date 13-07-2011
Date Of Final Hearing 13-07-2011
Next Hearing Date 13-07-2011
Assessment Year 2006-2007
Appeal Filed On 23-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI RAJENDRA SINGH (AM) AND SMT. ASHA VIJA YARAGHAVAN (JM) ITA NO.3194/MUM/2010 ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME TAX CIRCLE 15(3) MATRU MANDIR 1 ST FLOOR TARDEO ROAD MUMBAI-400 007. ..( APPELLANT ) VS. M/S. KESAR SONS UNIT NO.1 GROUND FLOOR KESAR VILLA SECTOR-12 PLOT NO.185 VASHI NAVIMUMBAI-400 703. ..( RESPONDENT ) P.A. NO. (AALFM 3689 G) APPELLANT BY : SHRI A.K. NAYAK RESPONDENT BY : NONE O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 11.2.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07 . THE REVENUE IN THIS APPEAL HAS RAISED DISPUTES ON TWO GROUNDS. 2. AT THE TIME OF HEARING OF THE APPEAL NO ONE APP EARED ON BEHALF OF THE ASSESSEE THOUGH THE NOTICE HAD BEEN GIVEN WELL IN A DVANCE. NOTICE HAD BEEN SENT BY RPAD ON 8.6.2011 WHICH HAS NOT BEEN RETURNE D UNSERVED AND THEREFORE NOTICE IS DEEMED TO HAVE BEEN SERVED ON THE ASSESSEE. ON THE EARLIER HEARING ALSO NO ONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. WE THEREFORE PROCEED TO DECIDE THE CAS E AFTER HEARING THE LD. DR AND ON THE BASIS OF THE MATERIAL AVAILABLE ON RECOR D. ITA NO.3194/M/10 A.Y:06-07 2 3. THE FIRST DISPUTE IS REGARDING DISALLOWANCE OF I NTEREST AMOUNTING TO RS.6 05 624/-. THE ASSESSING OFFICER NOTED THAT TH E ASSESSEE HAD CLAIMED EXPENDITURE ON ACCOUNT OF INTEREST TO THE TUNE OF R S.1 87 13 056/-. THE ASSESSEE HAD HOWEVER ADVANCED A SUM OF RS.1.10 CRO RES TO AHUJA PROPERTIES ON WHICH NO INTEREST WAS CHARGED. THE ASSESSEE HAD ALSO ADVANCED INTEREST FREE MONEY TO THE SISTER CONCERNS AS WELL AS TO RAN JAN GALA AND HASMUKHLAL & CO. THE ASSESSING OFFICER THEREFORE ASKED THE AS SESSEE TO EXPLAIN AS TO WHY INTEREST PROPORTIONATE TO INTEREST FREE LOANS A DVANCED SHOULD NOT BE DISALLOWED. THE ASSESSEE EXPLAINED THAT THE LOANS GIVEN TO SISTER CONCERNS WERE TEMPORARY ADVANCES AND THE LOANS GIVEN TO RANJ AN GALA AND HASMUKHLAL & CO. WERE FRIENDLY LOANS WHICH WERE REC EIVED DURING THE YEAR. IT WAS FURTHER SUBMITTED THAT THE AMOUNT ADVANCED T O M/S. AHUJA PROPERTIES WAS ADVANCE AGAINST PURCHASE OF PROPERTY WHICH WAS RECEIVED BACK IN THE SUBSEQUENT YEAR AS THE TERMS WERE NOT AGREED BY BOT H THE PARTIES. THE ASSESSING OFFICER OBSERVED THAT THE CLAIM OF THE AS SESSEE THAT THE MONEY ADVANCED TO M/S. AHUJA PROPERTIES WAS FOR ACQUISITI ON OF PROPERTY FOR THE PURPOSE OF BUSINESS WAS NOT SUPPORTED BY ANY EVIDEN CE. THE ASSESSING OFFICER ALSO OBSERVED THAT ADVANCE GIVEN TO M/S. AH UJA PROPERTIES WAS OUT OF INTEREST BEARING FUNDS WHICH WAS CLEAR FROM THE BAN K STATEMENT WHICH SHOWED THAT ADVANCES HAD BEEN GIVEN AFTER RECEIPT O F INTEREST BEARING LOANS. SIMILAR WAS THE POSITION IN RESPECT OF LOANS TO SIS TER CONCERNS AND OTHER PERSONS WHICH WAS ALSO OUT OF INTEREST BEARING LOAN S. THE ASSESSING OFFICER THEREFORE DISALLOWED THE PROPORTIONATE INTEREST IN RELATION TO THE ABOVE LOANS WHICH CAME TO RS .6 05 624/- INCLUDING DISALLOWANCE OF RS.5 56 932/- IN RELATION TO ADVANCE TO M/S. AHUJA PROPERTIES. 3.1 THE ASSESSEE DISPUTED THE DECISION OF THE ASSES SING OFFICER AND SUBMITTED BEFORE THE CIT(A) THAT ADVANCE GIVEN TO M /S. AHUJA PROPERTIES WAS FOR BOOKING OF FLAT AND THAT THE SAME WAS OUT OF NO N INTEREST BEARING FUNDS. THEREFORE NO DISALLOWANCE CAN BE MADE. IT WAS ALS O SUBMITTED THAT NO DISALLOWANCE CAN BE MADE IN RESPECT OF LOANS TO SIS TER CONCERNS AS THE SAME WAS OUT OF NON INTEREST BEARING FUNDS. FURTHER T HERE WAS COMMERCIAL ITA NO.3194/M/10 A.Y:06-07 3 EXPEDIENCY IN MAKING LOANS TO THE SISTER CONCERNS. AS REGARDS THE LOANS TO FRIENDLY CONCERNS IT WAS SUBMITTED THAT THE SAME W ERE OUT OF NON INTEREST BEARING FUNDS. THE CIT(A) ACCEPTED THE CLAIM OF TH E ASSESSEE THAT LOAN TO M/S. AHUJA PROPERTIES WAS FOR BUSINESS PURPOSES AND THAT THE SAME WAS OUT OF NON INTEREST BEARING FUNDS. SIMILARLY HE ALSO A CCEPTED THAT LOANS GIVEN TO OTHER CONCERNS WERE OUT OF NON INTEREST BEARING FUN DS. ACCORDINGLY CIT(A) DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL. 3.2 WE HAVE HEARD THE LD. DR PERUSED THE RECORDS A ND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING DISALLO WANCE OF INTEREST PROPORTIONATE TO INTEREST FREE ADVANCES GIVEN BY TH E ASSESSEE. THE INTEREST FREE ADVANCES HAD BEEN GIVEN TO M/S. AHUJA PROPERTI ES TO SISTER CONCERNS AND SOME OTHER FRIENDLY PARTIES. THE ASSESSING OFF ICER AFTER EXAMINATION OF BANK ACCOUNT GAVE A FINDING THAT INTEREST FREE ADVA NCES HAD BEEN GIVEN OUT OF INTEREST BEARING FUNDS. THE ASSESSING OFFICER A LSO GAVE A FINDING THAT THE CLAIM OF THE ASSESSEE THAT INTEREST FREE ADVANCE GI VEN TO M/S. AHUJA PROPERTIES WAS FOR BOOKING OF FLAT FOR THE PURPOSE OF BUSINESS WAS NOT SUPPORTED BY ANY EVIDENCE. IN APPEAL THE CIT(A) HAS ACCEPTED CLAIM OF THE ASSESSEE THAT ADVANCE TO M/S. AHUJA PROPERTIES WAS FOR THE PURPOSE OF BUSINESS WITHOUT ANY EXAMINATION AND WITHOUT ANY FU RTHER EVIDENCE PLACED ON RECORD. SIMILARLY CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE THAT INTEREST FREE ADVANCES TO ALL PARTIES WERE OUT OF INTEREST F REE FUNDS WITHOUT CONTROVERTING THE CLEAR FINDING OF THE ASSESSING OF FICER THAT INTEREST FREE ADVANCES WERE OUT OF INTEREST BEARING FUNDS. THERE WAS ALSO NO MATERIAL PLACED BEFORE CIT(A) TO ARRIVE AT A CONCLUSION THAT THE INTEREST FREE ADVANCES TO SISTER CONCERNS SERVED BUSINESS PURPOSE OF THE A SSESSEE AND THEREFORE CAN BE SAID TO BE OUT OF COMMERCIAL EXPEDIENCY. TH E ORDER OF THE CIT(A) THEREFORE CANNOT BE SUSTAINED. WE THEREFORE SET AS IDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUE BACK TO HIM FOR PASSIN G A FRESH ORDER AFTER NECESSARY EXAMINATION OF ALL ASPECTS OF THE ISSUE W ITH RESPECT TO EVIDENCE PRODUCED AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.3194/M/10 A.Y:06-07 4 4. THE SECOND DISPUTE IS WITH REGARD TO DISALLOWANC E OF BROKERAGE/COMMISSION AMOUNTING TO RS.2 88 625/-. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD PAID BROKERAGE/COMMISSI ON OF RS.2 88 625/- TO M/S. MEENA REAL ESTATE CONSULTANT (HUF). THE ASSESS ING OFFICER ASKED THE ASSESSEE TO PRODUCE EVIDENCE REGARDING SERVICES REN DERED AND AS PER ASSESSING OFFICER NO EVIDENCE WAS PRODUCED SHOWING THAT THE EXPENDITURE WAS FOR THE PURPOSE OF BUSINESS. HE THEREFORE DISA LLOWED THE CLAIM AND ADDED A SUM OF RS.2 88 625/- TO THE TOTAL INCOME. IN APPEAL THE ASSESSEE SUBMITTED THAT THE PAYMENT OF BROKERAGE WAS FOR BOO KING OF FLATS IN THE PROJECT WHICH WAS DONE THROUGH M/S. MEENA REAL ESTA TE CONSULTANT (HUF). IT WAS CLAIMED THAT THE ASSESSEE HAD PRODUCED BEFORE T HE ASSESSING OFFICER BOOKS OF ACCOUNT AND GIVEN DETAILS OF SERVICES REND ERED WHICH WERE NOT CONSIDERED BY THE ASSESSING OFFICER. THE ASSESSEE HAD PAID BROKERAGE @ 2% FOR BOOKING OF FLAT WHICH ARE REASONABLE. CIT(A) A CCEPTED THE CLAIM OF THE ASSESSEE THAT THE BROKERAGE HAD BEEN PAID FOR THE P URPOSE OF THE BUSINESS. IT WAS OBSERVED BY HIM THAT INCOME ON ACCOUNT OF BR OKERAGE HAD BEEN DECLARED BY THE SAID HUF NECESSARY DETAILS OF WHICH HAD BEEN FILED. HE THEREFORE DELETED THE ADDITION MADE BY THE ASSESSI NG OFFICER AGGRIEVED BY WHICH REVENUE IS IN APPEAL. 4.1 WE HAVE HEARD THE LD. DR PERUSED THE MATERIAL AVAILABLE ON RECORD AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE I S REGARDING DISALLOWANCE OF BROKERAGE/COMMISSION AMOUNTING TO RS.2 88 625/- PAI D TO M/S. MEENA REAL ESTATE CONSULTANT (HUF). THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM ON THE GROUND THAT THERE WAS NO EVIDENCE OF SERVICE RE NDERED. IN APPEAL THE ASSESSEE CLAIMED THAT THE ASSESSEE HAD GIVEN DETAIL S OF SERVICE RENDERED BEFORE THE ASSESSING OFFICER. THE CIT(A) HAS ACCEP TED THE CLAIM OF THE ASSESSEE WITHOUT GIVING DETAILS OF ACTUAL SERVICES RENDERED AND WITHOUT ANY EXAMINATION OF EVIDENCE OF THE SERVICES RENDERED. C IT(A) WAS REQUIRED TO EXAMINE THE EVIDENCE OF SERVICES RENDERED AND NO SU CH EVIDENCE HAD BEEN FILED BEFORE ASSESSING OFFICER. IN OUR VIEW MATTE R REQUIRES FRESH ITA NO.3194/M/10 A.Y:06-07 5 EXAMINATION BY CIT(A) FOR A CLEAR FINDING BASED ON EVIDENCE PRODUCED BY THE ASSESSEE. WE THEREFORE RESTORE THIS ISSUE ALSO TO THE FILE OF THE CIT(A) FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION A ND ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.7.2011. SD/- SD/- ( ASHA VIJAYARAGHAVAN ) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 13.7.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.