The ACIT, Circle-9,, Ahmedabad v. Shri Devang S.Nanavati, Ahmedabad

ITA 3628/AHD/2007 | 2004-2005
Pronouncement Date: 22-01-2010 | Result: Dismissed

Appeal Details

RSA Number 362820514 RSA 2007
Assessee PAN AAKPN5453C
Bench Ahmedabad
Appeal Number ITA 3628/AHD/2007
Duration Of Justice 2 year(s) 4 month(s) 15 day(s)
Appellant The ACIT, Circle-9,, Ahmedabad
Respondent Shri Devang S.Nanavati, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 22-01-2010
Date Of Final Hearing 05-01-2010
Next Hearing Date 05-01-2010
Assessment Year 2004-2005
Appeal Filed On 06-09-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING : 05/01/2010 DRAFTED ON: 07/ 01/2010 ITA NO.3628/AHD/2007 ASSESSMENT YEAR : 2004-05 THE ACIT CIR-9 AHMEDABAD VS. DEVANG S.NANAVATI 7 TH FLOOR CORPORATE HOUSE JUDGES BUNGALOW ROAD OPP.RAJPATH CLUB BODAKDEV AHMEDABAD PAN/GIR NO. : AAKPN 5453 C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI P. ORAM SR. D.R. RESPONDENT BY: SHRI S.N. SOPARKAR SR.ADV. O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-XV AHMEDABAD DATED 06/06/20 07 PASSED FOR ASSESSMENT YEAR 2004-05 BY RAISING FOLLOWING GROUN DS: 1. THE LD. COMMISSIONER OF INCOME-TAX(A)-XV AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1 06 908/- ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST ON CAR L OAN. 2. THE LD. COMMISSIONER OF INCOME-TAX(A)-XV AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4 95 296/- ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST ITA NO .3628/AHD/2007 ACIT VS. DEVANG S.NANAVATI ASST.YEAR - 2004-05 - 2 - 3. THE LD. COMMISSIONER OF INCOME-TAX(A)-XV AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1 21 374/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON CAR. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME-TAX(A)-XV AHMEDABAD OUGHT T O HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS THEREFORE PRAYED THAT THE ORDER OF THE L D. COMMISSIONER OF INCOME-TAX(A)-XV AHMEDABAD MAY BE SET-ASIDE AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 2. THERE ARE THREE MAIN ISSUES. ONE IS DISALLOWANC E OF INTEREST ON CAR LOAN; SECOND IS DEPRECIATION THEREON AND THIRD IS DISALLOWANCE OF INTEREST ON WITHDRAWAL FROM THE FIRM IN WHICH ASSESSEE WAS A PARTNER. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A RENOWNED ADVOCATE WHO IS DERIVING PROFESSIONAL INCOME FROM THE FIRM M/S.NANAVATI & NANAVATI IN WHICH HE IS A PARTNER. IN ADDITION HE IS HAVING A PROPRIETARY- CONCERN VIZ. M/S.I.M.NANAVATI ASSOCIATES. 4. THE FIRST TWO ISSUES ARE REGARDING INTEREST ON CAR AND DEPRECIATION THEREON. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE LEARNED ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIME D INTEREST ON CAR LOAN ITA NO .3628/AHD/2007 ACIT VS. DEVANG S.NANAVATI ASST.YEAR - 2004-05 - 3 - AGAINST INCOME FROM OTHER SOURCES. ACCORDING TO HIM INTEREST PAID BY THE ASSESSEE AT RS.1 06 908/- AGAINST CAR CANNOT BE SET OFF U/S.57((III) OF THE I.T. ACT 1961 AGAINST INTEREST INCOME EARNED B Y THE ASSESSEE FROM M/S.NAVRATNA ORGANIZERS AND DEVELOPERS PVT.LTD. BEC AUSE SUCH INTEREST WAS NOT EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PUR POSES OF EARNING INTEREST INCOME. THE LEARNED CIT(APPEALS) ALLOWED THE CLAIM AS BUSINESS EXPENDITURE. THIS INTEREST AMOUNT OF R S.1 06 908/- CONSISTED OF TWO ITEMS NAMELY RS.4 500/- BEING INTEREST P AID TO SHRI SHIRISH R. PARIKH ON AMOUNT BORROWED FROM HIM AND OTHER RS.1 0 2 408/- BEING INTEREST PAID AGAINST CAR LOAN. THE LEARNED CIT(AP PEALS) DID NOT UPHOLD THE REASONING OF THE ASSESSING OFFICER THAT CAR WAS NEVER USED FOR THE PROFESSIONAL BOOK OF THE ASSESSEE. THE LEARNED CIT (APPEALS) HELD THAT IT IS ILLOGICAL TO ASSUME THAT THE ADVOCATES DO NOT RE QUIRE ANY CAR FOR THEIR PROFESSIONAL WORK. IT IS NATURAL TO INFER THAT EVER Y LAWYER REQUIRES THE USE OF CAR FOR THEIR PROFESSIONAL ACTIVITIES. 5. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESEN TATIVE AND LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. WE ENTIRELY AGREE WITH THE REASONING GIVEN BY THE LEARNED CIT(APPEALS ). THE BASIS ON WHICH INTEREST ON CAR LOAN WAS DISALLOWED BY THE AS SESSING OFFICER ARE ITA NO .3628/AHD/2007 ACIT VS. DEVANG S.NANAVATI ASST.YEAR - 2004-05 - 4 - FLIMSY ILLOGICAL AND IRRELEVANT. PROFESSIONALS HA VE TO USE THE CAR FOR THEIR PROFESSIONAL WORK. WHETHER THEY ACTUALLY GO TO TH E CLIENT OR NOT IS NON- MATERIAL. EVEN IF CAR IS USED BY THEM FOR FEW DAY S IN THE YEAR FOR THEIR PROFESSIONAL WORK THE EXPENDITURE THEREON INCLUDI NG INTEREST ON CAR WOULD BE BUSINESS EXPENDITURE AND WILL HAVE TO BE ALLOWED AGAINST PROFESSIONAL RECEIPTS. BUT IN THE PRESENT CASE T HE ADVOCATES/LAWYERS HAVE NECESSARILY TO APPEAR BEFORE THE COURT OF LAW . USE OF THE CAR IS NOT A LUXURY RATHER IT IS A NECESSITY. IN OUR VIEW THE ASSESSING OFFICER OUGHT NOT TO HAVE VENTURED TO MAKE SUCH ADDITIONS. ACCOR DINGLY THIS GROUND OF REVENUE IS DISMISSED. SIMILARLY ON THE ISSUE OF DEPRECIATION ON CAR WE UPHOLD THE DECISION OF THE LEARNED CIT(APPEALS). 6. REGARDING DELETION OF ADDITION OF RS.4 95 296/- ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST THE FACTS ARE THAT THE ASSESSEE RECEIVED INCOME OF RS.5 84 367/- FROM M/S.NAVRATNA ORGANISER AND DEVELOPERS (P) LTD. WHICH WAS DECLARED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE SIMULTANEOUSLY PAID INTEREST OF RS.4 9 5 296/- TO ANOTHER FIRM CALLED M/S.NANAVATI & NANAVATI ON THE EXCESS WITHD RAWAL MADE FROM THE SAID FIRM. DEDUCTION OF INTEREST PAYMENT WAS CLAI MED AGAINST INTEREST INCOME. THE ASSESSING OFFICER DISALLOWED THE SAID CLAIM ON THE GROUND ITA NO .3628/AHD/2007 ACIT VS. DEVANG S.NANAVATI ASST.YEAR - 2004-05 - 5 - THAT THERE IS NO PROVISION IN THE PARTNERSHIP-DEED OF M/S.NANAVATI & NANAVATI THAT AN INTEREST IS TO BE RECOVERED ON THE EXCESS WITHDRAWALS MADE BY ANY PARTNER. FURTHER ASSESSING OFFICER OB SERVED THAT THERE IS NO NEXUS THAT MONEY WITHDRAWN FROM M/S.NANAVATI & NANA VATI WERE IN FACT INVESTED WITH M/S.NAVRATNA ORGANISER AND DEVELOPERS (P) LTD. WITH A VIEW TO EARN INTEREST. DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE LEARNED CIT(APPEALS) CALLED FOR A REMAND REPORT FRO M THE ASSESSING OFFICER WHO AFFIRMED THAT MONEY WITHDRAWN FROM M/S. NANAVATI & NANAVATI WERE IN FACT DEPOSITED IN THEIR BANK AC COUNT AND PAYMENTS WERE MADE TO M/S.NAVRATNA ORGANISER AND DEVELOPERS (P) LTD. ON 06/06/2003 AND 16/06/2003 RESPECTIVELY FROM THE SA ME BANK ACCOUNT. THUS ACCORDINGLY THERE A NEXUS OF MONEY WITHDRAWN FORM THE FIRM M/S.NANAVATI & NANAVATI WITH THAT OF INVESTMENT MAD E IN M/S.NAVRATNA ORGANISER AND DEVELOPERS (P) LTD. ACCORDINGLY T HE CLAIM OF DEDUCTION OF INTEREST PAYMENT OF RS.4 95 296/- WAS HELD ADMIS SIBLE. 7. AFTER HEARING THE PARTIES WE DECLINE TO INTERFE RE IN THE ORDER OF THE LEARNED CIT(APPEALS). NO CONTRARY MATERIAL HAS BEE N PLACED BY THE REVENUE ON THE RECORD. ONCE THE ASSESSING OFFICER HAS ACCEPTED IN THE REMAND REPORT THAT THERE IS A NEXUS THE QUESTION OF DISALLOWANCE OF INTEREST ITA NO .3628/AHD/2007 ACIT VS. DEVANG S.NANAVATI ASST.YEAR - 2004-05 - 6 - EXPENDITURE AGAINST INTEREST INCOME FROM M/S.NAVRAT NA ORGANISER AND DEVELOPERS (P) LTD. DOES NOT ARISE. 8. OTHER GROUNDS ARE GENERAL IN NATURE WHICH REQUIR E NO INDEPENDENT ADJUDICATION. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 22/01/ 2010. SD/- SD/- ( BHAVNESH SAINI ) ( D.C.AGR AWAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER AHMEDABAD; DATED 22 / 01 /2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XV AHMEDABAD 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD