ACIT, UDAIPUR v. Shri Udai Lal Anjana, CHITTORGARH

ITA 507/JODH/2013 | 2010-2011
Pronouncement Date: 25-04-2014 | Result: Dismissed

Appeal Details

RSA Number 50723314 RSA 2013
Assessee PAN ABNPA4495M
Bench Jodhpur
Appeal Number ITA 507/JODH/2013
Duration Of Justice 5 month(s) 13 day(s)
Appellant ACIT, UDAIPUR
Respondent Shri Udai Lal Anjana, CHITTORGARH
Appeal Type Income Tax Appeal
Pronouncement Date 25-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 08-04-2014
Date Of Final Hearing 08-04-2014
Next Hearing Date 08-04-2014
Assessment Year 2010-2011
Appeal Filed On 11-11-2013
Judgment Text
IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.K. SAINI ACCOUNTANT MEMBER. ITA NO.507/JODH/2013 (A.Y. 2010-11) ACIT CIRCLE-1 VS. SHRI UDA I LAL ANJANA UDAIPUR. VILLAGE KESUNDA TEHSIL CHOTI SADRI CHITTORGARH. PAN NO. ABNPA 4495 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.K. GARGIEYA & SHRI DINESH SHRIMALI. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 08/04/2014. DATE OF PRONOUNCEMENT : 25/04/2014. O R D E R PER N.K. SAINI A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 02/08/2013 OF LD. CIT(A) UDAIPUR. THE FOLLOWING G ROUNDS HAVE BEEN RAISED IN THIS APPEAL:- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN:- 2 1.1 DELETING THE DISALLOWANCE OF RS. 53 59 740/- MA DE U/S 14A OF THE I.T. ACT IGNORING THE FACT THAT THE ASSESSEE HAS UTILIZE D INTEREST BEARING UNSECURED LOANS FOR INVESTMENT IN SHARES OF COMPANI ES/BANK. 1.2. IGNORING THE FACT THAT AS PER THE PROVISIONS O F SECTION 14A IF THE AO IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE EXPENDITURE IN RESPECT OF EXEMPTED INCOME THEN HE HAS TO CALCULAT E THE DISALLOWANCE AS PER RULE AND IN THIS CASE THE AO HA S AMPLY DEMONSTRATED THAT HE IS NOT SATISFIED WITH THE CORR ECTNESS OF THE CLAIM THAT NO INTEREST BEARING BORROWED FUNDS HAVE BEEN U TILIZED FOR INVESTMENT IN SHARES OF COMPANIES. 1.3. OBSERVING THAT AO SHOULD PROVE THE NEXUS BETWE EN INTEREST BEARING FUND AND TAX FREE INVESTMENT BEFORE INVOKING PROVIS IONS OF SECTION 14A OF THE I.T. ACT. 1.4 IGNORING THE FACT THAT THE FRESH EQUITY SHARES HAVE ALSO BEEN PURCHASED DURING THE YEAR AND CONSIDERING THE INCRE ASE IN UNSECURED LOAN AS WELL AS INCREASE IN INTEREST EXPENDITURE A O IS JUSTIFIED IN HOLDING THAT HE IS NOT SATISFIED ABOUT CORRECTNESS OF THE ASSESSEES CLAIM OF NO EXPENDITURE INCURRED. 2. DELETING THE DISALLOWANCE OF RS. 19 90 973/- MAD E BY AO ON ACCOUNT OF INTEREST EXPENSES IGNORING THE FACT THAT THE AS SESSEE HAS DIVERTED INTEREST BEARING LOANS TO INTEREST FREE LOANS AND A DVANCES OR ADVANCES ON LOWER RATE OF INTEREST. 2 VIDE GROUND NOS. (1.1) TO (1.4) THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF DISALLOWANCE OF RS. 53 5 9 740/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE I.T. ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). 3. AS REGARDS TO THIS ISSUE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT AN IDENTICAL ISSUE HAVING S IMILAR FACTS HAS ALREADY BEEN ADJUDICATED BY THIS BENCH OF THE TRIBUNAL IN A SSESSEES OWN CASE 3 VIDE ORDER DATED 29/11/2013 FOR THE A.Y. 2009-10 IN I.T.A.NO. 63/JODH/2013 COPY OF THE SAID ORDER WAS FURNISHED. 4. LEARNED D.R. IN HIS RIVAL SUBMISSIONS ALTHOUGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES AND THE MATERIAL ON RECORD IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AN D AGAINST THE REVENUE IN THE PRECEDING YEAR IN ASSESSEES OWN CASE VIDE A FORESAID REFERRED TO ORDER DATED 29/11/2013 WHEREIN THE RELEVANT FINDING S HAVE BEEN GIVEN IN PARA 5.3 WHICH READ AS UNDER:- AFTER COGITATING THE ABOVE RIVAL STAND WE ARE OF T HE CONSIDERED OPINION THAT THE ORDER OF ID. CIT(A) ON THIS ISSUE DESERVES TO BE ENDORSED BY US. THERE IS NO DISPUTE REGARDING THE F ACTS THAT THE ASSESSEE WAS A PARTNER IN THE PARTNERSHIP FIRM NAME LY M/S CHETAK ENTERPRISES AND THERE WAS CREDIT IN CAPITAL OF THE ASSESSEE. THIS FACT HAS RATHER BEEN REITERATED BY THE REVENUE IN ITS GROUND OF APPEAL (GROUND NO.1.4). THIS FIRM WAS CONVERTED INT O A LIMITED COMPANY UNDER CHAPTER-IX OF THE COMPANIES ACT 1956 . ON CONVERSION THE ASSESSEE WAS ALLOTTED 6 10 000 EQUI TY SHARES OF THE FACE-VALUE OF RS.10/- EACH IN LIEU OF HIS CAPITAL-C REDIT. A COPY OF CERTIFICATE ISSUED BY THE COMPANY AND ENCLOSED IN T HE PAPER-BOOK IS SELF-EVIDENT OF THIS FACT. THE COMPANY HAD ALLOTTED 61 LAKHS BONUS SHARES TO THE ASSESSEE IN THE YEAR 2005-06 AND THE ASSESSEE POSSESSED 6 71 000 EQUITY SHARES AT THE END OF THE F.Y. RELATING TO 4 THE A.Y. UNDER CONSIDERATION. THE COMPANY HAS PAI D INTERIM DIVIDEND BY CHEQUE NO.944158 DATED 31.03.2009. THE DIVIDEND INCOME DECLARED BY THIS COMPANY IS RS.69 96 033/-. IN FACT THE A.O. HAS PROCEEDED ON AN INCORRECT PREMISE THAT THE CAPITAL STANDING CREDITED IN THE ACCOUNT OF THE ASSESSEE IN THE PART NERSHIP FIRM M/S CHETAK ENTERPRISES AT THE TIME OF ITS CONVERSION IN TO A LIMITED COMPANY IS FROM THE INTEREST-BEARING UNSECURED LOAN. THIS FACT IS NOT FOUND SUPPORTED BY ANY EVIDENCE. IT IS ALSO AN UNDISPUTED FACT THAT IN EARLIER YEARS ON IDENTICAL FACTS NO SUCH DISALLOWANCE HAD B EEN MADE. THE REASON GIVEN BY THE A.O. THAT THERE HAD BEEN INCRE ASE IN THE UNSECURED LOANS AND INTEREST EXPENSES IN THE YEARS 2008-09 AN D 2009-10 CANNOT BE MADE A BASIS FOR MAKING THIS TYPE OF DISALLOWANC E OF INTEREST ON LOANS TAKEN IN THE EARLIER YEARS AND WHEN IN THOSE YEARS NO SUCH DISALLOWANCES WERE MADE. APART FROM THE ABOVE THERE IS NO PROOF THAT THERE IS AN INCREASE IN UNSECURED LOAN AND INTEREST PAYMENT EXP ENSES DURING THE YEAR UNDER APPEAL. THEREFORE NO SUCH DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D CAN BE MADE IN THIS YEAR. THE ID. CIT(A) HAS CORRECTLY DELETED THE IMPUGNED DISALLOWANCE. ACCORD INGLY GROUND NO.1 (1.1 1.2 1.3 1.4 & 1.5) OF THE REVENUE'S APPEAL STANDS DISMISSED. 6 . SO BY RESPECTFULLY FOLLOWING THE ORDER DATED 29/ 11/2013 IN ASSESSEES OWN CASE IN I.T.A.NO. 63/JODH/2013 FOR T HE A.Y. 2009-10 WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTME NTAL APPEAL. 7 . THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE D ELETION OF DISALLOWANCE OF RS. 19 90 973/- MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF INTEREST EXPENSES. 8 . AS REGARDS TO THIS ISSUE ALSO LEARNED COUNSEL FO R THE ASSESSEE SUBMITTED THAT AN IDENTICAL ISSUE HAVING SIMILAR FA CTS HAS ALREADY BEEN 5 ADJUDICATED VIDE ORDER DATED 29/11/2013 IN ASSESSEE S OWN CASE IN THE PRECEDING YEAR IN I.T.A.NO. 63/JODH/2013 FOR THE A. Y. 2009-10. 9 . LEARNED D.R. COULD NOT CONTROVERT THE AFORESAID C ONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 10 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PAR TIES AND THE MATERIAL ON RECORD IT IS NOTICED THAT A SIMILAR IS SUE HAVING SIMILAR FACTS HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE VIDE AFORESAID REFERRED TO ORDER DATED 29/11/2013 WHERE IN THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 6 & 7 OF THE SAID ORDER WHICH READ AS UNDER:- 6. THE FACTS OF THE SECOND GROUND OF THIS APPEAL AR E THAT THE A.O. VIDE PARAGRAPH NO.4 OF HIS ORDER HAS FOUND THA T THE ASSESSEE HAS DIVERTED INTEREST-BEARING FUNDS TO INTEREST-FREE LO ANS/ADVANCES. THE ASSESSEE HAS SHOWN INTEREST-RECEIPT TO THE TUNE OF RS.1 45 71 921/- AS AGAINST WHICH INTEREST PAYMENTS ARE SHOWN AT RS.1 3 8 20 038/-. THE A.O. HAS DISALLOWED A SUM OF RS.15 56 362/- BEING THE INTEREST ON BORROWED FUNDS EITHER DIVERTED AS INTEREST-FREE ADV ANCE OR ON LOWER RATE OF INTEREST. THE ID. CIT(A) HAS DELETED THIS D ISALLOWANCE. 7. AFTER HEARING BOTH THE SIDES WE HAVE FROM THE RECO RDS FOUND THAT THE ASSESSEE HAS ALSO RAISED INTEREST-FR EE LOAN OF RS.81 00 000/- AND ITS TOTAL INTEREST- RECEIPT IS R S. 1 45 71 921/- AS AGAINST WHICH HE HAS PAID INTEREST AMOUNT OF RS. 1 38 20 038/-. WHICH HAS RESULTED IN POSITIVE INTEREST RECEIPT OF RS.31 89 883/-. THE ASSESSEE ALSO HAS AN OPENING CAPITAL OF RS.11 0 5 63 831/-. THUS 6 INTEREST-FREE ADVANCES ARE MUCH LESS THEREFORE NO SUCH DISALLOWANCE CAN BE MADE. AS A RESULT WE CONFIRM THE DELETION O F DISALLOWANCE OF INTEREST AMOUNTING TO RS. 15 56 362/- AND DISMISS G ROUND NO.2 OF REVENUE'S APPEAL. 11 . SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS INVOLVED IN THE PRECEDING YEAR SO RESPECTFUL LY FOLLOWING THE ORDER DATED 29/11/2013 IN ASSESSEES OWN CASE IN I.T.A.NO . 63/JODH/2013 WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE F INDINGS OF THE LD. CIT(A). 12. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISMISSE D. (ORDER PRONOUNCED IN THE COURT ON 25 TH APRIL 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH APRIL 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR ITAT JODHPUR.