Kiran Bhai Amin, Jabalpur v. Assistant Commissioner of Income Tax Circle 1(1),

ITA 84/JAB/2016 | 2006-2007
Pronouncement Date: 10-11-2017 | Result: Allowed

Appeal Details

RSA Number 8422914 RSA 2016
Assessee PAN ACUPA9979J
Bench Jabalpur
Appeal Number ITA 84/JAB/2016
Duration Of Justice 1 year(s) 5 month(s) 30 day(s)
Appellant Kiran Bhai Amin, Jabalpur
Respondent Assistant Commissioner of Income Tax Circle 1(1),
Appeal Type Income Tax Appeal
Pronouncement Date 10-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 10-11-2017
Last Hearing Date 08-11-2017
First Hearing Date 08-11-2017
Assessment Year 2006-2007
Appeal Filed On 11-05-2016
Judgment Text
I.T.A. NO. 84 & 85 /JAB/201 6 ASSESSMENT YEAR:2006-07 & 07-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH JABALPUR BEFORE SHRI MANISH BORAD ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY JUDICIAL MEMBER I.T.A. NO.84 & 85/JAB/2016 ASSESSMENT YEAR:2006-07 & 07-08 SHRI KIRAN BHAI AMIN 1297 NAPIER TOWN JABALPUR. PAN:ACUPA 9979 J VS. A.C.I.T. CIRCLE-1(1) JABALPUR. (APPELLANT) (RESPONDENT) O R D E R PER MANISH BORAD A.M. THESE TWO APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS OF CIT(A)-1 JABALPUR DATED 17/03/2016 AND 1 4/03/2016 RELATING TO ASSESSMENT YEAR 2006-07 AND 2007-08 WHICH ARISE OUT OF THE ORDER U/S 143(3) OF THE I.T. ACT DATED 29/12/2008 AND 24/12/2 008 FRAMED BY ACIT CENTRAL CIRCLE-1(1) AND DCIT CIRCLE-1(1) JABALPUR . AS MOST OF THE ISSUES RAISED IN THESE APPEALS ARE COMMON THESE APPEALS A RE BEING HEARD TOGETHER AND DISPOSED OF BY COMMON ORDER FOR THE SA KE OF CONVENIENCE. 2. FIRST COMMON ISSUE RELATES TO DISALLOWANCE U/S 1 4A AT RS.4 04 227/- AND RS.3 63 999/- FOR ASSESSMENT YEAR 2006-07 AND 2 007-08 RESPECTIVELY. 3. HEARD BOTH THE PARTIES AND PERUSED THE JUDGMENTS REFERRED. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FO R ASSESSMENT YEAR 2006-07 THE ASSESSING OFFICER OBSERVED THAT THE ASS ESSEE HAD MADE APPELLANT BY SHRI G. N. PUROHIT SR. ADVOCATE RESPONDENT BY SHRI I. B. KHANDEL D. R. DATE OF HEARING 08/11/2017 DATE OF PRONOUNCEMENT 10/11/2017 I.T.A. NO. 84 & 85 /JAB/201 6 ASSESSMENT YEAR:2006-07 & 07-08 2 INVESTMENT TO THE TUNE OF RS.31 89 441/- WHICH ARE EITHER NOT GENERATING INCOME OR GENERATING EXEMPTED INCOME. SUCH INVESTM ENT INCLUDED INTEREST FREE ADVANCES AS WELL AS INVESTMENT IN EQUITY SHARE S. THE ASSESSING OFFICER TOOK A VIEW THAT THE ASSESSEE HAS USED THE INTEREST BEARING BORROWED FUNDS FOR THE PURCHASE OF MAKING SUCH INVE STMENT WHICH THEREFORE CALLS FOR DISALLOWANCE U/S 14A AND ACCOR DINGLY DISALLOWANCE OF RS.4 04 227/- AND RS.3 63 999/- WERE MADE FOR ASSES SMENT YEAR 2006-07 AND ASSESSMENT YEAR 2007-08 RESPECTIVELY. THE IMPU GNED DISALLOWANCES WERE CONFIRMED BY CIT(A). WE FURTHER OBSERVE FROM PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE THAT INTEREST FREE FUNDS IN T HE FORM OF CAPITAL AS ON 31/03/2006 WAS RS.67 76 487/- AND AS ON 31/03/2007 AT RS.93 96 347/-. AS AGAINST THIS INTEREST FREE CAPITAL THE INVESTME NT IN EQUIRY SHARES AND OTHER INTEREST FREE ADVANCES ARE RS.31 89 441/- AS ON 31/03/2006. THESE FIGURES OF INTEREST FREE CAPITAL AND INVESTMENTS C LEARLY SHOW THAT THE INTEREST FREE CAPITAL IS MUCH MORE THAN THE INVESTM ENTS MADE. SIMILAR ISSUE CAME UP BEFORE HON'BLE MUMBAI HIGH COURT IN T HE CASE OF CIT VS. RELIANCE UTILITIES & POWER LIMITED [2009] 178 TAXMA N 135 WHEREIN HON'BLE COURT HELD THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST FREE AND OVER DRAFT AND / OR LOANS TAKEN THEN A PRESUMPTION WOULD ARIS E THAT INVESTMENTS WOULD BE OUT OF THE INTEREST FREE FUNDS GENERATED O R AVAILABLE WITH THE COMPANY IF THE INTEREST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENT. WE FIND THAT THE JUDGMENT OF HON'BLE BOMBAY HIGH CO URT IS SQUARELY APPLICABLE ON THE FACTS OF THE ASSESSEE WHEREIN INT EREST FREE FUNDS ARE MUCH MORE THAN THE IMPUGNED INVESTMENT AND THEREFOR E NO DISALLOWANCE OF INTEREST EXPENDITURE IS CALLED FOR U/S 14A OF TH E ACT. THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 AND GROUND NO. 1 OF ASSESSMENT YEAR 2007-08 ARE ALLOWED. I.T.A. NO. 84 & 85 /JAB/201 6 ASSESSMENT YEAR:2006-07 & 07-08 3 4. NOW WE TAKE UP GROUND NO. 2 RELATING TO ASSESSME NT YEAR 2007-08 WHEREIN THE ASSESSEE IS AGGRIEVED WITH THE ORDER OF CIT(A) DENYING THE CLAIM OF BAD DEBT OF RS.6 25 840/-. 5. HEARD BOTH THE PARTIES. WE FIND THAT DURING THE YEAR EMPLOYEE OF THE ASSESSEE SUNIL KUMAR VERMA WHO WAS MANAGING THE GODOWN MADE EMBEZZLEMENT AND SOLD THE CEMENT OF AROUND 3 520 BA G WITHOUT THE KNOWLEDGE OF THE ASSESSEE WHICH VALUED AT RS.6 75 8 40/-. THE ASSESSEE BEING C&F AGENT THE PRINCIPAL COMPANY ISSUED DEBIT NOTE TO THE ASSESSEE FOR RS.6 75 840/- TOWARDS SHORTAGE IN CEMENT. IN T URN THE ASSESSEE RAISED DEBIT NOTE IN THE NAME OF EMPLOYEE SUNIL KUMAR VERM A. HE MADE PART PAYMENT OF RS.50 000/- BUT DID NOT PAY THE REMAININ G AMOUNT OF RS.6 25 840/-. ACCORDINGLY THE ASSESSEE DEBITED T HE AMOUNT AS LOSS IN THE PROFIT & LOSS ACCOUNT AT RS.6 25 840/-. THIS LOSS WAS DISALLOWED BY THE ASSESSING OFFICER WHICH FURTHER FOUND FAVOUR FROM C IT(A) ALSO. FROM PERUSAL OF THE RECORDS INCLUDING THE PAPER BOOK FIL ED BY THE ASSESSEE WE FIND THAT THIS FACT IS NOT DISPUTED THAT THE ALLEGE D AMOUNT IS THE BUSINESS LOSS AND FURTHER DURING THE ASSESSMENT YEAR 2011-12 THE ASSESSEE WAS ABLE TO RECOVER THE REMAINING AMOUNT FROM ITS EMPLOYEE W HICH STANDS VERIFIABLE FROM THE AUDITED PROFIT & LOSS ACCOUNT FOR ASSESSME NT YEAR 2010-11 WHERE THE RECOVERY OF LOSS PREVIOUSLY WRITTEN OFF AT RS.6 25 840/- IS CREDITED AND OFFERED TO TAX. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE ARE OF THE VIEW THAT THE ASSESSEE HAS RIGHTLY CLAIMED THE BUSINESS LOSS OF RS.6 25 840/- AND BOTH THE LOWER AUTHORITIE S ERRED IN DISALLOWING THE SAME. WE THEREFORE DELETE THE DISALLOWANCE OF RS .6 25 840/-. GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 6. GROUND NO. 3 IN ASSESSMENT YEAR 2007-08 RELATES TO DISALLOWANCE OF EXPENDITURE OF RS.1 03 694/- INCURRED TOWARDS PAYME NT OF PF BY THE ASSESSEE. I.T.A. NO. 84 & 85 /JAB/201 6 ASSESSMENT YEAR:2006-07 & 07-08 4 7. HEARD RIVAL CONTENTIONS. WE FIND THAT ASSESSEE TOOK REGISTRATION DURING THE YEAR UNDER EPF/SBF AND ESI. IT DID NOT DEDUCT ANY AMOUNT FROM EMPLOYEES ACCOUNT. THE TOTAL SUM OF RS.1 03 964/- WAS ON ACCOUNT OF CONTRIBUTION TOWARDS EPF AND ESI WHICH WAS DEPO SITED BY THE ASSESSEE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. IT HAS BEEN CONSISTENTLY HELD THAT SUCH TYPE OF STATUTORY PAYMENTS ON ACCOUN T OF EMPLOYERS CONTRIBUTION ARE ALLOWED AS DEDUCTION IF THEY ARE P AID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AS PROVIDED IN SECTI ON 43B. THERE IS NO DISPUTE ABOUT THE ACTUAL DATE OF PAYMENT OF THE IMP UGNED AMOUNT IS BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. WE THEREFORE DELETE THE IMPUGNED DISALLOWANCE OF RS.1 03 694/- WRONGLY DISALLOWED U/S 36(1)(VA) R.W.S. 2(24)(10) OF THE ACT. GROUND NO. 3 OF THE ASSESSEES APPEAL IS ALLOWED. 8. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10/11/2 017 SD/. SD/. (PARTHA SARATHI CHAUDHURY) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:10/11/2017 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R. ASST T. REGISTRAR