Income Tax Appellate Tribunal - Ahmedabad
The Acit, Central Circle-1(3),, ... vs Shri Mukesh Balabhai Patel,, Bhavnagar on 10 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "SMC" BENCH
(BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
& SHRI S. S. GODARA, JUDICIAL MEMBER)
ITA. No: 2615/AHD/2013
(Assessment Year: 2009-10)
ACIT Central Circle-1(3), V/S Shri Mukesh Balabhai
Ahmedabad Patel. C/o. Shree Ram Steel
and Rolling Industries,
Bhavnagar, Rajkot Road,
Sihor, Dist-Bhavnagar.
(Appellant) (Respondent)
PAN: AAPPP8456N
Appellant by : Shri Albinus Tirkey, Sr. D.R.
Respondent by : Shri P.M. Mehta, A.R.
(आदे श)/ORDER
Date of hearing : 07 -02-2017
Date of Pronouncement : 10 -02-2017
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
1. This appeal by the Revenue is preferred against the order of the Ld. CIT(A)- XX, Ahmedabad dated 30.08.2013 pertaining to A.Y. 2009-10.
2 ITA No. 2615/Ahd/2013. A.Y. 2009-10
2. The only grievance of the revenue relates to the deletion of the disallowance of Rs. 40,15,678/- out of total disallowance of interest of Rs. 69,27,948/- made u/s. 14A read with Rule 8D of the Act.
3. The A.O. vide order dated 27.12.2011 made u/s. 143(3) of the Act made the following observations while making the impugned disallowances:-
"The submission of the assessee is perused & considered. On careful consideration of the same, it is seen that there is no substance in it. The claim of the assessee that interest expenses of Rs.69,27,948/- is actually pertaining to business expenditure to earn business income. However, the assessee did not furnish any cogent documentary evidence to establish his claim. It is derived by the assessee that the fund on which the said interest expenses was incurred was for the purpose of business. However he did not furnish any documentary evidence for the same. Hence the said claim of the assessee is not accepted. It is further claimed by the assessee that he was having sufficient capital and interest free funds. However he did not furnish any such details of interest free funds available. Hence this claim of the assessee is also not tenable. Remaining details of the assessee are also of general nature & without any supporting cogent documentary evidence.
It is significant to mentioned here that had the assessee been in knowledge of the fact that the said interest expenses of Rs.69,27,948/- is actually an expenses pertaining to business income & not pertaining to income from other source. He should have filed revised return of income as per provision of section 139(5). The assessee failed to do so. Hence said claim of the assessee is not tenable. Further, assessee in his letter stated that the most of the advance made to Mukeshbhai Patel Huf was made in earlier year and is clearly attributable to non- interest bearing funds (being capital and interest free unsecured loans) lying as opening balance. On verification of the bank statement filed by the assessee in his submission on 23-12-2011 it was seen that assessee was paid Rs. 12,50yOpO/- Mukeshbhai B. Patel (HUF) during the year under consideration. During filling of the return of income assessee was claimed loss of Rs.69,27,948/- against the income from other source. Further assessee in his letter requested to allow the above said loss as business activities. It is also seen that from the balance sheet , assessee had invested Rs.2,31,21,287/- in Share of various company. Hence the argument of the assessee is not acceptable. Therefore, the said interest expenses 3 ITA No. 2615/Ahd/2013 . A.Y. 2009-10 of Rs.69,27,948/- disallowed u/s.57(iii) of the Income Tax Act, 1961 and added to the total income. Penalty proceedings U/s 271(1)( c) of the I T Act, initiated separately."
4. Assessee carried the matter before the ld. CIT(A) and strongly objected to the disallowances made by the A.O. The ld. CIT(A) found that the assessee was having total interest free funds of Rs. 1208.16 lacs and total interest free advances of Rs. 1174.68 lacs. The ld. CIT(A) was of the opinion that the interest free funds available for the assessee was far more in excess of the investments made by the assessee. The ld. CIT(A) accordingly directed the A.O. to delete the disallowance of interest amounting to Rs. 40,15 ,678/-.
5. Aggrieved by this, the revenue is before us.
6. The ld. D.R. strongly supported the findings of the A.O. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities.
7. We have given a thoughtful consideration to the orders of the authorities below. It is an undisputed fact that the interest free funds available with the assessee were in excess of the investment made. The Hon'ble High Court of Bombay in the case of Reliance Utilities and Power Ltd. 313 ITR 340 has held that where the assessee has both own funds and borrowed funds then the presumption is that the investments have come out of own funds. This ratio was followed by the Hon'ble High Court in the case of HDFC Ltd. 366 ITTR 505.
4 ITA No. 2615/Ahd/2013. A.Y. 2009-10
8. Considering the findings of the First Appellate Authority in the light of the ratio laid down by the Hon'ble High Court of Bombay, we do not find any reason to interfere with the findings of the ld. CIT(A).
9. Appeal filed by the Revenue is accordingly dismissed.
Order pronounced in Open Court on 10 - 02- 2017
Sd/- Sd/-
(S. S. GODARA) (N. K. BILLAIYA)
JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER
Ahmedabad: Dated 10 /02/2017
Rajesh
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad