Income Tax Appellate Tribunal - Raipur
S.K. Agrawal & Sons (Huf),, Korba(Cg) vs Ito, Ward- 2,, Korba(Cg) on 19 February, 2016
आयकर अपील य अ धकरण, RAIPUR
IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR
BEFORE S/SHRI MUKUL SHRAWAT (JM) SHAMIM YAHYA (AM)
सव ी मुकुल ावत, या यक सद य एवं शमीम याहया, लेखा सद य के सम ।
आयकर अपील सं./I.T.A. No.84/Bi/2013
( नधारण वष / Assessment Year : 2008-09)
S.K.AgraW AL & Sons बनाम/ ITO, W ard -2,
(HUF), Agroha Marg, Mahanadi Complex, Niharika
Vs.
Korba Road, Korba
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAOHS 1222A
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से / Appellant by : Shri Prakash Chand Agarwal
यथ क ओर से/Respondent by : Shri H.M.Moharana
सुनवाई क तार ख / Date of Hearing : 18-02-2016
घोषणा क तार ख /Date of Pronouncement : 19 -02-2016
आदे श / O R D E R
Per Mukul Shrawat, JM
This is an appeal filed by the assessee arising from an order of the ld CIT(A), Bilaspur dated 8.2.2013. The only ground raised by the assessee is as under:
"That on the facts and circumstances of the case, the ld CIT(A) erred in confirming the addition of Rs.2,37,124/- made by the AO on the basis of hypothetical assumptions by disallowing of the interest expenses paid to bank , claimed by the assessee without considering the submission explanation given by the assessee during the assessment proceedings. The above addition is bad in law and against the principal of natural justice. The unsustainable addition so confirmed may kindly be deleted."2
I.T.A. No.84/Bi/2013 / Assessment Year : 2008-09 Prakash Agarwal
2. The only issue as emerged from the corresponding assessment order passed by the Assessing Officer u/s.143(3) of the I.T.Act, 1961 dated 30.12.2010 is that in a situation when the assessee in his individual capacity is in the business of truck plying raised loan from the bank, whether the disallowance of interest of Rs.2,37,124/- was justifiable.
3. The facts have revealed that the accounts were maintained as per the provisions of section 44AB of the I.T.Act, 1961. According to the AO, the assessee has not established the necessity and the business expediency in respect of loan raised from the bank. According to the AO, it appeared that interest on the said loan as claimed in the profit & loss account was not justifiable, hence, the same was taxed in the hands of the assessee. Being aggrieved, the matter was carried before the first appellate authority.
4. Before the ld CIT(A), it was reiterated that merely on guess work, the AO had made the disallowance although it was very much established that the loan was taken for the business purposes. However, ld CIT(A) was not convinced and confirmed the action of the AO in the following manner:
"The submission made by the Ld. AR was considered carefully with reference to material available on record. The appellant used to file return of income of income of the earlier years on the basis of provisions of section 44AE of the Act. He owns three trucks. The turnover of die year from transportation activities by use of the trucks owned have exceeded the specified limit and therefore, the appellant got his account books audited and disclosed income at 3.80% of the turnover. The only objection of the AO was failure of 3 I.T.A. No.84/Bi/2013 / Assessment Year : 2008-09 Prakash Agarwal the appellant to explain justification of interest paid to the bank claimed as admissible expenditure u/s 36(1))(iii)) of the Act. The appellant has not explained the same in any proceedings under the Act. The onus to prove that the interest on Joan is an admissible expenditure lies with the appellant. The appellant has availed a cash credit limit of Rs. 3 7,00,000/- with UCO Bank, Transport Nagar, Korba through his Cash Credit Account No. 3080 against fixed deposit of Rs. 17,05,364/- and paid interest of Rs. 2,37,124/-. It is the onus of the appellant to explain nexus of loan obtained from the bank with the business activities of plying trucks already owned by him. This has not been done in any proceedings under the Act. Rather, the appellant wholly relied on fantastic explanation submitted by the Ld. AR. It is not the law that any or every narration by the Ld. AR must be accepted. lt must be an explanation acceptable to the facts obtained by the Department during the proceedings under the Act and it is miserably missing in the present case since the appellant has not tendered any evidence to explain that the cash credit limit utilized in the bank against the loan were invested in transportation business against which the appellant has shown profit. Moreover, the nature of work in progress disclosed in the return and its correctness has not been explained and demonstrated with cogent evidences. In view of the above, the ground of appeal is dismissed. "
5. On this short issue, we have heard both the sides. From the side of the assessee, Shri Prakash Chand Agarwal, ld A.R. appeared and informed that during the course of assessment proceedings, the assessee appeared before the AO and informed that loan was taken for the business purposes and the interest was paid on the said loan, which was claimed in the profit and loss account due to the reason that the loan has a direct nexus with the business activity of the assessee. In our considered opinion, the AO has not given any specific reason for the said disallowance. He has merely presumed that there was no nexus between the business activity with the loan taken from the bank. On the other hand, the explanation of the assessee was that the loan was raised to run the 4 I.T.A. No.84/Bi/2013 / Assessment Year : 2008-09 Prakash Agarwal business of truck hiring. The income was shown from three trucks and to run the trucks, said loan was obtained from the bank. Even, ld CIT(A) has not given any specific findings that on what basis he has presumed that the claim of interest u/s.36(1)(iii) was not for the business purposes of the assessee. He has made a general remark that every explanation of the assessee could not be accepted. As against that, the assessee has vehemently contested that the accounts of the assessee itself have demonstrated that the cash credit limit was utilized towards the transportation business of the assessee. Ld A.R. has also explained that there was no other activity of the assessee except transportation business, hence, there was no possibility of diversion of loan for any other purposes but for business purpose. Under the above facts and circumstances of the case and also placing reliance on the decision of Hon'ble Jurisdictional High Court in the case of JCIT vs. Beekay Engineering Corporation (2010) 325 ITR 384 (Chh), the orders of the authorities below are hereby reversed and the AO is directed to delete the addition.
6. In the result, appeal filed by the assessee is allowed., Order pronounced in the open court on 19 /02/2016 .
आदे श क घोषणा खुले यायालय म दनांकः को क गई ।
Sd/- sd/-
(शमीम याहया,लेखासद य) (मुकुल ावत, या यक सद य)
SHAMIM YAHYA, ACCOUNTANT MEMBER MUKUL SHRAWAT,JUDICIAL MEMBER
Raipur, दनांक Dated 19 / 02/2016
5
I.T.A. No.84/Bi/2013
/ Assessment Year : 2008-09
Prakash Agarwal
व. न.स./ Parida , Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. The appellant :S.K.AgraW AL & Sons (HUF), Agroha Marg, Korba
2. यथ / The Respondent: ITO, W ard -2, Mahanadi Complex, Niharika Road, Korba
3. आयकर आयु त(अपील) / The CIT(A)-Bilaspur
4. आयकर आयु त / CIT, Bilaspur
5. वभागीय त न ध, आयकर अपील य अ धकरण, / DR, ITAT, Raipur
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या पत त //True Copy// SR. PS, ITAT, CAMP: RAIPUR