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आदेश/Order
The present appeal has been preferred by the assessee against the order dated 23.3.2017 of the Commissioner of Income Tax (Appeals), Palampur [hereinafter referred to as ‘CIT(A)’].
The assessee in this appeal has taken following grounds of appeal:-
That on the facts, circumstances of the case and in law, the Worthy CIT(A) through his order dated 03.04.2017 has erred in passing that order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961. 2. That on the facts, circumstances of the case and in law, the Worthy CIT(A) has erred in confirming the action of Ld. AO wherein he had erred in not allowiung deduction u/s 80IC on interest income of Rs. 1,36,856/- even when such income is derived from the fixed deposits held as security with various government authority pertaining to business activity.
That on the facts, circumstances of the case and in law, the Worthy CIT(A) has erred in confirming the action of Ld. AO wherein he had erred in making addition of Rs. 15,75,000/- to
ITA No. 843-Chd-2018- Sh. G.P.Singh, HUF, Ludhiana 2
the appellant's income on account of alleged unexplained cash credit which were amounts of capital introduced by partners of the appellant firm. 4. That on the facts, circumstances of the case and in law, the Worthy CIT(A) has erred in confirming the action of Ld. AO of not allowing deduction u/s 80IC on addition of Rs. 15,75,000/- (agitated through ground 3 above) made u/s 68 on account of capital introduced by partners. 5. That on the facts, circumstances of the case and in law, the Worthy CIT(A) has erred in confirming the action of Ld. AO wherein he had erred in making addition of Rs. 8,11,241/- to the appellant's income on account of alleged unexplained cash credit from Sh. Paramjit Singh.
That on the facts, circumstances of the case and in law, the Worthy CIT(A) has erred in confirming the action of Ld. AO of not allowing deduction u/s 801C on addition of Rs. 8,11,241/- (agitated through ground 5 above) made u/s 68 on account of alleged unexplained cash credit from Sh. Paramjit Singh.
That on the facts, circumstances of the case and in law, the Worthy C1T(A) has erred in confirming the action of Ld. AO of estimating the interest income of Rs. 20,000/- from deposit of Rs. 2,00,000/- given to sales tax authorities even when no such income was received during the year. He has also erred in not allowing deduction u/s 80IC on the said enhanced income.
That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
Ground No.1 : Ground No.1 is general in nature and does not require 3.
any specific adjudication.
Ground No. 2 : Vide ground No.2, the assessee has agitated the 4.
action of the lower authorities in denying deduction u/s 80IC of the
Income-tax Act, 1961 (in short 'the Act') on interest income of Rs.
1,36,856/-.
ITA No. 843-Chd-2018- Sh. G.P.Singh, HUF, Ludhiana 3
At the outset, the Ld. Counsel for the assessee has submitted that the
assessee inadvertently mentioned in the return of income the said receipt as
‘interest from FDRs’ whereas, the same was received as interest from
partners of the assessee firm. He has further submitted that the assessee
during the year also paid some interest to the other partners on their
capital. He, therefore, has submitted that in the computation of income,
the assessee may be allowed netting of the interest paid with interest
received from partners. However, the Ld. Counsel fairly agreed that the
assessee is not eligible to claim deduction u/s 80IC of the Act on the
aforesaid amount.
The Ld. DR has also agreed that the matter may be examined afresh
by the Ld. CIT(A) in this respect.
I have considered the rival submissions. It is held that if there is a
receipt of interest from the partners as well as payment of interest to the
same partners, the assessee is entitled to netting of the same. Therefore,
the matter is remanded to the file of the Assessing officer to verify this
fact and allow the relief to the assessee accordingly. However, the
assessee is not entitled to deduction u/s 80IC of the Act on the aforesaid
interest income.
Ground Nos. 3 & 4: Vide ground No.3 and 4 the assessee has 8.
agitated the addition of Rs. 15.75 lacs made into the income of the
assessee as unexplained cash credits u/s 68 of the Act and further the
action of the lower authorities in denying deduction u/s 80IC of the Act on
the said amount.
ITA No. 843-Chd-2018- Sh. G.P.Singh, HUF, Ludhiana 4
The Ld. Counsel for the assessee has submitted that the said amount
of Rs. 15.75 lacs were in fact capital introduced by Shri Raj Kumar into
the firm. He has further relied upon the various documents to submit that
in fact the said amount was transferred from his proprietorship concern
M/s MBH Traders. He has also submitted that even certain amount was
credited to the account of M/s MBH Traders from other proprietorship
concern of the assessee. He, therefore, has submitted that the assessee has
explained the source of deposits.
On the other hand, the Ld. DR submitted that though the assessee
has tried to show that the amount has been credited from proprietorship
concern, however, the creditworthiness of the proprietorship concern has
not been proved.
Considering the overall facts and circumstances of the case, I am of
the view that the matter needs examination and verification at the hands of
the Assessing officer. The assessee will demonstrate before the Assessing
officer the source and creditworthiness of the creditor including the source
of the deposits in the proprietorship concern. The Assessing officer will
examine the same and decide the issue afresh in accordance with law.
Since it is a case of capital introduction, I do not think that the assessee is
entitled to any deduction u/s 80IC of the Act on this account. Therefore,
the issue raised vide ground No.3 is restored to the file of the Assessing
officer, whereas, the issue raised vide ground No.4 is decided against the
assessee.
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Ground No.5. Vide this ground, the assessee has agitated the
addition of Rs. 8.11 lacs made into the income of the assessee by lower
authorities as unexplained cash credit u/s 68 of the Act. The Ld. Counsel
for the assessee has submitted that this amount has been added under the
head unexplained loans. He has further submitted that in fact the creditor
Sh. Paramjit Singh was the partner of the of the firm, however, he retired
from the partnership of the firm during the year under consideration. As
per the dissolution deed, his capital was treated loan to the firm. That
there was otherwise no introduction of any cash or capital during the year.
That the amount of capital was introduced by Parmajit Singh as capital of
the partner during the earlier years.
The Ld. DR, on the other hand, has submitted that these pleas have
not been taken into account by the lower authorities. That the matter needs
examination at the end of the CIT(A).
After considering the rival submissions, I am of the view, that since
these aspects has not been examined by the Assessing officer and I have
also restored the other issues to the file of the Assessing officer, hence,
this issue is also restored to the file of the Assessing officer to examine
the above contentions of the assessee and decide the issue in accordance
with law.
Ground No. 6: So far as the ground No.6 is cornered, the assessee
has claimed deduction u/s 80IC of the Act on the aforesaid amount of Rs.
8.11 lacs as unexplained loans from Sh. Paramjit Singh. The Ld. counsel
has been fair enough to admit that this amount does not qualify for
ITA No. 843-Chd-2018- Sh. G.P.Singh, HUF, Ludhiana 6
deduction u/s 80IC of the Act. Ground No. 6 of the appeal is, therefore, dismissed.
Ground No.7: This ground is not pressed by the Ld. Counsel for the assessee, therefore, the same is dismissed as ‘not pressed’.
Ground No.8 : This ground is general is nature and does not require any specific adjudication.
In view of the findings given above, the appeal of the assessee is partly allowed for statistical purposes. Order dictated and pronounced in the Open Court immediately on completion of hearing.
Sd/-
(संजय गग� / SANJAY GARG) �या�यक सद�य/ Judicial Member Dated : 27.02.2019 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar