M/S. WOOL PALACE,NEW DELHI vs. ITO, NEW DELHI

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ITA 6291/DEL/2016Status: DisposedITAT Delhi27 January 2020AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the lower authorities did not examine the issue in the proper perspective and made additions without considering the assessee's accounts and submitted details. Therefore, the case was restored to the Assessing Officer for fresh examination.

What were the facts?

The assessee declared an income of Rs. 3,46,045/-. The Assessing Officer made additions for huge interest expenses relatable to exempt investment, proportionate interest on funds used for property investment, and proportionate interest on loans and advances given without charging interest. A disallowance was also made for personal element in expenditure.

What were the issues?

Whether the disallowances made by the Assessing Officer on account of interest expenses and personal element in expenditure were justified, and whether the assessee's accounts and submitted details were properly considered.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘B+ SMC’ NEW DELHI

Before: SHRI SUDHANSHU SRIVASTAVA & SHRI PRASHANT MAHARISHI

Hearing: 31.10.2019Pronounced: 27.01.2020

PER SUDHANSHU SRIVASTAVA, J.M.: This appeal is preferred by the Assessee against order dated 05.10.2016 passed by the Ld. Commissioner of Income Tax (Appeals)-17, New Delhi {CIT(A)} for assessment year 2012-13.

(M/s Wool Palace) 2.0 The brief facts of the case are that the return of income was filed declaring an income of Rs. 3,46,045/- The case was selected for scrutiny through CASS on the ground that the assessee had incurred huge interest expenses relatable to exempt investment u/s 14A of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The assessment was completed at an income of Rs. 8,10,102/- after making a disallowance of Rs. 3,17,057/- on account of proportionate interest on funds used for investment in property. Further disallowance of Rs. 11,9,000/- was made on account of disallowance of proportionate interest on loans and advances given by the assessee which were given out of interest bearing funds but no interest had been charged. A disallowance of Rs. 28,000/- was also made on account of alleged presence of personal element in the expenditure. 2.1 The assessee’s appeal before the Ld. CIT (A) was partly allowed wherein the Ld. CIT (A) upheld the disallowance of Rs. 28,000/- on account of presence of personal element in the expenditure. The Ld. CIT(A) also upheld the disallowance of interest to the tune of Rs. (M/s Wool Palace) 3,17,057/- but gave partial relief by directing the AO to calculate the disallowance on interest free loans given to various persons after allowing a relief of Rs. 27,200/-. 2.2 Now the assessee is before the Tribunal and has challenged the action of the Ld. CIT (A) in partly confirming the disallowances as aforesaid. 3.0 None was present for the assessee when the appeal was called out for hearing nor was any application for adjournment received on behalf of assessee. Looking into the facts and circumstances of the case, we proceed to hear the appeal ex parte qua the assessee. 4.0 The Ld. Sr. Departmental Representative supported the order of the Assessing Officer and also submitted that the Ld. CIT (A) had allowed appropriate relief and now no further relief was required to be allowed at this juncture. 5.0 We have heard the Ld. Sr. Departmental Representative and have also perused the orders of the authorities below. It is seen that the lower authorities have not examined issue at hand in proper perspective and the additions have been made without properly

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