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Income Tax Appellate Tribunal, “A”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals), Pune-6dated 20.08.2020 for the A.Y.2015-16. The Assessee has raised the following grounds of appeal: “The following grounds are taken without prejudice to each other - On facts and in law,
1. The learned CIT(A) erred in dismissing the appeal merely on the ground of non-persecution which is illegal and unjustified in law without knowing the fact that the hearing notices were not served on the appellant which is against the principle of natural justice as no opportunity of heard being given.
A.Y. 2015-16 Shri Anand Venkateshwara Developers Vs. ITO, Ward-9(4), Pune (A)
The learned CIT(A) erred in dismissing assessee’s appeal on merits in a summary manner on grounds of appeal raised before him only on the basis of observations of the AO given in the assessment order.
3. The Id CIT(A) has erred in confirming addition of Rs.5,01,373/- made by the AO on the ground that the appellant firm paid bank interest on loan of Rs.29,27,137/- which was more than the interest received of Rs.24,25,764 from sister concern M/s.Anand Venkateshwara Associates without assigning a valid reason.
4. While confirming the addition, the Id CIT (A) has relied upon the decision of ITAT which is distinguishable on the facts”
2. In this case the only issue involved is disallowance of Interest of Rs.5,01,373/- . The brief facts are that the assessee had taken a loan from Baramati Co Op Bank of Rs.3.50 Crores for the purpose of the business. It is a fact that assessee’s business could not be started due to some reasons. The assessee gave the said Rs.3.50 crores to its sister concern. The Assessee has shown Rs. 24,25,764/- as interest received from the sister concern and Rs.29,27,137/- as interest paid to Baramati Co Op bank in the profit and loss account. It is an undisputed fact that assessee had not started any business during the year. The Assessing Officer disallowed the difference between interest paid and interest earned. The Commissioner of Income Tax (Appeal) confirmed the assessment order following ITAT Pune’s decision in the case of H.I Tamboli & Co order dated 27.09.2017.
A.Y. 2015-16 Shri Anand Venkateshwara Developers Vs. ITO, Ward-9(4), Pune (A)
It is a fact in this case that business was not started. The assessee took loan from Bank and gave the said amount to its sister concern at a lesser rate. The assessee was not having sufficient funds of its own to advance loan to its sister concern. Also, neither before us, nor before the lower authorities the assessee has established business expediency. Therefore, the ld.CIT(A) was right in following the ITAT decision in the case of H.I.Tamboli & Co, ITA No.101/PUN/2015. In the said decision, the ITAT has held as under: Quote , “We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to disallowance of interest on the interest free amounts advanced to sister concern. We find that Ld.CIT(A) while granting partial relief to the assessee has noted that as against the interest free advanceof Rs.1.27 crores to its sister concern M/s. Hira Enterprises, the average balance of partner capital stood at around Rs.21,00,000/- meaning thereby that the assessee did not have sufficient interest free funds at its disposal for advancing the amount. We further find that Ld.CIT(A) while granting partial relief has noted that no reasons were provided by the assessee for advancing interest free advances. Before us also assessee has not placed any material on record to demonstrate the commercial expediency. We further find that Ld.CIT(A) has noted that on perusal of the ledger account of M/s. Hira Enterprises as well as the copy of bank statement of Kharad Urban Co-operative Bank that amount advanced to sister concern was through the cash credit account. We further find that Ld.CIT(A) by a well reasoned and detailed order has decided the issue and granted partial relief to assessee. Ld.CIT(A) further directed to disallow the proportionate interest. Before us, assessee has not placed any material on record to controvert the findings of A.Y. 2015-16 Shri Anand Venkateshwara Developers Vs. ITO, Ward-9(4), Pune (A)
Ld.CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of Ld.CIT(A) and thus this ground of the assessee is dismissed.” Unquote.
Respectfully following the above decision of ITAT Pune Bench, we find that the ld.CIT(A) has given a reasoned order, which does not call for any interference from our side, hence, we uphold the impugned order of the ld.CIT(A) on this score, accordingly, grounds of appeal raised by the assessee are dismissed.
In the result, appeal of the assessee is dismissed. Order pronounced in the open Court on 28th June, 2022.