ACIT 25(2), MUMBAI vs. H.K. PUJARA BUILDERS, MUMBAI

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ITA 6191/MUM/2018Status: DisposedITAT Mumbai03 December 2019AY 2014-152 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) correctly deleted the disallowance of interest, as the loan was previously held to be genuine. The ITAT confirmed the CIT(A)'s order, finding no infirmity.

What were the facts?

The Assessing Officer disallowed interest paid on an unsecured loan, treating the loan as non-genuine. The assessee had previously established the genuineness of the loan in an earlier assessment year, which was confirmed by the ITAT.

What were the issues?

Whether interest paid on a loan, previously held to be genuine, is allowable as a deduction. The genuineness of the loan transaction and the creditworthiness of the lender.

Which sections of the Income-tax Act were involved?

Section 69,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, H Bench, Mumbai

Before: Shri Shamim Yahya & Shri Saktijit Dey

For Appellant: Shri M. Rajan
For Respondent: Shri Prakash K. Jotwani
Hearing: 11.09.2019Pronounced: 03.12.2019

This appeal filed by Revenue is directed against the order of the learned CIT(A)-37, Mumbai dated 05.09.2016 and it relates to A.Y. 2014- 15.

2.

The issue raised in the appeal is that the CIT(A) erred in deleting the disallowance of interest of `1,08,66,516/-.

3.

Brief facts of the case are that during the scrutiny proceedings, the AO has observed that the assessee has paid interest of `1,08,66,516/- to M/s. Grafton Merchant Pvt. Ltd. The AO has further observed that the interest paid to the Grafton Merchant Pvt. Ltd. was disallowed in the A.Y. 2013-14 as the assessee could not prove the credit worthiness of the lender and genuineness of loan transaction as the unsecured loan of `3,75,00,000/- taken from Grafton Merchant Pvt. Ltd. was treated as non- genuine transaction. Therefore, the AO has disallowed claim of interest of `1,08,66,516/ and added back to the total income.

M/s. H.K. Pujara Builders 4. Upon assessee’s appeal the learned CIT(A) referred to the order of the CIT(A) for A.Y. 2013-14 and held as under: -

“It is evident from the order of CIT(A)-37 that the loan of Rs.3,75,00,000/- is genuine. The A.O. has made addition of Rs.1,08,66,516/- on account of interest paid on loan. As the loans from the above mentioned party have been held to be genuine, the interest paid of Rs.1,08,66,516/- is also held to be genuine. Considering the earlier decision of CIT(A)-37, the A.O. is directed to delete the said addition. This ground of appeal is allowed.” Against the above order the assessee is in appeal before us.

5. At the outset it is noted that the aforesaid order of the learned CIT(A) for A.Y. 2013-14 is confirmed by the ITAT in for A.Y. 2013-14 vide order dated 22.02.2019. In this view of the matter there is no infirmity in the order of the learned CIT(A).

6.

Moreover, the tax effect in this case is below the limit fixed by CBDT vide Circular No. 17/2019 dated 8th August, 2019 for filing appeals before ITAT.

7.

In the result, the appeal filed by the Revenue is dismissed.

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