Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “C+SMC”: NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A)-16, New Delhi for the Assessment Year 2013-14. The assessee has raised effectively 5 grounds of appeal out of which ground No. 1, 2 5 and 6 are not pressed, therefore, only ground No. 3 and 4 remains which are as under:- “3. That the order of the ld CIT(A) u/s 250(6) of Income Tax Act on account of disallowance of interest of Rs. 3,33,361/- is unjustified and should be deleted.
4. That the order of CIT(A) u/s 250(6) of Income Tax Act on account of addition of drawings for household expenses of Rs. 4,77,530/- is unjustified and should be deleted when case has been selected through CASS on the point of exempted income.”
Brief facts of the case is that the assessee is engaged in the business of trading of cloth. During the year the assessee paid bank interest of Rs. 349923/-. The ld AO noted that the assessee has an investment of Rs. 12617518/-. Therefore, the ld AO noted that the assessee has utilised interest bearing loan funds in the form of secured loan and overdraft loan Jitender Dhawan Vs. ITO (Assessment Year: 2013-14) for the purpose of investment in the non interest bearing investments. Therefore, according to him the proportionate interest is not allowable to the assessee as deduction from business income. The ld AO held that non-interest bearing funds in the form of capital plus net profit and non interest bearing unsecured loan amounting to Rs. 3993669/- are not sufficient for investment in business in fixed assets and investment of Rs. 13329577/- and therefore, he proportionately disallowed the sum of Rs. 333361/- out of interest expenditure. The ld CIT(A) on appeal upheld the order of the ld AO. Therefore, the assessee is in appeal before us on this issue.
The ld AR vehemently stated that the interest expenditure are allowable because the assessee has non-interest bearing funds available with it in the form of unsecured loan of the relatives then the amount of investment made during the year. It was stated that amount of interest bearing loan are utilised for the purpose of business of the assessee. He further stated that in the preceding year identical disallowance was made and same was deleted by the ld CIT(A). He further stated that investment made during the year of Rs. 17.76 lakhs are far less than non interest bearing unsecured loan of Rs. 19.36 lakhs of the assessee. 4. The ld DR vehemently contested the argument of the ld AR and relied upon the orders of the lower authorities. 5. We have carefully considered the rival contentions and also perused the orders of the lower authorities. Apparently, the assessee has made interest expenditure of Rs. 349923/-. The assessee has made an investment of Rs. 1.26 crores in plot and lands and other securities. The ld AO held that the assessee did not have non interest bearing funds more than investment which does not yield any interest. Therefore, he disallowed Rs. 333361/-. It is submitted that in the earlier years identical disallowances were made and same was deleted by the ld CIT(A) and admittedly revenue could not show us that whether the same has been contested or not. We have also perused the order for Assessment Year Jitender Dhawan Vs. ITO (Assessment Year: 2013-14) 2012-13 of the ld CIT(A) where 2nd ground of appeal
on identical facts, the ld CIT(A) has deleted the same. The ld DR could not show us any deviation in the facts. In view of this we do not find any reason to sustain the addition for this year. For this reason alone we reverse the finding of the ld CIT(A) and allow ground No. 3 of the appeal of the assessee.
6. The ground No. 4 and issue No. 2 in the appeal is regarding addition on account of household expenditure of Rs. 477530/-. The ld AO noted that the assessee has shown withdrawal of Rs. 122470/-. The assessee was questioned for low household withdrawal. The assessee submitted that a sum of Rs. 265766/- has been contributed for the same and his wife contributed Rs. 1,20,000/-. He also submitted the PAN of his wife. The ld AO did not agree with the same and stated that the assessee is living in posh locality and huge investment shows that the assessee has undisclosed source of income and out of which he estimated the household expenditure of Rs. 50,000/- per month.
7. Consequently, he made an addition of Rs. 477530/-. The ld CIT(A) also confirmed the above addition. The ld AR submitted that wife of the assessee has withdrawn Rs. 120000/- and no credit for which has been given by the ld AO.
8. We have carefully considered the rival contentions and also perused the orders of the lower authorities. In the present case the assessee has shown household withdrawals of Rs. 265776/- from his own account where the drawings in cash were shown of Rs. 120000/- and other expenses were incurred by cheque. The wife of the assessee has withdrawn a sum of Rs. 1,20,000/-. The ld Assessing Officer while making the addition has firstly not granted the benefit of Rs. 1,20,000/-. The ld AO has further estimated the household expenditure @50,000/ per month just for the reason that assessee has made huge investment in properties and business assets. The ld AO was also swayed that assessee was residing in one of the posh localities. In any way no expenditure of household was found to be incurred outside books by the assessee. The ld