What did the Tribunal hold?

The Tribunal found that the CIT(A) had not properly considered the documentary evidence submitted by the assessee. Therefore, in the interest of justice, the matter was restored back to the Assessing Officer for fresh adjudication.

The assessee claimed a deduction for interest paid on borrowed loans, which were advanced to a private limited company where he was a director. The Assessing Officer and CIT(A) disallowed this deduction, not considering the documentary evidence provided by the assessee.

What were the issues?

Whether the interest paid on borrowed funds, advanced to a related company, is deductible as an expense. Whether documentary evidence proving the nexus between borrowed and advanced loans was adequately considered.

Kartik S. Gandhi vs JCIT | ITAT Mumbai 2018

Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI D.T. GARASIA & SHRI RAJESH KUMAR

For Appellant: Shri Sanjay C. Shah, A.R

For Respondent: Shri Rajesh Kumar Yadav, D.R

Hearing: 09.01.2018Pronounced: 14.02.2018

Per D.T. GARASIA, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 19.08.2014 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.

The short facts of the case are that the assessee has filed the return of income declaring income of Rs.74,76,800/-. During the year under consideration assessee has earned interest income of 2 Shri Kartik S. Gandhi Rs.3,19,277/- on the loan advanced by him to M/s. Gandhi Automation Pvt. Ltd. where the assessee is a whole time director. For the said loan to M/s. Gandhi Automation Pvt. Ltd. the assessee has borrowed loans from outsiders and he has paid interest on the said borrowed loans amounting to Rs.3,18,794/- which he has claimed as a deduction by way of interest expense from interest income earned by him from the said M/s. Gandhi Automation Pvt. Ltd. There is no direct nexus between the loans borrowed and loans advanced. To prove this nexus, the assessee has submitted the copies of bank pass book/statements of the earlier years when these loans have been borrowed and immediately advanced to M/s. Gandhi Automation Pvt. Ltd. The Assessing Officer (hereinafter referred to as the AO) and the Ld. CIT(A) have not considered the documentary evidences and disallowed the same.

During the course of hearing, the Ld. A.R. submitted that assessee has submitted all the details before AO and the Ld. CIT(A) but without considering the same they have passed the order. Therefore, all the details may be verified by the AO and appeal may be restored to AO.

Ld. D.R. objected to it.

Having heard both the parties, we find that the Ld. CIT(A) has taken all these evidences on record but has not considered the documentary evidence which was filed before the AO and the Ld. CIT(A). Therefore, in the interest of justice and fairplay, we restore

In the result, appeal is allowed for statistical purposes.

Order pronounced in the open court on 14.02.2018.

KARTIK S. GANDHI,MUMBAI vs. JCIT 24(2), MUMBAI

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

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