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आदेश/Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 28.12.2012 of the Commissioner of Income Tax (Appeals)-II, Ludhiana [hereinafter referred to as ‘CIT(A)’].
The assessee has taken the following grounds of appeal:- 1. That the order passed u/s 250(6) of the Income-tax Act, 1961 is against law and facts on the file in as much as the Ld. CIT(A) was not justified to arbitrarily uphold the addition of Rs. 10,60,000/- made by the Ld. Assessing officer by resort to provisions of section 2(22)(e) of the Income-tax Act, 1961.
That he was further not justified to arbitrarily uphold a disallowance of Rs. 23,92,670/- made by
ITA No. 97/Chd/2013- Sh. Vinay Singal, Ludhiana 2 the Ld. Assessing officer out of interest account by resort to provisions of section 36(i)(iii).
That he was also not justified to arbitrarily uphold the disallowance of Rs. 10,29,664/- out of interest account by resort the provisions of seciton14A.
Ground No.1 is against the conformation of addition on account of
deemed dividend u/s 2(22)(e) of the Income-tax Act, 1961 (in short 'the
Act') amounting to Rs. 10,60,000/-.
At the outset, the Ld. Counsel for the assessee has reproduced before
us a copy of the account of the assessee with the company namely M/s
Janpath Estates Pvt Ltd. in which the assessee admittedly has substantial
interest. The Ld. Counsel for the assessee has demonstrated from the
account sheet that it is not a case of loan or advance from the company as
such, rather, the assessee was having a running account with the said
company and often there was a credit balance of the assessee towards the
company. It was on a particular day that some amount was found debited
in the account of the assessee, however, immediately within next 10 days
there was again a credit balance of the assessee towards the company. In
the end of the year, there was a credit balance of Rs. 4.26 crores of the
assessee towards the company. After perusal of the above statement of
record, which the Ld. DR could not rebut, we are of the view that the
provisions of section 2(22)(e) of the Act are not attracted in this case.
In view of our above discussion, disallowance made by the lower
authorities on this issue is ordered to be deleted.
Ground No.2: Vide ground No.2, the assessee has agitated the
disallowance of Rs. 23,92,670/- made by the Assessing officer out of the
ITA No. 97/Chd/2013- Sh. Vinay Singal, Ludhiana 3 interest expenditure by resort to the provisions of section 36(i)(iii) of the
Act.
At the outset, the Ld. Counsel for the assessee has submitted that the
total amount advanced by the assessee was Rs. 3.79 cores, whereas, the
assessee’s own capital on the date of advancement was Rs. 13.77 crores,
which means the assessee was possessed of sufficient funds to meet the
aforesaid interest free advance. A perusal of the orders of the lower
authorities reveals that his fact has not been disputed by them.
In view of this, the issue is squarely covered by the decision of the
Hon'ble Jurisdictional High Court in the case of CIT Vs. Kapson
Associates (2016) 381 ITR 204 (P&H), and further by the recent
decision of the Coordinate Bench of the Tribunal in the case of ‘ACIT Vs.
Janak Global Resources Pvt Ltd’ ITA No. 470/Chd/2018 order dated
16.10.2018. Accordingly, the disallowance made by the lower authorities
is ordered to be deleted.
Ground No.3: The issue taken by the assessee in ground No.3 is
regarding disallowance out of interest expenditure u/s 14A of the Act.
As noted above, since the assessee has demonstrated that he was
possessed of own sufficient funds, hence, applying the same analogy as
discussed above, no disallowance u/s 14A of the Act on account of interest
expenditure is warranted. Admittedly the assessee has not claimed any
other expenditure in respect of administrative expenses; hence, no
disallowance can be made in that respect also. This issue is also
accordingly decided in favour of the assessee.
ITA No. 97/Chd/2013- Sh. Vinay Singal, Ludhiana 4 In the result, the appeal of the assessee is hereby allowed. Order pronounced in the Open Court on 28.11.2018.
Sd/- Sd/- ( बी , आर . आर . कुमार / B.R.R. KUMAR) (संजय गग� / SANJAY GARG ) लेखा सद�य/ Accountant Member �या�यक सद�य /Judicial Member
Dated : 28.11 .2018 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar