SH. GURVINDER SINGH GILL,CHANDIGARH vs. ITO, CHANDIGARH

In the present appeal Assessee has raised the following grounds:

The facts taken from the record are that the assessee is a Director in the company M/s Yamada Automation Pvt. Ltd. and claimed to have earned interest of Rs. 18,86,836/- on loan given to the said company. The assessee has claimed deduction of interest of the same amount against this income u/s 57 on account of interest paid to another company i.e. M/s India Infoline Financial

The arguments of the assessee that a loan of Rs. 5,50,00,000/- was taken by Yamada Automation Pvt. Ltd. and the assessee along with his family members as co applicants to the loan. The loan was recorded in the books of Yamada Automation Pvt. Ltd. in the name of the assessee his father arid brother. Since, the loan was taken against the personal property of assessee's family the same was shown as loan in the books of Yamada Automation Pvt. Ltd. in the manner as settled by the family members. The assessee derived interest on the loan raised from Yamada Automation Pvt. Ltd. So, much so, that even TDS has been deducted on the interest received.

The assessing officer has disallowed the same on the ground that the loan was received by Yamada Automation Pvt. Ltd. and since the above company had not deducted TDS u/s 194 of the Income Tax Act, 1961 on payment made to India Infoline Financial Ltd. the appellant had devised the above method to escape the provision of law and the arrangement was made in the books of the company to mislead the revenue. It was further held The assessee derived interest from Yamada Automation Pvt. Ltd. The interest was credited on 31.03.2012 and TDS was deducted on the same. Had, the intention been as stated by the assessing officer than the company would have deducted TDS to the account of India Infoline Financial Ltd. from whom the loan was raised in any case, TDS has been deducted on time and there is no default of the same. The company Yamada Automation Pvt. Ltd. could have deducted and deposited the TDS to the, account of India Infoline Financial Ltd. instead of the individual directors if that was the case.

Ld.CIT(A) confirmed the addition holding that on the one side interest income have been received from M/s Yamada Automation Pvt. Ltd. and on the hand interest was paid on the same loan amount to M/s India Infoline Financial Services. It was submitted that the loan amount of Rs. 2,24,99,164/- was received

Before us, the Ld. AR submitted copy of the reply dated 19/12/2014 filed before the Assessing Officer alongwith the following annexures:

Ld. DR strongly supported the orders of the Ld. CIT(A) and the Assessing Officer.

We find that the ledger accounts filed by the assessee give a contrary picture to the findings of the Assessing Officer. While the ledger account shows the journal entries made in the account of the assessee on loan account of India Infoline interest the material collected by the Assessing Officer shows that the India Infoline has directly disbursed the loan to the Yamada Automation Pvt. Ltd. The AR argues that the amount of loan has been adjusted among the three co-applicants of the loan mutually keeping into the consideration of liability to pay interest to the said financial institution and on the other side to receive the interest from Yamada Automation Pvt. Ltd. Further he argues that the co- applicants have made adjustment of the loan mutually and there is no doubt regarding the deposit of Rs. 2.24 Crores which is booked in the name of the assessee in the books of the Company. The AR explains that the reason being the to decrease the liability of the company already running in huge losses. While saying so it is also observed that the company is paying interest to the Director who in turn passed on the interest to the lending institution. To that extent the arguments of the Ld. AR cannot be said to have any valid grounds. The method and rationale of apportioning the loan received from India Infoline

Ground No. 2 of the appeal is against the addition of Rs. 8,88,400/- on account of agricultural income.

The addition was confirmed mainly on the basis that the assessee is not the owner of the agricultural land and the persons produced by the assessee are not cultivators as per land records of fard zamabandi and also the assessee failed to produce J Form issued in his name. The farmers namely Shri Ramesh Masith, Shri Bhupinder Pal Singh, stated that they are doing agricultural activities on contract basis on 20 / 18 Acres of land of Shri Kanwaljeet Singh, other persons namely Shri Balwinder Pal and Shri Jagjeet Singh stated that they are doing agricultural activities on contract basis on 21 /18 Acres of Land of Kanwaljeet Singh and the assessee and paying @ Rs. 40,000/- per Acre.

We hold that the earning of agricultural income cannot be disputed on the grounds that the J Forms are not in the name of the assessee as generally they are not issued in the name of the assessee or on the grounds that fard jama bandi doesn’t show the assessee as the owner of the agricultural land. The assessee could as well lease the lands and still can earned agricultural income. What is to be examined is the fact whether the assessee has earned income by the way of agricultural activities or not. While the Assessing Officer contents that fard jamabandi is not in the name of the assessee, the farmers stated that they have been doing agriculture on 78 Acres of agriculture land belonging to the assessee. The fact that how this 78 acres of land has been aggregated by the assessee, whether any agriculture land was owned by the assessee or leased by the assessee, if so any lease rentals have been paid by the assessee, the type of the crops cultivated on these lands either by the assessee or by the contract or sub contract farmers, the history of the assessee earning any agricultural income in the previous years has not been brought on record. Hence we restore the

As a result, appeal of the Assessee is allowed for statistical purposes.