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Income Tax Appellate Tribunal, MUMBAI “E” BENCH, MUMBAI
Before: SHRI SHAILENDRA KUMAR YADAV, JUDICIAL & SHRI RAJESH KUMAR.
अपीलाथ� क� ओर से /By Appellant : Shri Hari S. Raheja, A.R. ��यथ� क� ओर से/By Respondent : Shri Vinod Kumar, D.R. सुनवाई क� तार�ख/Date of Hearing : 16.06.2016 घोषणा क� तार�ख/Date of Pronouncement : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-23, Mumbai, dated 10.03.2014 for A.Y. 2009-10 on following grounds:
“1. On the facts and in the circumstances of the case and in law the CIT(Appeals) grossly erred in A.Y. 09-10 [Mrs. Sushila A. Kataria vs.ITO] Page 2 confirming the disallowance of interest made by the Assessing Officer in respect of Shri Rahul Shah, and in holding that the loan is out of interest bearing funds.
On the facts and in the circumstances of the case and in law, the CIT(Appeals) was not justified in confirming the addition made by the Assessing Officer on account of cash deposited in the bank and in holding that there was a long gap between the period of withdrawal and redeposit, and hence the explanation does not appear to be logical.”
2. Assessing Officer observed that assessee had shown interest receipt of Rs.6,68,843/- and had claimed interest expenses of Rs.1,98,804/-. However, on verification it was found that assessee had received interest o fRs.11,21,499/- and had claimed interest expenses of Rs.6,44,461/-. Assessing Officer further found that some of the interest bearing funds had been utilized for investment and other activities on which no interest had been received. Assessee was issued show cause notice to explain as to why interest expenses claimed should not be disallowed as related to other activity on which no interest had been received. Assessing Officer observed that assessee did not file any submission nor had any co-relation been filed of utilization of interest bearing funds to justify the claim of interest expenses of Rs.6,44,641/- as related to interest earning activity. In view of the same, Assessing Officer held that assessee had diverted the interest bearing funds for other than interest earning purposes. Therefore, he disallowed the amount of Rs.3,05,945/-. A.Y. 09-10 [Mrs. Sushila A. Kataria vs.ITO] Page 3 2.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted partial relief to assessee.
2.2 The stand of assessee has been that loan of Rs.15 lacs given to Shri Rahul K. Shah, confirmation of accounts have been submitted and which reveals that no interest has been received as the said party was unable to pay the principal amount and with great difficulties assessee managed to get back principal amount.
Assessee has filed photocopy of the cheque of Rs.15 lacs received from said part after loan made without interest, which has not been disputed by assessee and the stand of assessee has been that since party was in a distress position, so, he was not in position to pay interest. Nothing contrary was brought on behalf of Revenue that creditor was not in position to pay interest. He hardly managed to give back the similar amount, so it is a reasonable case for not charging interest from him. Assessing Officer is directed accordingly.
Next issue is with regards to cash deposited in bank. The stand of assessee has been that the deposit of Rs.1 lac on 9th March, 2008 and Rs.1 lac on 10th March, 2008 was out of the cash withdrawal of Rs.3 lacs made on 2nd February, 2008. Rs.1 lac was given to her daughter Sonal Kataria as a temporary loan which was returned and deposited in the A.Y. 09-10 [Mrs. Sushila A. Kataria vs.ITO] Page 4 bank. Assessee has deposited a sum of Rs.1 lac out of cash in hand available in the balance sheet was the 31st March 2008 which balance sheet is a part of the record of the return for A.Y.2008-09 and not refuted by Assessing Officer in any manner. In this factual background, Assessing Officer was not justified in making addition in question. Same is directed to be deleted.
As a result, appeal filed by assessee is allowed.
Pronounced in the open Court on this the 24th day of June, 2016.
Sd/- Sd/- (RAJESH KUMAR) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: Dated 24/06/2016 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार, आयकर अपील�य अ�धकरण, मुंबई ।