RITU AGARWAL,BHILWARA vs. ACIT, CIRCLE, BHILWARA

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (SMC), JODHPUR

BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER

ITA No. 101/Jodh/2018 (ASSESSMENT YEAR-2014-15

Ritu Agarwal Vs Asstt. Prop. M/s Kanu Enterprises Commissioner of 45, Heena Panna Market Income Tax Cicle Pur Road, Bhilwara Bhilwara (Appellant) (Respondent) PAN: AFXPA5676E

Assessee By Shri Hemant Chhajed (CA) Revenue By Shri Shri A. K. Das (JCIT) DR Date of hearing 17/07/2018 Date of 19/07/2018 Pronouncement

O R D E R PER: R.C. SHARMA, AM

This is an appeal filed by the assessee against the order of

the CIT(A), Ajmer dated 25/01/2018 for the A.Y. 2014-15 in the

in the matter of order passed u/s 143(3) of the Income-tax Act,

1961 [hereinafter referred to as ‘the Act’, for short]. The

grounds raised by the assessee in appeal are reproduced as

under:

“1. The ld. Commissioner of Income Tax (Appeals) has erred in fact and

in law in confirming the action of the Assessing Officer in respect of disallowance

2 ITA 101/Jodh/2018 Ritu Agarwal, Bhilwara Vs. ACIT

of proportionate interest of Rs. 155370/- out of the total interest payment of

Rs. 456974/- in the personal capacity on hypothetical assumption.

facts in brief are that the assessee is engaged in the business of

manufacturing and trading of fabrics and yarn in the name of

proprietorship. During the course of scrutiny, the Assessing

Officer disallowed proportionate interest of Rs. 1,55,370/- out of

total interest payment of Rs. 4,56,974/-. From the record, I

found that assessee had taken loan in personal name and then

invested it in the business as capital.

has paid. The Assessing Officer declined the proportionate claim

on the plea that entire fund was not used for the purpose of the

business. I found that the total of assets other than the

investment in the business amounts to Rs. 7173710/- which is

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fully financed by the Assessee from the PNB housing loan and

interest free unsecured loans.

is from the capital of the assessee and interest bearing as well

as interest free unsecured loans. Further, the assessee has not

taken any new loan on which she had paid the interest during

the year under consideration. All these loans are taken in the

preceding years and no new loan is taken during the year under

consideration. The same was discussed and verified during the

proceeding carried u/s 143(3) for the Assessment year relevant

to the preceding previous year and was duly allowed. The

Assessee paid the interest of Rs. 456974/- after deduction of

TDS on the various unsecured loan taken for investment in

business by the Assessee.

confirmation of the unsecured loan along with the copy of

Income Tax Return and Bank statement at the time of

proceedings carried u/s 143(3) of Income Tax Act, 1961 and

said unsecured creditor showed interest income in their ITR.

The Assessment of the Assessee for the A.Y. 2013-14 was

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carried u/s 143(3) and the interest on the loan was duly

accepted and allowed by the ld. Assessing Officer at the time of

Assessment.

business, expenditure so incurred for securing the use of money

for the purpose of business is to be allowed as deduction while

computing business profits. Keeping in view the totality of facts

and circumstances of the case, I do not find any merit for the

proportionate disallowance of interest so made by the Assessing

Officer. Accordingly, the Assessing Officer is directed deleted

the disallowance of interest.

expenditure of 37,500/-. From the record, I found that the

during the course of business, assessee has incurred

expenditure on travelling expenses, delivery charges and office

expenses.

Officer made ad hock the disallowance of Rs. 75,000/- out of

these expenditure. By the impugned order by the CIT(A)

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confirmed the same to the extent of Rs. 37,500/- against which

assessee is further before me.

through the orders of the authorities below. Keeping in view the

reasons for the disallowance as given by the Assessing Officer vis a vis ld.

CIT(A) and also the nature of assessee’s business and the nature of

expenditure so incurred, I deem it appropriate to restrict the disallowance

to the extent of Rs. 5,000/-. I direct accordingly.

In the result, appeal of the assessee is allowed in part.

Order pronounced in the open court on 19/07/2018.

Sd/- [R.C. SHARMA] Accountant Member Dated : 19/07/2018 *Ganesh Kr. Copy to : 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File (ITA No. 101/Jodh/2018)

Assistant Registrar Jodhpur Bench