Shri Dharam Veer Yadav, New Delhi v. Addl. CIT, New Delhi

ITA 4843/DEL/2009 | 2006-2007
Pronouncement Date: 25-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 484320114 RSA 2009
Bench Delhi
Appeal Number ITA 4843/DEL/2009
Duration Of Justice 2 month(s) 1 day(s)
Appellant Shri Dharam Veer Yadav, New Delhi
Respondent Addl. CIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 25-02-2010
Date Of Final Hearing 24-02-2010
Next Hearing Date 24-02-2010
Assessment Year 2006-2007
Appeal Filed On 24-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI R.C. SHARMA I.T.A. NO. 4843/DEL/2009 ASSESSMENT YEAR: 2006-07 SHRI DHARAM VEER YADAV VS. ADDITIONAL C OMMISSIONER OF IT H4/9 MODEL TOWN RANGE-20 DELHI-1100 09 NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI BL GUPTA AR RESPONDENT BY: SHRI MANISH GUPT A DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 16.11.2009 PASSED FOR ASSESSMENT YEAR 2006-07. IN THE FIRST GROUND OF APPEAL IT IS PLEADED BY THE ASSESS EE THAT LEARNED CIT(APPEALS) HAS ERRED IN UPHOLDING THE ADDITION OF RS.2 59 200. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL CARRYING ON THE BUSINESS OF PROVIDING MAINTENANCE S ERVICES IN THE NAME OF M/S. NIRVAN SERVICES AND ALSO RUNNING OF VEHICLES O N HIRE IN THE NAME OF M/S. NIRVAN TRAVELS. HE HAS FILED HIS RETURN OF INC OME ON 31.10.2006 DECLARING AN INCOME OF RS.39 35 420. ON SCRUTINY OF THE ACCOUNT THE 2 ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS AD VANCED A LOAN OF RS.21 60 000 WITHOUT CHARGING ANY INTEREST. HE FURT HER HELD THAT IN ASSESSMENT YEAR 2005-06 IT HAS BEEN CONSTRUED THAT ASSESSEE HAS DIVERTED ITS BORROWED FUNDS WITHOUT CHARGING INTEREST AND PROPOR TIONATELY INTEREST EXPENSES WERE DISALLOWED TO THE ASSESSEE. ASSESSING OFFICER FURTHER OBSERVED THAT INTEREST RATE AT THE RELEVANT TIME CL AIMED BY THE ASSESSEE WHILE PAYING INTEREST ON THE BORROWED FUNDS WAS 12%. HE A PPLIED THIS RATE TO THE LOANS GIVEN BY THE ASSESSEE ALLEGEDLY WITHOUT CHARG ING ANY INTEREST AND WORKED OUT A DISALLOWANCE OF RS.2 59 200. 3. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT SIMILAR DISALLOWANCE WAS MADE IN ASSESSMENT YEAR 20 03-04. THE DISALLOWANCE WAS DELETED BY THE LEARNED CIT(APPEALS ) AND IT WAS UPHELD BY THE ITAT IN ITA NO.1354/DEL/07. HE FURTHER CONTENDE D THAT IN ASSESSMENT YEAR 2005-06 EXACTLY RS.21 60 000 WERE TREATED AS ADVANCED BY THE ASSESSEE TO NEAR AND DEAR WITHOUT CHARGING ANY INTEREST. A D ISALLOWANCE OF RS.2 59 200 WAS MADE IN ASSESSMENT YEAR 2005-06. TH IS DISALLOWANCE WAS DELETED BY THE LEARNED CIT(APPEALS). HOWEVER ON AN APPEAL BEFORE THE 3 ITAT AT THE INSTANCE OF THE REVENUE THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION. HE PRA YED THAT THIS ISSUE BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H ADJUDICATION. LEARNED DR ON THE OTHER HAND CONTENDED THAT FACTS IN ASSESSME NT YEAR 2003-04 ARE ALTOGETHER DIFFERENT. IN THAT YEAR THE ASSESSEE WA S ABLE TO DEMONSTRATE THAT HE HAS NOT USED INTEREST BEARING FUNDS FOR NON-BUSI NESS PURPOSES BUT THOSE FACTS ARE NOT AVAILABLE IN THE ASSESSMENT YEAR THE REFORE ASSESSEE CANNOT DREW ANY BENEFIT FROM THE ORDER OF THE ITAT IN ASSE SSMENT YEAR 2003-04. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. ASSESSING OFFICER HAS NOT RECORDE D ANY INDEPENDENT FINDING IN THIS ASSESSMENT YEAR. HE ONLY OBSERVED THAT ASSE SSEE HAS ADVANCED LOANS OF RS.21 60 000 WITHOUT CHARGING ANY INTEREST. IT I S NOWHERE DISCERNIBLE HOW MUCH LOAN AND ADVANCES HAVE BEEN TAKEN BY THE ASSES SEE FOR THE PURPOSES OF THE BUSINESS HOW MUCH INTEREST HE IS PAYING AND WH ETHER THERE IS DIRECT NEXUS BETWEEN THE INTEREST BEARING FUNDS AND THEIR UTILIZATION FOR NON- BUSINESS PURPOSES. ALL THESE FACTORS ARE RELEVANT F ACTORS FOR MAKING ANY DISALLOWANCE OF INTEREST EXPENSES CLAIMED BY AN ASS ESSEE. THEREFORE WE SET ASIDE THE ORDER OF THE ASSESSING OFFICER RESTORE TH E ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION. HE SHALL DECI DE THE ISSUE IN ACCORDANCE 4 WITH LAW. IT IS NEEDLESS TO SAY THAT THE OBSERVATIO NS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF A.O. OR WOULD CAUSE AN Y PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. 6. IN THE SECOND GROUND ASSESSEE HAS PLEADED THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE AT 20% OUT OF EXPENSES CLAIMED ON CAR LOAN INSURANCE VEHICLE RUNNING AND MAINTENANC E EXPENSES ON ACCOUNT OF POSSIBILITY OF PERSONAL USER OF THESE FACILITIES. T HE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL AT THE TIME OF HEARING HENCE IT IS REJECTED. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 25.02.2010 ( R.C. SHARMA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25/02/2010 MOHAN LAL COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR