The ACIT, Bhopal v. M/s. Agarwal Jewellers, Bhopal

ITA 508/IND/2009 | 2004-2005
Pronouncement Date: 28-05-2010 | Result: Dismissed

Appeal Details

RSA Number 50822714 RSA 2009
Assessee PAN AAFFA7758N
Bench Indore
Appeal Number ITA 508/IND/2009
Duration Of Justice 6 month(s) 25 day(s)
Appellant The ACIT, Bhopal
Respondent M/s. Agarwal Jewellers, Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-05-2010
Assessment Year 2004-2005
Appeal Filed On 03-11-2009
Judgment Text
PAGE 1 OF 4 -. I.T.A.NO. 508/IND/2009 M/S.AGARWAL JEWLLERS BHOPAL. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : AAFFA7758N I.T.A.NO. 508/IND/2009 A.Y. : 2004-05 ACIT M/S.AGARWAL JEWELLERS 2(1) VS JAWAHAR BHAWAN TT NAGAR BHOPAL. BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SMT.APARNA KARAN CIT DR RESPONDENT BY : SHRI R.N. GUPTA CA. DATE OF HEARING : 26.05.2010 O R D E R PER V.K. GUPTA A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A)-I BHOPAL DATED 19.01.2009 FOR THE ASSESS MENT YEAR 2005-06. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO. 1 READS AS UNDER :- ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 16 72 318/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE INT EREST PAGE 2 OF 4 -. I.T.A.NO. 508/IND/2009 M/S.AGARWAL JEWLLERS BHOPAL. WHICH WAS PAID TO THE PERSONS WHO WERE NOT PARTNERS AS PER THE PARTNERSHIP DEED DATED 21.3.1996 AND THUS WAS BEYOND THE PURVIEW OF THE PARTNERSHIP DEED ? 4. THE FACTS IN BRIEF ARE THAT THERE WERE FUNDS OF S HRI RAJ MOHAN AGARWAL AND SHRI SHASHI MOHAN AGRAWAL HUF WITH THE ASSESSEE FIRM AND THE ASSESSEE FIRM PAID INTEREST THEREON @ 12 %. THE AO HELD THAT THE INDIVIDUAL PERSONS WERE THE PARTNERS. HENCE THE IN TEREST PAID ON FUNDS BORROWED FROM HUF WAS NOT ALLOWABLE. AGGRIEVED BY T HIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO HELD THAT THERE WAS NO DISPUTE AS REGARD TO UTILIZATION OF SUCH FUNDS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE FIRM. HENCE THE INTEREST ON SUCH FUND WAS ALLOWABLE U/S 36(1)((III)/37 OF THE INCOME-TAX ACT 1961. ACCORDI NGLY HE DELETED THE IMPUGNED ADDITION. AGGRIEVED BY THIS THE REVENUE I S IN APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING THE LD. SR. DR RELIED ON THE ORDER OF THE A.O. WHEREAS THE LD. COUNSEL FOR THE ASSESS EE RELIED ON THE ORDER OF THE LD. CIT(A). 6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 7. IT IS NOTED THAT THE IMPUGNED FUNDS HAVE BEEN BORRO WED FORM THE HUF OF INDIVIDUAL PARTNERS AND THE UTILIZATION OF SUCH FUNDS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE FIRM IS NOT IN DISPUTE. HENCE SUCH PAGE 3 OF 4 -. I.T.A.NO. 508/IND/2009 M/S.AGARWAL JEWLLERS BHOPAL. INTEREST IS ALLOWABLE AS BUSINESS EXPENDITURE. ACCO RDINGLY WE CONFIRM THE FINDINGS OF THE LD. CIT(A). HENCE THIS GROUND OF THE REVENUE IS DISMISSED. 8. GROUND NO.2 READS AS UNDER :- ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13 64 350/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE DISALLOWANCE OF SHARE IN PROFIT PAID TO THE PERSONS WHO WERE NOT PARTNERS AS PER THE PARTNERSHIP DEED DATED 21.3 .1996 AND THUS WAS BEYOND THE PURVIEW OF THE PARTNERSHIP DEE D ? 9. THE FACTS IN BRIEF ARE THAT THE ULTIMATE FACT AS ACCEPTED BY BOTH THE PARTIES IS THAT THE ASSESSEE FIRM DID NOT CLAIM ANY DEDUCTION ON ACCOUNT OF SHARE OF PROFITS CREDITED TO THE PARTNER S ACCOUNT. HENCE IN OUR VIEW THERE CANNOT BE ANY DISALLOWANCE OF THE SAME. ACCORDINGLY WE CONFIRM THE FINDINGS OF THE LD. CIT(A)IN THIS REGAR D. THUS THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS D ISMISSED. PAGE 4 OF 4 -. I.T.A.NO. 508/IND/2009 M/S.AGARWAL JEWLLERS BHOPAL. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH MAY 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :28 TH MAY 2010. CPU* 265