TaxTMI 
TaxTMI 
2021 (3) TMI 759
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.... in law as well on facts in denying the fact that the property are used for business purpose and confirming addition under the head income from House Property by determining fair market rentable rent on estimation basis. 3. Id. CIT(A) erred in law and in fact in confirming disallowance of Interest Expense of Rs. 1,79,154/- stating that appellant has not established that borrowed funds are utilized for purpose of business or any interest income received on funds advanced out of only borrowed funds." ITA No.364/RJT/2017 (Shri Ashwinbhai Chunilal Bhayani) "1. Ld. AO erred in law as well as on facts in disallowing entire transportation expenses of Rs. 16,90,417/- incurred against the transport income of Rs. 18,82,619/- and taxing the entire income without allowing any expenditure and Ld. CIT(A) erred in confirming the same. 2. Ld. CIT(A) erred in law as well on facts in denying the fact that the property are used for business purpose and confirming addition under the head income from House Property by determining fair market rentable rent on estimation basis. 3. Ld. CIT(A) erred in law and in facts in confirming disallowance of Interest Expense of Rs. 4,97,284/- stating th....
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....y of the truck operating agreement with JC & Co, along with supporting bills/vouchers to prove their claim. The assessee has also given point wise detailed reply in tabular form, which the ld.CIT(A) has noticed in his impugned order from page no.12 to 15, and they read as under: " Ref. of Asstt.Order Reasons given by AO Appellant's submission Para no 2.0 During the course of scrutiny proceedings it was observed that the assesses has claimed expense of Rs. 16,76,910/- in transport business from a truck having no. GJ10X8741. However, the assessee is not having this asset in his balance sheet for A.Y.2013-14 on which the said expense can be occurred. Assessee vide letter dated 16/03/2016 stated that he had taken Truck bearing no. GJ-10X-8741 on hire from M/s. Jayantilal Chatrabhuj & Co. so the asset was not reflected as asset in the balance sheet. Para no.2.1 It is noticed that with the letter dated the assessee has neither submitted that from whom the truck was taken on hire nor he has submitted any contract/agreement or any other supporting documents which can prove the plea of the assessee that he has taken the truck on hire/rent. However, the assessee in his lett....
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....see nor the asset details of M/s. J C & Co was provided which indicate that the said truck was of M/s. J C & Co. It is the assessee who has to prove that what he is saying is true. The onus is on the assessee to prove that he has taken the truck of M/s. J C & Co. On hire. The assessee has not successfully discharged the onus. Truck bearing no. GJ-10X- 8741 belongs to M/s. Jayantila lChatrabhuj& Co. Copy of registration certificate is enclosed herewith at page no. __ of the paperbook. Assessee had taken Truck bearing no. GJ-1 OX-8741 on hire from M/s. Jayantila/Chatrabhuj& Co. The copy of tanker truck operating agreement entered between J C & Co and appellant is enclosed herewith at page no. _____ of the paperbook. Para No.2.4 The bills / vouchers which were provided by the assessee were raised in the name of M/s. J C & company. Not a single bill was raised in the name of assessee. As per the truck operating agreement M/s. J C & Co. would pay advance to driver on behalf of appellant and would incur expenditure on behalf of appellant. Hence, all the bills / vouchers which were provided by the assessee were raised in the name of M/s. J C & company and not appellant. Vouc....
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....P & L A/C WHICH IS SHOWN AS TYRE EXPENDITURE BY MISTAKE. THE EXPENSE INCURRED ON TYRES OF Rs. 1,18,740/- RELATES TO PURCHASE OF NEW TYRES AND OTHER EXPENSE RELATE TO IT ETC. THE COPIES OF ALL THE BILLS ARE ENCLOSED HEREWITH ' AT PAGE NO. _____ OF THE PAPERBOOK. THE APPELLANT HAS BY MISTAKE CLASSIFIED ALL THE TYRE EXPENSES INCURRED DURING THE YEAR UNDER CONSIDERATION UNDER THE COMMON -HEAD "TIRE PUNCTURE EXPENSE". IT IS SEEN FROM THE PROFIT AND LOSS ACCOUNT OF THE APPELLANT THAT THERE IS ONE MORE EXPENDITURE 'TYRE EXPENDITURE' OF Rs. 5,850/- WHICH ACTUALLY RELATES TO PUNCTURE EXPENSE. IT WAS WRONGLY NAMED AS 'TYRE EXPENDITURE'. SUPPORTING VOUCHERS FOR THE SAME WERE ALSO PRODUCED BEFORE LD. AO. HOWEVER, AO FAILED TO APPRECIATE THE SAME. THE COPY OF LEDGER ACCOUNT OF TYRE EXPENDITURE AND TYRE PUNCTURE EXPENDITURE IS ENCLOSED HEREWITH AT PAGE NO. OF THE PAPERBOOK. Para no.2.7 This can be say that the assesses no. 2.7 has not earned this income from the transportation of the truck but from any other source which is dest known to the assessee. The assesses was not able to justify the source of the income shown by the assessee. It is on the assessee to prove that w....
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....the expenditure against the income earned by the assessee were before them, however, the same were not considered by the ld.CIT(A). Copy of log book maintained by the JC & Co. for truck trips showed that the assessee was carrying on business of transportation on regular basis, and the income thereof has been shown in the return every year, which were accepted by the Department in those years. It is further submitted that, addition if at all to be made, then the same should be on the net profit earned by the assessee from the business and not the entire gross transportation income. The assessee has given agreed hire rental charges to the said JC& Co. which was not disputed by the Revenue authorities. The Revenue authorities simply brushed aside claim of the assessee without considering the facts supported by evidences provided by the assessee. Since the claim of the assessee being genuine supported with material evidences, therefore same requires to be allowed. On the other hand, the ld.DR supported orders of the Revenue authorities. 7. We have considered rival submissions and gone through the orders of the Revenue authorities and other materials placed on record including the subm....
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....s. No sincere efforts have been put in by the ld.CIT(A) to examine the claim of the assessee, though requisite details were placed before him. After considering the facts and circumstances of the case in totality, supported by the evidences submitted by the assessee, we find that action of Revenue authorities in disallowing the claim of the assessee for transport expenses of Rs. 16,76,190/- cannot be sustained. We, therefore, reverse their orders, and allow this ground no.1 of assessee appeal. 8. As far as facts in case of Ashwin Chunilal Bhayani is concerned, they are same except quantum, therefore, identical treatment be made in this case also. 9. As regards second ground regarding income from house properties are concerned, it was observed by the AO, the assesseees have shown details of immovable properties held by them being land and buildings. The ld.AO noticed the details of these properties along with their value as per the balance sheet, in page no.5 of respective impugned orders. The assessees claimed that these land/buildings were used by them as residence and for business activities, and no income earned to them. However, the AO was of the view that since no proof of b....
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....d hence made an addition under the head income from house property of Rs. 4,62,000/-. With regard to this ground of appeal, I agree with the findings of the AO as given in the assessment order that no business activities have been carried on by the appellant from any of the premises. This is also in view of the facts as discussed in detail in earlier paragraphs of this appeal order. There is on record to show that any premise has been used by the appellant for his transportation business. In view of this it is held that fair market rentable value of the house properties of the appellant are required to be taken. However, in my opinion, the AO has taken the fair market rentable value without any basis and has not worked out such fair market rentable value by taking any instance of nearby area. The fair market rentable value taken by the AO for the properties appears to be on hire side. In view of this, the AO is directed to take fair market rentable value of land of Ajmera estate ( i.e. shop 3) at Rs. 12,0007- per month instead of Rs. 20,000/- per month and accordingly tax the income from house property after giving the standard deduction. 6.1 As regards land of Ajmera estate, Ra....
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.... assessee regarding user of these buildings and land for the purpose of business simply for the reason that the assessee failed to submit any evidence demonstrating the fact that these premises were used for any business purpose. In the case of Anilbhai Chunilal Bhayani, the ld.AO at page no.6 of the assessment order has observed that there is no letter head provided by the assessee showing the fact that address of its shops/godowns is being displayed on the letter-head of JC & Co. In other words, the ld.AO was expecting that the assessee should produce some secondary evidence in the shape of letter head, electricity bills showing that the premises were used for the purpose of business. To our mind, these reasoning are fallacious. The assessee has been pleading that premises has been used for business purpose. The AO should have deputed someone to inspect the sites. By simply sitting in the office, he just assigned the reason that I don't agree with your submission. This type of simple denial of the claim is not sustainable in the eyes of law. The statement of facts made by the assessee has to be rejected on the basis of some investigation. The AO has rejected the statement of fact....
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....apital) 2,67,939 3 Interest from HarshitBhayani 17,233 4 Professional income from M/s. J C & Co. 3,00,000 5 Interest paid on unsecured loan to - Anil Bhayani (HUF) 2,97,966 - ChunilalBhayani (HUF) 1,68,841 Jankibenbhayani 35,668 Vamaben Anil Bhayani 1,09,290 Others 14,039 JayantilalChatrabhuj & Co. 65,686 Total 8,29,569 6,91,490 3. The Ld. AO completely disallowed the interest expenditure of Rs. 6,91,490/- however the Hon'ble CIT(A) directed the AO to find out as to whether the appellant has advanced funds to M/s. Janki Land Developers and M/s Anand Agencies only 'out of the borrowed funds on which the interest of Rs. 6,91,490/- is being claimed. If the appellant has received the interest of Rs. 5,12,336/-( Rs. 2,44,397/- from Anand Agencies and Rs. 2,67,939/- from Janki Land Developers) on the advances made to the above two concerns which are made out of such borrowed funds, then the AO is directed to allow the interest expenses to the extent of Rs. 5,12,336/-against the interest i....
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....nvested because the table has already been given stating the interest paid and interest received and showing that full amount of borrowed funds on which interest of Rs. 6,91,490/- has been paid been invested at one or the other place. 8. Thus the professional income shall be allowed proportionate considering the commercial expediency. Thus, the disallowance of interest on borrowed funds of Rs. 1,79,514/- should be deleted." 17. Similarly, with regard to ground no.3 in ITA No.364/RJT/2017 is concerned, the submissions made by the assessee read as under: "Ground No. 3: Ld. CIT(A) erred in law and in facts in confirming disallowance of Interest Expense of Rs. 4,97,284/- stating that appellant has not established that borrowed funds are utilized for purpose of business or any interest income received on funds advanced out of only borrowed funds. 1. The appellant has earned interest of Rs. 1,17,226/- from partnership firm. Appellant also receives interest income from sister concern and other entities against advances given during the year of Rs. 3,10,710/-. Over and above his transport business appellant also provides his services in M/s. J C & Co. which is also engaged in tra....
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....usiness or profession. 8. Further, with respect to professional income earned by appellant we submit that inadvertently appellant has considered income under the head income from other sources instead of income from 'business or profession. If the same has been considered under business, expenses claimed should be allowed in view of commercial expediency. We request your Honour to consider the professional income under the head income from business and profession and allow the expenses claimed. 9. As laid down by Hon Supreme Court, for allowance of a claim for deduction of interest under this provision following three conditions are there: (i) The money, that is capital, must have been borrowed by the assessee (ii) It must have been borrowed for the purpose of business. (iii) The assessee must have paid interest on the borrowed amount i.e. he has shown the same as an item of expenditure. 10. All the above conditions have not been disputed by Hon. CIT(A) and hence, deduction of expenditure from interest on capital from partnership firm should be allowed. 11. Hon'ble Supreme Court in the case of S. A. Builders Ltd. Vs. CIT(A), Chandigarh reported in 288 I....