TaxTMI 
TaxTMI 
2018 (12) TMI 2024
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....ciating the facts of case of appellant. 2. In law and in the facts and circumstances of the appellant's ease, the learned CIT(A) has grossly erred in upholding the disallowance of interest paid of Rs 5,85,383/- u/s 57(iii) which by the appellant's own admission had been wrongly claimed under that the said section and he had further erred in also not allowing the claim of the appellant for deduction of the said interest paid under section 36(1)(iii) of the Act. even though the appellant, by the documents filed, had established the nexus between the loan taken and the utilization thereof for the purpose of the appellant's business. 3. The appellant craves leave to add. alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 3. The solitary issue raised by the assessee is that ld. CIT(A) erred in not allowing the deduction of Interest Expenses amounting to Rs.5,85,383/- u/s 36(1)(iii) of the Act. 4. Briefly stated facts are that the assessee in the present case is a HUF and engaged in the wholesale business of cloth under the name and style of M/s. Ridhi Sidhi Traders. The assessee is....
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....in the A.Y. 2012-13 and accordingly, interest expense was also incurred in the A.Y. 2012-13. There was no disallowance of interest expenses claimed by it in the intimation issued under Section 143(1) of the Act. 5.1 The assessee further claimed that the amount received by it from Rishabh Enterprises was transferred to Ridhi Sidhi Traders a proprietor concern of the Assessee. As such, there was a separate set of the Financial Statement prepared by the assessee for its share trading activity as well as its proprietary concern. The assessee also contended that it never prepared any consolidated financial statement for both the concern. Therefore, the assessee has not shown any interest income from its proprietary concern, but the interest expenses paid to Rishabh Enterprises was claimed as expenditure in its personal financial statement. 5.2 The loan taken by the assessee was transferred to M/s Ridhi Sidhi Traders, and the AO did not dispute this fact during the assessment proceedings. 5.3 The assessee also claimed that the expenses were claimed u/s 57(iii) of the Act wrongly, but it should have been claimed under the provision of Section 36(1)(iii) of the Act. However, if th....
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....0 of the Paper Book by the appellant. Therefore, there Is no force even In the alternative argument of the appellant ground also dismissed. In the result, the appeal is dismissed." Being aggrieved by the order of ld. CIT(A) assessee is in appeal before us. 6. The ld AR before us filed a paper book running from pages 1-49 and submitted that the fund received from Rishabh Enterprises were utilized for the purpose of the business. Therefore, it is very much eligible for deduction u/s 36(1)(iii) of the Act. The ld. AR in support of his claim drew our attention on page 24 of the paper book which is the bank statement of the assessee reflecting the loan received and paid to Ridhi Sidhi Enterprises. 6.1 The ld. AR also submitted that the finding of the AO that there was a mismatch between the dates of received of loan vis-à-vis loan transfer to M/s. Ridhi Sidhi Enterprises is incorrect. As such, the loan was transferred by the assessee to M/s. Ridhi Sidhi Enterprises on the very same date when it was received. 6.2 The ld. AR also submitted that the proprietor of Rishabh Enterprises has already shown the amount of interest income received from the assessee. The ....
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.... 50,000.00 26/11/2012 BP-222258 6,00,000.00 27/11/2012 BP-222259 3,00,000.00 28/11/2012 BP-222260 5,50,000.00 30/11/2012 BP-222261 15,00,000.00 03/12/2012 BP-222262 5,00,000.00 14/12/2012 BP-222266 3,50,000.00 18/12/2012 BP-222267 12,00,000.00 03/01/2013 BP-130301 Chq/DD#: 82755 NNSB 50,000.00 11/02/2013 BP-359883 2,00,000.00 22/03/2013 BP-359889 80,000.00 31/03/2013 BP-153103 TDS ON 58,538.00 INTEREST 31/03/2013 BP-153103 INTEREST CR. UPTO 31.03.2013 5,85,383.00 GRAND TOTAL: 69,38,538.00 69,88,915.00 CLOSING BALANCE: 50,377.00Cr. 8.3 We also note that M/s Ridhi Sidhi Traders made the payment to M/s Rishabh Enterprises. Therefore there was shown the amount withdrawn in the balance sheet of Ridhi Sidhi Traders. The relevant extract of the balance sheet is reproduced under: Ridhi Sidhi Traders Ashokkumar HUF SCHEDULE "1" OF OWNERS CAPITAL 31.03.2013 31.03.2012 Opening Balance 8....
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....have omitted to claim for some reason or other. b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. (Circular No. 14(XL-35) of 1955 dated 11.04.1955)" Further, we rely upon the decision of the Supreme Court in Navnit Lal C. Javeri v. K. K. Sen, Appellate Assistant Commissioner of Income tax [1965] 56 1TR 198 (SC). There the majority of the learned judges hearing the appeal held that circular issued by the Central Board of Revenue, of the kind of circular mentioned therein, would be binding on all. Further in view of the decision of Hon'ble Calcutta High Court in the case of ICICI Bank Ex-Employees' Welfare Association (Supra), in our considered opinion, the claim of the assessee merits to be allowed. We find that the CBDT vide its circular no. 14(XI-35) of 1955 dated 11.04.1955 opined that the officer of the department must not take advantage of the ignorance of an assessee as to his rights and that although the responsibility for claiming refunds and reliefs rests with the assesses ON WHOM it is imposed by law, yet (a) the officers should draw the....
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....to by Learned A.O. viz. "Kalandi Investment Pvt Ltd." reported as 260 ITR 261 is not applicable to the fact of the assessee case because the Learned Hon'ble Judges of the High Court remarked that if the borrowing had been utilized not for the purpose of making or earning taxable income the interest paid thereupon shall not be allowed as deduction but in the ease of the assessee such loans were utilized for the purpose of business and as such the above referred case, the purpose of which the borrowing have been made stood frustrated, hence the disallowance of this interest was confirmed. In the case of the assessee, the facts are different because the borrowing were utilized for business. Hence the disallowance is not legal and the claim of interest cannot be denied simply because that inadvertently the assessee claimed such interest under the head Income from other sources. It may also be pointed out that the Supreme Court in Seth R. Dalmias case [1977] 1 10 ITR 644 (SC) has laid down the following condition (at p. 650) for the purpose of applying s. 57(iii) of the Income tax Act, 1961 : "(i) the expenditure must have been incurred solely and exclusiv....