IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "E" NEW DELHI
BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER
AND
SHRI GEORGE GEORGE K. : JUDICIAL MEMBER
ITA no. 3599/Del/2012
A.Y. 2009-10
ACIT, Circle-16(1), Vs. Narinder Singh Kohli,
Circle-16(1), New Delhi. 47, Jor Bagh, New Delhi.
PAN: AAFPK 6203 N
( Appellant ) ( Respondent )
Appellant by : Shri P. Dum Kanunjna Sr. DR
Respondent by : Shri Satyajit Goyal CA
Date of hearing : 11-06-2015
Date of order : 17-06-2015.
ORDER
PER S.V. MEHROTRA, A.M:-
This appeal, by the revenue, is directed against the order dated 2-4-
2012 passed by the ld. CIT(A)-XIX, New Delhi in appeal no. 270/2011-12
relating to A.Y. 2009-10.
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ITA 3599/Del/2012
ACIT Vs. Narinder Singh Kohli
2. For A.Y. 2009-10, the assessee filed his return of income declaring
loss of Rs. 2,28,12,072/-. The assessee, late Shri Narinder Singh Kohli, in
the relevant assessment year derived income from salary from company as
director, income from house property, income from business, dividend
income and interest income. The AO noticed from P&L A/c that assessee
had claimed deduction on account of interest payment of Rs. 1,00,23,037/-
i.e. paid to the parties from whom the loan had been taken, whereas the
assessee had also given loans on which interest of Rs. 68,75,452/- had been
received from the parties to whom loan had been given. He noted from the
balance-sheet that assessee had a debit balance of Rs. 1,57,21,565/- in the
capital account. From this he concluded that interest bearing funds had been
utilized for personal purpose and, therefore, he disallowed a sum of Rs.
18,86,588/- computed @ 12% of Rs. 1,57,21,565/- out of interest expenses.
2.1. Ld. CIT(A) deleted the disallowance after considering the assessee's
detailed submissions, as reproduced in para 6.1 of his order wherein it was
clearly demonstrated that the debit balance had arisen because of loss
incurred in the business.
2.2. Aggrieved, the revenue is in appeal before us. Sole effective ground is
as under:
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ITA 3599/Del/2012
ACIT Vs. Narinder Singh Kohli
"Ld. CIT(A) erred in law and on the facts of the case in
deleting the addition of Rs. 5,10,17,971/- made by the AO u/s
43B(f) of the I.T. Act."
3. We have considered the submissions of both the parties and have
perused the record of the case. The extract of capital account, as submitted
by assessee, was as under:
Opening balance 6,22,04,273.69
Add: Annuity Received 2,592.00
6,22,06,865.69
Less:
Loss during the year 1,96,18,778.51
Gift made 5,54,28,298.60
Drawing 7,04,100.00
LIC premium 1,27,040.00
Medical Insurance 34,695.00
Income Tax 2008-09 13,20,009.00
Security transaction tax 08-09 6,95,509.86 7,79,28,430.97
(-) 1,57,21,565.28
3.1. From a bare perusal of this capital account, it is evident that as against
the net debit balance of Rs. 1,57,21,565.28, the loss during the year was Rs.
1,96,18,778.51. Therefore, it is evident that the net debit balance in the
capital account was on account of loss during the year which was more than
the net debit balance in the account. Therefore, AO wrongly inferred that
the borrowed funds were utilized for financing the net debit balance in the
capital account. Nothing has been brought on record to controvert the
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ITA 3599/Del/2012
ACIT Vs. Narinder Singh Kohli
finding of ld. CIT(A) in allowing relief to the assessee. We, accordingly,
uphold the order of ld. CIT(A) on the issue in question. Ground is
dismissed.
4. In the result, departmental appeal is dismissed.
Order pronounced in open court on 17-06-2015.
Sd/- Sd/-
(GEORGE GEORGE K.) ( S.V. MEHROTRA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 17-06-2015.
MP: Copy to :
1. Assessee
2. AO
3. CIT
4. CIT(A)
5. DR
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