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ACIT, Circle-16(1),Circle-16(1), New Delhi. Vs. Narinder Singh Kohli, 47, Jor Bagh, New Delhi.
June, 18th 2015
                DELHI BENCH "E" NEW DELHI

                            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.



      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.
                                                                           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:
                                                                              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
       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
                                                                       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


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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