9911796707
TMI Blog2015 (8) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.2007. According to the ld. Counsel, the assessee alongwith other co-owners, availed housing loan of Rs. 5 crores for the purpose of construction of the building. In fact, the above said Rs. 5 crores was disbursed by Indian Bank, Tirunelveli Branch on four installments. Out of the first installment of Rs. 25 lakhs received on 28.6.2007, a sum of Rs. 13.50 lakhs was utilized for purchase of the land to the extent of 206.5 cents. Since Rs. 13.50 lakhs was utilized for purchase of the landed property, according to the ld. Counsel, the assessee is not pressing the disallowance of interest to that extent. The ld. Counsel has made an endorsement in the file to this effect. Now the dispute is with regard to interest on the balance amount of Rs. 70 lakhs. The ld. Counsel further submitted that the second and third installments of Rs. 1 crore and Rs. 2 crores respectively, was in fact used for the purpose of construction by transferring the amount to the Current Account of RMKV & Sons, R.K. Salai, Chennai. The ld. Counsel further pointed out that out of the final installment of Rs. 175 lakhs, a sum of Rs. 70 lakhs was paid to various temples on behalf of RMKV & Sons as per the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of construction of the building to RMKV & Sons, therefore, instead of repaying the cost of construction to RMKV & Sons, the co-owners/ assessee paid the amount directly to the temples as per the direction of HR&CE. Therefore, the interest paid by the assessee on Rs. 70 lakhs has to be allowed. On a query from the Bench, the ld. Counsel clarified that the assessee is not a partner in RMKV & Sons. 4. On the contrary, Shri S. Das Gupta, ld. Departmental Representative submitted that the assessee is a partner in RMKV group of concerns. This is apparent from the assessment order as well as CIT(A)'s order. A search operation was conducted in the business premises of RMKV & Sons and the residential premises of Shri K. Sivakumar and Shri Venkatesh. Admittedly, the assessee and other co-owners borrowed a sum of Rs. 5 crores towards housing loan. A sum of Rs. 83 lakhs was not utilized for construction and the same was diverted to the respective persons including the assessee. Therefore, the Assessing Officer disallowed the interest on loan of Rs. 83 lakhs. Now, before this Tribunal, the ld. Counsel claims that he is not pressing the ground with regard to diversion of the amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arulmighu Mutharamman Temple, Palayamkottai, on the basis of the order of the Commissioner, HR&CE subject to the condition that they give donation to four temples as indicated in the order and the lease period is for three years. The copy of the lease agreement said to be entered into between the assessee and RMKV & Sons is available at page 1 of the paper book. As per this lease agreement, there is no reference about the liability of the assessee to reimburse any of the expenditure said to be incurred by RMKV & Sons, partnership firm. The lease period is for 20 years from 19.10.2007. Apart from rental deposit of Rs. 50 lakhs, RMKV & Sons has to pay rent of Rs. 3,75,000/- per month inclusive of service tax. Therefore, the claim of the assessee that RMKV & Sons has invested their funds for construction of the building and the assessee has to reimburse the expenditure is not supported by any evidence. Therefore, this Tribunal is of the considered opinion that that the assessee has diverted a sum of Rs. 70 lakhs borrowed for the purpose other than construction. Under section 24 of the Income-tax Act, the interest paid by the assessee on the loan borrowed has to be allowed only from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h tax return therefore, it was allowed. The Assessing Officer also was very reasonable in deducting 10kgs of silver jewellery as streedhan property and made addition only the value of silver jewellery to the extent of 28.23 kgs. However, the CIT(A) found that the assessee might have received another 10 kgs of silver jewellery as gift during the past 25 years. Therefore, he confirmed the addition towards 18.23 kgs of silver jewellery. 10. The Revenue has also filed appeal challenging the correctness of the order of the CIT(A) giving relief to the assessee to the extent of 10 kgs of silver articles on the ground that the assessee might have received gift for the last 25 years. According to the ld. DR, in the absence of any material, the claim of the assessee that she might have received 10 kgs of silver articles for the past 25 years cannot be accepted. Therefore, the CIT(A) ought to have confirmed the order of the Assessing Officer. 11. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee's family is engaged in business at Tirunelveli and Chennai. Because of the business, the assessee's family is having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut invoices. 13. Shri S. Das Gupta, ld. Departmental Representative submitted that during the course of search operation, the Revenue authorities found the following jewellery even though the same was not supported by invoices: (i) Shoba Hazar - jewellery valuing Rs. 1,77,500 (ii) Jaipur Gems - jewellery valuing Rs. 1,98,970/- Since the above purchases were not supported by any vouchers, the Assessing Officer made the addition. However, the CIT(A) allowed the claim of the assessee on the ground that the purchase of the above jewellery was supported by book entries. According to the ld. DR, the CIT(A) ought not to have allowed the claim of the assessee. 14. On the contrary, Shri G. Baskar, ld. Counsel for the assessee submitted that the Assessing Officer made an addition of Rs. 13,32,652/- towards unexplained investment in jewellery which includes Rs. 3,76,470/-. Though the CIT(A) deleted the addition, the entire unexplained investment of Rs. 13,32,652/- except the value of 2.38 carats of diamond, the Revenue has filed appeal only in respect of unexplained jewellery of Rs. 3,76,470/- and the value of 2.38 carats of diamond. The Revenue has accepted the order of the CIT(A) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e used to wear diamond jewellery. this Tribunal is of the considered opinion that it is not known how the assessee could establish by material evidence to indicate the inheritance of 2.38 carats of diamond from her mother-in-law. This Tribunal is of the considered opinion that in view of the smallness of the value, the CIT(A) has rightly deleted the addition. In fact, the Assessing Officer himself has made addition of Rs. 65,071/-. Therefore, this Tribunal do not find any infirmity in the order of the CIT(A) on this issue. Accordingly, the same is confirmed. 19. The next ground of appeal is with regard to unexplained investment in silver articles. We have discussed this issue elaborately in the earlier part of this order in assessee's appeal. In view of our finding therein, this ground of the Revenue is dismissed. I.T.A.No. 238/Mds/2013 - Shri V. Thiyagarajan 20. In this appeal, the first ground is with regard to disallowance of interest on housing loan borrowed by the assessee to the extent of Rs. 83.50 lakhs. 21. During the course of hearing, the ld. Counsel for the assessee very fairly submitted that this issue does not arise for consideration in the present appeal. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable with him. However, the Assessing Officer accepted the claim only to the extent of 417 gms. The balance jewellery acquired by the assessee's daughter subsequent to her marriage to the extent of 248 gms was not even considered. Referring to the diamond jewellery, the ld. Counsel pointed out that the assessee was married 45 years back. By considering the social status of the family in the society, the gift item of jewellery on the occasion of marriage in those days is normally 2 carats of diamond ear stud and 0.5 carats of diamond ring. According to the ld. Counsel, one ring is for the bride and the other for the bridegroom. Apart from that, there is a usual practice in this part of the country to gift a diamond necklace of 5 to 7 carats to the bride by the parents of the bridegroom. This fact which prevails in the society was not taken into consideration while making the addition by the Assessing Officer. Considering the age of the assessee that he has now completed 70 years and engaged himself in a reputed family business in textile over the decades of period, according to the ld. Counsel, the CIT(A) ought to have deleted the entire addition. 24. On the contrary, Shri S. Das ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Therefore, this Tribunal is of the considered opinion that 240 gms of gold jewellery belongs to the assessee's daughter might have been kept in the house of the assessee. Now the difference is 133.59 gms. The assessee claims that this is the difference between the gross and net weight. On a query from the Bench, the ld. Counsel explained that this difference is due to the weight of the stone embedded in the jewellery and impurities. This Tribunal is of the considered opinion that it is common practice in all jewellery shop that stones are valued at the gold rate and in addition to the rate which prevails for the gold. The assessee has also required to pay charges for wastage, making charges besides the applicable taxes. Therefore, this Tribunal is of the considered opinion that the difference between the gross and net weight of 133.59 gms cannot be allowed. 26. Now, coming to the diamond jewellery, the dispute is only with regard to 9.93 carats of diamond jewellery. As rightly pointed out by the ld. Counsel, it is usual practice in custom to gift diamond ear stud and diamond ring to the bride and bridegroom apart from diamond necklace. Since the assessee was married 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee's father. The ld. Counsel further submitted that some of the jewellery were exchanged and converted into new jewellery. The ld. Counsel further submitted that about 200 gms of jewellery was received by his two children which was not considered by the authorities below. The ld. Counsel further submitted that the CIT(A) found that the assessee might have purchased 192 gms of jewellery from the drawings made in the due course and he also accepted that the two minor children might have received 100 gms each jewellery. Accordingly, the CIT(A) admitted the claim of the assessee to the extent of 492 gms. However, the addition towards the balance 600.2 gms of jewellery was confirmed by the CIT(A). 30. The ld. Counsel further submitted that during the course of search operation, in fact, the Revenue authorities found 1692.2 gms of gross weight of jewellery whereas the net weight was 1594.5 gms. The difference between the gross and net weight is 97.7 gms. The CIT(A) has not given any credit for subsequent acquisition of jewellery by the assessee's wife. Therefore, the addition made by the lower authorities needs to be deleted. 31. On the contrary, Shri S. Das Gupta, ld. DR s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plained would be 200.2 gms. The assessee claims that difference between the gross and net weight of the jewellery is 97.7 has to be taken into consideration. This Tribunal is of the considered opinion that while purchasing jewellery the assessee has to make payment on the gross weight and not on the net weight. The stones which form part of jewellery would be weighed alongwith the gold and the assessee has to necessarily pay the cost of the stone at gold rate. Therefore, there is no justifiable reason for excluding the difference between the gross and net weight of the jewellery found. Therefore, the claim of the assessee that 97.7 gms of jewellery being the difference between the gross and net weight has to be excluded cannot be accepted. In view of the above, the balance remains to be explained is 200.2 gms. Accordingly, the order of the lower authority is modified and the Assessing Officer is directed to add the value of 200.2 gms of gold jewellery as unexplained investment. I.T.A.No.598/Mds/2013 & Revenue's appeal I.T.A.No. 319/Mds/2013- Shri P. Pranav Kumarawswamy 33. The ld. Counsel submitted that Shri P. Pranav Kumaraswamy is the Legal Heir of Late Shri K. Ponanand. 34. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of streedhan property. Therefore, the CIT(A) ought not to have deleted the addition made by the Assessing Officer. 38. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, 2511.2 gms of gold jewellery and 24.99 carats of diamond jewellery were found during the course of search operation. The Assessing Officer accepted the explanation that the assessee's wife might have received streedhan property of 800 gms of gold jewellery and the assessee's mother might have received gold jewellery to the extent of 150 gms and the jewellery declared in the wealth tax return was 57 gms and the remaining jewellery to the extent of 1504.2 gms and 24.99 carats of diamond jewellery was treated as unexplained investment. The CIT(A) by taking into consideration the status of the assessee accepted another 1100 gms of of gold jewellery and 13.25 carats of diamond jewellery. The contention of the Revenue before this Tribunal is that there is no material available on record to substantiate the receipt of streedhan property or acquisition of jewellery investing the money drawn from the business. It is common to gift gold jewellery during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance remains to explain is only 204 gms of gold jewellery. Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to make addition to the extent of 204 gms of gold jewellery. 39. In the assessee's appeal, the assessee has taken an additional ground relating to the disallowance of interest on the housing loan to the extent of Rs. 83.50 lakhs. Both the ld. Counsel for the assessee and the ld. Departmental Representative submit that the facts are identical to that of Smt. V. Dhanalakshmi in I.T.A.No.234/Mds/2013. In view of the above, as discussed elaborately in the earlier part of this order in the case of Smt. V. Dhanalakshmi, the disallowance made by the lower authorities is sustained. I.T.A.No. 239/Mds/2013 - Shri N. Manickavasagam 40. The only issue arises for consideration is disallowance of interest on housing loan of Rs. 83.5 lakhs. 41. Both the ld. Counsel for the assessee and the ld. Departmental Representative submit that the facts are identical to that of Smt. V. Dhanalakshmi in I.T.A.No.234/Mds/2013. In view of the above, as discussed elaborately in the earlier part of this order in the case of Smt. V. Dhanalakshmi, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to delete 537gms of gold jewellery. Referring to the claim of the assessee before the lower authorities that some of the jewellery were purchased out of the drawings, the ld. DR pointed out that originally the assessee claimed that the jewellery were received in gift at the time of opening of the branches in Chennai and Tirunelveli. Subsequently, the assessee claimed before the lower authority that the same was purchased out of the drawings. In view of the conflicting claim made by the assessee, according to the ld. DR, the CIT(A) ought not to have deleted the addition made by the Assessing Officer. 47. We have considered the rival submissions on either side and also perused the material available on record. The Assessing Officer accepted the claim of the assessee to the extent of 800 gms of gold jewellery towards streedhan of his wife at the time of marriage. The Assessing Officer has also taken credit of 150 gms of gold jewellery declared by his mother Smt Selvavinagathammal in the wealth tax return for the assessment year 1992-93. The Assessing Officer has also accepted purchase of gold jewellery of 122.46 gms. Totally the Assessing Officer accepted explanation of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow coming to the diamond jewellery, ld. Counsel for the assessee submitted that the Revenue authorities found 38.01 carats of diamond jewellery. The Assessing Officer accepted the explanation of the assessee for 17.40 carats and made addition of 20.61 carats of diamond jewellery. On appeal by the assessee, the CIT(A) deleted the addition to the extent of 10.75 carats of diamond jewellery. However, the CIT(A) sustained the addition of 9.86 carats of diamond jewellery. According to the ld. Counsel, the assessee got married ten years back and his father-in-law was a rich man residing at Dubai. It is very common, according to the ld. Counsel, to gift bangles, ear rings etc during the occasion of marriage. The ld. Counsel further submitted that the assessee received 2.38 carats of diamond from his mother Smt Selvavinagathammal which was declared in the wealth tax return for the assessment year 1992-93. 49. On the contrary, the ld. DR submitted that the Assessing Officer accepted the explanation of the assessee to the extent of 17.40 carats of diamond jewellery. The CIT(A) deleted the addition made by the Assessing Officer to the extent of 10.75 carats of diamond jewellery. In fact, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring were also found by the Revenue authorities. According to the ld. Counsel, they are acquired over a period of time, received as gift on various occasions and family functions. 54. On the contrary, the ld. DR submitted that the assessee claims that silver articles were received during his marriage as gift. No material evidence is available to suggest that the assessee has received streedhan as silver articles and as gift. Therefore, the CIT(A) ought to have confirmed the entire addition made by the Assessing Officer. 55. We have considered the rival submissions on either side and also perused the material available on record. It is not in dispute that what was found during the course of search operation are mostly pooja articles like kuthuvilakku, panner fan, camphor stand, kukum bowk, sandal bowl and plates etc besides tumblers. By taking into consideration the status of the assessee's family in the society and the nature of business, it is not uncommon to receive silver articles as gift on various occasions, family functions etc. It is also common in this part of the country to receive silver articles as gift during marriage time. Apart from that the assessee's father-in-law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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