9911796707
TMI Blog2022 (4) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... irming the addition of the genuine loan received from the MIS K.C. Kapadia and Sons(P) Ltd of Rs. 39,34,639/- to the total income of the assessee and thereby erred in treating the same for non-business purpose. 4. The Ld. CIT(A) erred in confirming the charging of interest under section 234A, 234B, 234C and 234D of the Income Tax Act 1961. 5. The Ld. CIT(A) erred in confirming the initiation of the penalty proceeding under section 271(1)(c) of the Income Tax Act 1961 6. The Assessee craves leave to add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing." 3. The brief facts of the case are that the assessee filed its return of income on 25.11.2014 declaring total income to the tune of Rs. 17,11,600/-. The return was processed under section 143(1) of the Act. The assessment was selected for scrutiny under CASS. Notices under section 143(2) & 143(1) were issued and served upon the assessee. The assessee is a firm engaged in trading and commission agent of yarn and derives income from business. The assessee received interest bearing loan of Rs. 3,35,23,178/- which was used to advance interest free loan to two other parties. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of the Ld. CIT(A) on record. "5.3 I have very carefully perused the impugned order, the entire attendant facts and circumstances of the matter and the submissions of the Ld. AR. I have also perused with circumspection, the pertinent details and materials on record. 5.4 Appros to the above, I find that although the Id. AR has given a lengthy and prolix submissions and also has quoted several case laws and judicial pronouncements, however, the fact of the matter is that the same do not in any manner or mode explain and demonstrate as to the exact fault that can be found out with the action of the AO in disallowing the proportionate interest of Rs. 22,24,357/-. This is more so, since, I find and observe that the AO has clearly given the relevant details as to how the part of the principal amount of the loan has been diverted towards the non-business purpose. Specifically, the AO has clearly demonstrated as to how out of the total loan funds of Rs. 12.19 crore (approx.), the funds of Rs. 3.35 crores (approx.) have not been utilized in furtherance of the exclusive use for business purpose. Therefore, it is seen that about 27% of the total loan funds have no plausible business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance of Rs. 39,34,639/- under section 2(22)(e) of the Act. The assessee firm was having 4 partners namely Mr. Parthiv K. Kapadia, Mr. Shaunak K. Kapadia, Ms. Sonalben S. Kapadia, Ms. Vandanaben Kapadia having 25% share each. They took the unsecured loan from M/s. K.C. Kapadia and Sons (P) Ltd. in which Mr. Shaunak K. Kapadia was holding 10% and Mr. Parthiv K. Kapadia was holding 10% and remaining 2 were having 25% share. They took the unsecured loan of 39,34,639/-. The explanation of the assessee was not found justifiable, therefore the said loan was treated as dividend income of the assessee under section 2(22)(e) of the Act. The Ld. CIT(A) has given the following findings: "7.3 On this issue, I have very carefully perused the impugned order, the entire attendant facts and circumstances of the matter and the submissions of the Ld. AR. I have also perused with circumspection, the pertinent details and materials on record. 7.4 Appros to the above, I find and pertinently -note 'that it is an undisputed position that the Tax Audit Report (TAR) clearly states that for the year under consideration, the appellant has received unsecured loan from one M/s. K.C. Kapadia and Sons P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n between the appellant firm and M/s. K.C. Kapadia and Sons Pvt. Ltd. are not in the nature of loan transactions, but rather are current account transactions and hence the Section 2(22)(e) cannot be applied. However, as I have discussed and noted in detail that the observations and classifications of the said impugned transaction of the appellant firm with M/s. K.C. Kapadia and Sons Pvt. Ltd. to the tune of Rs. 39,34,639/-as per the Tax Audit Report (TAR) clearly categorizes this transaction as one of unsecured loan and therefore, given the nature of the inter-se shareholding of the two partners of the appellant firm with the fact of holding together the 20% shareholding leading to 20% voting power, in the said M/s. K.C. Kapadia and Sons Pvt. Ltd. clearly demonstrates that this is a fit case of Section 2(22)(e). 7.8 Moreover, I find that the Id. AR instead has not explained in any mode or manner by leading factual evidence as to how the classification as per the TAR is erroneous and that the transaction is actually not one of loan but relates to current account transactions. Further, the myriad of case laws cited by the Id. AR do not prove as to how the peculiar and solitary fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
