Delhi High Court
Commissioner Of Income Tax vs Ms. Sushma Kapoor on 26 October, 2009
Author: A.K.Sikri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 324/2009
Date of decision: 26th October, 2009
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Ms. P.L. Bansal, Adv.
versus
MS. SUSHMA KAPOOR ...... Respondent
Through: Dr. Rakesh Gupta, Adv.
with Ms. Mahima Agrawal
and Ms. Rani Kiyala, Advs.
% CORAM:
HON'BLE MR. JUSTICE A.K.SIKRI
HON'BLE MR. JUSTICE SIDDHARTH MRIDUL
1. Whether reporters of local papers may be allowed to see
the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in
the Digest?
JUDGMENT
A.K.SIKRI, J. (ORAL)
1. While issuing notice in respect of three items, addition
made by the Assessing Officer which were deleted by the CIT(A)
and formed by the appeal. After hearing counsel for the parties we
are of the opinion that all the issues are factual in nature where
findings of facts are recorded in favour of the assessee herein and
no question of law arises. It is demonstrated in the following
manner:-
1. The Assessing Officer found that the assessee had
already taken loan from the bank on which it had
paid interest to the tune of Rs.40,51,126/-. On the
other hand assessee had granted certain interest free
advances. These advances were to the tune of
Rs.39.65 lacs. The Assessing Officer was of the
opinion that there was no business transactions with
those who the assessee gave the loan advances and
did not borrowed interest and,
therefore, they had disallowed the proportionate
interest which had been paid by the assessee to the
banks in this manner and a sum of Rs.7,13,700/- was
disallowed. The CIT(A), in appeal apart from other
findings, recorded a categorical finding that the
amount of advances made to the parties were paid
advances and in any case they were given in the
earlier years i.e. before the loan was taken on which
interest was paid and, therefore, these trade
advances were not given out of the loan taken by the
assessee. This is clearly a finding of fact.
2. The Assessing Officer had disallowed expenses to the
extent of Rs.10,00,000/- under Section 14A of the
Income Tax Act. In appeal preferred by the assessee,
the CIT (A) arrived at a finding that on the last date
of accounting year the investment was only
Rs.80,000/-. Another finding of fact which was
recorded was that the investment was made in the
preceding year and no part of investments were
correlated with the borrowed funds. The CIT
found that investment made in
Zurich India Top 200 funds was advances from the
loan and, therefore, only to this extent the interest
could be disallowed under Section 14A of the Act.
Following is the relevant discussion in this behalf as
noted by the Tribunal as well:
"...The A.O. had made disallowance of Rs.10
lacs on ad hoc basis. We agree with the
submissions of the Ld. A.R. that
disallowance on ad hoc basis is not justified
without placing any material on record to
show as to how much borrowed funds had
been invested in the shares. CIT(A) on the
other hand on detailed examination has
given a finding that borrowed funds had
been utilized only for investment in Zurich
Mutual Fund and Zurich India Top 200 Fund
and accordingly has reduced the
disallowance to Rs.107510/-."
It is clear from the above that to the extent it
could be proved that investment was made from
the borrowed funds, the expenses have been
disallowed under Section 14A of the Act, which is
again based on finding of facts.
3. The assessee had claimed depreciation in respect of
Flat No.801 and 802, International Trade Tower,
Nehru Place. Assessee had claimed that she had half
shares in both these flats and on all of these half
shares depreciation was claimed. The Assessing
Officer disallowed 50% of the depreciation claimed
on the ground that two other firms namely M/s. PDK
Stock and Securities and Ms/. Sidhi Vinayak
Enterprises were also functioning from that address.
However, CIT(A) reversed this finding and calculated
that those two firms were in fact running from 296,
Forest Lane, Neb Sarai, New Delhi. Income Tax
Appellate Tribunal (ITAT) has confirmed this finding
recorded by the CIT(A) in the following manner:
"The assessee submitted before CIT(A) that
the business of Sidhi Vinayak Enterprises
and M/s. PDK Stock & Securities were run
from 296, Forest Lane, Neb Sarai, New
Delhi. It was also pointed out that Miss
Sheila Kapoor had expired on 23.8.1999 and
her business had been inherited by Shri
Punit Kapoor and accordingly, the same was
being run from 296 Forest Lane. The A.O.
had made disallowance without any
material. The assessee had claimed 50%
depreciation and only 50% of electricity
expenses as she owned 50% of the premises
CIT(A) was satisfied by the explanation and
observed that the A.O. had no evidence to
say that Shri Punit Kapoor and Smt. Sheila
Kapoor were carrying on business from the
said premises. He accordingly, deleted the
addition aggrieved by which the revenue is
in appeal before the tribunal."
2. We thus find that no question of law, much less
substantial question of law, arises for consideration.
3. Dismissed.
A.K. SIKRI, J.
SIDDHARTH MRIDUL, J.
October 26, 2009
dn
