I . T. . N o. 1 7 9 2 / KO L . / 2 0 1 4 Assessment year: 2008-2009 & I . T. . N o. 1 4 1 5 / KO L . / 2 0 1 4 Assessment year: 2009-2010 Page 1 of 5 IN INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA Before Shri P.M. Jagtap, Accountant Member I.T .A. No. 1792/KOL/ 2014 Assessment Year: 2008-2009 & I.T.A. No. 1415/KOL/ 2014 Assessment Year: 2009-2010 Kanoi Tea Pvt. Limi ted,....................................................Appellant 3, Transport Depot Road, Kolkata-700 088 [PAN: AABCK 2868 E] -Vs.- Deputy Commissioner of Income Tax,........ ...................Respondent Circle-XI, Ko lkata, Aayakar Bhawan Po orva, 110, Shanti Pally, Kolkata-700 107 Appearances by: N o n e, fo r assessee (w/submission filed) Shri Arun Kanti Sinha, Addl. CIT, D.R., for Department Date of concluding th e hearing : Au gust 18, 2016 Date of pronouncing order : October 21, 2016 O R D E R These two appeals filed by assessee are directed against two separate orders passed by ld. Commissioner of Income Tax (Appeals), Central-1, Kolkata dated 21.07.2014 and 07.04.2014 for A.Y. 2008-09 and 2009-10 respectively and same have been heard together and are being disposed of by single consolidated order for sake of convenience. 2. solitary issue involved in appeal of assessee for A.Y. 2008-09 being ITA No. 1792/KOL/2014 relates to disallowance of Rs.2.88 lakhs made by Assessing Officer and confirmed by ld. CIT(Appeals) on account of interest expenditure. I . T. . N o. 1 7 9 2 / KO L . / 2 0 1 4 Assessment year: 2008-2009 & I . T. . N o. 1 4 1 5 / KO L . / 2 0 1 4 Assessment year: 2009-2010 Page 2 of 5 3. assessee in present case is Company, which is engaged in business of tea, warehousing and trading. return of income for year under consideration, i.e. A.Y. 2008-09 was filed by it on 25.09.2008 declaring total income of Rs.9,94,690/-. During course of assessment proceedings, it was noticed by Assessing Officer that assessee has borrowed loan of Rs.3.61 crores on interest, but same was not fully utilized for purpose of its business. In this regard, he noted that sum of Rs.24,00,000/- out of borrowed funds was invested by assessee in shares. Since assessee was not carrying on any business of share trading, proportionate interest expenditure as attributable to investment of Rs.24,00,000/- made in shares calculated by applying rate of 12% amounting to Rs.2.88 lakhs was disallowed by Assessing Officer. On appeal, ld. CIT(Appeals) confirmed said disallowance made by Assessing Officer by observing that investment made by assessee in shares was not for purpose of its business. 4. I have considered rival submissions and also perused relevant material available on record. It is observed that proportionate interest attributable to investment of Rs.24,00,000/- made by assessee in shares has been disallowed by authorities below on ground that said investment was not made by assessee for purpose of its business. In written submission filed before Tribunal, assessee has not been able to controvert or rebut findings recorded by authorities below in this regard by establishing any nexus whatsoever of investment made in relevant shares with its business. It is thus clear that borrowed funds to extent of Rs.24,00,000/- were not utilized by assessee for purpose of its business and interest expenditure claimed by assessee as attributable on such investment is liable to be disallowed being not I . T. . N o. 1 7 9 2 / KO L . / 2 0 1 4 Assessment year: 2008-2009 & I . T. . N o. 1 4 1 5 / KO L . / 2 0 1 4 Assessment year: 2009-2010 Page 3 of 5 wholly and exclusively incurred for purpose of assessee s business. I, therefore, find no infirmity in impugned order of ld. CIT(Appeals) confirming disallowance made by Assessing Officer on this issue and upholding same, I dismiss appeal of assessee for A.Y. 2008-09. 5. Now I take up appeal of assessee for A.Y. 2009-10 being ITA No. 1415/KOL/2014, which involves solitary issue relating to addition of Rs.83,278/- made by Assessing Officer and confirmed by ld. CIT(Appeals) on account of service charges by treating same as unexplained expenditure under section 69C of Act. 6. In Profit & Loss Account filed along with its return of income for A.Y. 2009-10 declaring total income of Rs.13,76,718/-, sum of Rs.6,63,291/- paid to M/s. PDK Export & Imports (Pvt.) Limited on account of service charges was debited by assessee. Enquiry made by Assessing Officer with said party, however, revealed that sum of Rs.7,46,570/- was actually paid by assessee to said Company. Since assessee could not offer any satisfactory explanation in this regard, difference of Rs.83,278/- in service charges paid by assessee to M/s. PDK Export & Imports (Pvt.) Limited was added by Assessing Officer to income of assessee as unexplained expenditure. On appeal, ld. CIT(Appeals) confirmed said addition made by Assessing Officer on ground that assessee could not offer any satisfactory explanation even before him as regards difference of Rs.83,278/- noticed by Assessing Officer in amount paid to M/s. PDK Export & Imports (Pvt.) Limited on account of service charges. 7. I have considered rival submissions and also perused relevant material on record. As submitted by assessee in written I . T. . N o. 1 7 9 2 / KO L . / 2 0 1 4 Assessment year: 2008-2009 & I . T. . N o. 1 4 1 5 / KO L . / 2 0 1 4 Assessment year: 2009-2010 Page 4 of 5 submission filed before ld. CIT(Appeal) as well as before Tribunal, there were three separate accounts maintained by it in name of M/s. PDK Export & Imports (Pvt.) Limited and total amount paid to said party taking all these three accounts together was Rs.7,92,091/-. It appears that Assessing Officer as well as ld. CIT(Appeals), however, have considered only one account and remaining two accounts showing payments of Rs.33,800/- and Rs.95,000/- made to said party have been ignored by them while making impugned addition on account of difference of Rs.83,278/- by treating same as unexplained expenditure. If total payment made by assessee to said party as reflected in three accounts maintained by assessee is taken into consideration, there is actually no such difference and keeping in view same, I hold that addition made by Assessing Officer and confirmed by ld. CIT(Appeals) on this issue is not sustainable. I, therefore, delete same and allow appeal of assessee for A.Y. 2009-10. 8. In result, appeal of assessee for A.Y. 2008-09 is dismissed, while appeal of assessee for A.Y. 2009-10 is allowed. Order pronounced in open Court on October 21, 2016. Sd/- (P.M. Jagtap) Accountant Member Kolkata, 21 s t day of October, 2016 Copies to : (1) Kanoi Tea Pvt. Limi ted, 3, Transport Depot Road, Kolkata-700 088 (2 ) Deputy Commissioner of Income Tax, Circle-XI, Ko lkata, Aayakar Bhawan Po orva, 110, Shanti Pally, Kolkata-700 107 I . T. . N o. 1 7 9 2 / KO L . / 2 0 1 4 Assessment year: 2008-2009 & I . T. . N o. 1 4 1 5 / KO L . / 2 0 1 4 Assessment year: 2009-2010 Page 5 of 5 (3) Commissioner of Income Tax(Appeals), Central-1, Kolkata; (4) Commissio ner of Income Tax- , (5) Depart ment al Represent ative (6) Guard File By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. Kanoi Tea Pvt. Limited v. Deputy Commissioner of Income-tax, Circle-XI, Kolkata