Dharamshala Health Resorts Ltd. v. The ACIT, Palampur - 2019-LL-0911-103

Citation	2019-LL-0911-103
Appellant Name	Dharamshala Health Resorts Ltd.
Respondent Name	The ACIT, Palampur
Court	ITAT-Chandigarh
Relevant Act	Income-tax
Date of Order	11/09/2019
Assessment Year	2005-06
Judgment	View Judgment
Keyword Tags	disallowance of interest expenditure • notional interest • purchase of property • advance payment • business purpose • profit and loss account
Bot Summary:	PAN NO: AABCD8254H Appellant Respondent /Assessee by : Shri Surinder Babbar, CA Revenue by : Sh. Rohit Mehra, Sr.DR Date of Hearing : 11.09.2019 Date of Pronouncement : 11.09.2019 Order The present appeal has been preferred by the assessee against the order dated 10.10.2018 of the Commissioner of Income Tax- Palampur hereinafter referred to as CIT(A). The sole issue raised in this appeal is regarding the confirmation of addition of Rs. 4,00,842/- by the Ld. CIT(A) into the income of the assessee on account of disallowance of notional interest on the advances made by the assessee for the purchase of the property. During the assessment proceedings, the Assessing Officer noted that he assessee during the year advanced an amount of Rs. 62,56,265/- ITA No.1543-Chd-2018 M/ s Dharamshala Health Resorts Ltd, Distt. In appeal before the Ld. CIT(A), the assessee submitted that the assessee had not debited / booked any interest expenditure in its profit loss account there was no question of disallowance of any interest expenditure. The Ld. CIT(A) observed that the assessee during the year had paid interest of Rs. 4,00,842/- on a loan of Rs. 82,24,273/- received by the assessee from J K Bank. The Ld. Counsel for the assessee, at the outset, has submitted that the assessee had not booked the said interest payment of Rs. 4,00,842/- in its Profit Loss account as an expenditure. The issue is restored to the file of the Assessing Officer to verify as to whether any interest expenditure has been booked by the assessee during the year and if it is not found so, then there is no question of any disallowance of interest expenditure.

IN INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH , SMC, CHANDIGARH, BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ITA No. 1543/CHD/2018 Assessment Year : 2005-06 Dharamshala Health Resorts Ltd., Vs. ACIT, Palampur, Village Satobari, Near Dal Lake, Distt. Kangra (H.P.) Dharamshala Cantt, Distt. Kangra-176216 ./PAN NO: AABCD8254H Appellant Respondent /Assessee by : Shri Surinder Babbar, CA Revenue by : Sh. Rohit Mehra, Sr.DR Date of Hearing : 11.09.2019 Date of Pronouncement : 11.09.2019 Order present appeal has been preferred by assessee against order dated 10.10.2018 of Commissioner of Income Tax (Appeals)- Palampur [hereinafter referred to as CIT(A) ]. 2. sole issue raised in this appeal is regarding confirmation of addition of Rs. 4,00,842/- by Ld. CIT(A) into income of assessee on account of disallowance of notional interest on advances made by assessee for purchase of property. 3. During assessment proceedings, Assessing Officer noted that he assessee during year advanced amount of Rs. 62,56,265/- ITA No.1543-Chd-2018 M/ s Dharamshala Health Resorts Ltd, Distt. Kangra 2 for purchase of property. Assessing Officer calculated notional interest @ 12% of said amount holding that said amount was not advanced for business purposes and accordingly added same into income of assessee. 4. In appeal before Ld. CIT(A), assessee submitted that assessee had not debited / booked any interest expenditure in its profit & loss account, hence, there was no question of disallowance of any interest expenditure. Ld. CIT(A), however, observed that assessee during year had paid interest of Rs. 4,00,842/- on loan of Rs. 82,24,273/- received by assessee from J& K Bank. Ld. CIT(A) accordingly restricted disallowance of aforesaid amount to Rs. 4,00,842/-. 5. Aggrieved by above order, assessee had come in appeal before us. 6. Ld. Counsel for assessee, at outset, has submitted that assessee had not booked said interest payment of Rs. 4,00,842/- in its Profit & Loss account as expenditure. That when no interest expenditure has been booked / debited in Profit & Loss account, there is no question of any disallowance of such expenditure. I agree with above submissions of Ld. AR of assessee. However, fact that assessee during year had not booked / debited any interest expenditure in its profit and loss account needs ITA No.1543-Chd-2018 M/ s Dharamshala Health Resorts Ltd, Distt. Kangra 3 verification at hands of Assessing Officer. Therefore, issue is restored to file of Assessing Officer to verify as to whether any interest expenditure has been booked by assessee during year and if it is not found so, then there is no question of any disallowance of interest expenditure. Assessing Officer is directed to verify this issue on this limited aspect and decide same as per directions given above. appeal of assessee is treated as allowed for statistical purposes. Order dictated and pronounced in Open Court immediately on completion of hearing. Sd/- (SANJAY GARG) Judicial Member Dated : 11. 09.2019 .Copy of order forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, CHANDIGARH 6. Guard File By order, Assistant Registrar Dharamshala Health Resorts Ltd. v. ACIT, Palampur

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