IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH SMC , JAIPUR BEFORE: SHRI SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA No. 922/JP/2017 fAssessment Year : 2014-15. Smt. Vimla Gupta Income Tax Officer, E-402, Shastri Nagar, Vs. Ward 2(1) Ajmer. Ajmer.PAN No. AHMPG5240P Appellant Respondent Assessee by : Shri Nikhilesh Kataria (CA) Revenue by: Smt. Poonam Rai (DCIT) Date of Hearing : 23.09.2019. Date of Pronouncement : 24/09/2019. ORDER PER VIJAY PAL RAO, JM : This appeal by assessee is directed against order dated 27th September, 2017 of ld. CIT (A), Ajmer for assessment year 2014-15. assessee has raised following grounds of appeal :- 1. assessment order passed u/s 143(3) is bad in law as well as on facts and hence, same may please be quashed. 2. Rs. 1,15,425/-. ld. AO erred in law as well as on facts of present case in disallowing payment of interest on housing loan and ld. CIT (A) erred in sustaining same. 3. Rs. 1,36,197/-. ld. AO erred in law as well as on facts of present case in disallowing payment of interest on loan taken merely on presumption and ld. CIT (A) erred in sustaining same. 4. appellant prays your Honor s indulgence to add, amend, modify or delete all or any ground of appeal. 2 ITA No. 922/JP/2017 Smt. Vimla Gupta, Ajmer. 2. At time of hearing, ld. A/R of assessee has stated at Bar that assessee does not press ground nos. 1 & 2 of appeal and same may be dismissed as not pressed. ld. D/R has raised no objection if ground nos. 1 & 2 of assessee s appeal are dismissed as not pressed. Accordingly, ground nos. 1 & 2 of assessee s appeal are dismissed being not pressed. Ground No. 3 is regarding disallowance of interest of Rs. 1,36,197/-. 3. A.O. has noted that assessee has taken loan of Rs. 40,00,000/- against FDR from Baroda Rajasthan Khetriya Gramin Bank. said loan amount was not utilized for purpose of business but assessee has used same for interest free advances to certain parties. Further, AO noted that assessee has also taken loan of Rs. 5,00,000/- from one Shri Kumar Agneet and said amount was given to Smt. Pushpa Tejwani. assessee has paid interest on loan of Rs. 60,000/- as against interest received of Rs. 45,000/-. Therefore, AO made disallowance of Rs. 1,21,197/- in respect of loan taken against FDR and given to various parties as interest free advances and Rs. 15,000/- being difference of interest paid by assessee in respect of loan taken from Shri Kumar Agneet and interest received by assessee from Smt. Pushpa Tejwani total amounting to Rs. 1,36,197/-. assessee challenged action of AO before ld. CIT (A) but could not succeed. 4. Before Tribunal, ld. A/R of assessee has referred to computation of income and submitted that assessee has claimed only Rs. 45,000/- as interest in respect of loan of Rs. 5,00,000/- and further assessee has claimed only Rs. 1,21,197/- in respect of loan taken against FDR whereas 3 ITA No. 922/JP/2017 Smt. Vimla Gupta, Ajmer. interest of Rs. 1,28,211/- was received by assessee from FDR. Therefore, expenditure of payment of interest in respect of loan taken against FDR is to save and earning interest on FDR. assessee preserved said income by taking loan and not withdrawing FDR prematurely. Similarly interest of Rs. 45,000/- was claimed against interest from other parties of Rs. 45,158/-. Thus assessee has offered net interest income, therefore, no further addition or disallowance is called for. AO has made addition of Rs. 15,000/- being interest of Rs. 60,000/- and Rs. 45,000/- received by assessee whereas assessee has claimed only Rs. 45,000/- against receipt of Rs. 45,158/-. Hence ld. A/R has submitted that disallowance made by AO is not justified and same be deleted. 5. On other hand, ld. D/R has relied upon orders of authorities below. 6. I have considered rival submissions as well as relevant material on record. AO has made total disallowance of Rs. 1,36,197/- towards interest paid of Rs. 1,21,197/- on loan taken by assessee against FDR and further difference of Rs. 15,000/- being interest income and interest paid in respect of loan of Rs. 5,00,000/- taken by assessee from one Shri Kumar Agneet and loan was given to Smt. Pushpa Tejwani. From computation of income, it is clear that business income of assessee was accepted by AO as exempt under section 10(12A). Therefore, it is not case of any interest expenditure claimed against business income. Further assessee has claimed only Rs. 45,000/- as interest against interest income of Rs. 45,158/-. Hence actual payment of interest by assessee of Rs. 60,000/- is irrelevant when assessee herself has 4 ITA No. 922/JP/2017 Smt. Vimla Gupta, Ajmer. not claimed said amount and restricted claim only to Rs. 45,000/-. Therefore, disallowance of Rs. 15,000/- made by AO is uncalled for. Similarly, assessee has earned interest of Rs. 1,28,211/- on FDR and has claimed interest of Rs. 1,21,197/- being payment of interest on loan taken against FDR. Therefore, it is clear case of incurring expenditure of interest to preserve income from FDR. These facts are clear from computation and not in dispute, therefore, in view of facts and circumstances of case, disallowance made by AO is not justified and same is deleted. 7. In result, appeal of assessee is partly allowed. Order is pronounced in open court on 24/09/2019. Sd/- (VIJAY PAL RAO) Judicial Member Jaipur Dated:- 24/09/2019. Das/ Copy of order forwarded to: 1. Appellant- Smt. Vimla Gupta, Ajmer. 2. Respondent ITO Ward 2 (1), Ajmer. 3. CIT(A). 4. CIT, 5. DR, ITAT, Jaipur 6. Guard File (ITA No. 922/JP/2017) By order, Assistant. Registrar 5 ITA No. 922/JP/2017 Smt. Vimla Gupta, Ajmer. Vimla Gupta v. Income-tax Officer, Ward 2(1) Ajmer