M.A. SHAHUL HMEED Vs. INCOME TAX OFFICER
LAWS(IT)-2014-5-28
INCOME TAX APPELLATE TRIBUNAL
Decided on May 07,2014

M.A. Shahul Hmeed Appellant
VERSUS
INCOME TAX OFFICER Respondents

JUDGEMENT

P.M.JAGTAP - (1.) THIS appeal is filed by the assessee against the order of ld. CIT(A) -32, Mumbai dated 21.12.2011 whereby he confirmed /sustained the following additions/disallowances made by AO: A: Disallowance of interest expenditure Rs.37,521/ - B: Addition on account of short term capital gain Rs.1,56,599/ - C: Addition on account of unexplained cash deposits under section Rs.13,40,750/ - 69 of the Income Tax Act, 1961 (the Act)
(2.) WE have heard the arguments of both the sides on the issues involved in this appeal and also perused the relevant material available on record. As regards, the issue involved in Ground "A" regarding disallowance of interest, it is observed that the loan taken by the assessee on interest from the bank was found by the AO to have been parked in the interest free mutual funds, cash in hand and cash in bank account. He, therefore, disallowed the interest attributable to the said loans worked out at Rs.1,56,582/ -. On appeal, the ld. CIT(A) held that the assessee having his own funds sufficient to make investment in the interest free mutual funds as well as to cover cash in hand and cash at bank, there was no case of utilization of interest bearing loans by the assessee for the said purposes. He however found that the assessee had paid interest at the rate of 14% to the bank on one hand and it had advanced money in the form of his capital in the partnership firms on the other hand, at interest rate of 12% only. He held that this excess amount of interest paid by assessee at the rate of 2% therefore was disallowable and accordingly the disallowance made by AO on account of interest was sustained by him to the extent of Rs.37,521/ -
(3.) AT the time of hearing before us, the ld. counsel for the assessee has not been able to bring anything on record to controvert or rebut the findings recorded by ld. CIT(A) that the loan taken by the assessee from bank at the interest rate of 14% was utilized to make investment by the assessee as his capital in the partnership firms at the rate of 12% only and this being so, we find no justifiable reason to interfere with the impugned order of ld. CIT(A) sustaining the disallowance made on account of interest to the extent of Rs.37,521/ -. Ground "A" of assessee's appeal is accordingly dismissed. As regards the issue raised in Ground "B", it is observed that the AO during the assessment proceedings for the year under consideration noticed that the assessee had received a sum of Rs.2,56,699/ - from Life Insurance Corporation against the investment of Rs.1 lakh made earlier. Although the assessee claimed that this entire amount was exempt u/s 10(10D) of the Income Tax Act, 1961 (the Act) being maturity value of the LIC policy, no evidence could be produced by the assessee to show that the said amount represented maturity value of any LIC policy taken by him. The AO, therefore, treated the difference of Rs.1,56,599/ - as "Short Term Capital Gain" (STCG)chargeable to tax in the hands of the assessee and the ld. CIT(A) upheld the action of the AO on this issue.;


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