Charu G. Mehta, Mumbai vs Assessee

2 Mrs. Charu G. Mehta..

2. During hearing, at the outset, the ld. counsel for the assessee, Shri Bhupendra Shah, claimed that the impugned issue is covered, on identical fact, by the decision of the Tribunal dated 01/02/2013, in the case of Mr. Gautam Mehta,(ITA No.7162/Mum/2011), husband of the assessee. Shri J. Premanand, ld. DR, though defended the impugned order, but did not controvert the order of the Tribunal. 2.1. We have considered the rival submissions and perused the material available on record. The facts in brief, are that the Assessing Officer, by way of disallowance of interest, added Rs.27,84,382/- by holding that the assessee paid the same in respect of share trading activities. The claim of the assessee is that there is no diversion of interest bearing loans, thus, the disallowance is not justified. Without going into much deliberation, we find that in the case of Shri Gautam Mehta (husband of the assessee) (ITA No.7162/Mum/2011) SMC Bench, order dated 01/02/2013 held as under:-

"6. After considering the submission and perusing the material on record, I found that the assessee deserves to succeed on the first issue. Both the authorities below i.e. AO as well as CIT(A) were of the view that the assessee has diverted its funds for personal interest in the business of share trading. It is not understandable as to what was the personal interest of the assessee in diverting the funds to share trading. This is a business man, who knows how to run his business activity. In stead of doing diamond and jewellery export during the year under consideration, the assessee transferred its entire funds in share trading business. This is luck of the assessee that he suffered a heavy loss in share transactions. It was explained before the CIT(A) that during the year the loss in

3 Mrs. Charu G. Mehta..

future and options at (-) Rs.1.53 crores. The assessee has invested fairly large amount with the intention to take maximum advantage of fluctuation in the share market and make profit. All of sudden, crisis developed and the prices crashed sharply leaving no scope for recovery. It was also stated that the strategy failed and it had to book heavy losses to the tune of Rs.1.53 crores.

7. It was also submitted that the assessee mainly lost Rs.34.00 lacs through Motilal Oswal Securities and Rs.124.94 lacs through Edleweiss Securities Ltd., Lehman Brothers case is well known to evidence the same. Meanwhile, international market witnessed worst every crisis. It effects continues till date even after. This submission of the assessee neither found wrong nor could be controverted by any of the lower authorities. By chance, if the share market crashed and the assessee suffered losses, then if the loss is genuine, that has to be allowed. As stated above, this is a business man, who knows how to run and manage and how to do his business activity. The assessee thought proper that instead of diamond and jewellery business, he can earn heavy profits in share trading business as there was a big fluctuation in share trading business. However, luck did not favour to the assessee and, therefore, he suffered a heavy losses. It cannot be said that the assessee has diverted its business funds to some private parties from whom no interest has been charged. The assessee borrowed funds for diamond and jewellery business, however, during the year under consideration, the assessee transferred all its business funds to the share trading business. This fact is admitted by both the authorities i.e. the AO and the CIT(A). The observation of the learned CIT(A) that "the assessee has diverted the entire funds in share transaction for personal interest which cannot be burdened on the business", this observations of the learned CIT(A), in my 4 Mrs. Charu G. Mehta..

considered view, are not correct because the assessee has diverted his own funds, which were burrowed for diamond and jewellery business to the share trading business. The diamond and jewellery business was also personal business of the assessee and share trading is also personal business of the assessee. Therefore, this is assessee's wish where the business funds are to be utilized. In view of the above facts and circumstances of the case, I am of the considered view that the loss suffered by the assessee is allowable, however, the genuineness of the loss can be verified by the AO. I order accordingly."

2.2. In the light of the above, without going into much deliberation, since the assessment record/facts of the case of Shri Gautam Mehta (husband of the assessee) are not available before us, therefore, we direct the ld. Assessing Officer to examine the facts of the assessee vis-à-vis the present assessee and if he finds that the facts are identical then decide the appeal in accordance with law and in the light of the aforesaid order of the Tribunal. The assessee may be given opportunity of being heard. Thus, the appeal of the assessee is allowed for statistical purposes in terms indicated hereinabove. Finally, the appeal of the assessee is disposed off as above.

This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 28/01/2015.

आदे श क+ घोषणा 2दनांकः 28/01/2015 को क+ गई ।

Sd/- Sd/- (N.K.Billaiya) (Joginder Singh) लेखा सदःय / ACCOUNTANT MEMBER याियक सदःय / JUDICIAL MEMBER

मुंबई Mumbai; 2दनांक Dated : 28/01/2015 f{x~{tÜ? P.S/.िन.स.

5 Mrs. Charu G. Mehta..

आदे श क+ ूितिल प अमे षत/Copy षत of the Order forwarded to :

1. अपीलाथ= / The Appellant

2. ू>यथ= / The Respondent.

3. आयकर आयु?(अपील) / The CIT, Mumbai.

4. आयकर आयु? / CIT(A)- , Mumbai

5. वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड' फाईल / Guard file.

आदे शानुसार/ ार BY ORDER, स>या पत ूित //True Copy//

उप/ उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण, मुब ं ई / ITAT, Mumbai