Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HONBLE & SHRI NARENDRA KUMAR BILLAIYA, HONBLE
PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assesse is preferred against the order dated 16/01/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)"] pertaining to AY 2017-18. 2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the disallowance made by AO in respect of interest expenses of Rs.48,89,313/- incurred for earning interest income from capital contribution in partnership firm.
Briefly stated that the facts of the case are that the assessee filed his return of income on 16/03/2018 declaring total income at Rs.1,08,24,270/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. While scrutinizing the return of income, the AO noticed that the assessee has claimed a deduction of Rs.48,89,313/- u/s 57 of the Act.
आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNAL Ι.Τ.Α. No. 1560/Mum/2025 2
The AO noticed that there is no nexus with the income from other sources and disallowed the claim of interest. The assessee had strongly contended that the same should have been allowed u/s 36(iii) of the Act as interest has been paid on the borrowings invested in the capital of the firm from which the assessee has earned interest on capital under the head "profit and gains from business or professions". This contention of the assessee was dismissed by the AO and disallowed by the ld. CIT(A).
Having heard the rival contentions, we have carefully perused the orders of the authorities below. It is true that the assessee has paid interest on borrowings contributed in the capital of partnership firm from which the assessee has earned interest which has been returned under the head profit and gains from business or profession, therefore, in our considered opinion the interest paid on borrowings amounting to Rs.48,89,313/- deserves to be allowed from the business income. Even if inadvertently the assessee has claimed as deduction under the head income from other sources but the claim u/s 36(iii) of the Act was made during the assessment proceedings itself which was rubbished by the AO but should have been allowed. Therefore, considering the facts of the case in totality, we direct the AO to allow the interest of Rs. 48,89,313/- as deduction from profit and gains from business and profession.
In the result, appeal of the assessee is allowed. Order pronounced in the Court on 24th October, 2025 at Mumbai. (SAKTIJIT DEY) VICE PRESIDENT (NARENDRA KUMAR BILLAIYA) ACCOUNTANT MEMBER Mumbai, Dated 24/10/2025 *SC SPS
आदेश की प्रतिलिपि अग्रेषित/