THE TRAVANCORE TEXTILES PVT. LTD.,CHENNAI vs. ITO, CORP. WARD-3(2), CHENNAI

Since identical facts and issues are involved in all these three appeals, these appeals were heard together and disposed of by this common order. For the sake of clarity and convenience the facts relevant in the ITA No.2005/CHNY/2026 for the Assessment Year 2016-17 are stated herein:

The Assessee-Company in ITA No.2005/CHNY/2026 raised the following grounds of appeal :

Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of cultivation and sale of coffee. The appellant filed Return of Income for the Assessment Year 2016-17 on 17.10.2016 disclosing income of Rs.6,17,020/-. Against the said Return of Income, no scrutiny assessment was made. Subsequently, Assessing Officer formed an opinion that income got escaped assessment from tax for the reason that the expenditure claimed as the deduction u/s.57(iii) of the Act is not allowable, accordingly, a notice u/s.148 of the Act was issued on 13.03.2020. Against the said Return of Income, the assessment was completed by the faceless assessment unit (hereinafter called ‘AO’) vide order dated 17.09.2021 passed u/s.147 read with section 144B of the Income Tax act, 1961 at a total income of Rs.9,71,880/-. While doing so, the Assessing Officer disallowed the claim for allowance of expenditure of Rs.3,54,856/- claimed u/s.57(iii) of the Act by holding that the expenditure claimed was not incurred for the purpose of earning income falling under head “Income from Other Sources”.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), who vide impugned order confirmed the action of the Assessing Officer.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. At the outset, we find that there is a delay of 60 days. The appellant had filed a petition seeking condonation of delay on the ground that the delay had occurred on account as the appellant that not received the impugned order.

We have perused the Affidavit and the averments made in the Affidavit. The averments made in the affidavit remain uncontroverted by Learned CIT-DR. The Hon’ble Supreme Court in the case of M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, held that an uncontroverted affidavit shall be taken as an affidavit on fact. In the light of this legal position, we are of the considered opinion that the delay had occurred in filing the appeal on account of Bonafide reasons and the explanation cannot be brushed aside. Therefore, we are of considered opinion that there is a reasonable and sufficient cause for the delay, hence, the delay is condoned. Accordingly, we admit the appeal for adjudication on merits.

Now, on the merits, he submits that the appellant had incurred expenditure in the form of bank charges, electricity charges, salaries paid to the staff, vehicle maintenance, these expenditures were incurred to earn the interest income. Therefore, the same is allowable as deduction u/s.57(iii) of the Act. He further submitted that the above expenditure is incurred wholly and exclusively for the purpose of earning interest income and the expenditure is not in the nature of any capital expenditure or any personal expenditure of the company. The company had not option except to incur the above expenditure in order to earn income from other sources. Therefore, it is submitted that the same is allowable as deduction u/s.357(iii) of the Act.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the expenditure claimed by the assessee is allowable as deduction u/s.57(iii) while computing income under head “Income from Other Sources”. The undisputed facts of the case are that the appellant company earned the interest on deposits was offered to tax under head “Income from Other Sources”. The appellant company claimed the expenses in the form of bank charges, electricity charges, salaries paid to the staff, vehicle maintenance, these expenditures were incurred to earn the interest income. The Assessing Officer was of the opinion that the expenditure incurred had no direct nexus with the income earned and therefore disallowed the same. Even on appeal before the ld.CIT(A), the ld.CIT(A) took the similar view. Undisputedly, the appellant is a non-juristic person. It cannot be said that interest income on fixed deposits can be earned without any human efforts and maintenance of office etc. Therefore, there was no evidence brought on record by the Assessing Officer to show that the expenditure was incurred for some other purpose. Therefore, we are of the considered opinion that the claim made by the appellant company for allowance of the expenditure to earn the interest income is clearly allowable as deduction u/s.57(iii) of the Act and accordingly, we direct the Assessing Officer to delete the addition of Rs.3,54,856/-.

In the result, appeal filed by the Assessee is allowed.

Since the facts and issues involved in the above captioned appeal is identical, therefore, our decision in ITA No.2005/CHNY/2026 for A.Y.2016-17 shall apply mutatis mutandis to both these appeals of the Appellant Company i.e. ITA No.2006 & 2007/CHNY/2026 also. Accordingly, grounds of appeal filed by the assessee are allowed.

To sum up, all three appeals filed by the Assessee are allowed. Order pronounced in the open Court on 31st July, 2026. (SS VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; िदनांक / Dated : 31st July, 2026 SGR, Sr.PS आदेश क" "ितिलिप अ"ेिषत / Copy of the Order forwarded to : अपीलाथ" / The Appellant.

GANGADHARA RAO SALEELA RAO SALEELA Date: 2026.08.04 16:27:38 +05'30'