HASTI MAL JAIN,JAIPUR vs. INCOME TAX OFFICER , JAIPUR

P a g e | 1 ITA No.1268/JPR/2025 Hasti Mal Jain IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ITA No.1268/JPR/2025 (Assessment Year:2018-19) Hasti Mal Jain Vs. Income Tax Officer, 8/336, Jaipur Vidhyadhar Ward 4(2), Jaipur Nagar, S.O. Jaipur, Rajasthan �थायीलेखासं./जीआइआरसं./PAN/GIR No:AAWPJ9685N Appellant .. Respondent Appellant by : None Respondent by : Sh. Gautam Singh Choudhary, JCIT

Date of Hearing 17.03.2026 Date of Pronouncement 19.05.2026

O R D E R The present appeal has been preferred by assessee against the order of Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as “Ld. CIT(A)”) dated 21.07.2025, passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”).

P a g e | 2 ITA No.1268/JPR/2025 Hasti Mal Jain 2. Under the facts and circumstances of the case the Ld. CIT(A) has erred in confirming the disallowance of Rs.17,00,316/- made by the ld. AO u/s 57(iii) of the Income Tax Act, 1961. 3. The assessee craves leave to add, alter or amend any of the grounds of appeal. 3. No one has put in appearance on behalf of the assessee despite service of notice. An application for adjournment has been filed, wherein, it has been mentioned that the ld. representative who has to argue the matter is presently pre-occupied with other professional engagements. This reason mentioned in the application does not constitute sufficient ground for adjournment. Therefore, the application of the Ld. AR for adjournment of the case is rejected. I therefore, proceed to adjudicate this appeal after hearing the Ld. DR and going through the records. 4. The sole issue involved in this appeal is relating to the disallowance of interest expenditure of Rs.17,00,316/- made by the Assessing Officer and further confirmed by the Ld. CIT(A) on the ground that the assessee had furnished his return of income u/s 44AD of the Income Tax Act,1961 (in short “Act”) and that u/s 44AD of the Act, the income is assessed at the fixed rate of 8% and no further deduction of expenditure is allowed. 5. The assessee has claimed before the lower authorities that the assessee had borrowed the amount from the HDFC Bank which was further given on loan to other parties from which the assessee had earned corresponding interest income. That since the interest expenditure has nexus with the corresponding interest income, therefore, the same was eligible for deduction. The Ld. AO however, was of the view that the

P a g e | 3 ITA No.1268/JPR/2025 Hasti Mal Jain assessee has not clearly established the nexus between the interest income earned and the interest expenditure incurred. 6. Though, the assessee had given various details and dates and events to submit that the amount was obtained on loan, part of which was invested in the Fixed Deposits (FDRs) and thereafter, the same was transferred to Bank of Baroda account from which the amount was further advanced to third parties, whereupon the interest income was earned and after deducting the interest expenditure, the same was offered for taxation, however, a perusal of the impugned assessment order would reveal that the Assessing Officer has not properly examined and appreciated the aforesaid contention of the assessee. Merely, because the assessee has filed his return of income u/s 44AD of the Act, that does not mean that the claim of the assessee of interest expenditure which is related to interest income should be rejected without verification. If the assessee has separately offered the interest income, which is not part of the business income offered u/s 44AD of the Act, the assessee will also be entitled to claim deduction of expenditure on such interest income. Therefore, the impugned order of the Ld. CIT(A) is set aside and the matter is restored to the file of the Assessing Officer for de novo assessment on this issue. The Ld. AO will give proper opportunity to the assessee to present his case and thereafter, will examine the details furnished by the assessee and pass the order afresh in accordance with law. 7. In the result, appeal of the assessee-trust is treated as allowed for statistical purposes.

P a g e | 4 ITA No.1268/JPR/2025 Hasti Mal Jain Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 19/05/2026.

Sd/- (Sanjay Garg) Judicial Member Dated 19.05.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order,

Asst. Registrar ITAT, Jaipur