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Facts
The assessee claimed expenses of Rs.4,73,573/- against interest income earned. The Assessing Officer disallowed these expenses, stating lack of evidence and nexus, and classifying them as personal. The CIT(A) confirmed the disallowance.
Held
The Tribunal held that most of the expenses were not personal in nature. It restored the matter to the AO for verification of documents and to check if similar expenses were allowed in past years.
Key Issues
Whether the disallowance of expenses claimed against interest income is justified when the assessee has provided supporting documents and the expenses are not personal in nature?
Sections Cited
57(iii), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH
(Assessment Year :2017-18) Prakash Chimanlal Sheth Vs. Income Tax Officer B-Basement Jewel 19(2)(5) Building Mumbai Mama Parmanand Marg Opera House Maharashtra- 400 007 PAN/GIR No.AABPS9043E (Appellant) .. (Respondent) Assessee by Shri Madhao Vichore(Virtually) Revenue by Shri Mahesh Pamnani Date of Hearing 13/01/2025 Date of Pronouncement 30/01/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 15/01/2024 passed by Addl. / JCIT (A)-6, Kolkata.
In various grounds of appeal
, the assessee has challenged disallowance of expenses of Rs.4,73,573/- claimed u/s.57(iii).
3. The brief facts are that assessee had shown receipt of interest income of Rs. 51,30,947/-. Against this interest income, assessee has claimed expenses to the tune of Rs.44,63,407/- and Misc. Expenses 49,970/- Stipend 37,500/- Salary 1,00,000/- Court Fees 1,59,000/- Electricity Charges 35,921/- Jewel Soc. Maintenance 38,012/- Legal Fees 5000/- Office Expenses 10,700/- Professional Fees 1,500/- Telephone Expense 13,782/- Vehicle Expense 13,420/- Vehicle Insurance 8,772/- TOTAL 4,73,577/- 4. The ld. Assessing Officer had disallowed these expenses stating that assessee has not filed any evidence regarding above payments and there is no nexus of the expenditure for earning interest income and he held that certain expenses are falling in nature of personal expenses. Even the ld. CIT (A) has confirmed the said disallowance.
Before us it has been stated that in all the past years the assessee claimed the interest income and the similar expenditure claimed has been allowed u/s.143(3). It has been stated that assessee has filed all the relevant bills and evidences and before us also following documents have been filed:-
Prakash Chimanlal Sheth Sr. No. Description 1 Misc. Expenses (Rs.49970/-) Ledger Copy and 12 Vouchers in support of these expenses. 2 Stipend (Rs.37,500,/-) and Salary (Rs.1,00,000/-) Ledger Copy and 20 Vouchers in support of these expenses. 3 Court Fees (Rs.1,59,000) and Legal Fees (Rs.5000) Ledger Copy and 3 Court Fee Challans in support of these expenses. 4 Electricity Charges (Rs.35,921/-) Ledger Copy and 16 Bills in support of these expenses. 5 Jewel Society Maintenance (Rs.38,012/-) Ledger Copy and 4 Bills in support of these expenses. 6 Office Expenses (Rs.10,700/-) Ledger Copy and 1 Bill in support of this expense.
Professional Fees (Rs.1500/-) Ledger Copy in support of this expense.
8. Telephone Expenses (Rs.13,782/-) Ledger Copy and 22 Bills in support of these expenses. 9 Vehicle Expenses (Rs.13,420/-) Ledger Copy and 30 Bills in support of these expenses. 10 Vehicle Insurance (Rs.8,772/-) Ledger Copy and 2 Bills in support of these expenses 6. It has been stated that all these expenses pertain to lending of money only from which assessee has been earning interest.
7. Here the disallowance has been made on the ground that these are personal expenditure and it is not verifiable. However we find that assessee has given all the details which have not Prakash Chimanlal Sheth been verified. Therefore, in the interest of justice, matter is restored back to the file of AO and ld. Assessing Officer is directed to verify these documents and if in the past similar expenses have been allowed, then no disallowance should be made. It is not the case of the ld. Assessing Officer that the nature of expenses debited cannot be allowed u/s.57(iii), albeit, assessee has not produced any evidence regarding the payment and has not shown the nexus of expenses spent for earning the interest income. Most of these expenses are not personal in nature, for example, expenditure like Court fees, electricity charges, society maintenance charges, office expenses, professional fees, salary etc., does not appear to be personal in nature. After verifying the same, ld. Assessing Officer will examine these details and decide in accordance with law.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 30th January,2025.