SMT. SHANTI DEVI MERWAH,NEW DELHI vs. ACIT, NEW DELHI

All four appeals filed by assessee are against order of CIT(A)-XXXI, New Delhi dated 31.10.2014 against order passed under section 153A r.w.s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’). to 270/Del/2015 Assessment Years 2006-07 to 2009-10

These appeals on similar issues relating to assessment years 2006-07 to 2009-10 were heard together and are being disposed off by this consolidated order for the sake of convenience. However, in order to adjudicate the issue, reference is made to the facts and the issue raised in relating to Assessment Year 2006-07.

The assessee has raised following grounds of appeal:-

During the course of hearing, Revised Memo of appeal was filed in the name of legal heir, which is taken on record.

The first issue raised in the present appeal is against the non-admittance of the appeal by the CIT(A) on the ground that tax liability arising on account of returned income has not been paid by the assessee.

The second issue raised on merits is against the disallowance made on account of bank charges as expenses while calculating the interest income for the respective years.

The Ld.AR for the assessee pointed out that the assessee had demised on 25.09.2008 and the younger son of the assessee was brought on record as legal heir of deceased assessee. It was further explained that the issue raised in the present appeal i.e. allowance of bank charges against bank interest stands covered in favour of the assessee by the order of CIT(A) relating to Assessment Years 2010-11 & 2011-12. It was further stated that the CIT(A) dismissed the appeal on the ground that the tax has not been paid by the assessee. However, the assessee had paid the aforesaid taxes. Our attention was drawn to the written submissions filed in this regard with special reference to Page 8 to 270/Del/2015 Assessment Years 2006-07 to 2009-10 wherein the said taxes have been paid from the sale proceeds of the house property of the assessee during the period between 18.03.2015 to 12.08.2015.

The Ld.DR for the Revenue however, pointed out that the assessee had not paid the taxes in time and were paid after the appellate proceedings.

We have heard the rival contentions and perused the record. The first aspect of the issue raised before us is that the appeals which were not admitted by the CIT(A) on the ground that the taxes have not been paid against the returned income and hence, the appeals were not maintainable; can such appeals be decided by the Tribunal now? In the peculiar facts and circumstances, the assessee is deceased and the appeal is represented by the legal heir of the assessee. Admittedly, the taxes were not paid by the assessee alongwtih return of income; though repeated pleas, were raised before the authorities below to sell the gold ornaments seized and adjust the sale proceeds against the tax payable by the assessee, but no such exercise was carried out by the Department. Thereafter, the assessee claims that she sold house property and paid the taxes due with interest on returned income before her death during 18.03.2015 to 12.08.2015. The details of payments are as under:-

In such peculiar facts and circumstances especially where the assessee had demised, it is deemed fit to admit the appeals of the assessee and decide the issue on merits. We do not find any merit in setting aside the issue to the CIT(A) and proceed to decide present appeals.

Now coming to the next issue raised on merits. The assessee was living in Kuwait till 1985 and deposited funds in the accounts held with HSBC, Switzerland. Against the interest received from different years, the assessee had paid bank charges and the tabulated details are as under:-

The issue raised in the present appeal is against the claim of bank charges debited by the foreign bank account maintained by the assessee with HSBC Bank, Switzerland. The case of the assessee is that the accounts were managed by the bank itself by investing the funds in fiduciary deposits with other banks for which maintenance fees and bank charges were charged from the assessee. The assessee has declared its income on account of interest net off of bank charges. The provisions of section 57(1) of the Act is reproduced for ready-reference:-

The Hon’ble Supreme Court in the case of Seth R.Dalmia vs CIT [1977] 110 ITR 644 (SC) was held that “for allowability of such deduction, the dominant purpose of the expenditure incurred must be to earn income. The connection between the expenditure and the earning of income need not be direct; even an indirect connection could prove the nexus between the expenditure incurred and the income.” The claim of the assessee has been allowed in succeeding years 2010-11 & 2011-12 by the CIT(A) against which no appeal has been filed by the Revenue. We hold that the assessee has merit in her claim; the bank charges being related to the interest income are duly allowable as expenditure in the hands of the assessee. Accordingly, we hold so. The Assessing Officer is directed to allow the deduction on account of bank charges against the interest income assessed in the hands of the assessee. Thus, the grounds of appeal raised by the assessee are allowed. to 270/Del/2015 Assessment Years 2006-07 to 2009-10

In the result, all appeals filed by the assessee are allowed. Order pronounced in the open court on 21st May, 2020.